The Role of Technology to Automate Sales and Tax Compliance and Reduce Audits

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In the modern age of business, following financial rules means being careful about tax-related governance. Companies that sell in different states or online must automatically handle sales tax to keep up with new laws.

It’s now possible to use advanced tax automation technology, which reduces the chances of making errors and helps avoid an audit. In case of any audit, one can choose to have sales tax audit lawyers who are efficient enough to defend the business and can fix any mistakes related to sales tax.

In this blog, I look into the use of automation tools to keep your business up to date with tax laws and protection from audits.

tax attorney


1.      The Increasing Complexity of Sales Tax Laws

Sales tax rules in the United States are recognized as very complicated. Since there are more than 11,000 sales tax districts and rules tend to change quickly, trying to follow them by hand can be difficult or risky.

Because of the Supreme Court case South Dakota v. As a result of the 2018 decision by Wayfair, Inc., states have been passing new laws that make more companies responsible for collecting and sending sales tax. Because of this extra focus, there has been a sharp rise in sales tax audits at the state level for remote sellers and businesses with ties to many states.

2.      Why Automation is the New Standard in Sales Tax?

When tax tracking is done manually, businesses may make mistakes in the rates they use, how they manage exemptions, and the way they submit papers. Such mistakes may lead to getting audited and paying harsh fines. They make it easier for businesses to perform many tasks.

·         Rate calculations that happen as you change the place from one state to another

·         No matter when payments are received, sales tax must be charged on products and services at the moment the transaction is made.

·         Management of exemption certificates using automated means

·         Filing and remitting payments that keep to their schedule and guidelines introduced by the laws.

When businesses automate these aspects, they are protected from possible audit risks and always remain compliant.

3.      Key Features of Sales Tax Automation Software

There are several online tools created for handling the whole sales tax process. Some of the popular platforms are Avalara, TaxJar, Vertex, and Sovos. The following are the main functions you should pay attention to:

a.       Real-Time Tax Calculation

It comes with tax rate rules to match the location, category, and type of every transaction. It is perfect for both POS systems and e-commerce sites.

b)      Nexus Tracking

Keeps track of your activities and letters in your business’s name and informs you when you have to register.

c)      Exemption Certificate Management

Stores exemption certificates that are used to check compliance in B2B sales and purchasing.

d)      Automated Filing and Remittance

Filing all sales tax forms with the proper frequency and meeting the deadline set for each state is managed.

e)      Audit Trail and Reporting

All financial activities are logged in detail to ensure transparent and prepared dealings when an audit occurs.

Now, with the right software, one can also clarify the payroll issues and a payroll tax attorney is the person who can help in such situations to a business.

Location: Los Angeles, CA, USA

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