Intelligent Automation: Your Best Defense In A World Of Tax Complexity

Uwe Erdtmann

Millions of companies across the United States and Canada are leaving themselves vulnerable to perhaps one of the most underestimated, overlooked, and misunderstood aspect of their finances. With over 10,000 different tax rates and a growing array of evolving taxability rules for goods and services, compliant payment of sales and use taxes is, at a minimum, challenging.

However, ignorance isn’t bliss when it comes to tax authorities. As local and state governments continue to pursue every penny owed, mismanaging sales and use taxes could be the costliest compliance mistake that a company can make – no matter the size, industry, market, or region. In fact, a small online business in Pennsylvania is facing a US$1.6 million bill from the State of California for state taxes not collected on sales transacted through Amazon. Noncompliance headaches range from punitive fines to avoidable audits.

While there’s no way to avoid paying sales and use taxes, there is a silver lining: technology can make tax compliance smarter, straightforward, and safeguarded.

Determining tax with intelligence and expertise

With a tax automation solution in place, your business can integrate an end-to-end chain of processes for the determination, calculation, and validation of U.S. and Canadian sales, use, and good and services taxes. This approach allows the delivery of automated indirect tax calculations, on a real-time basis, throughout the entire transaction lifecycle.

From the combination of an ERP system and real-time data to the integration of a tax automation solution in the cloud, finance professionals can quickly generate tax returns – monthly, quarterly, or annually – that accurately reflect the tax to be paid. This promise is best achieved when functionality enhancements and expanded government guidance are updated regularly and automatically through cloud integration.

Cloud based tax automation

For example, SAP and Thomson Reuters offer a tested and proven solution that includes over 25 standard ready-to-run reports, exemption certificate management, and access to thousands of product taxability content from the United Nations Standard Products and Services Code (UNSPSC). Furthermore, the technology supports a variety of standard goods transaction types to evaluate sales tax validation, coupled with automated use tax accruals and postings.

By taking advantage of the latest technology enhancements, as well as legal and tax content, your finance organization can increase the accuracy of tax reporting and payments on a real-time basis. For example:

  • Support of UNSPSC goods and services tax categories, which today total 10,000
  • Retail tax content supporting fees for line items such as baggage, tires, battery, and telephony
  • Specific to the oil and gas industry, upstream and midstream tax content, such as new tax rates, rules, and logic supporting complex excise tax determination, calculation, and reporting on motor-fuel taxes as well as well-head service taxes
  • For petroleum, utility, and telecommunications providers, precise latitude and longitude coordinates to augment site determination logic for remote rural locations
  • Streamlined configuration of tax policy, covering product mapping, legal entity tax jurisdiction, and statutory nexus thresholds and establishments in North America

Getting taxes right the first time, every time

The rapid evolution of sales and use tax requirements can make maintaining an in-house engine of tax intelligence nearly impossible. And let’s face it – no organization can afford to make a mistake.

However, this latest innovation in global tax and accounting administration can change this reality for every business. With access to extensive content that is always timely, accurate, and up to date, your finance team can automatically calculate right the first time every time – no matter how often individual tax tables and rules are adjusted.

Interested in this new approach to tax administration? Read this press release and check out ONESOURCE Determination for SAP S/4HANA Cloud.

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This article originally appeared in the Future of Customer Engagement and Experience.


Uwe Erdtmann

About Uwe Erdtmann

Uwe Erdtmann is product marketing director for Digital Core at SAP. With SAP since 2004, Uwe has a background in business studies and computer sciences, which has helped him bridge the gap between market reality and development theory.