Sales Tax Exemption Certificates

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Confidential and Proprietary - ISSI

Sales Tax Exemption CertificatesLarry PowersISSI/TEAMS

ISSI provides industry-leading, Sarbanes Oxley and SSAE 16 Type II Compliant Electronic Certificate (ECM) solutions that give you control over your document management governance and processes cost-effectively.

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Agenda for Presentation

The Regulatory Challenge for Governance

What is Exemption Certificate Governance Policy?

Assembling the best ”Governance Team” ECM Governance Metrics Setting the Mission and Strategy Best Practice Data Policies What are my Integration Points? Technology Enablement Success Conclusions and Q/A

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ISSI/TEAMS

Founded in 1994, ISSI conceived and developed imaging software specifically to help corporations get control of the sales tax exemption certificates and tax planning/audit strategy that goes with this process. The decision to use technology to streamline certificate management was made, and TEAMS was developed as an on-premise solution with complementary tools and utilities, then moved to SaaS environment for a more fluid delivery model and to meet industry demand for a hosted model.

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The Governance Challenge Increasing Regulatory Scrutiny.

Transaction Taxability Encompasses:

Today: Sales and Use

Tomorrow: VAT

National and International

Expand Compliance Efforts.

Reduce compliance cost and effort.

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Exemption Certificate Governance Policy

Cost Reduction

Risk Reduction

Effort Reduction

Compliance Improvement

Short Term Impact

Long Term Results

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Inhibitors - Certificate Governance Diffused compliance responsibility

No central authority

Many departments play a part

The framework is crucial to success

Lack of visibility

Limited understanding of true risk

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ECM Governance Metrics

Reduction in

Assessments, interest and penalties.

Accruals.

Resources spent

Preparing for and defending audits.

Acquiring and reviewing certificates.

Researching and correcting errors.

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Percentage of Revenue

A Measure of Relative Impact.

A Means for Audit Assessment.

Statistical Sampling that can hurt or help.

Used as a means to proportionally determine compliance.

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More ECM Governance Metrics Number of valid exemption

certificates as a percentage of the total number of exempt customers and as a percentage of revenue.

Number missing, incomplete or invalid exemption certificates as a percentage of the total number of exempt customers and as a percentage of revenue.

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Even More ECM Metrics Response time on certificate

acquisition campaigns.

Response levels on certificate acquisition campaigns.

Tax accrual accuracy.

Time spent preparing Tax accrual calculations.

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Data Policies Standardization

Quality Control

Compliance Rules

Data Ownership

Flow of Data

Synchronization Rules

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Data Policy Impact

Master Customer File

Master Vendor File Order Entry General Ledger Exemption

Certificates

Exempt Status Determination

Sales Tax Calculation

Tax Accruals Contingent

Reserves Calculation

Reverse Audits Audit Defense

Data Sources: Data Uses:

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Document Indexing

Customer Name FEIN Customer Bill To Address Customer Ship To Address(es) Customer E-mail Customer Phone Customer Fax Unique Customer ID Effective Date Expiration Date State Registration Number Signature Current Certificate Status

Certificate Type: MTC Multi-State Resale SSTI Multi-State State Issued Blanket Exemption Single Purchase

Exemption Direct Pay Permits Exempt Use Non-Expiring Limited Life Description of Purchase

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Data Synchronization Which system’s data takes

priority?

How, when and at what interval data is exchanged?

How are data conflicts resolved?

Where and when is new customer or vendor data entered?

What happens when customer or vendor records are deleted?

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The Sales Tax Process Determine tax-exempt status of

the customer placing an order. Calculate sales tax owed. Collect exemption certificate. Review certificate for sufficiency. Reverse audit to determine

overall level of compliance and determine specific gaps and audit exposure.

Respond to state audit documentation requests and defend the audit.

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The Use Tax Process Request determination that a purchase

is use tax exempt. Determine the taxability of said

transaction. Prepare and deliver an exemption

certificate to the specific vendor. Document use tax-exempt transaction

for future reference. Perform periodic Use Tax accrual

calculations. Reverse audit to determine overall

level of compliance and determine specific gaps and audit exposure.

Respond to state audit documentation requests and defend the audit.

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“Gotchas” for Additional Complexity

Drop Shipments

Streamlined Sales Tax Project

Direct Pay Agreements

What is and is not taxable?

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Sufficiency ReviewA minimum set of sufficiency rules

would include checking: That the proper form was used. That it was signed and dated.

And may also include: A specific seller’s name A description of purchase A valid certificate registration

number (form and format). Expiration Dates.

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Forms and Statutory Compliance Each State has their own

May be transaction specific

SSTP

May expire

Change frequently

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Certificate Workflow Transaction inception

Sales taxability

Sufficiency Reviewed

Documented, Stored, Indexed

Searchable

Retrievable

Audit Defense

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Document Capture Paper Delivery

Pot luck Needs scanning Easy for customers to fax or mail

Electronic Delivery Improved document capture Better indexing Correct Forms first time Fewer errors

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Technology Enablement Platform

SaaS Traditional Self-hosted Delivery Hybrid Models

Reliability Transparency Who has the staff? Who has the expertise? When do we need help?

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Security At a minimum, SAS 70 Level II Certified Multi-tenant versus Single-tenant Commingling Data:

Instances Customer Files Certificates

Single Sign-on Offshore versus Onshore

Hosting Services

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Benefits of ECM Governance Reduce the cost to acquire and

handle exemption certificates.

Eliminate errors and confusion.

Increase ECM compliance.

Minimize audit risk and exposure.

Satisfy Customers and Staff.

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Thank you for your time!

Larry Powers

Chief Strategy Officer, ISSI/TEAMS

http://www.teamscert.com

[email protected]

650.383.8527

http://www.teamscert.com/

mailto:[email protected]

Date post:	23-Jun-2015
Category:	Business
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Sales Tax Exemption Certificates

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