Tax Automation

Learn how the latest release of the Sabrix Integration for Oracle 12 enables companies to quickly deploy a fully automated tax solution with SAS 70 certified tax research. Register now for the July 28th web seminar to learn more.

During this event, you will learn:

• How the Sabrix Application Suite supports Oracle customers with global transaction tax compliance
• How the Sabrix Integration for Oracle 12 facilitates and streamlines support for multi-country deployments by setting up one regime to rate flow per country.  
• How Sabrix extends Oracle EBTax functionality with out of the box tax determination and calculation, tax rate logic and up to date SAS 70 certified tax research.

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10AM PDT (1PM EDT)
 

Woodland, CA voters are all set to vote on Measure V, which would raise the sales tax by a quarter-cent.  An unidentified source has been busy recently, attacking the measure and its proponents. It all began two weeks ago when registered voters received calls from an automated voice calling herself “Nancy”. Nancy proceeded to list off reasons not to vote for Measure V. Last Sunday, flyers were circulated throughout the town opposing the sales tax increase. The flyer listed off 10 reasons to oppose the tax and even included an apparent anti-tax passage from the bible. The wording on the flyers was suspiciously close to that of Nancy’s.

Supporters of the tax note that the legitimacy of this election could be called into question, as it appears it may violate California government code. The code mandates that any campaign which receives more than $1,000 in support has to register as a formal group and report contributions. It appears unlikely that the cost of the automated phone calls, flyer distribution and volunteers would be less than $1,000. As such, a complaint could be filed with California Fair Political Practices Commission.


Source:

www.dailydemocrat.com/news/ci_15250077

For many tax departments managing exemption certificates consistently falls to the bottom of the priority list…until an audit exposes holes in the process.  Come join Sabrix tax consulting partner, DuCharme, McMillen & Associates, as they discuss their total solution for automating exemption certificate management during this one hour webinar.  See how this solution integrates with Sabrix’s transaction tax software, and how it has helped businesses comply with sales and use taxes, industry-specific taxes and value-added taxes.  Through the combination of modern software technology, embedded forms validation, and services and benchmark studies provided by knowledgeable tax professionals, companies are taking a proactive approach to efficiently managing exemption certificates.

Presenter: Eric Christian
Executive Director of Tax Technology
DuCharme, McMillen & Associates, Inc.

January 19^th at 10AM PST
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• Downloaded digital goods such as music and movies;
• Streamed digital goods;
• Automated digital services;
• Remote access software.

Continued from Part 1

A Cash Flow Opportunity: Establishing an Integrated Tax Management Practice
Pay your sales and use tax or VAT late and you incur a penalty. Interpret one of the many new tax law changes incorrectly and you incur a penalty or risk an audit. The list can go on and on. The bottom line is that transaction tax management has a direct effect on cash flow. Mismanagement of your tax management process can result in penalties and interest charges. The flip side is that establishing a world-class tax practice can increase your businesses cash flow.

Progressive finance departments looking to thrive, not just survive in this economy know that an integrated approach, in which their technology, people and processes work seamlessly, is key to capitalising on the transaction tax management cash flow opportunity and are swiftly taking steps to optimise their tax management process.

The first step to seamless integration is centralised technology. Consolidating your tax management technology across multiple business systems eliminates manual tax determination done by staff. In addition, this centralised technology approach acts as the hub from which domain experts can set tax rules and establish corporate tax policies and best practices centrally, which is automatically disseminated across the company from a single source. The result is improved accuracy and reduced workload, providing the company with higher degrees of compliance at a lower cost of compliance.

Centralised technology effectively automates the tax compliance process for efficiency and should integrate with a company's finance and accounting applications for sales, purchasing, payment processing and resource planning. Also, with a myriad of software delivery models - from software as a service (SaaS) or on-premise - businesses can now choose whichever model best suits their needs. But automation alone isn't enough, especially if you automate errors.

Tax domain experts provide the multi-disciplinary expertise in tax law, tax policy, research and audit to ensure the highest level of service to your business. Smaller organisations particularly may lack qualified tax professionals experienced with all the processes required to achieve and maintain the highest degree of compliance, and often choose to outsource this function entirely. Whatever approach you take, whether in-house, outsource or a hybrid model, you must build a team of tax domain experts that can help your business navigate through changes or growth.

