Pitfalls of Sales Tax Compliance: In-House Resources

Many companies don’t think about how to handle sales tax obligations—until it’s too late.

Previously, we examined how back-office functions like your general ledger, tax calendar can quietly derail sales tax compliance. Still, you might ask, “It’s just sales tax. It’s just putting a number on a form; how hard can it be?”

The answer: much harder than it looks.

There are 50 states, each with its own tax system, laws, and rules. Managing sales tax properly takes time, attention, and resources; not just a form and a number.

Can Your Internal Team Keep Up?

Sales tax compliance isn’t a strategic initiative. It’s not value-added work. It’s a tax-collection responsibility imposed on you, and when managed in-house, it often falls through the cracks due to insufficient resources.

Our latest annual survey of top finance executives revealed:

• 48% are not fully satisfied with how their business handles sales tax.
• Most still rely, fully or partially, on internal staff for sales tax compliance.

Sales Tax: Not Just “Another Task”

It’s tempting to delegate sales tax to someone who already manages finance or accounting. But here’s why that doesn’t work:

• No oversight or review: Notices from tax jurisdictions get ignored. Mistakes go unnoticed and become recurring issues.
• Staff turnover: If an in-house admin leaves and no one updates the credentials on the state tax portal, you could miss crucial communications or enforcement actions.
• Single-threaded knowledge: If only one person knows your sales tax process, what happens when they’re out—or gone?

This isn’t a side task. It’s a core compliance responsibility that deserves dedicated attention.

Build a Legacy of Compliance

You’re juggling deadlines, filing returns, and handling countless other tasks. But when an auditor shows up three years from now and asks how you came up with the numbers for a certain return; will you remember?

Probably not.

That’s why you need to build a legacy-level support system for your sales tax compliance. Here’s what to do:

• Centralize your records: Save all sales tax returns, workpapers, reconciliations, and invoice history in one location.
• Ensure audit readiness: Maintain a full audit trail, including reconciliation of sales data to returns, tax return support files, and invoices for all periods with nexus.
• Prepare for M&A: If you plan to be acquired, vague or incomplete sales tax histories can become deal-breakers.

Technology Alone Isn’t the Answer

Even the best tech solutions can’t manage sales tax on their own. Companies often learn the hard way: technology without oversight is not compliance.

You need:

• Great technology
• Someone monitoring it regularly
• Clear cost-benefit decisions about your tax process
• Human oversight to adjust as your business changes

Sales tax is not “set it and forget it.” Whether you add new products, expand into new states, or change sales platforms; your tax obligations change too.

And if no one’s watching? You’re at risk.

Avoid the Pitfalls of In-House Sales Tax Compliance

Sales tax gets complicated fast, especially as your business grows across state lines. You need more than software or spreadsheets. You need a partner.

Learn more: Watch our webinar
Don’t Test Your Luck: The Pitfalls of Sales Tax Compliance

Need help now?
Contact TaxConnex to learn what it means when sales tax compliance is all on us.