workshop d ohio tax - mec seminars · biographical information richard a. calich, manager, the...

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Workshop D

Best Practices…Sales and Use Tax Automation

of Purchasing & Accounts Payable

Thursday, January 27, 2011 1:45 p.m. to 2:45 p.m.

Biographical Information

Richard A. Calich, Manager, The Sherwin-Williams Company 101 West Prospect Ave., Cleveland, OH 44115

[email protected] 216.566.2588

Rick Calich is the Manager of Tax Systems at The Sherwin-Williams Company. He serves as the system administrator for CorpTax, CorpSales, and Taxware. Rick also provides oversight and system support for Sherwin-Williams’ Federal, State, and Local tax compliance, audits and systems implementations. Currently, Rick is managing a project team responsible for the integration of Oracle Financials with ADP Taxware’s Enterprise Sales and Use tax solution. The scope of this project includes a roll out of Taxware functionality to over 3,500 manufacturing and retail locations. Rick has also consulted on the design, development, and implementation of sales and use tax software. Rick serves on Steering Committees and Product Advisory Boards for several tax software companies. Rick graduated from Ohio Northern University with a Bachelor of Science in Accounting and Management, and received a Masters of Accountancy from Case Western Reserve University.

Tony Chavez, Principal, Ryan 2355 E. Camelback Road, Suite 825, Phoenix, AZ 85016

[email protected] 602.955.1792

Current - Principal, Tax Technology Practice Leader, Ryan, Phoenix office. Specializes in the evaluation and implementation of third-party automated transaction tax software (e.g., ADP Taxware, PinPoint, Sabrix, and Vertex); design and implementation of “best practice” improvements to automated tax decision and reporting processes; and design and development of custom tax interfaces to third-party automated tax solutions. Experience in tax processing with various ERPs, including Oracle, PeopleSoft, and SAP. Previous - Principal, Ryan, Boston office, Director, Tax Technology, Ryan, Boston office, Vice President, Enterprise Solutions Group, ADP Taxware. Management responsibilities included: Implementation of Taxware solutions. Development and maintenance of standard interfaces to Taxware Enterprise. Demonstration of Taxware software solutions to sales prospects. Presentation of Taxware solutions via webinars, Taxware Summits, and tradeshows. Senior Manager, Tax Management Automation Services, national accounting firm. Evaluated and implemented third-party automated sales and use tax software (e.g., ADP Taxware, Sabrix, and Vertex). Manager, State and Local Tax/Sales and Use Tax Practice, national accounting firm. Provided audit representation, tax recovery, nexus studies, taxability research, tax planning, and voluntary disclosure services. Senior Consultant, State and Local Tax/Sales and Use Tax Practice, national accounting firm. Senior Consultant, State and Local Tax/Federal and State Income Tax, national accounting firm PUBLIC PRESENTATIONS Mr. Chavez lectures on various tax topics for Ryan clients. Additionally, he has appeared as a speaker for the following organizations: SAP Financials Conference, Taxware Regional Seminars, Taxware Summits 10 and 11, Taxware Webinars PROFESSIONAL AFFILIATIONS Institute for Professionals in Taxation EDUCATION/ACCREDITATION Master of Science Degree, Business Taxation, University of Southern California Bachelor of Science Degree, Accounting, University of Southern California

“Best Practices”Sales and Use Tax Automation of Purchasing and Accounts of Purchasing and Accounts Payable

Introductions and Agenda

Introductions– Rick Calich, Tax Systems Manager, The Sherwin-Williams

Company– Tony Chavez, Principal, Ryan, LLC – Tax Technology

AgendaTax Technology Landscape– Tax Technology Landscape

– Sales and Use Tax Compliance Overview– Data gathering and extraction ideas for sales and use tax

tmanagement – Technology and tax minimization strategies– Today’s tax automation engines – Tax Automation– Challenges and Solutions

Background

Technology Developments– Technology is quickly shaping the Sales and Use Tax landscape– Technology is quickly shaping the Sales and Use Tax landscape

across the globe as companies look for ways to automate tax decisions, reporting, and compliance responsibilities

– Many global companies are moving to a single platform andMany global companies are moving to a single platform and investing heavily in tax automation solutions

– At the same time, state audit offices are more aggressive and sophisticated with taxpayer audits of sales and purchases as statesophisticated with taxpayer audits of sales and purchases as state budget deficits grow larger

– More regulatory compliance leaves little time for tax departments to work on value added items and tax minimizationwork on value added items and tax minimization

