Continued state revenue shortfalls in 2009 made the DIFM trend more important than ever for businesses trying to stay ahead of the auditors. At the same time, access to robust technology offerings made the decision to offload this chore a no brainer. Businesses and their employees have virtually unlimited choices when it comes to moving the time-consuming task of calculating, reporting, and remitting sales and use tax to someone else’s plate. These businesses can decide which part of the process is most easily handed off to others, and which parts, if any, they want to handle themselves. Solutions are available via the Web or via more traditional desktop options, can be integrated or stand-alone, and can include payment remittance or not.
CPA firms, rarely at the forefront of any new trend, are actually leading the DIFM movement. These firms are stepping up as the service providers of choice for business clients looking to offload their sales tax hassles. And they are getting plenty of help from sales tax solution providers. All five sales tax providers have seen increased accounting firm interest in their tools as a means of delivering these services.
Let’s take a look at four vendors who are helping businesses and their CPA firms offload their sales tax hassles:
•CCH (Wolters Kluwer)
Bainbridge Island, Wash.
Price: Varies with transaction volume. For 720 transactions, $350 annually, (49 cents per transaction, plus $89 setup charge. For 7,200 transactions, $2,495 annually (about 35 cents per transaction, plus $795 setup.
These are some of the offerings from Avalara:
1. Their AvaTax solutions, focused on tax rate calculations are available one of two ways: AvaTax OnDemand or AvaTax OnSite. Both solutions automatically perform address validation, jurisdiction research and rate calculation and simplify rules management including, nexus, exemptions, certificate management and product taxability rules but only AvaTax OnDemand is available via the Web.
2. When it comes to filing returns and making payments, Avalara offers almost as many options as the dollar menu at a McDonald's drive-through window. They offer AvaFile, TrustFile or LaserBridge. AvaFile is an add-on to the AvaTax OnDemand product which handles sales-and-use tax returns and remittance. Their TrustFile offering is a filing and payment only option for companies who aren’t fully prepared to abandon their DIY leanings. And finally, for those clients who just want to prepare a form, they can turn to Avalara’s LaserBridge for a solution. Plans for a “forms in a box” offering are also in the works.
3. If you want to validate the sales tax charges on that $20 box of popcorn before you view Avatar in 3D, have no fear, Avalara has an app for that. It’s called AvaRates for the Iphone. This is the next logical extension of their desktop plug-in by the same name.
4. Avalara has a number of options for integration with financial, e-commerce and point-of-sale applications. If one of its pre-built connectors (covering most of the popular ERP systems) doesn’t do the trick, Avalara also offers a software development kit for those who need to craft their own integration.
Avalara has spent the last year broadening its application integrations across more products, deepening product depth, and growing accounting alliances. It has kept its eye on acquisition opportunities and has a few things up its sleeve in the coming quarter.
When it comes to trends, Avalara, like the other sales tax vendors in this review, is in a great position to spot economic trends. Sales tax data, since it is based on sales activity, is a leading indicator of changes in the economy – and it comes as no surprise that Avalara saw more customers filing returns with lower transaction amounts than in prior periods. It expects to see a positive revenue trend on returns filed in the first quarter of 2010.
(800) 424-2938, select option 3
Price: BNA Sales & Use Tax Forms, $925; Rates Online, $925.
BNA Software, more than any of the other vendors, has its roots in being a DIY knowledge provider for accountants. In addition to sharing its letters “BNA” (short for Berry Field Nashville) with the Nashville airport, the company is known for providing checklists that simplify even the most complicated tax computation. Who among us hasn’t had to look up the treatment of an S Corp AAA distribution in one of the gray guides? While its sales tax offerings are less technology-centric than many of the others, BNA does offer plain English information for business owners and accountants who need answers - fast.
The products come in two forms:
1. BNA Sales & Use Tax Rates Online offers simple and affordable rate lookups from more than 58,000 jurisdictions. Tax updates can be automatically delivered to an e-mail inbox, while on-screen cues keep users alert to rate changes. It also delivers rate table exports for use in updating individual business systems.
