From time to time, sales tax outsourcing relationships fail to work properly, and a change is necessary.

As the sales tax outsourcing relationship progresses over time, sales and marketing messages give way to the realities of the operational relationship.  Changes in ownership, staff or operations can affect provider performance or client needs.  Let’s take a look at some of the major beefs that respondents had with their sales tax providers based on a survey TaxConnex conducted of financial professionals at the end of 2021. 

I’m still doing too much of the work. Almost one out of four respondents said this was their biggest complaint – especially for those using automated sales tax solutions.  Not surprising since there are many aspects of the sales tax compliance process that cannot be automated.  For example, software cannot respond to notices.  Software cannot update a filing frequency or make a risk-based decision as to whether a business should register for sales tax in a state.  What happens to that automated system when something breaks?  The list of potential issues can become painfully clear when you learn that another provider fails to deliver a complete service. 

No reliable point of contact. Do you have a central point of contact who knows and can help with your issues?  

Often there’s a new point of contact every three to six months, or the contact is a clerical resource incapable of providing needed support. Or worse, there is no direct point of contact, and you are left entering trouble tickets and hoping for a response.  Often times, the response is an email with links to articles where you are required to sift through the materials and try to make the best decision for your business. 

An increase in notice activity. Do you get a lot of notices from tax jurisdictions? Are you starting to get more? A notice is not always an indicator of something bad, but too many notices can identify underlying problems with your sales tax compliance. How quickly are notices resolved? Notices often have short deadlines – and stiff penalties for missing them. A provider must make sure you don’t wind up with the burden of handling this.

Other problems 

If only our survey highlighted all the possible reasons to switch providers. But there are more. 

Not customized. Different businesses manage sales tax obligations in different ways, with different systems and risk tolerances. One-size-fits-all definitely doesn’t work. 

Outgrown the provider. You can outgrow a provider in many ways: mergers, new products, more sales and so on. All can impact your sales tax obligations and knock you out of compliance.   

Lost confidence. Ultimately, the above issues can erode your confidence in the service provider. At this point, it’s time for change. 

(Check out our eBook Changing Sales Tax Outsourcing Providers.) 

We often hear concerns about how difficult it is to switch from one sales tax provider to another. But if you’re currently outsourced, you’ve likely already done the heavy lifting of determining nexus, setting up tax calculation and registering with tax jurisdictions. You may find the process is much faster and simpler than you imagine.  

Contact TaxConnex to learn about our services in providing a sales tax compliance service that will take the burden off you. 

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2011 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.