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What Manufacturers Need to Know from the IPT Annual Conference

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I recently attended the Institute for Professionals in Taxation (IPT) annual conference in Michigan and I’m excited to share with my clients and WT consulting team all the great information I gathered. The message that I heard loud and clear: while each company has its own unique challenges and hurdles, most companies agree that sales tax is getting tougher and tougher. And companies need to take their sales tax mentality to the next level.

  1. States are getting more aggressive and audits are more challenging. I've seen this first hand, and so has everyone else. Gone are the days when auditors took a common sense & practical approach to audits and assessments. Now, every exemption your company takes is getting carefully scrutinized with a hint of skepticism., For example, many DORs are now requiring exemption certificate documentation, even for companies which clearly only sell to wholesalers.
  2. Sadly, many DOR auditors have retired, leaving a large gap in knowledge. Corporate tax departments are having to train the new crop of "green" auditors. This means significantly more time spent on audits and far less time on tax planning and money saving projects.
  3. You had better get it right the first time! The mountain of documentation, proof, and backup needed to get a refund claim approved can easily be compared to climbing Mt. Everest. States are requiring invoice copies, POs, requisition logs and more before they even begin to consider a refund. Companies that take proactive measures have a much easier climb.
  4. But there's always room for a second set of eyes. Teaming up with an experienced consultant to conduct a contingency-based reverse audit often yields free money and reduces audit risks.
  5.  States are on the warpath to collect more revenue. Instead of raising tax rates, the states are expanding the tax base. It does the trick and is usually less obvious to the voters in the state.
  6. Business is changing the world of sales tax. Whether it is new services (cloud services, sharing economy), an increasingly mobile workforce, or the increasingly M&A landscape of business, sales tax obligations for companies are impacted. People handling sales tax for the company need to have a more prominent involvement in all aspects of their ever-changing business. They need to be involved upfront on major business changes.
These days, the sales tax function clearly goes way beyond simply filling out tax returns. Being proactive is a necessity. Staying on top of nexus obligations, understanding the taxability of your products and services and training your AP & purchasing staff about state sales and use tax laws are just a few of the areas that need to be addressed by the people making sales and use tax decisions at your company.

Are your states cracking down on sales and use tax compliance? And more importantly, have you taken your sales and use tax processes to the next level?

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Lauren Stinson, CMI
Written by Lauren Stinson, CMI

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