The use of internal resources still seems the way to go for most companies struggling to meet their sales tax filing and remittance obligations. But for how long?
Staying on top of the ever-evolving sales tax landscape takes constant time and attention. The employee landscape might make finding the right folks to handle your sales tax in-house difficult, if not impossible.
The shortage starts at the highest level of tax compliance and trickles down. According to published reports, fewer than 100,000 people take the certified public accountant exam each year; about half fail. Both the number of candidates and the number of those who passed has also fallen in recent years. University enrollment in accounting courses is also dropping.
Even if you don’t need a CPA to handle your sales taxes (in fact, it’s a specialty that many CPAs don’t handle), there’s a good chance you still don’t have the internal expertise to effectively manage it in-house. According to our third annual Sales Tax Market Survey, lack of understanding of the complexities of sales tax is a cause of dissatisfaction with 29% of companies that responded to our survey.
Furthermore, more than a third of respondents were among companies struggling with a “lack of bandwidth”. One out of three respondents outsource or plan to outsource business processes due to the lack of internal resources.
What to look for
How do you fill this talent gap? Several familiar tactics are worth fresh examination:
- Just as you sell everywhere, your staff can probably be anywhere. Use all networks from social media to the local chamber of commerce.
- Institute referral rewards for your staff.
- Update your job description and incentives.
- Hire for attitude and the potential to learn new skills and create a realistic and not overly specific list of requirements.
Also know the success factors associated with the specific job. The right person to manage sales tax in your company needs many skills: attention to detail, speed and accuracy, adaptability to keep up with rules and deadlines and thorough knowledge of your operations to know where you have physical or economic nexus as a result of various factors.
What skills are needed?
Understanding how changing rules and regulations apply to your business. There are more than 10,000 tax jurisdictions in the U.S. Many have their own rules regarding sales tax. And understanding the regulations means nothing without being able to apply them to changing circumstances. Lately, for instance, remote workers can suddenly give your company physical nexus in a state.
Highly organized. Tax calendars and due dates are not static – they change for reasons from a holiday to a hurricane. A sales tax manager must file all returns by the correct due date and in the correct format, as well as ensure timely payment. Failure to keep up with changing tax calendars and notices from tax jurisdictions can result in penalties and fines – or worse.
Adaptable. Your company might be riding the e-commerce wave right now. So are many states that flourished during and after the pandemic due in part to the sales tax from e-commerce and from sales tax from companies with nexus in their state. As your customer base and revenue in new states grow, so does your potential sales tax obligation.
Internal questions. You must look for firm answers about how much your staff can handle. Chances of errors multiply as fewer people try to do the complex work of compliance with more on their plate or without the proper expertise – and the legal liability is all yours if you miss a compliance matter.
How many staffers will it take to handle your current and future sales tax obligations? What resources will they need? What will be their reaction to the new workload?
Rely on sales tax experts to maintain your compliance. Contact TaxConnex to learn what it means when sales tax is all on us.