Today's Technology for Tomorrow's Firm.
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October 2015 • www.CPAPracticeAdvisor.com 23 Jeanete Sherman is a journalist and legal writer who is fascinated by the complexi- ties of sales tax worldwide. She learns something new every day in her transactional tax research at Avalara. A Year in the Life of a SALT Accountant is sponsored by Avalara c c o u n t a n t b y A v a l a r a • Filing local returns • Tracking due dates and fling sched- ules • Managing diferent payment methods • Adjusting to changing fling methods • Notice management 1 FILING LOCAL RETURNS Each state has its own set of r u les and reg u lations that m ay d i f fer f rom ot her st ates . I n add ition to state r u les, cities and counties may impose and manage sales and use ta x returns on their ow n. Responsibi lit y lies w ith the business to not only determine if they have to fle with specifc cities and counties, but also to register of their own accord. 2 DUE DATES AND FILING SCHEDULES Not all returns are due on t h e s a m e d a y o f t h e month. W hen dealing with multiple states and loca l jurisdictions, the nu m b e r of du e d at e s a nd f i l i n g schedules that must be managed can be daunting. Tese tasks are time consuming and prevent employees from engaging in more value-added eforts to build the business. In an ef for t to increase income and cash fow, a number of jurisdic- t i o n s a r e a d d i n g p r e p a y m e n t requirements for larger tax amounts. Prepay ment requires pay ments to be made to jurisdictions on a dif- ferent f iling schedule, sometimes more than once a month. Due dates are also dynamic when adjusting for state furlough days, state and federal holidays and weekends. If jurisdic- t ions c ross t i me zones, pay ment deadlines var y depending on time zone. 3 DIFFERENT PAY- MENT METHODS Each state deter m i nes what pay ment opt ions a re ava i lable to businesses. Most states now allow returns to be paid electronically, either through elec - t r on ic c he c k or t he A u t om a t e d Clea r i ng House (ACH) process. Some states may have infrastructure a n d s o f t w a r e l i m i t a t i o n s . F o r example, some states or municipali- ties do not have the capabi l it y to receive ACH payments. Timing of automated withdrawals also creates a concern. Many busi- nesses run a risk that the state will w it hd r aw f u nd s i n e r ror on t he wrong schedule or that their banks will not be able to deliver the check or electronic transfer at the r ight time. Not all banks have the ability to i n it iate ACH-cred it pay ments where a business pushes the funds to states, l i m it i ng t hei r pay ment options. 4 DIFFERENT FILING METHODS Not all sales tax return proce s se s a re c reated equal. Filing methods can var y as m u c h a s p a y m e n t m e t h o d s . Me t ho d s a l low e d b y s t at e s a nd individual municipalities can var y within the same state. Some states now require sales tax returns to be f i le d e le c t ron ic a l l y; ot her s s t i l l require hard-copy submission and a few states ofer online fling along with an electronic data interchange (EDI) option. In addition to methods of fling, forms can also var y from jurisdic- tion to jurisdiction. Keeping track of the rapidly changing environment of sales tax compliance can be con- fusing and time consuming. In order to keep up with how returns should be f i led for a l l st ates, a bu si ness needs, at a minimum, a full-time tax specialist to track, implement and document all the changes. 5 NOTICE MANAGEMENT O n c e y o u r s a l e s t a x return has been fled and your liability remited, compliance isn't over. A lthough your returns are fled and paid on-time, jurisdictions may make an error and send a notice. Teir systems may not have read a postmark date properly, or a pay- ment could have been applied to an i n c o r r e c t a c c o u n t , a l l c a u s i n g notices to be sent. The Value of Outsourcing Outsourcing your state and local tax work to a third party provider allows you to focus on your business and removes t he wor r y a nd concer n about meet i ng a l l of you r S A LT dead l i nes . For e x a mple, Av a la ra (sponsor of this series) takes care of f i l i n g s t a t e a n d l o c a l r e t u r n s , meeting deadlines, arranging pay- m e n t s , u n d e r s t a n d i n g f i l i n g requirements for all taxing jurisdic- tions, and managing tax notices. F or businesses that fle their sales and use tax returns in-house, the most common com- plaints are: The 5 Major Pains of Sales Tax Filing and Remittance By Jeanette Sherman