Six Questions About Your Exemption Certificate Management Solution

by | May 14, 2021

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Ray Diaz

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Implementing CERTifyTax Will Set Your Business up for Success

Perhaps your exemption certificate management solution is homegrown. Maybe it is an appendage to your sales tax engine. Most work to varying degrees. What should you expect from your solution? Ask yourself the following six questions to identify any deficiencies in your exempt sales solution and process.

Is your current solution backed by the granular exempt sales research used by the world’s largest sellers?

At its core, properly documenting exempt sales requires a comprehensive understanding of the rules of the exempt sales game (along with rigorous, systematic compliance, more about that later). So, about those rules. They are contained in the statutes, regulations, administrative guidance, and case law in every state and locality. Our exempt sales attorneys and accountants know all of them. And as a result, our clients have them all available at the click of a button. Our solution is updated monthly to reflect every change in law, every new regulation or ruling. Is yours?

At CERTifyTax we have experts who focus exclusively on exempt sales. When you implement our solution, you get the benefit of our decades of exempt sales experience.

Does your current solution provide accurate assessments of your exempt sales risk profile?

Do you know what your exposure would be if the government audited all your exempt sales? What jurisdictions present the most risk? What types of exempt customers are proving problematic?  Your solution should provide the answers. You need to know where you stand before the government auditors come knocking on your door.  If your current solution doesn’t provide risk analytics, contact us! 

Does your team receive timely management updates?

Our exempt sales experts will meet with your team quarterly to provide comprehensive status updates. We will let you know how many certificates were acquired and whether any are outstanding. We will alert your team to certificates that don’t meet the applicable documentation standards. Minimizing time lag between when perfecting defective certificates reduces potential liability. We will also determine if your overall exposure is increasing or decreasing and make recommendations to put you in the best position. 

Are you currently receiving comprehensive quarterly updates?

What does your solution do to verify that the certificates you receive are valid?

Most taxing jurisdictions judge the validity of exemption certificates by a Good Faith Standard. If a seller acts prudently in accepting customers’ exemption certificates, that seller is relieved of liability. While the Good Faith Standard is somewhat subjective in application it is objectively true that implementing a truly best-in-class verification process will put you in the absolute best position to pass the test. CERTifyTax provides that best-in-class verification. We do it at the field level by taking steps to ensure that customers provide all required information, that certificates are signed and dated, and that all information is in the appropriate format. In addition, we implement extensive procedures to verify that any information that is cross-referenceable with government databases is valid.  

Short of conducting background investigations of your exempt customers (just kidding, do not do this!), implementing CERTifyTax puts you in the best possible position to meet the Good Faith Standard, defend your audits and reduce your financial burden.

Will your solution integrate easily as your business requirements change?

We are all familiar with the pain (agony?) associated with system changes. If your systems have not changed recently, they likely will soon. Your exempt sales solution should be fully adaptable to any changes to your system. CERTifyTax is a configurable, versatile system. It can work seamlessly with any ERP, tax engine or point of sale system. 

Your tax engine is homegrown? No problem. Looking to switch tax engines? CERTifyTax will plug right in with your new engine. Is your ERP outdated? We have you covered. We can even fully integrate and embed directly into your website to acquire all your exempt sales documents.

Are you betting that the future of exempt sales audits will look like the past?

We sometimes hear from companies that their exempt sales audit results have not been all that bad. The old financial disclosure that past performance does not guarantee future results applies here. We consistently hear from companies that states and localities have stepped up their games related to exempt sales. If you have followed tax trends since the onset of the Covid-19 healthcare crisis, you know that taxing authorities are becoming more aggressive especially concerning exempt sales. We see it with our clients that we represent on audit and we see it in recent cases and administrative rulings. The handwriting is on the wall. The time is now to fix the problem before the tax audit teams show up at your door.

If you have any questions regarding our comprehensive exempt sales research, risk assessments, quarterly management reports, automated validation tools, systems integration, audit trends, or any other questions you may have related to exempt sales, give us a call. Our exempt sales experts Ray Diaz and Tom McCarthy will be happy to answer your questions. You can reach Ray at (914) 798-9925 or Tom at (914) 798-9902.

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