Indirect tax professional are masters?
Do you know an indirect tax professional or have one on your staff? Do you know the person who is responsible for a company’s sales and use tax compliance and accruals? I know hundreds of these gladiators. I was talking with one yesterday and I had a revelation. Indirect tax professionals are masters at “wingin’ it.” AND, most hide this from their boss.
Most indirect tax professionals are sound tax technicians, yet they use very little of that tax technical knowledge because they are busy managing manual processes such as building massive, and often complex, spreadsheets. For example, most indirect tax professionals rely on spreadsheets to calculate a monthly use tax accrual or calculate adjustments to an accrual calculated by a bolt-on tax engine. Most indirect tax professionals are masterful spreadsheet and data handlers, however using and maintaining spreadsheets for indirect tax data is “wingin’ it.”
There are many reasons indirect tax professionals use spreadsheets. Tax professionals, like most finance professionals, have been using them for years because they are easy to build, modify, and send. Also, I think it’s safe to say the vast majority of tax professionals have access to a spreadsheet application. However, spreadsheets are inherently risky for reasons that make them convenient. PriceWaterhouseCoopers’ research has found that 91% of spreadsheets contain, at a minimum, a 5% error margin. A quick Google search yields several other studies by reputable firms that corroborate this finding.
Spreadsheets are susceptible to human error in this scenario because they are populated by copy and paste efforts involving thousands or even millions of transactions. Formulas are input manually, and data is often also entered manually. Spreadsheets are normally built by single employees who are not software engineers and know very little about software documentation and version control.
As I hinted above, I believe many indirect tax professionals do not actively seek spreadsheet alternatives because they are comfortable with using them and are unaware of the risks. I rarely hear about earnest efforts by indirect tax professions to research technology and process alternatives to spreadsheets and presenting those solutions to the CFO, tax director or vice president of tax. In my opinion this is a missed opportunity because I believe most tax directors or CFO’s rely on their indirect tax professional to be proactive. They have hired that person to seek out and present solutions that solve problems and obtain results. If the indirect tax person doesn’t do that, they are “wingin’ it.”
About the Author – Mark Mercer is a Co-Founder of DTS where he helps companies focus to see their sales and use tax errors. When he’s not thinking about golf, Mark is looking for the use tax issue in everything.
About the Company – DTS combines tax technology and proprietary processes to deliver true visibility and powerful analytic tools that allow tax professionals to identify and correct their purchase-side tax errors. Say goodbye to years of expensive bolt-on software implementations, endless reverse audits, and huge audit assessments. The new way is here, and DTS can show you how easy it can be.