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A New Twist on Exemption Certificate Collection…

author photo of Silvia Aguirre

I’ve been involved with taxes for a long time, but I ran into a new twist on dealing with sales tax exemption certificates last week.  I was speaking with a company about how they deal with sales tax exemption certificates and they stated they had set up a phone number for customers to call in and leave their tax information.  There is no operator on the line. A recording asks the incoming caller to leave their information at the tone: Name, company name, industry type, reason for exemption and phone number. The incoming calls are converted to .WAV files and forwarded to the tax department. 

This is a variant of the SST regulations I had not considered. The company claims they are receiving the Standard Data Elements electronically, so according to SST guidelines everything is fine.  Although this approach may speed up the collection process for tax documents, and may actually conform to the SST guidelines, I really don’t think auditors are going to enjoy this much. Imagine an auditor walking in and asking for copies of sales tax forms and instead receiving a CD with phone messages! I really don’t think they would appreciate that. When you don’t make it easy for an auditor, many times they feel obligated to return the favor and not make life easy for you.

Have you encountered this practice?  I'd also be interested in getting some feedback/comments from our auditors in the audience...

Note: Silvia Aguirre is no longer accepting new comments nor questions. More recent "Exemption Certificate Mgmt" posts by Michael Fleming (of Peisner Johnson) are still active. Also use the Site's SEARCH bar to locate other helpful information.

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Note: Silvia Aguirre is no longer accepting new comments or questions.  More recent "Exemption Certificate Mgmt" posts by Michael Fleming (of Peisner Johnson) are still active.  Also use the Site's SEARCH bar to locate other helpful information.

5 Responses to A New Twist on Exemption Certificate Collection…

  • Posted by Author photo of Silvia AguirreSilvia Aguirre on April 16, 2012 12:10am:

    Everyone, great comments, I agree with all of you, always be cautious when dealing with exemption certificates and their completion. The SST member states are obligated to follow the agreement and in the agreement it is true that elements collected electronically will relieve the seller from any liability so long as all the elements are collected. The question is really, what does it mean electronically? An answer that can only be obtained once an SST audit is completed. For reference:

  • Posted by Michael on April 14, 2012 5:16am:

    I was an auditor for 16 years. Voice recordings and electronic data are significantly different types of communication. I think it's unreasonable to believe that the SST rules are endorsing this and, even if that is the case, it's an even bigger stretch to believe the States will accept it. I would follow the old axiom "if it isn't in writing it doesn't exist". Practicalities of review and auditor relations aside, the assumption that a voice recording is the same as electronic data is false. I wouldn't rely on a voice recording as an artifact to support an exemption. You may, or may not, be able to gather adequate documentation based on the voice recording if an audit occurs. It seems risky at best.

  • Posted by "Cynthia on April 13, 2012 10:45pm:

    The exemption certificates must be signed, often by an officer of the company. How can a company believe that they have a valid certificate if it has not been validated by a signature? I have never heard of this, but I cannot imagine that it conforms to the rules of exemption certificate retention.

  • Posted by Roberta on April 4, 2012 8:00am:

    Listing to a CD will be too time consuming for auditors review. You should inform your state department and see if they will accept this type of reporting.

    • Posted by Author photo of Silvia AguirreSilvia Aguirre on April 4, 2012 10:29pm:

      Roberta, I agree with you and always being in the side of caution by checking with the state departments is a great idea.


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