"If I only knew then what I know now." How often do you talk to someone who made a seemingly intelligent, well-thought-out service purchase that quickly left them very troubled? We've all done it, whether it was as minor as a yard service or as major as an engine overhaul. Almost everytime, I discover that those decisions were because I was more uninformed about "fit" than I believed myself to be when I purchased. As you might guess, the same goes for outsourcing services - even with savvy tax managers and executives. These same purchasers generally compound the problem by "hoping" the service will get better, rather than quickly moving to the solution that you now know fits...right now!
If you're going to outsource sales tax compliance, make sure you are evaluating the right criteria for you and your company:
- Do you need a data-knowlegeable, data-sensitive provider?
- Does your preparer have you stuck in a rigid box of processes, rules, or technologies?
- Should your decisions and returns have a customer-intimate touch?
- Is price-per-return the outsourcer's primary focus in the relationship?
- Do you have access to expert advice for frequently asked questions as part of the engagement?
- Is full automation a help or a hinderence to your process?
- Will you have an expert tax professional who will pay attention to all the details like it's their Sales and Use Tax Department.?
- How urgent will your notices and problems be to the person and company preparing your returns?
Certainly there are more elements to examine for a perfect fit, but most often, these are some of the key questions that get overlooked in the pursuit of the right outsource partner. Most of us are heavily influenced by price. We have to be. But the notion of low price is much deeper than the cost-per-return. Repair and rework are costly, and if you don't have a good fit with your outsourcer, then there's plenty of unrecognized cost on the horizon. Be smart about how you evaluate the true cost of your outsourcing engagement.
Finally, don't be paralyzed by a bad initial outsource selection. Get rid of them quickly, before the boat has a chance to sink. I've learned that hanging on is the biggest expense you'll have to deal with. Bailing quickly keeps the real cost of failed compliance at a minimum. When you see standing water, there is certainly a fatal leak. Time to call the tug boat and move to the right relationship...today.
A great number of issues I help resolve are pretty easy to prevent. Mechanics will tell you that it's not so hard to avoid a car that won't run if you'll just check your engine once in a while. I think it's the same issue with sales tax - you just need to check your tax engine once in a while. Just like the mechanic who deals with an angry customer who's been stranded on the road...in the rain...on a cold day...with no jacket, a couple of my advisory conversations have gone the same way. Somehow, somebody, or something else caused their tax problem and they have to deal with the repair issues now. So the DOR and I get the brunt of their sore temperament about the situation.
Sometimes the rules, rates, changes, etc. aren't clear - I really do get that. What I don't get is how someone can sign a return when they are not certain about what it contains. I mean, eventually the sales tax data has to connect to the returns which has to reflect the statutes...right? That's what the auditor will tell you when he shows up. So why does someone submit a return where they haven't already connected the dots on data-to-return-to-statute? It's probably because they don't know how...just like I don't know how to get the gasoline to my fuel injector, which eventually results in power getting to my wheels.
Make sure you're filing something that makes sense and keeps you in full compliance. And if you don't know, ask someone who can advise you properly. It's a shame to have to ask someone after the auditor has already shellacked you, and nothing can really be done about it.
Stop checking the mail if you do business in Minnesota. Like most states, Minnesota is suffering from the effects of the economy. So much so, it has suspended certain business related tax refunds. While this suspension will not affect individual taxpayers, businesses expecting refunds associated with capital equipment, sales tax, and corporate franchise taxes are going to have to wait until things improve. There is no definitive timetable on when the issuance of checks will resume. However, interest will continue to accrue and will be paid. The legislature approved this suspension in L. 2010 § 6 (1st S.S.). ( Business tax refund delays, Department of Revenue, 10/21/2010 .)
A number of states are experiencing similar effects from the economy and some have been delaying the payment of refunds for some time now. If you are experiencing delays in refunds, you may be afforded an opportunity to take credits against current and prospective tax liabilities - under certain conditions and in certain states. Not all states allow this practice and you should check with your sales tax advisor or refer to the state statutes before pursuing this remedy.