This three-part series, How to Manage Sales and Use Tax Risks, examines the three areas where most manufacturers encounter the greatest risks of making costly sales and use tax mistakes, and how to put out these fires before they ignite into bigger problems.
In part 1, we discussed sales tax nexus, including legislation to keep an eye on, tips to control nexus fires and the risks of ignoring these red flags.
Now let’s look at the risks of having untrained staff making sales and use tax decisions.
In my 25-year career of working as a sales & use tax consultant, I have helped many clients manage audits. I’ve seen my fair share of companies ask for my help because they owed large assessments due to unpaid sales or use tax on taxable purchases.
On the flip side, I’ve helped many clients file for big sales tax refunds because they mistakenly paid sales tax on tax-exempt purchases.
These clients usually had one common thread – the staff was not trained to make good sales and use tax decisions.
Think about it. Who is responsible for ensuring that your company pays sales tax correctly on each and every transaction. Who is making the decisions that some purchases are taxable while other purchases qualify for exemptions? Typically, it is either the Purchasing Department or the Accounts Payable staff.
These employees want to make the right decisions. They want to pay tax where they legally should; yet at the same time, save their company money by making sure they are taking full advantage of all exemptions available. But what happens if they are not given the tools to do so?
Most companies don’t provide state-specific sales and use tax training to their staff. At best, they might attend a general sales & use tax seminar that covers many industries. What they really need is a very practical training focused on their industry and state. They need to know the taxability of specific purchases made by their company. The training should teach them what to look for in their company’s daily operations which impact sales and use tax decisions. Plus, the training should help them keep up with changing tax laws.
When I conduct training seminars for my clients, I’m amazed at how appreciative the employees are that their company has given them the tools to do their jobs correctly. It’s amazing to see the lightbulb go off and all the pieces of information fall into place. Call me a sales tax nerd, but I am delighted when someone’s nagging sales or use tax question is answered, and understood.
When key employees are given the opportunity to understand the sales and use tax decision-making process, sales tax risks are minimized. Good decisions are made. Sales and use tax is paid on time. Audits no longer need to be feared. And money is saved, not wasted. Take the time to train your staff and give them the tools to make smart sales and use tax decisions, then watch your profits grow.
Click below to get tips for selecting the best sales tax training for your employees:
Photo credit: Charly W. Karl via Photopin.com
Leave a comment