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
June 6, 2024
Observations and Predictions: The Future of Tax and Compliance

When I became the CEO of Sovos one year ago, I knew that I was stepping into an innovative company in an industry primed for a seismic transformation. However, even with this knowledge in place, I must admit that the speed and scope of change over the past year has been extraordinary to witness. Here […]

EMEA VAT & Fiscal Reporting
June 21, 2024
ViDA Rejected Again – Europe Misses Another Chance to Harmonize e-Invoicing

During the latest ECOFIN meeting on 21 June, Member States met to discuss if they could come to an agreement to implement the VAT in the Digital Age proposals. At the ECOFIN meeting in May, Estonia objected to the platform rules being proposed, instead requesting to make the new deemed supplier rules optional (an opt-in), […]

North America ShipCompliant
June 20, 2024
New York Poised to Expand DtC Shipping

The New York legislature recently passed A3132A, a bill that will expand the range of products that residents of the state can have direct-to-consumer (DtC) shipped to them. The bill is now in the hands of Governor Kathy Hochul—meaning that unless she decides to exercise her veto power, producers across the country will soon be […]

North America Sales & Use Tax
May 23, 2024
Streamlined Sales Tax (SST) Attempts to Simplify Compliance for Digital Sellers

Accurate sales tax determination is historically predicated on the seller knowing the precise street address of their customer. Since sales tax jurisdictional boundaries do not necessarily correspond to governmental boundaries (e.g., state, county, city) and don’t tightly align with zip codes, the only way to apply correct local rates is by knowing the pinpoint location […]

North America ShipCompliant
May 21, 2024
19th Annual Wine Summit: Highlights and Takeaways

Over May 8-9, Sovos ShipCompliant hosted its 19th annual Wine Summit. For two days, wine makers, managers, consultants, attorneys and other industry members gathered at the Napa Valley Marriott to hear from a cavalcade of experts on regulatory and marketing advice and updates related to the wine industry.  19th annual Wine Summit Recap from Presenters […]