I often speak with companies that are considering sales tax compliance outsourcing. I’m surprised at the frequency I hear comments like, “all the returns are filed online – it’s easy”. I guess the people that tell me that haven’t filed a return online recently. Or perhaps they are filing in some of the less complicated states.
I was reminded how time consuming this task can be recently. I was helping a colleague file a few returns online. Here’s what I discovered:
Let’s start with Pennsylvania.This return was actually pretty easy. There were a couple of line items I had to account for but it took me just a couple of minutes to file online and submit a payment. If only all states were this easy.
Utah was next.Hmm…..do I use Schedule A or Schedule J? Schedule J it is. This was much more involved than the Pennsylvania return. It wasn’t difficult - it just took more time than necessary. For each location, I had to pick the location from a drop down list and then enter the tax. Why can’t the data entry screen for the return have all the locations listed and then you enter the tax where appropriate. Utah done – also not hard but very inefficient.
I finished with Texas.I had a detailed spreadsheet of 6 printed pages with the various taxes due to different local and special taxing districts. It was a key entry exercise and I was distracted a couple of times during the data input. When I was finished entering the 6 pages of data – I couldn’t file the return. Evidently after 30 minutes of “inactivity” the website times out. I didn’t know that entering data was considered “inactivity”. On the second go around, I saved the return after every two pages of data entry. OK…..Texas done – not too hard but took a ton of time – close to one hour on this one.
There were other returns as well. Some simple – others more difficult and time consuming like Texas. Keep in mind that this was toward the end of the compliance cycle – the data had already been imported into a tax return system where the data was parsed out to the specific locations and a nice, clean data entry sheet was produced. It’s incredible how disparate the taxing rules and even the tax forms and online sites are from state to state. I’m sure if I did these returns every day I would become more efficient at it and I could greatly reduce the amount of time spent.
During the whole process, I kept wondering how could all of this ever be simplified to a point where software could automate the entire process? I just don’t see it happening.