Data Consistency with Sales Tax Compliance

The monthly sales tax compliance process is highly dependent on the available data. 

This data should be consistent from month to month.  The data consistency I’m referring to is the format of the report each time it is generated.  Of course there will be new source systems (new billing systems or new ecommerce applications) occasionally, but the data format each month should be the same. 

Consistency is critical because inaccurate or incomplete data can lead to inaccurate return filings and ultimately notices and increased risk. 

In order to ensure consistency:

• Automate the data file generation when possible.  Most billing systems have the ability to automatically generate a report in a specific file format thus ensuring format consistency. Excel and Access also have macro capabilities that can automate steps to create the files which reduces the risk for errors.

• Generate the data from a single source when possible. The more sources and formats involved the higher the risk for errors and inconsistencies.

• Quickly review the files each month to ensure all columns of data are present.

• Tie the data back to the source via a control total.  For example, if you know how much tax liability is in your GL account, tie the tax in the reports back to the GL.  This initial reconciliation of tax data to the GL will ensure you have all the necessary data in the proper format before you start preparing and filing your sales tax returns.

 These seem like simple steps, but they need to be executed properly each month.