, ,

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

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 Tax Information Reporting
June 7, 2023
4 Ways to Elevate Your Direct State Reporting Process

Direct state reporting obligations have gotten increasingly difficult for some businesses over the past few years. With more states requiring direct reporting of form series 1099, more companies are subject to penalties if they do not comply with those obligations. As state reporting evolves, ensuring your process is efficient is critical. Strengthening your reporting process […]

EMEA VAT & Fiscal Reporting
June 7, 2023
The Value of SAP S/4HANA Add-On Software Certification

Many companies utilise SAP for their tax processes, but limitations in native software functionality add a layer of complexity. Custom coding is often required for businesses to achieve their desired results, producing the need for ongoing customisation and optimisation – this creates a hefty burden for companies, in addition to their tax compliance obligations. SAP-certified […]

North America Sales & Use Tax
June 5, 2023
Sovos Onboarding: 6 Departments Dedicated to Customer Success

If you are evaluating Sovos, we want you to understand expectations for the customer experience and what teams are there to support you. At Sovos, we have a range of teams ready to support you from the day you sign a contract. Whether it be a customer success representative to review the value you are […]

North America Sales & Use Tax
June 1, 2023
3 Things to Remember if You Get a Sales Tax Notice

Have you ever received a sales tax notice from a state department of revenue? Whether you answered yes or no, there are important things to keep top of mind to help keep your business prepared. Finding out that you have failed to comply with one or more of your sales tax obligations can be startling. […]

EMEA VAT & Fiscal Reporting
May 31, 2023
Bizkaia: What is Batuz LROE?

The Ledger of Economic Operations (Libro Registro de Operaciones Económicas), also known as LROE, is a main compliance element of the Batuz tax control system. This system is under implementation in the province of Bizkaia, located in the autonomous Basque community in Spain. Taxpayers under the Batuz mandate must comply with both TicketBAI and LROE […]