Sales and Use Tax Filing Automation Considerations

Successful organizations may experience growth very rapidly. While growth and expansion offer tremendous benefits to your brand and revenue, it can have a crippling effect on internal departments, particularly Tax during sales and use tax filing.

As sales and operations expand geographically, so too does your tax obligation. Spending valuable time and money on Indirect Tax compliance detracts from your ability to focus on more lucrative endeavors, and the manual processes typically practiced open your organization up to risk.

So what are the typical challenges experienced during the Indirect Tax compliance process, and how can Sovos help?

It’s All About the Sales Tax Filing Data

Assuming that you’re calculating and collecting tax correctly, you’ve got to compile all of that information into a singular format in order to begin your reconciliation and form population processes.

• Where is your data?
• Is it all in your ERP?
• Does some of it live in a CRM or billing system?
• Who can get it for you?
• Once they do, who can put it in a format so that you can make sense of it?

These are all common challenges that we hear. Often it’s a messy process that involves multiple departments, data re-formatting and lots of time. And it happens every month! What happens when the company adds a new system or acquires another entity? This is definitely not a scalable process.

With Sovos Sales & Use Tax Filing, we offer a flexible import tool to consolidate ALL of your data, no matter the system. No special file layout or file type required. All you need is the data – summarized or detailed – and with a simple one-time data mapping per system, it’s all loaded and consolidated in one location in a matter of seconds.

Forms, Forms, Forms

Consolidating all of your data together is a big challenge; now that it’s complete, you’ve actually got to take that data and put it on a return. Depending on where you do business (hundreds of returns in Colorado alone) or what it is that you sell (Custom Software Return in Baton Rouge) the number of returns could be enormous. Each return could be asking for different information on different lines, so the process of populating with your data is time-consuming. The forms do change, too, so you’ve got to keep up with any jurisdictional updates and notices.

The Sovos Sales & Use Tax Filing solution takes all of your data and populates the forms correctly based on the return requirement. In addition, Sovos maintains the jurisdictional forms on your behalf, so you’re always up to date.

Sales and Use Tax Filing Reconciliation

One of the most frustrating aspects of the returns process is reconciling the information on the return with the funds accrued in your G/L. If the numbers don’t match up, this could send you on a scavenger hunt searching for a specific invoice or exemption. Credits and returned items that cross reporting periods also contribute to the reconciliation headaches.

In the Sovos Filing solution, you’re able to see the individual transactions that are tied to each return, greatly simplifying any research that needs to be done to assist in reconciliation.

Appropriately entitled users can edit and override information within the return – and all of the adjustments are captured in the Return Audit History.

Also, handling credits is a snap with the “Data on Hold” feature that allows you to carry-over credits until subsequent filing periods when there is enough obligation. You can also initiate amended returns.

Filing & Remittance

Filing returns can be a struggle as well. According to a recent Aberdeen study, audit penalties from inaccurate filing was cited as one of the top 3 drains and business risks on a manufacturing business. Some organizations file paper returns and mail directly to the jurisdiction. This costs time and money – not to mention trees. Other companies use the jurisdiction’s website and enter their information directly on the webfile portal. While environmentally friendly, this is still a manual process that takes time and introduces the possibility of data entry error. Other organizations file electronic returns and submit directly to the jurisdiction. The challenge here is the EDI formats can be complex and expensive to map to from the return information.

Sovos offers the benefit of all three. You can print and mail your return to those jurisdictions that don’t allow any other options. You can use the PDF version of the return and copy and paste information directly to the jurisdiction’s website to e-file. Or, the most efficient way, you can submit a correctly formatted electronic return directly out of the Sovos interface to the jurisdiction.

The solution also offers planning tools to help you proactively plan remittance activities and requests to Treasury Management to streamline payment.

Filing corporate tax returns is a time-consuming, complex task that becomes more challenging as an organization grows. Sovos Filing keeps your organization ahead of any regulatory changes while providing transparency within your data set to mitigate potential audit risk – all while saving your team precious time that can be focused on growth!

Photo by Ahsan Avi on Unsplash