Consumer Use Tax Technology
Effective consumer use tax calculation and compliance are key factors in the management of an organization's true expenses. However take into consideration the narrowly defined taxable and non-taxable events and circumstances a company can have, along with 46 different state tax codes that a tax department has to interpret and your business can easily open itself up to consumer use tax liabilities and an inaccurate representation of its expenses. Implementing automation tools in order to better understand and record this information may seem like the straightforward solution, however due to the above as well as the thousands of purchasing decisions that many businesses are up against, this becomes a much more complex task.
Consumer use tax management is getting better however with today's technologies. Many ERP systems now have the ability to warehouse data that is accessible to various users for a wide array of purposes. It is this same data that can be accessed to standardize the verification and calculation of tax on transactions, promoting better consumer use tax management through the recognition of identifiers that will set this type of tax apart from others.
Two elements that can help point out identifiers and promote the accurate calculation of consumer use tax are:
- Sales Tax Calculation - When goods are sold to a customer, tax logic can be conformed to identify product exemptions based on part numbers or SKU's that are supported by a valid exemption certification in certain jurisdictions. This makes it possible to make a consumer use calculation based on purchase transaction identifiers just as easily as a sales transaction.
- Purchase Transaction Details -Similarly, information passed from a purchase transaction provides enough identifiers to make logical tax determinations including the separation of consumer use tax.
Essentially, the availability of these identifiers from sales tax and purchase transaction details and the configuration of third party tax software provide a better range of data to effectively manage a business. With better data availability, improved tools and ERP systems, the recognition of consumer use tax becomes possible, while at the same time mistakes or non-consumptions are more easily recognized to prevent bigger liabilities.
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