A few years ago, I left the sales tax outsourcing service provider that I spent 11 years with to embark on a new journey – one with my client, a Fortune 100 company where I would serve as an Indirect Tax Manager for Compliance within their Indirect Tax group.  Few people have the opportunity to work on both the provider and client sides, and I was thrilled to make the transition.

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After orientation, connectivity lunches and meeting the team; I was immersed into the group and quickly learned that my 11 years in sales tax outsourcing had taught me little about how a business determines nexus, creates taxability rules, manages the sales and use tax accounting process, handles audits, controls risk, and ensures that millions of tax liability dollars are remitted each month.  While on the service provider side, my calendar revolved around the filing due dates with the 20th due date being the most stressful.  Responding to customer inquiries and resolving notices was “filler” activity between filing due dates.

On the client side, I quickly learned how challenging it was to rely on my service provider to help manage my own workflow.  For example, in order to respond to an audit inquiry, I had to speak with my service provider to better understand how a certain set of returns for a jurisdiction was prepared.  The problem I encountered was that my question was during the first part of the month – prior to the 20th due date when the service provider was focused on returns.  My common response on the service provider side was to push the client request out as far as possible in order to get the returns out the door.  This seems like a natural way to do things while on the service provider side.  However, on the client side, I quickly saw how frustrating this could become.

I’m back on the service provider side, and what I’ve learned over the years is that most service providers are focused on preparing sales tax returns.  That’s their focus.  Some service providers even describe their service as “Returns Outsourcing”.  This type of service revolves almost entirely around getting data on returns and filing by the due date.  The client is left to manage the rest of the sales tax process – nexus questions, taxability issues, registrations, audits, etc.  I’ve now learned there are different options available.  I’ve discovered the difference between “returns outsourcing” and providing a true outsourced sales tax function – or an outsourced sales tax department.

With an outsourced sales tax department, when the client has a question, the service provider answer is, “Sure.  Let me help with that.”  Not, “I can help you with that but your returns won’t get filed on time.  Do you want me to stop the returns process to help with this?  Or can you wait a couple of weeks?”  As an outsourced sales tax department, the service provider truly becomes an extension of the client’s organization, a true partner.

If you’re struggling with a sales tax outsourcing relationship that is returns-focused, we’d love to discuss how an outsourced sales tax department might help.  Additionally, here's a link to our quick guide on how to smoothly transition your service from one provider to another.

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Noelle Ard

Written by Noelle Ard