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Reviews For Your Firm SALES & USE TAX REVIEW SECTIONS INTEGRATED SALES TAX RATE ENGINES BASIC SYSTEM FUNCTIONS • General navigation/ease-of-use • Installation process • Multi-company management • Multi locations • Remote Access Capabilities COMPLIANCE CAPABILITIES • Multi-Jurisdictions • Automated compliance tools • Electronic Filing & Payment • Rate Updates INTEGRATION/IMPORT/EXPORT • Data output options • Reporting • Integration with accounting system HELP/SUPPORT • Built-In Support Features • Support Website/Documentation • Live Support SALES TAX PREPARATION SYSTEMS BASIC SYSTEM FUNCTIONS • General navigation/ease-of-use • Installation process • Multi-company management COMPLIANCE CAPABILITIES • Multi-Jurisdictions • Forms preparation • Electronic Filing & Payment • Rate Updates INTEGRATION/IMPORT/EXPORT • Data output options – pdf copy • Reporting • Integration with accounting system – summary report HELP/SUPPORT • Built-In Support Features • Support Website/Documentation • Live Support Sales & Use Tax Compliance Systems Keeping Up with the Challenges of Sales & Use Tax I 8 April 2012 've writ en about the volatility and challenges of sales and use tax compli- ance for more than 10 years and, despite movements like the Stream- lined Sales Tax Initiative and increased eff orts from states to recoup lost tax revenues for their bat ered budgets, I'll probably be writing about sales taxes for another 10 years or more. T e paradox of sales and use taxes is that it actually starts out quite simple, but can grow into a complex situation almost overnight. For small businesses, particularly those that are geographically stationary, such as brick and mortar stores, the process is fairly straight forward: One tax rate gets collected and sent to the state, oſt en via the state's online submission website, and perhaps with a few exemptions. However, as the business grows, expands to online sales, partners with other companies, adds delivery operations or opens up additional locations, the challenges add up quickly. Just as with the Internal Revenue Code, over the years the base concept of sales taxation has been constantly amended by state and local authorities. Tax rates increase, temporary taxation periods are added along with occasional tax holidays, and to add to the confusion are maximum taxation caps, varying exemption qualifi ca- tions, exemption certificates and other issues. Even more so, each state, county, city and special districts may have taxation authority, which can result in hundreds or thousands of changes per year that a busi- ness has to keep track of. All of that is compounded when dealing with the ongoing redefi nition of nexus and changes in what items are subject to sales tax in some states, but not in others. T e expansion of online commerce has also resulted in many smaller companies experiencing these challenges. By the tra- ditional measure of revenue a local specialty shop might be described as small, but can potentially have sales throughout the pril 2012 • www.CPAPrCPAPracticeAdvisor.com United States. Without knowing in advance where their sales will be coming from (and where their products will be shipping to), how can a small web-based business be prepared for the possible reporting requirements of those jurisdictions? With all of these variables and unknowns, it's easy to see why so many businesses, large and small, frequently face fi nes, back tax remit ances and even liens for non-compliance. T e best way for them to avoid these perils is to be proactive and seek the advice of a professional who knows the issues of sales tax and can determine their collection and reporting responsi- bilities. For those businesses that have grown from having very simple taxation needs into more complex scenarios,, it may also be wise to invest in a more comprehensive sales tax rate and compliance system. T ere are two general types of sales tax man- agement systems, and this review categorizes them as such: Sales Ta x Preparation systems, and Integrated Sales Tax Rate Engines. a - w For smaller businesses with fewe r sales tax challenges, Sales Tax Preparation systems can help them or their accounting specialist with the processes of completing sales tax returns and associated forms for fi ling with the appropriate state agencies. T ese programs also include tax rates for the jurisdictions they support, which can be used as a look-up system or, sometimes imported into an accounting package. All of the programs in this category in this review off er direct e-fi ling of returns and electronic remittance to the states and sub-jurisdictions they support. For businesses with more complex or frequently changing sales tax collection requirements across large numbers of jurisdictions, especially those with higher volumes of transactions, Integrated Sales Tax Rate Engines are more focused on getting the right sales tax rates into a transaction in real-time. T ese are generally notify users of pendin d f d g deadlines. The l programs in this category do not off er direct e-fi ling to the states, but the vendors off er optional compliance services through which they will handle all aspects of printing, fi ling and remit ance. T e type of program best-suited to a par- ticular business depends on their transaction volumes, the number of jurisdictions they have reporting obligations to, the complexity of the products they sell, and the value to them of having instant rate lookup and application to a transaction. ● Isaac M. O'Bannon, Editor Mr. O'Bannon is the chief editor and digital content director for CPA Practice Advisor. web-based tools that connect a business' sales, accounting and/or e-commerce systems to a live database of sales tax rates, rules and special variables, usually for every taxing jurisdiction in the country, with a few even covering Canada and VAT/GST abroad. T ese are very powerful programs that take into account all aspects of tax- ability, and they can do it in under a second, while a transaction is being processed, and insert the applicable taxes into the transac- tion as a line-item. These integrated systems also offer automated preparation, taking the data from the transactions and preparing review-ready, print-ready forms for all jurisdictions, and can include alerts to The states with the lowest combined state/local average sales tax: MT: 0% OR: 0% NH: 0% DE: 0% AK: 1.74% The states with the highest combined state/local average sales taxes: TN: 9.43% AZ: 9.12% LA: 8.84% WA: 8.79% OK: 8.66%