The prevailing attitude toward taking care of sales-and-use taxes looks a lot like the attitude many people have towards payroll processing. That ranges from doing everything yourself to outsourcing everything. In the middle, are all the variants of performing some tasks, but not others. And that probably explains why there’s an array of software and services available, like Well, there’s outsourcing and then there’s outsourcing because vendors offer everything from software that does most of the work for an enduser and services that include software and a good deal of consulting.
With this month’s introduction of CorpSystem Sales Tax Compliance Services, CCH has a foot in both the service and software market and the purely software sales and uses tax venue, such as its Sales Tax Office software.
The new compliance services are about a lot more than simply utilizing software that can use the Web to get rates, validate addresses and prepare and file returns. The two-tiered pricing system for the new CorpSystem Services is based on a review of a potential clients operation before establishing a service-level agreement.
The review team will look at a company’s filing footprint, complexity of returns, and they will decide if it’s a Level I- or Level II-service agreement,” he says. Within those two levels, there are pricing tiers depending on the number of returns processed, starting at 1 to 75, 75 to 250 and so on. Although Schlesinger says the service can be appropriate for virtually any size firm, users need to conduct business in five to 10 states to make it worthwhile.
The new CCH service follows in the path of Thomson Reuters, which last year acquired Sabrix, another sales and use tax service provider.
Similarly Greg Bragg, director of product management, also says that the size of the company may not the factor in determining which Sabrix products are best for it. “It’s not necessarily size or number of transactions,” says Bragg. The complexity of a company’s tax issues might be the deciding factor. This encompasses issues such as how complex the business process is, whether a company has many transactions involving value-added tax, the number of counties it operates in and whether it has multiple locations.
Sabrix offers two products—the Sabrix Application Suite, a systems whose pricing starts at $35,000, for enterprise-sized companies. The other is the Managed Tax Service for small and mid-sized businesses, which can integrate with Microsoft Dynamics GP and NAV and SAP’s Business One applications. Functions include calculations and population of returns, Internet-based address verification tax determination and calculation.
The question for smaller business is at what point can they benefit from a system like Sabrix’s MTS that combines applications with expert advice and a software-only approach, the best known of which come from Avalara and SpeedTax.
Both companies deliver their services through integrations with accounting software packages from the major vendors. Avalara’s list includes Microsoft Dynamics AX, GP, NAV and SL; Intuit's QuickBooks, SAP Business One, Syspro, NetSuite, Epicor, Infor, Intaact and Sage Accpac, MAS 90/200/500, PFW and Pro. SpeedTax has fewer, but an increasing number of integrations, including Sage’s Accpac, and MAS 90/200, along with QuickBooks, Intacct, SAP Business One, NetSuite and Dynamics GP.
So are all the consulting and higher-level services necessary because software alone can’t handle these functions? Anton Donde, CEO of SpeedTax, says no. “All of the vendors that are forced to do in this consulting manner, don’t have the level of sophistication [in their software],” he says.
Most SpeedTax clients don’t need the high-level consulting, he continues. “It’s less than 5 percent of our clients that need consulting and 95 percent of consulting is around nexus and taxability rules for their products. And it’s not a matter of companies that need such services not looking at SpeedTax to begin with, he adds.
What SpeedTax has done, he continued, is produce a package that automates the process for companies because the cycle of sales tax preparation is very manic.
Compared to the hybrid systems, "It's far more automated and you get your returns in real time. In sales tax compliance, you have very little time," says Donde. Some competitors, he continues, are delayed in providing returns.
