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What Do You Do When Sales Tax Outsourcing Goes Awry?

Posted by Doug Starr on Mon, Nov 15, 2010 @ 04:21 PM

sinking boat

"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.

 

Topics: sales tax compliance, sales tax, sales tax outsourcing, sales tax return, sales tax professional, return, returns, automation, sales tax automation