Key Sales and Use Tax Considerations for Manufacturers
What are top sales tax compliance trends and strategies for increasing efficiency and reducing risk?
Sovos and the Manufacturers Alliance partnered to conduct a survey to gain a better understanding of trends in sales and use tax compliance. This survey asked manufacturing leaders what they are seeing and the strategies they are using to reduce risk and attain a more efficient filing process.
Below are five key survey findings on how industry leaders are best adapting to evolving requirements and changing business practices:
- Improving efficiency in sales and use tax compliance and integrating sales tax technology are top priorities. These two areas were the top two selections by far among survey respondents when asked what their key sales and use tax priorities were for the next year.
- Organizational changes add complexity to sales and use tax compliance. Overall, 44% of executives reported that changes in business strategy (e.g., M&A) added the most complexity to the sales and use tax compliance process. Technology (e.g., migrating to a different ERP system) change followed at 35%.
- No matter the size of your company, sales and use tax compliance takes time and resources. While larger manufacturers spend significantly more time preparing for audits, smaller manufacturers prioritize the day-to-day compliance.
- Investing in additional technologies and/or analytics is the top strategy that executives are selecting to improve their sales and use tax compliance. A majority (51%) of executives chose investing in additional sales and use tax technology as their most important strategy over the year.
- Sales and use tax audits are increasing and most leaders think this trend will not stop. Over three-quarters (78%)of respondents expect more audits in the next 12 to 36 months. While 22% forecast the same level of audits, none of the respondents said they expect fewer audits in the future.