Sales & Use Tax Compliance Process Sales & Use Tax Compliance Process

People, Systems, Policies, Processes

Tax Process Review Tax Process Review

AccountPayable

Purchasing

InformationTechnologyReporting

Tax ProcessR i

Returns

Tax DecisionPolicy

ERP

Tax Department

Review

SourceSystems

Preparation System

Tax Process Review

– Identify departments and individuals involved in tax compliance process

– Goal is to attempt to develop a single source of information. An example is ga data warehouse. A data warehouse is a repository of an organization’s electronically stored data

– Identify and document current policies and practices

– Assess the effectiveness, efficiency, and relevance of policies and practices

– Assess the degree of alignment between current tax practices and polices, corporate strategy and key performance indicators

– Identify potential areas for process improvement and efficiencyIdentify potential areas for process improvement and efficiency enhancement

– Develop a tax technology roadmap

– Findings will support ROI

Data Gathering Ideas for Tax Departments

Data Gathering, Extraction, and Conversion for Sales and Use Tax AuditsUse Tax Audits– Goal is to attempt to develop a single source of information. An

example is a data warehouse. A data warehouse is a repository of an organization’s electronically stored datag y

– The ability to work with the data in a data warehouse, and analyze data compiled in the data warehouse, is just as important as creating the data warehouse itself

– Extract Good Data!Develop a data extraction plan for the data warehouseUnderstand your company and business units (what will feed the warehouse)warehouse)Reconcile the data to control totals for audit scrutiny to insure validityKnow what is excluded from the data warehouse (PO vs. Non-PO)

Data Gathering Ideas for Tax Departments

Data Gathering, Extraction, and Conversion for Sales and U T A l i ( ti d)Use Tax Analysis (continued)– Convert the data effectively into a usable format!

If you truncate the data, the analysis will be flawedy y– Understand your data!

Work with your data before you provide it to auditorsKnow where the spend and tax dollars areKnow where the spend and tax dollars areCheck the auditors’ population/sample basesLook for credit memos, reversals, date range issuesThink about short-pays, installment payments, check amounts

Technology and Streamlining Tax Department Management

Establish Single Data Platform– Use feeds from various systems or tables

Use Data Manipulation ToolsUse Data Manipulation Tools– Spreadsheets vs. Relational Databases– Internal Standardized Audit Tool– Business Intelligence Analysis Tools – Cognos, Business Objects

Prepare Data ReportsPrepare Data Reports – Database Reports – Ability to customize reports– Business Objects, Crystal Reports, and Dashboards

Tax Automation Engines

Common Functionality– Jurisdictional Data– Tax Rates– Tax Decision Content– Taxability Management– Calculation Engine

Major ERP integration to order to cash and procure to pay– Major ERP integration to order-to-cash and procure-to-pay processes

– Transaction JournalT R t S R t G ti– Tax Return Summary Report Generation

– Analysis and Reporting Tools

Tax Automation Engines

Key Benefits– Consistency

Entire organization uses same tax rules, no manual tax decisions

– AccuracyRates and taxability maintained monthlyMax and tier tax rate functionality enabledMax and tier tax rate functionality enabled

– EfficiencySet-up tax rules once and use across entire organizationAll t l t tti i t i d i l tiAll tax relevant settings maintained in one location

Tax Calculation Packages

Major Tax Automation Providers and SolutionsThomson-Reuters– Sabrix Application Suite

Vertex Inc.– Vertex® Sales Tax O Series™

ADP– Taxware Enterprise

S d D i lSecond Decimal– PinPoint

CCH– STOSTO

SpeedTaxClient Server Tax Automation Solutions– Taxware Sales and Use Tax Systemy– Vertex® Sales Tax Q Series™

Tax Return Packages

Major Tax Return Providers and SolutionsADP– TaxSolver® (Returns)

Thomson RIAThomson RIA – InSource® Sales & Use Tax (Returns)

Vertex Inc.– Vertex® Sales Tax Returns Q Series™

CCHSales Tax Returns Online– Sales Tax Returns Online

CORPSales

Tax Certificate Management Packages

Major Tax Certificate Providers and SolutionsVertex Inc.TaxcientS d D i lSecond DecimalISSICertCaptureCertCaptureAlternative option to utilize a third-party provider to perform certificate management compliance

General Discussion

Depending on implementation strategy:– Real-Time versus Batch Analysis– Moves tax decision making from procurement to accounts payable– Requisitioner determines what is being purchased using product q g p g p

groupings– A default list of product groupings can be available depending on

the various factors– Product groupings can be managed centrally– Use can be included in decision using additional data elements

such as account assignment elements like cost centersuch as account assignment elements like cost center– Overrides to taxability possible

Rick’s Random Thoughts(On Sales & Use Tax Automation)

Words to live by:

To err is human– To err is human– To really mess things up takes a computer– To achieve true FUBAR status, requires an ERP system!

