The place to find business sales tax information

— as well as solutions, services and jobs!

Sales Tax Outsourcing – Walking the Performance Tightrope

author photo of Robert Dumas

Monitoring the success of your sales tax outsourcing relationship can be challenging.  There’s a tightrope that you must walk between turning over the process solely to your partner and staying too involved.  I’ve seen outsourcing engagements go sour in both situations but more often when a business stays too involved in the process after outsourcing.

Sales tax outsourcing relationships often begin with intense scrutiny until a certain level of trust and credibility are established.  It’s natural for a company to review the sales tax returns and ask a lot of questions initially.  It’s good for them to know what is happening in the engagement and it helps identify various manual adjustments and custom processes that otherwise would not surface.  However, at some point, a business needs to step out of the process and monitor the effectiveness.

A good way to monitor the effectiveness is to take note of any notices from jurisdictions.  While many of these will be informational in nature – tax rate changes, new forms, etc. – deficiencies will be noted as well.  You should be sure you see the deficiency notices and take note as to how the notice is resolved.  This is a great check and balance.

Another way to monitor the effectiveness is to balance your partner’s tax reports to your General Ledger.  TaxConnex provides a tax reconciliation spreadsheet that ties the tax data to the taxes due on each tax return.  The tax due and any held balances should tie out to your General Ledger.  (Held balances are often as a result of tax that has been collected but not yet remitted.  For example, quarterly returns.)

Periodically, reviewing your engagement with your partner should be part of your monitoring process as well.  Depending on the complexity of your business this may be once per-month or once per-quarter.  Key discussion points include reviewing any open notices, anticipated changes in your business (mergers, acquisitions, new billing systems, etc.), opportunities for improvement such as changes to a data file that could improve the accuracy of the returns, and any pending sales tax audits.

Allowing your partner to do what you hired them to do and having the appropriate monitoring process in place is all part of walking the performance tightrope – which will help you reach your goal of sales tax outsourcing success.

Other recent “Sales Tax Outsourcing” posts by Robert Dumas:

NOTE: All blog content, comments, and participation subject to disclaimer at bottom of page.


1 Responses to Sales Tax Outsourcing – Walking the Performance Tightrope

  • Posted by Dave on July 16, 2012 11:14pm:

    Excellent comments. Trust and verify.


Access to any portion of is contingent upon your acceptance of our Terms of Use. This Web Site and content provided by STS Publishing, LLC and its third party content providers, including, but not limited to information, documents, forms, comments, advice and opinions, is for informational purposes only, and is not a substitute for professional advice, nor does the use of this Web Site constitute a professional-client relationship. The Web-Site also includes advertisements, directory listings, job postings and links to third party web sites, all of which are provided for your convenience only and in no way constitute a referral, endorsement, or warranty by of any product or service provided by such third parties. All content is provided “as is” with no guarantee regarding accuracy, suitability, or timeliness. Your reliance on any content accessed on or through the Web Site, or on any product or service provider is strictly at your own risk.