Many finance leaders from different business sizes are still grappling with various sales tax regulations. Accuracy is crucial in sales tax compliance, as mistakes can lead to costly penalties that can damage a company's reputation. Whether your business operates in multiple states or just one, understanding and knowing how to avoid these common sales tax errors is necessary.
In their September 2023 State of Tax Report, Avalara worked with Hanover Research to identify the top challenges finance and tax departments face today and their future strategic plans and priorities.
Here are some of the business's most frequent sales tax errors in firms and how tools like Epicor Tax Connect and Avalara can streamline compliance.
In the U.S., tax rates can vary by state and county, city, and even individual districts. These ever-changing rates mean that most companies of all sizes need help applying correct taxes.
Avalara's State of Tax Report also notes that 69% of companies today are trying to bridge efficiency gaps related to tax management.
Epicor Tax Connect, powered by Avalara AvaTax, automates real-time tax rate calculations by pulling data for the applicable jurisdiction. Its cloud-based engine integrates with business systems to regularly update rates as they change, improving accuracy across locations. Epicor Tax Connect, designed explicitly for Epicor ERP users, ensures tax rates are current and applied correctly, reducing manual errors and maintaining compliance.
Epicor Tax Connect, powered by Avalara AvaTax, provides real-time address validation, jurisdiction assessment, and tax rate calculations through a cloud-based system. Advanced geolocation technology and automatic content updates help deliver more accurate tax rates, reducing the need to assign customers to specific tax schedules manually.
Not all goods and services are subject to sales tax, and taxability can vary widely by jurisdiction. Misclassifying items as taxable or non-taxable is a common source of errors.
Epicor Tax Connect helps keep tax rules current for different products and services. By automating tax classifications, it helps businesses apply the right tax treatment for each item, tailored to the rules of specific jurisdictions. This helps ensure greater accuracy while preventing both customer overcharges and underreported tax liabilities.
Many businesses sell to tax-exempt organizations or resellers who present exemption certificates. Managing these certificates can lead to missing or expired certificates, resulting in incorrect tax calculations and potential audits.
Epicor Tax Connect allows businesses to store, track, and validate certificates. Avalara's CertCapture and Epicor Tax Connect automate the collection and management of exemption certificates, making it easy for users to have up-to-date, easily accessible certificates during audits. This streamlines compliance and helps avoid costly penalties for missing documentation.
Effective sales compliance requires accurate data tracking and reporting. However, many companies today struggle with inconsistencies when dealing with different departments and manually tracking sales tax information. Discrepancies often arise from manually tracking sales tax information, which can lead to errors in tax returns, risking penalties and audits.
Epicor Tax Connect and Avalara manage sales tax data and standardize reporting across departments by integrating with your ERP. They automate data entry and help users maintain a single source of truth, reducing the risk of human error and making it easier to pull accurate reports for tax filings. Automated reporting also provides a clear audit trail, which is invaluable during a tax review.
Missing filing deadlines or delaying payments can result in fines and interest fees. Because filing dates vary by jurisdiction and are often tied to sales volume, businesses sometimes need support to keep up with due dates, especially as they expand into new markets.
Avalara offers an automated filing service that helps manage deadlines, submitting returns directly to tax authorities on your behalf. Epicor Tax Connect helps generate the necessary tax reports on time and accurately prepares all filings. These tools can help you to avoid penalties for late submissions, improve cash flow by managing payments, and reduce the burden on in-house finance teams.
It's important to note that tax laws change consistently and rapidly. Failing to update your tax software to reflect these changes can result in outdated rates and rules, leading to non-compliance.
Epicor Tax Connect is regularly updated through the Avalara service to reflect tax laws, rates, and rule changes. The cloud-based platform behind Tax Connect helps ensure that the Epicor ERP systems are always up to date so that you can remain compliant without manual updates. This proactive approach gives businesses peace of mind, allowing them to focus on growth rather than regulatory tracking.
Although tax compliance is complex, having the right tools can make it manageable. Today, 75% of businesses are investing in new technology to help bridge the gaps needed for effective transformation—not only in tax compliance but also in other areas.
Epicor Tax Connect, powered by Avalara Avatax, is your go-to resource for streamlining this process. Epicor Tax Connect offers robust solutions that simplify tax rate calculations while also providing better exemption management, reporting, and compliance tracking. By automating these processes, businesses of all sizes can reduce errors, avoid penalties, and free up time to focus on growth.
Organizations that use Epicor ERP systems and are looking for seamless integration and tailored functionality can take advantage of Epicor Tax Connect. This includes a robust solution with extensive features for companies with multi-jurisdictional requirements or those seeking comprehensive tax compliance services. Together, these tools provide a strategic advantage—helping ensure accurate, hassle-free tax compliance in a constantly changing tax landscape.
Learn more about how Epicor Tax Connect can help make tax compliance easier.
