Tax Automation: A Powerful Resource for CPAs and SMBs

The Supreme Court’s Wayfair decision, which allows states to require remote sellers to collect sales tax, is just one feature of an increasingly complex and volatile tax environment.

In 2017 alone, tax departments faced 721 sales tax rate changes, notes Vertex Chief Technology Officer Jen Kurtz in a new article for CPA Practice Advisor. While the unrelenting pace of change “sounds like a problem for large corporations, it’s one that small businesses and the CPAs that support them need to understand and address as well.”

Tax automation technologies are a boon for both types of organizations; Jen focuses on the advantages for professionals at public tax and accounting practices. Tax technologies can help these firms in at least two important ways:

1. Simplifying the role of the CPA. Calculating returns can be a steep challenge. In addition to the applicable tax rates, you need to know the rules around product taxability. For example, “clothing isn’t taxable in Pennsylvania, but it is in New York, and a specific item can be tax exempt in one jurisdiction, but not the other,” Jen notes. Tax engines can handle the data and calculations easily, minimizing compliance risks. These solutions can also streamline the monthly sales tax filing process; automate adjustments; and enable efficient, on-demand reporting.
2. Providing strategic tax insights. Given their sometimes limited resources, SMBs have traditionally focused on compliance. But with tax automation software, CPAs can deliver a level of strategic value and actionable data that’s usually available only to large enterprises.

It all adds up to an exceptional opportunity for tax and accounting firms to accelerate their own processes and offer a range of enticing new services for SMB clients at the same time.