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.

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

dtc spirits new york
North America ShipCompliant
February 14, 2025
A New Era for DtC Spirits Shipping: How New York’s Market is Taking Shape

This blog was last updated on February 14, 2025 In the fall of 2024, New York became the latest state to open its doors to direct-to-consumer (DtC) spirits shipping, marking a significant milestone for the industry. As one of the most populous states with a thriving market for craft and high-end spirits, the shift was […]

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

This blog was last updated on February 14, 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 14, 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 14, 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 […]