Avalara founder, Rory Rawlings, states,
“The sales tax management industry allows organizations to spend more time on what drives revenue: nurturing customers. With such offerings as Managed Returns Service, organizations spend less time on manually calculating sales tax and keeping abreast of changes in rules, rates and boundaries, and instead can concentrate on providing exceptional customer service.”
Sales tax compliance is not a priority for most accountants. Of course, the hurry-up and help call is made when the tax auditor arrives and everyone has to scramble. As states and local tax jurisdictions experience sales tax revenue decrease and their revenue expectations shrink, they will aggressively look for non payers through enforcement of the nexus concept. If nexus is established, then tax collection and remittance is required.
The intent of the Streamlined Sales Tax (SST) consortium effort is to assist businesses with compliance, increase tax collections for SST members and reduce cost. Whether and how fast SST can accomplish these goals will be determined over time. Certainly some method of compliance is necessary to promote any kind of cost reduction. According to a PricewaterhouseCoopers study, businesses with less than one million dollars in annual sales spent 13.47% of sales taxes collected for compliance and businesses between one to ten million dollars in sales spent 5.2% to report and submit sales tax. Even the 5.2% cost is too high. This cost must be reduced.
There system wide requirements to update the customer records, sales information data, local, county, state and federal reporting requirements. Doing the job right the first time will keep customers happy, reduce non-productive time and make any sales tax audit efficient.
Automatically maintaining sales tax tables within accounting software is where Sales Tax Management Systems (STMS) shine. Tax updates and rule changes are downloaded automatically with regional detail down to zip code + 4 in the US. Sales tax holidays, which are becoming popular especially for clothing and back to school periods, are also computed. Sales tax holidays create significant tax complexity by forcing calculations based on more than one set of sales tax rules during the year. This compliance burden can generate substantial unexpected costs to change computer and manual systems.
Sales Tax Management Systems (STMS) provider Avalara offer a varying range of support from full sales tax management to just updated sales tax tables. This competent STM system will track taxing jurisdiction information as follows: >> Nexus >> Address Validation >> Auto Jurisdictional Assignment >> Customer Exemptions >> Product & Service exceptions >> Sourcing Rules
Avalara will even remit the returns on behalf of the client.