Rick’s Random Thoughts

Words to live by:

Sales and Use Tax Automation is a lot like baseball– Sales and Use Tax Automation is a lot like baseball and nobody clinches the World Series on Opening Day!


Playing the Game to WIN:

Hard to win the game if never asked to play!– Hard to win the game, if never asked to play!



– Hard to win the game, if never asked to play!

• Make it known to Sr. Management that you (Tax Dept.) want/need to be on the Project Team

• Show up for “Spring Training” ready to work hardShow up for Spring Training ready to work hard• Keep in mind what Tom Hanks said as the coach in ‘A League of

Their Own’, “There’s no crying in baseball!”• Realize others may be “Full-time on the Project” but you probably• Realize others may be Full-time on the Project but you probably

still have your Day Job to do!• The Project Timeline waits for nobody, especially the Tax Dept.



When asked to play should you bring your own bat?– When asked to play, should you bring your own bat?



– When asked to play, should you bring your own bat?

• Should you engage a separate Integration Partner, one whoseShould you engage a separate Integration Partner, one whose specialty is Sales & Use Tax Solutions?

• You probably will have no vote when choosing the Integration Partner for the overall project

• The firm best for General Ledger and Accounts Payable may not be the best choice to implement your Sales & Use Tax solution

• Consider the True cost of NOT using a separate Tax Technology I t ti P tIntegration Partner

• Is this your first attempt at automation or an upgrade?• Just “Dump in the Rates” or an “Informed Decision based on your

specific needs a Solution that works for YOU”specific needs, a Solution that works for YOU



Get to know the Players on your Team!– Get to know the Players on your Team!



– Get to know the Players on your Team!

• Experience of the Integration Partner (Firm versus Onsite Staff)Experience of the Integration Partner (Firm versus Onsite Staff)• Get to know key members of IT; Employee versus contractor?• Know the Business Owners (GL, AP, FA, Purchasing, IT and Tax)• Will the players change after Go-Live (Legacy versus ERP/FSS)?p y g ( g y )• If there will be a restructuring, is it known or to be a surprise?• Realize there are fundamental differences on what drives each

team memberT ll d i b t t t d dli d lti f• Tax generally driven by statutory deadlines and penalties for failure

• IT generally driven by projects, risk of failure and ROI



There’s NO “I” in Team there’s only “me”– There s NO I in Team, there s only me



– There’s NO “I” in Team, there’s only “me”

• Most tax departments are operated on the lean sideMost tax departments are operated on the lean side• Your ERP / Tax Solution will generate a massive amount of data• If done right, some of it will be very useful• BUT, Tax is under staffed to make good use of it• Use a Sales Tax Recovery Firm• Your Sales Tax Solution IP might even offer those services• The Net Recoveries may cover most or all costs of automation!• The recoveries can lead to further refinements in your Sales Tax

Automation• The review by the recovery firm highlights the areas needing

refinemente e e t• The recovered funds pay for the improvements



Everybody loves the Stats!– Everybody loves the Stats!



Everybody loves the Stats!– Everybody loves the Stats!

• Just as in Baseball, everyone wants to know the score and who doesn’t love a winning team?

• Make known your victories, your recoveries and your reductions in tax. Soon you’ll be asking for more funds for enhancements and upgrades; remember everyone loves a winner!



When in 1st Place by 15 Games don’t stop practicing!– When in 1st Place by 15 Games, don t stop practicing!



– When in 1st Place by 15 Games, don’t stop practicing!

• Regression Testing does not stop with go-live• Regression Testing must be ongoing!• Regression Testing must be done with each new ERP module that

goes live• Regression Testing must be done with each ERP roll-up patch or

bug fix put into the production instance• Regression Test and just say “NO” to FUBAR!



– The Final Say: The Commissioner and Team Owners

• The #1 Best Practice and FUBAR Preventer:“The Change Control Board”

• The CCB is made up of all the ERP “Business Owners”(GL, AP, FA, BPI, IT, Purchasing, PN, and TAX)

• The CCB is operated by the PMOp y• ALL changes impacting our ERP/Tax Solution are discussed,

voted upon and monitored by the CCB

Thank you!

Tony Chavez tony chavez@ryan [email protected]

Rick Calich [email protected]

workshop d ohio tax - mec seminars · biographical information richard a. calich, manager, the...

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