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

Chuck is Vice President –Regulatory Analysis & Design at Sovos, a global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, he leads a team of attorneys and tax professionals that provide the tax and regulatory content that keeps Sovos customers continually compliant. Over his 20-year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC, Bloomberg and more. Chuck has also been named to the Accounting Today list of Top 100 Most Influential People four times.
Share this post

North America Unclaimed Property
February 10, 2025
Delaware Announces 2025 VDA Invitation Dates

This blog was last updated on February 10, 2025 Mark your calendars – April 11, 2025 and August 15, 2025 are this year’s anticipated release dates for the Delaware’s Secretary of State (SOS) VDA program invitations. In the event that an organization receives an invitation to participate in the Voluntary Disclosure Agreement (VDA) program  , […]

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 12, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]

retailer dtc wine shipping
North America ShipCompliant
February 6, 2025
Retailer DtC Wine Shipping: The Time Has Come

This blog was last updated on February 6, 2025 By Tom Wark, Executive Director, National Association of Wine Retailers We are often reminded by the media and those in the wine industry—as well as by wine enthusiasts—that the three-tier system of alcohol distribution in most states hinders consumer access to the expansive number of wines […]

Montana 1099-DA
North America Tax Information Reporting
February 5, 2025
State Filing Alert: Montana’s New 1099-DA Requirements for Crypto Brokers

This blog was last updated on February 5, 2025 Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a […]

North America ShipCompliant
January 23, 2025
DtC Wine Shipping in 2024: A Year-in-Review

This blog was last updated on January 28, 2025 The direct-to-consumer (DtC) wine shipping channel faced a storm of challenges in 2024, navigating some of the toughest market conditions in over a decade. As inflation tightened wallets and consumer behaviors shifted, the industry recorded its steepest declines in shipment volume and value since the inception […]