Best practices/processes ensure that your company achieves streamlined compliance across the complete tax lifecycle - from tax determination to return preparation to rapid reconciliation and preparation of audit reports. As compliance requirements change, your company is automatically kept up-to-date.

By creating a tax management practices consisting of centralised technology, domain experts and best practices, organisations such as Cisco, Tektronix, Hewlett Packard and Lenovo are not only saving tens of thousands of dollars, which can be used for growth initiatives, but are also eliminating the need to hire additional headcount to support expansion. During lean times, the companies best prepared and opportunistic are the ones that will come out on top. Weaker players will dwindle leaving market share available for the remaining players to pick up. While every aspect of the company should be reviewed and 'recession proofed', focusing efforts on the transaction tax management, an opportunity to increase cash flow, is increasingly becoming a top priority for savvy finance departments.

 

• supplied to VAT registered businesses;
• taxable under the reverse charge arrangements according to the rules in the customer's country.

• customer's country code
• customer's VAT registration number
• value (in local currency) of goods and related costs
• value (in local currency) of taxable reverse charge supplies of services
• an indicator code to separate the services from goods

As a student I spent a couple of days with Dutch customs at the border between the Netherlands and Germany. It's a long time ago, and before a Tax Automation era, but I still remember all those trucks stopping at the border, waiting for hours to get their paperwork stamped by Dutch and German customs. It was quite a sight and an intrusive process for all those truckers. The two countries were separate from each other and goods needed to be exported and imported in each country.

With the introduction of the single market on 1 January 1993 , fiscal customs based controls at internal frontiers were abolished and a new Value Added Tax (VAT) control system was put in place for intra-Community trade. The most significant benefit was the reduction of the administrative burden on companies; with the elimination of some 60 million customs documents per annum.

Under the new VAT system intra-Community supplies of goods are exempt from VAT in the Member State of dispatch when they are made to a taxable person in another Member State who will account for the VAT on arrival. However, this is only possible when the company making such supplies verifies that their customers in another Member State are taxable persons and do hold a valid VAT identification number. 

Each Member State's tax administration maintains an electronic database containing the VAT registration data of its traders. Such information includes the VAT identification number, the date of issue, the trader's name, the trader's address and, where applicable, the date of cessation of validity of a VAT number. Even when Tax Management Software systems are used, companies must verify their customers' registration numbers.

A computerized VAT Information Exchange System (V.I.E.S.) was set up to allow for the flow of the data held across the internal frontiers which:

• enables companies to obtain rapidly confirmation of the VAT numbers of their trading partners
• Enables VAT administrations to monitor and control the flow of intra-Community trade to detect all kinds of irregularities

The unit responsible for the control of intra-Community trade in each Member State , the Central Liaison Office (CLO), has a direct access through VIES to the VAT registration database of the other Member States. You can check out that database here.

Written by guest writer
David Emmons, CMI
Tax & Business Consultant at Sabrix

Whether you are a sales tax professional, a purchasing professional or an accounts payable professional, in today’s economy, everyone is concerned about adding value to their organization (or in lay man’s terms; job security). Having worked as a sales and use tax manager in private industry myself, my position had more of an accounting aspect to it than taxation. With the increased control measures introduced by the passing of SOX-404, it seems that every journal entry or balance sheet account was scrutinized to the nth degree; our company was sensitive to economic inefficiencies and corporate “waste.” We were looking for every possible opportunity to enhance the bottom line. One way in the tax department was to evaluate our processes to identify opportunities for increased efficiency. This included tax automation using sales tax software to drive the transaction tax determination process and streamlining the sales and use tax compliance process.
 

With many years of experience, Sabrix has determined that the most efficient global tax management process is directly related to an increase in the accuracy of sales tax determination and control of use tax calculation. When transaction tax processes become more efficient, there are more resources and time available to monitor and monetize opportunity cost while providing an opportunity to leverage tax management software. We will explore several of these opportunities in the coming months. The first cost saving opportunity, illustrated below, is the result of taking advantage of early or timely sales and use tax return filing discounts.
 

