SALT Rocks August 2020: The Right Technology Makes Sales Tax a Snap

  • Post published:April 1, 2022
  • Post category:SALT / Articles
Jeff Dorris, CPA | Mauldin & Jenkins, LLC

Technology has transformed nearly every aspect of life in the past few decades, and that’s especially true in the world of commerce. Whether they’re selling old-fashioned widgets or cutting-edge cloud solutions, today’s businesses have access to a panoply of tech tools to solve problems and help compete in an ever-more-crowded marketplace.


Enterprise Resource Planning (ERP) software epitomize this technological revolution. Once simply an online version of a spreadsheet, ERPs has become incredibly powerful, with modern platforms doing everything from collecting, storing, managing & interpreting data to taking orders and invoicing customers.

Besides what the platform can do on its own, high-performance ERPs offer another advantage that makes doing business easier: the ability to interact smoothly with other tech tools, including those that make sales tax less burdensome, more accurate and fully integrated with accounting processes.

Fulfilling a company’s sales tax obligations traditionally involved vast numbers of staff hours, not to mention the inevitable frustration and headaches. Now that ERPs and integrated tools are capable of taking on the brunt of the work,  a properly implemented system frees up significant internal resources that can be devoted to higher-value activities. To ensure your business reaps all the benefits of your investment in technology, pay close attention to these key aspects of your tech-based sales tax solutions:

  • Sales tax calculation engine – Behind the scenes of the online shopping cart, the sales tax calculation engine uses the ship-to address to calculate the correct sales tax amount to add to the purchase price of an item. There’s a lot of variation in these tools, so you’ve got plenty of choices. The only cardinal rule is that you must have one!

 

  • Product mapping – When businesses offer multiple types of products or services for purchase, as most do, each offering must be mapped individually in the sales tax calculation engine. That’s because state and local jurisdictions categorize products differently, and each one requires a specific tax treatment based on the taxing jurisdiction’s unique approach. Appropriate product mapping enables your sales tax calculation engine to determine an accurate figure when customers make a purchase.

 

  • Geo coding  You can’t collect the right amount of sales tax from customers unless you know which rules apply, and unfortunately tax jurisdictions don’t always fit neatly into one or more zip codes. Geo coding refers to the algorithms that identify the precise location of a given shipping address and the taxing jurisdictions that govern it. This is a tricky area that can lead to mistakes with costly financial and legal ramifications, so it’s important that you select tools with enough sophistication to do the job right.

 

  • Tax Technology Integration – Technology can save tons of time and hassle when it’s functioning as intended but getting all your tools to work together can be a challenge. Whether it’s coaxing a shopping cart to interact smoothly with the website or preparing tax data to update the accounting system, the quality of the ERP integration determines the ultimate performance. In general, it’s easiest to minimize the number of siloed systems you use, which avoids integrations in the first place. But when a handful of point solutions offer the best fit for specific needs, allotting adequate time and effort for an effective integration (and turning to experts with specialized expertise, if necessary) is a wise investment.

Technology has become an integral part of sales tax management. Finding the best ways to utilize today’s technology confers a competitive edge for your business, allowing you to reach your goals more efficiently. The sales tax experts at Mauldin & Jenkins are here to help you identify new tech-based opportunities, adopt best practices and overcome barriers. Contact the firm today to learn more about how technology can boost your business performance.