This blog was last updated on January 12, 2024
Launched at SAP Ariba in March of 2018, Sovos Use Tax Manager, a cloud-based solution that automates use tax determination reconciliation on purchases to accurately self-assess and accrue tax for proper filing, is one of the few innovations in sales and use tax compliance that is focused on improving your procurement process by eliminating invoice exceptions and much more.
Due to the lack of visibility into tax obligations, use tax has traditionally been a costly and risky issue for businesses, resulting in overpayments to vendors and penalties for failing to properly self-assess use tax. While many businesses are familiar with tax automation in their accounts receivable process, auditors are increasingly turning their focus toward accounts payable and use tax, and they’re stepping up their frequency and scrutiny.
Use Tax and the Procurement Process – Avoiding a 3-Ring Circus
Auditors know the strain that the accounts payable process puts on organizations that purchase goods from many different suppliers all over the world. They also know that one, tax teams typically have little visibility into these invoices to ensure the tax is accurate. And two, that gathering all the necessary purchase data from various disparate finance and customer database systems typically requires a manual process from the finance, tax and IT team to determine if the company was overcharged, undercharged or requires a self-assessment when no tax was included.
By automating use tax from determination to reconciliation to filing, tax pros have complete control of tax in the purchasing process, reducing AP errors and IT involvement.
Your tax team may be the only ones alarmed if there was no tax charged on an invoice, but depending on the situation, the company may be obligated to self-assess a use tax based on:
- How it is being used, or how much of it is being used;
- Where it is being used; or
- What part of the manufacturing process an item is being used?M
Use Tax Manager gives tax teams the tools to effectively centralize purchase data, validate their tax obligations and manage the process without disrupting AP or IT. Tax teams will absolutely love the flexibility and control it offers.”
– Alex Laskowski, Partner, Grant Thornton
A Few Benefits of Using Use Tax Manager for AP, Tax and IT Teams
Identify invoices that require use tax self-assessment and accrue tax to ensure accurate filing and remittance in all jurisdictions.
- Eliminate manual review and easily inspect all vendor invoices for over or under charges of sales tax.
Take control of the process and keep purchasing and AP running smoothly by easily aggregating and enhancing data from any purchasing technology with minimal development effort. - Spot exceptions and configure rules with Use Tax Manager’s reconciliation reports to make the process more “intelligent” to prevent future sales and use tax gaps.
- Use Tax Manager is also known to be a useful stepping stone as your IT digital transformation takes hold by ensuring the most current tax rates and rules are stored securely in the cloud and isolated from impactful changes to ERP, accounts payable and other financial core systems.
Use Tax Management Resources
Stop allocating business profits for audit penalties because your accounts payable process has traditionally incurred sales and use tax fines and penalties. Give your tax team the visibility, control and intelligence needed over tax data on every purchase – without slowing down your accounts payable process. And feel confident when the auditor comes knocking all the information you need is at your fingertips.
Check out a review of various approaches we see in the market for use tax compliance and vendor charged tax validation in my previous blog:
Batch vs. Real-Time Sales Tax Evaluation and Use Tax Accrual Processes
Also, if you missed our webinar with APP2P Network, “The Challenges and Solutions to Use Tax Compliance in Today’s Regulatory Landscape,” the recording will teach you implementation and data considerations for automating and managing proper tax calculation on your purchases, and which approach may best fit you.
Take Action
Safeguard your business against tax errors in the purchasing process, and give your tax team the visibility and control needed over tax data on every purchase – without slowing down your Accounts Payable process. Visit the Use Tax Manager page for details.
