States and local jurisdictions are stepping up the pressure. Is your company ready?
The likelihood of a sales and use tax audit may not be the first tax-related challenge that springs to mind for CFOs. But the risk is significant and growing – and finance chiefs should be aware of this possibility. Even before the U.S. Supreme Court’s South Dakota v. Wayfair ruling in June, audits were on the rise. The new legislation, which will likely result in more companies being required to collect sales tax for online sales, will only accelerate that trend.
Best practices to help your company steer clear of audits. The best offense is a good defense, so start with a detailed understanding of where your company is doing business. We offer a list of key questions to ask, such as: Are you using the correct forms? Are you applying the correct local and state tax rates? Are your exemption certificates maintained and updated?
The risks around non-compliance, and how automation helps you mitigate them. The impact of non-compliance goes beyond penalties and interest charges. It’s considered fraud by some states. It can also hurt cash flow. Customers that are not taxed accurately typically under-pay invoices, which creates collection issues that tend to have a negative impact on cash flow. The whitepaper explains how third-party providers and technologies, including cloud-based solutions, help you integrate data from disparate departments, streamline tax calculations and simplify the filing process.
What to do if the auditors come knocking. Tax automation tools can provide a solid audit trail. The whitepaper provides a checklist of steps to take in the event of an audit, including reviewing documents that support deductions taken, reviewing sales tax accrual accounts and revisiting documentation from any previous audits.
There’s also some great info on audit triggers; I’ll detail those in my next post.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.