Notices are a way for taxing jurisdictions to get in touch with you. Monitoring and responding to notices as well as making the corresponding adjustments or taking the prescribed actions is one of the many pieces of your sales tax compliance process. A very important piece in fact, as ignoring a notice can put you and your business in hot water, opening the door to additional penalties and fees. So who is managing your sales tax notices?
A recent survey of financial professionals conducted by TaxConnex stated that 34% of businesses are outsourcing the preparation and filing of their sales tax returns to an integrated software, but when asked how they were managing jurisdictional notices and communications, only 21% stated they utilized an outsourced software. Out of all the sales tax tasks we asked about, managing notices and jurisdictional communication (56%) say they relied on internal resources to manage this.
Why are so many businesses managing this in-house when they are comfortable outsourcing other aspects of finance and sales tax? Often, it’s because their sales tax software providers do not offer this as a service, so it’s left to businesses to manage on their own.
So what is involved in managing notices? Why do you receive a notice in the first place? If your outsourced provider is doing a good job, you won’t receive any notices right? It depends. Errors are not the only reason a jurisdiction may need to contact you.
There are many reasons you could receive a notice – not all of which mean you are in trouble. Your filing deadlines could have changed, you may need to send your filings or payments to a new location or in a new format, and then of course, there could be an error or mishap with your previous payment or filing. While some may be minor adjustments, there often needs to be updates to the process to ensure the notices are followed, and responses to the notice sent when needed.
How do notices arrive? They can arrive by mail, be emailed or be posted to your account on the jurisdiction’s website. The person in charge of checking and responding to notices must know where to monitor, how to respond and have access to all jurisdictional sites. The time to manage notices can quickly add up.
If you’ve outsourced your sales tax compliance process to a software company or other provider, you don’t expect to have to continue to manage nuances like this on your own, but often that is the case if you don’t check to see what all they actually manage for you. Specifically, the software providers will not log into and check your e-file accounts. They rely on a technology solution to upload or report the taxes to the state and don’t take the extra step to check the e-file account for notices. When choosing a sales tax compliance provider, be sure you read the fine print on what services are offered, what comes at an extra cost, and what you will have to continue to manage on your own. You may be surprised that many providers don’t provide as much as you think.
If you’ve become frustrated with managing sales tax on your own or are looking for a provider that will actually manage the entire process including notices for you, get in touch with TaxConnex. Learn more about TaxConnex services here: The TaxConnex Difference