Making the Case: Seven Benefits of Automating Your Tax Exemption Certificate Management Process

Charles Maniace
May 22, 2020

Tax exemption certificate management might not be the topic at the forefront of every executives mind, but if your organization is serious about reducing the risk of adverse audit assessments (including penalties and interest), it’s a process you absolutely have to get right.

Manual processes have proven time and time again that they are no longer capable of keeping pace with today’s challenging and ever-changing regulatory environments. Ultimately, they suck valuable resources away from the organization while failing to deliver the level of control needed to ensure compliance.

If you are trying to make the case to your organization on why this process needs to be automated without delay, start with these seven talking points.

Automating the exemption certificate management process will:

  1. Reduce manual work and paper documentation – By importing and centralizing exemption certificates and customer data into the cloud your team will have instant access and full visibility into which customers have missing, incomplete, invalid or expired certificates in a matter of minutes.
  2. Minimize transaction errors and incomplete records – A certificate management solution will alert you when there are certificates that need action. You can then proactively request new or updated certificates. This will reduce the amount of time your team spends collecting and validating certificates and ensure you are only exempting customers who have provided valid documents.
  3. Reduce IT costs – The value of outsourcing this business functions to a tax technology expert greatly reduces the costs of building and maintaining an in-house solution. Cloud-based or SaaS (software-as-a-service) models are the ideal as they represent low up-front cost, centralized processes and require minimal IT support.
  4. Simplify the customer onboarding process – Streamline the customer onboarding process by providing a simple method of uploading exemption certificates directly into the solution. This will improve your customer experience while ensuring you always have visibility into who has submitted certificates. 
  5. Improve customer relationshipsEnsuring accurate tax treatment on invoices and timely order fulfillment can make a huge difference in customer satisfaction. Holding up orders, reissuing invoices, and mis-applying tax can strain a relationship. A proactive exemption certificate management process in place will help to eliminate these issues.
  6. Significantly reduce audit frequency and time needed to prepare – Eliminate time spent gathering data if audited. Confidently defend audit inquiries knowing you have the required certificate documentation easily accessible. As everyone knows, when a state audits a taxpayer and finds a buttoned down and complete compliance process, the less likely they are to return any time soon.
  7. Maintain exemption certificate compliance as your business grows – As your customer base grows and your nexus footprint expands, collecting certificates will only become more challenging and time consuming. Having a management system in place that scales along with you ensures compliance no matter how big and diverse your customer base becomes.

Getting the exemption certificate management process right is an important step in ensuring that your organization remains compliant. Given the growing complexity of today’s regulatory environment, this is no longer a nice to have tool, but rather an essential solution in protecting your business from financial risk.

If you aren’t sure how to get started in automating your processes, talk to Sovos, we can help.

Sign up for Email Updates

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


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 […]

EMEA Spain VAT & Fiscal Reporting
November 26, 2020
Spain Extends SII Scope From 2021

The tax authority in Spain, Agencia Estatal de Administración Tributaria (AEAT), aiming to enhance the Immediate Supply of Information (SII) version 1.1, has introduced new validations and fields to the schema expected to be enforced from 1 January 2021. The new fields will record the sales of goods in consignment (Venta de bienes en consigna) […]

November 25, 2020
Audio Blog: Brexit and VAT

Brexit: What are the Implications for VAT Part I Brexit is set to become reality at the end of December. So, what does it mean for organizations doing business in the UK and the European Union? Turns out, there are several tax implications that will need to be accounted for. In this episode of the […]

EMEA VAT & Fiscal Reporting
November 25, 2020
HMRC issue guidance on VAT accounting processes for goods moving between Great Britain and Northern Ireland from 1 January 2021

HMRC has published a policy paper that outlines the VAT accounting process for goods moving between Great Britain (GB) and Northern Ireland (NI) from 1 January 2021. As from 1 January 2021, the Northern Ireland protocol will come into force which means that NI will remain in the part of the single market and customs […]

E-Invoicing Compliance EMEA Tax Compliance Turkey VAT & Fiscal Reporting
November 25, 2020
Turkey’s Digital Tax Transformation: What is E-Arşiv Invoice?

Companies have begun to transfer financial processes to the digital environment as a result of technological developments in recent years. Business efficiency has increased through the financial processes regulated via e-transformation applications. The e-transformation system in Turkey covers applications such as e-invoice, e-ledger, e-arşiv, e-ticket, e-reconciliation, and e-delivery note. Mandate scope of e-arşiv invoice According […]

November 24, 2020
Technology Disconnect in Insurance – Why IPT Needs Prioritising

Many insurers still depend on legacy systems to file insurance premium tax (IPT). Whilst cost is sometimes the reason for this decision, some organisations simply don’t prioritise technology upgrades, instead, choosing to focus on initiatives that improve the customer experience or other business workflows. Can this situation continue? Unlikely for much longer, as more tax […]