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Case Study: Sales Tax Technology

By: Donald Bast Christina Edson, Esq. |

True Partners Consulting assisted a petroleum products retailer and distributor to fully customize their sales tax software system in order to correctly reflect the taxability of a complex product portfolio. Our client produces various fuel and lubrication products and manages bulk petroleum and propane plants throughout the Central US and is one of the largest propane retailers in the United States.

With such a wide variety of business activities and products, manually managing the sales tax function while keeping up with changing tax laws and tax rates is almost impossible. Overlooking a law or rate change can lead to under-collection of tax from customers, which could create significant liabilities for the company. Sales tax determination software that is correctly customized and implemented by a tax professional can help alleviate risk.

True Partners Consulting helped our client customize their sales tax software in order to correctly determine the taxability of all their products in all the jurisdictions where they pay sales tax, thus reducing their risk of under-collection and costly audit liabilities.

Challenges:

  1. The company sells a wide variety of fuel products and the taxability of each product can vary from state to state.
  2. Taxability of a specific fuel product can vary within one state, depending on the use of the product.
  3. Exemptions may apply to specific products and may require an exemption certificate depending on their use.
  4. Fuel products are typically subject to other taxes, like state administered fuel tax, in addition to sales tax. Sales tax determinations
    often hinge on whether or not a specific fuel product is subject to these other taxes.
  5. The company’s sales tax determination software needed to integrate with their ERP system and additional software used to
    determine fuel tax rates.

No taxability determination software can handle such a complicated scenario out of the box. Our knowledge of sales tax rules and regulations coupled with our experience with taxability determination systems allowed us to customize the system to meet the client’s needs.

Getting the taxability set up correctly prevents:

  1. Overcharging customers and having to issue refunds.
  2. Undercharging customers and creating potentially expensive audit liability.

Are you struggling with manual processes or complex taxability determination challenges? True Partners can help.