This is part one of a two part series focused on switching sales tax compliance outsourcing providers. 

This first part will focus on identifying when it’s time to switch while the second part will focus on the steps necessary to make a change.  It’s challenging to know when to make a change. 


If you encounter any of the following issues, it may be time:

Too much time spent on oversight 

How much time are you spending reviewing the work of your service provider?  Occasionally, we hear that a business spends as much time reviewing the service provider’s work as they did doing the work themselves.  This usually stems from a lack of confidence with the service provider.  Lasting impressions are often formed in the initial three months of an engagement.  It’s expected that a business would have a high level of scrutiny over the work provided by the service provider in the initial stages of the engagement.  If confidence is established early on, then the business often steps back from the process and relies on the expertise of the service provider.  However, errors early in the relationship and less than professional responses to issues will cause a business to continually scrutinize the process beyond the honeymoon phase, limiting the benefits of the outsourcing relationship.


Notice Activity 

What is your level of notice activity?  Notices are part of any compliance process whether it is performed in-house or if it’s outsourced.  However, if the compliance process is outsourced and you have to track the resolution of the notices and you’re not confident the service provider is representing you professionally with the jurisdictions, then additional risk is being introduced into your business.  You may want to ask, how many notices are received as a percentage of the filings?  How many days old are the notices?  What is my notice balance?  You may be alarmed by the answers.


No reliable point of contact 

Do you have a central point of contact that knows, cares and can help with your issues? We’ve heard from some businesses that have outsourced their sales tax process that their service provider does not provide a central point of contact when there’s an issue.  Some businesses have described a process where they enter a “trouble ticket” similar to an IT support environment and all communication is done via email.  Other businesses have described situations where there’s a new point of contact every 3-6 months or the point of contact is a clerical resource incapable of providing the level of support necessary.  Regardless, you should seek a consistent, reliable, and professional point of contact.          


No Accountability

Who is accountable to you for resolving issues?  We see this manifest itself in two varieties:

Too many vendors

Some service providers use a third party payment processor and present it as a “best of breed” option.  In this situation, one company provides the return preparation and another company provides the payment processing.  You should ask yourself how is it advantageous to bifurcate the process?  Having two companies involved in providing one service introduces unnecessary risk and increases the likelihood of finger pointing if there is an issue.

Too many people 

Multiple departments involved in the process is “sold” as segregation of duties to enhance security of the process as well as to create scalability in the process.  However, this type of arrangement increases the likelihood of finger pointing when there is an issue and reduces the overall accountability.  Who’s in charge?  Is it an IT issue, a Treasury issue, or some other department?


Your boss (insert “C”-level executive) is contacted by jurisdictions 

Has your boss contacted you about a sales tax issue?  When the CFO or CEO has been contacted at home or has had their personal assets impeded, it’s past time for change.  This is a real situation that we have seen on multiple occasions.  Usually, once something gets to this stage, there have been multiple additional red flags along the way – high notice volume, lack of responsiveness on notices, lack of accountability, etc.  If this occurs, you may be forced to make a change in order to demonstrate to the C-level that you will not allow this type of event to happen again.

Stay tuned for part two with specific steps to facilitate a transition to another service provider.  It’s not as difficult as it may seem.



Brian Greer

Written by Brian Greer