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Don't Get Burned by a Sales Tax Audit

With tough economic times, sales tax auditors are increasingly aggressive. Some say, more aggressive than the IRS.

How accurate are your sales tax calculations?

Did you know that: if a sales tax auditor finds a failure to collect in a small sample of transactions, they can extrapolate that over twelve months' sales?  A few mistakes could cost you big dollars.

Sadly, we have seen clients owe thousands and tens of thousands in back taxes because they failed to correctly calculate and collect sales tax.

Does your system put you at risk of being burned?

Most order processing and accounting software has tax tables that you can maintain. For many companies, that is sufficient.

However, there are pit-falls. One common problem is when you need more than just the zip code to determine proper sales tax. Some jurisdictions require the full street address plus item information.

In the US and Canada there are more than 17,000 jurisdictions. Furthermore, some jurisdictions tax the same item at different rates--depending on how, where, and to whom you sell it.

Amazon.com famously argued for many years that it was impractical for them to comply with so many sales tax rules. Really? Sales tax calculation software is readily available to companies large and small. (Amazon recently backed down and will begin collecting sales tax in some states).

Some of our clients use cloud-based software to automate sales tax calculation and compliance.  One solution is AvaTax, which integrates into widely used software including Sage MAS90/MAS200 Microsoft Dynamics, Peachtree , QuickBooks, SAP, and others. For more information or a short demo, click AvaTax demo.

AvaTax determines sales tax rates 'real time' by jurisdiction, product rules and more. Then, AvaTax applies the calculated rate to transactions in your Order Processing system.

Want to try it? To translate a street address into a sales tax rate, click on Sales Tax Calculator, then bottom right.

MBSG helps clients streamline, automate, and integrate business management systems. To discuss improvements to your inventory, accounting, ERP, e-commerce, manufacturing or other work flow, contact MBSG at 818 338-7220 or  This email address is being protected from spambots. You need JavaScript enabled to view it.