7 Signs that Your Exemption Certificate Management Process is Putting You at Risk

Charles Maniace
May 21, 2020

Maintaining valid tax exemption certificates is one of the more difficult and labor intensive, yet critical, compliance requirements. Doing it correctly and completely is essential to protecting your business from audit exposure.

As the tax landscape continues to evolve and grow more complex, managing this process is becoming increasingly difficult and time consuming. Many companies are continuing to try to evolve and expand existing manual solutions to meet their new requirements but have found themselves falling further and further behind. The result is often a repository prone to missing or expired certificates that put your business in the cross hairs of auditors.

Knowing when you need help in managing the exemption certificate process is an important step in mitigating your audit risk. To assist you in assessing your own capabilities we’ve put together a list of key identifiers assembled from years of experience and conversations with hundreds of customers.

If any of these statements apply to your business and exemption certificate management process, it’s time to talk to the tax technology experts before the auditors ask to talk with you.

Seven signs you may need help:

  1. Our team is small, and we struggle to always request and track the receipt of exemption certificates from new customers.
  2. We don’t have the proper controls in place to track when certificates may be expiring so that we can request and receive new ones.
  3. Our customers find our certificate submission process to be cumbersome.
  4. Requesting exemption certificates from our customers is extremely time consuming and full of redundant tasks.
  5. We can’t easily track, or in some cases track at all exempt drop shipments We have yet to evaluate our need to collect and maintain certificates in the states where we are now collecting tax due to economic nexus.
  6. The number of exempt transactions booked in error is on the rise.
  7. Our existing process of managing exemption certificates is not scaling to meet or business expansion and growing compliance needs.

The best protection against a risk is often the simplest. In the case of exemption certificates, ensuring that you have the proper ones on file and current sounds easy. Yet the process of getting there can be anything but.

Automating your exemption certificate management process will ensure that you are protected against missing and expired certificates. It will also eliminate the hours upon hours your staff spends completing redundant tasks, freeing them up to focus on higher priority initiatives.

This process is complex and getting more complicated by the day. It’s OK to ask for help. If your organization identifies with any of these scenarios, talk to Sovos. We can support you seamlessly and ensure that the stress of exemption certificates becomes a thing of the past.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Charles Maniace

Charles Maniace is Vice President – Regulatory Analysis & Design at Sovos, a leading global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos customers continually compliant. Over his 15 year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC and more.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

ShipCompliant
August 10, 2020
Ask Alex: Your Bev Alc Compliance Questions Answered (August 2020)

Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.  To take advantage of this opportunity and get […]

Tax Compliance
August 7, 2020
GAO Urges IRS to Overhaul 1099 Reporting for the Gig

A couple of weeks ago, the Government Accountability Office (GAO) released a report to the Senate Finance Committee describing the issues the IRS faces in enforcing income tax compliance for gig economy workers. The report highlighted long-standing issues the government has been grappling with in receiving tax information necessary to enforce compliance along with specific […]

EMEA VAT & Fiscal Reporting
August 4, 2020
New VAT Rules for Online Marketplaces and Imports of Goods into the UK

The United Kingdom’s HMRC has issued new guidance on the VAT treatment of cross-border sales of goods and online marketplaces beginning 1 January 2021, following the end of the transition period. Cross-Border Sales under £135 New rules will apply when a business sells goods for £135 or less to a UK customer and the goods […]

EMEA VAT & Fiscal Reporting
August 3, 2020
New EU Tax Package: VAT Priorities

On 15 July 2020, the European Commission (EC) adopted a new Tax Package, intended to increase tax compliance while reducing administrative burden on businesses. The Tax Package contains a number of proposals related to VAT, of which three in particular stand out: A single EU VAT registration for taxpayers; Modernized VAT reporting obligations; and Facilitated […]

IPT
August 3, 2020
Should Insurers Receive an IPT Holiday From Their Governments?

It’s been a tough year for businesses. Whilst many have accepted that 2020 is likely to be a year to forget, unfortunately tax still needs filing and paying. Tax authorities have been understanding – nobody could have foreseen this – and there has been a concerted effort to provide SMEs with tax relief and postponements […]