Most companies unfortunately experience significant transaction tax errors each month, and the root causes for these errors are simply too voluminous to list. Nonetheless, we have found the number one issue behind all such errors is incorrect and/or omitted data. So, if you want to significantly reduce your chances of having tax errors, you need to constantly review the information going to the tax engine, as well as the answers coming out.
Are you Periodically Looking at Data Going TO the Tax Engine?
Are you looking at the information going to your tax engine? If not, you may be surprised by what you find. Essentially, if you’re sending garbage to the tax engine, you’re most likely getting garbage in return. Incorrect data, such as the wrong General Ledger account, may lead to an incorrect tax answer. Omitted data, such as the lack of a specific material group, may lead to a default taxable answer from your engine.
You need to have success with your data, which means you need to constantly look at the data going to your engine. Have a clear procedure for when and how you will review your data, as this will give you a schedule that will hold you responsible.
By periodically looking at the data going to the tax engine, you will be ready to catch any potential errors or changes in the structure of your information. If certain data points stop being collected, for whatever reason, you will be prepared to catch the omission and deal with it appropriately. This, in turn, will yield greater tax accuracy and save you money.
Are you Regularly Reviewing the Answers Coming Back FROM the Tax Engine?
Now that we have discussed the importance of regular source data reviews, we’d like to look at the data from a different angle: the results. Let’s take a deeper look at the answers themselves. By analyzing the answers, you’ll have another perspective on whether you have good data in the first place.
To ensure the best results for your business, you should be taking a regular look at the information and answers you receive from your tax engine. The information should be reviewed for quality, consistency, and accuracy. The sooner and more often you can find such irregularities, the more money and hassle you’re likely to save your company down the road.
As for the cadence of these reviews, we have found that monthly typically produces the most fruit. However, we also recognize that most tax departments tend to be understaffed, and/or their professionals are really stretched for time. So, if this sounds more like your environment, try to commit to looking at your results at least every quarter. Doing so won’t be as beneficial as monthly, but it’s still far better than keeping your head in the sand.
Final Point: Details Matter, So Review Your Data!
We’d like to leave you with one final and important point: consistent reviews of your information are essential. Details matter, so review and study them. Most people, unfortunately, rarely review their data, as well as the answers they receive from their tax automation. This is a big mistake, as it can lead to a variety of problems in the future.
Get the Tax Support You Need with DTS
Numerous companies overpay on their taxes, which is an easy way to needlessly drain capital. On the other hand, some accidentally underpay, putting their company at risk of costly audits and legal penalties.
Don’t let this happen to you! If you need help with you tax data, please contact us and we’ll reach out to you with outstanding service and support to ensure your taxes are accurate and reliable.