Sales and Use Tax Collection Allowance Compensation Benefits
This analysis is based an organization which has $1 Billion of combined revenue and spend or total transaction tax remittances of $80 million (comprised of both sale and use tax) and transaction tax remittances are spread equally across all fifty states. It also takes into consideration those states without a sales tax and those without an early payment discount. The following savings from taking advantage of prompt payment discounts could come to more than $ 350,000.
 

 *NH has a collection allowance on Rental Tax Remittances.


Collection Allowance Analysis

In these tough economic times, households and businesses are evaluating which “extras” they can cut from their budget to save money.  It isn’t so much fun to have to cut/change these expenditures, but you learn a lot about people when you ask them what they are considering cutting.  Will they stop purchasing their morning coffee and brew their own?  Will they start bringing their lunch rather than going out to eat?  Or will they start cleaning their own house again?  It is a very personal decision about the things that are optional and which are necessary for basic life.   

If you are a business and need to cut expenses, what are the “extras” that you can cut or change to save money?  You can cut/reduce travel, business meals and entertainment, subscriptions/publications and/or staffing expenses.  Just like households, businesses consider pulling outsourced services back in house and having existing folks absorb the work.  This can work but requires careful evaluation of the risks and rewards.  You have to be aware of the quantity of work, the complexity of the work, your feelings towards the work, and the risk in doing the work incorrectly.

If I have prepared sales and use tax returns before, feel comfortable doing it, and have the capacity to take the work on, I might decide that the cost savings of not utilizing an outsourced return preparation service is worth my time – but probably only during these tough economic conditions since I would rather be spending my time on strategic activities.  On the other hand, if I am using an end-to-end transaction tax compliance solution that provides tax automation and automatically calculates correct tax on the transaction, records the transaction and tax, generates returns for reporting/remitting the tax, and provides support when I am audited or when I have questions about sales and use tax nexus, I am probably going to think hard about whether it is realistic to take this on, based on complexity and load.  The more an outsourced provider is handling your business process from end-to-end, the more difficult it is to bring it back in-house since it may have a larger complexity span than existing staffing can absorb.  If there is risk of error associated with the work, and the end-to-end service provider can do it cheaper and better, it usually still makes sense to use the full-service provider during tough times since you will probably not save money in the long run.

I asked my hair dresser/stylist how she is fairing in these economic conditions.  She said that the recession has had very little impact on her business.  Even though you can buy a pair of hair cutting scissors and a $10 box of hair color, the risk of not doing it right is too great for her clients and is not worth the potential cost of having to fix the error.  Is it worth the risk to take on something that may end up costing you more in the end?         

One of the most difficult areas of US sales and use taxation is determining which state and local tax jurisdictions can impose tax on the transaction. When I have a pizza delivered, my lawn mowed, or blinds installed, these companies must determine what tax I should be charged based on my address.  One of the complications is that the city portion of my address is not tax accurate since I do not live within the city limits.  Another complication is that the city continues annexing county land, so while I may not be located in the city limits today, the odds are fairly good that we will be annexed at some point.  Another complication is that I live within the transit district.  The transit district does not follow city or county boundaries.  Instead, it follows the bus routes and the areas served by the local bus system.  This is a lot to keep track of for businesses that deliver to my address.

When I think about destination sourcing I always think about my Dad's very small lawn mowing business that is small enough to not get in the way of his golf schedule.  He has to charge sales tax on his lawn mowing service receipts based on where he performs the service.  He doesn't use sales tax calculation software since he has the human equivalent to do his books.  My Mom handles his books and happens to know the exact city limits boundary since she is on the City Council.  It helps that he doesn't have that many customers and the materiality level of his business is pretty low.  I don't think he has raised his rates for my kindergarten teacher that he started mowing for over 20 years ago.

For growing businesses that don't have human tax jurisdiction calculators and are operating in multiple tax jurisdictions, tax calculation software can automate tax determination and minimize the risk of charging the wrong tax rates.  With the risk of audit assessments for charging too little tax, and the risk of class-action lawsuits for over-charging tax, you can't afford to be wrong.  And you can't be sure that you aren't delivering to the home of a sales tax auditor, though I try to make sure my husband doesn't know how much I spent for other reasons.     

www.sabrix.com