2. BNA Software Sales & Use Tax Forms 2010 offer more than 3,400 state city and local sales and use tax forms online. Accountants and their clients will find everything they need to file sales and use tax returns in one central location.
BNA’s focus this year, like last, is on keeping it simple for businesses and their accountants struggling to manage their sales and use tax compliance.
Price: About $2,900 up to 9,000 transactions, plus setup fee. Sales Tax Online, $15,400
CCH is the 500-pound gorilla in the sales-and-use tax management space. As a division of Wolters Kluwer, CCH has access to deep pockets (plus a corporate headquarters in the Netherlands) in delivering a range of products for businesses looking for DIFM solutions. They have made major technology announcements in the current year and have more in the works.
Over the course of the last year, CCH has been monitoring some alarming sales tax trends that they say have served to drive even more businesses toward outsourced solutions. These trends include:
1) Attributional nexus or the “Amazon” law, which was enacted by the state of New York. This law created a maelstrom between state agencies, online retailers, and individuals acting as retail affiliates for online retailers like Amazon. (You gotta love the cool terms like “attributional nexus” that we accountants get to toss around at will.)
2) A focus on curbing the abuse of resale certificate privileges began in Washington State which is expected to spread to other states seeking to increase their sales tax revenues.
3) States are investing additional dollars in automated audit selection tools leading to increased audit risk for businesses.
4) States are increasing the political pressure to get their share of the billions of dollars being exchanged in e-commerce transactions.
These are some of CCH’s solutions:
1. CorpSystem Sales Tax Office and Sales Tax Online are CCH’s core tax calculation applications. Sales Tax Office is a desktop solution while Sales Tax Online is Software as Service (SaaS) solution that provides real-time tax calculations.
2. When it comes to filling out sales tax returns, CCH’s CorpSystem Sales Tax Returns Online takes the pain out of this time-consuming task while letting companies stay on top of their tax reporting obligations. The system accepts monthly files from Sales Tax Office, Sales Tax Online or directly from any accounting, point-of-sale, procure-to-pay system. Future enhancements of Sales Tax Returns Online will include ERP-specific extract utilities to simplify the process of pulling end-of-month liability files from popular mid-market accounting applications.
3. CCH also offers the Tax Exemption Administrative System through a partnership with Imaging Science and Services Inc. (ISSI) to automate the capture, organization and management of sales tax exemption certificates and resale exemption certificates.
CCH has spent the last year working on product enhancements, including an upcoming Sales Tax Office release 3.0 that will offer an integrated Exemption Certificate Information Management system.
Laguna Hills, Calif.
Price: About $795 for 1,200 transactions annually.
An entirely SaaS (Software as a Service) solution provider, SpeedTax has benefited from its focus on CPA relationships over the last year. As the states have gotten more aggressive in their enforcement efforts resulting in more visits to businesses, the accounting profession has (finally) begun to take note. More firms are turning to providers like SpeedTax for Web-based integrated solutions that are accessible by both firm staff members and their clients.
SpeedTax offers the following solutions scalable from QuickBooks to SAP R3:
1. SpeedTax Core is the integrated rules engine, validation, and rate solution. Configuration and management is performed via a Web-based management Console. SpeedTax ‘s solutions promise accuracy down to the rooftop level at a time when states like Texas are mandating increased jurisdictional granularity.
2. The company also offers a standalone review and approval, return filing and remittance tool called SpeedTax Plus.
3. SpeedTax Pro, a management dashboard, enables allows accountants to manage and review sales tax compliance across multiple clients.
4. Finally, its AuditPro can be used by accountants in support of compliance reviews, business valuation services and audits.
In addition to securing additional equity funding, last year for SpeedTax was all about extending application integration across more products while also expanding its footprint among top American CPA firms.