Case Study: Healthcare / BioTech
BACKGROUND
ABC Company is a global medical technology company that develops, manufactures, and sells medical devices, instrument systems, and reagents used in healthcare settings worldwide. The company has three main business segments: Medical, Life Sciences, and Interventional, offering various products and services for medication management, delivery, infection prevention, biopharmaceuticals, cell therapies, genomics, and minimally invasive surgical devices and technologies.
CHALLENGE
As a global company, ABC faces various sales tax challenges such as determining its physical presence or "nexus" in each state, navigating state-by-state rules, identifying exemptions, determining the taxability of services, keeping up with tax rate changes, and managing sales tax audits. The company uses a tax engine to make taxability determinations, but errors can still occur, and integrating with existing systems can be challenging. Audit risk and ongoing support are also concerns.
SOLUTION
To mitigate these risks, Philip performed a reverse sales tax audit on behalf of ABC Company. The audit identified overpaid sales tax that could be recovered from state and local governments, as well as areas of exposure where sales tax was underpaid or not properly charged. By reviewing purchase invoices and identifying any instances where tax was overpaid or charged in error, the audit helped the company address any compliance issues and mitigate the risk of future sales tax audits or disputes.
RESULTS
The reverse sales tax audit resulted in the identification and recovery of significant overpayments totaling $1.6 million, helping ABC Company better allocate resources towards its core activities. Regularly reviewing purchase invoices and other relevant documents to ensure proper sales tax compliance is crucial for companies to prevent similar errors and achieve significant cost savings. The successful audit demonstrated the importance of identifying and addressing compliance issues and mitigating the risks of future sales tax audits or disputes.
CONCLUSION
The reverse sales tax audit resulted in the identification and recovery of significant overpayments totaling $1.6 million. By making adjustments to its tax engine and sales tax compliance procedures, ABC company can prevent similar errors from occurring in the future.
This successful audit demonstrates the importance of regularly reviewing purchase invoices and other relevant documents to ensure that sales tax is being properly charged and paid, and how doing so can lead to significant cost savings and better allocation of resources towards core activities.
AT A GLANCE
CHALLENGES
Determining physical presence or "nexus" in each state
Navigating state-by-state rules
Identifying exemptions and determining taxability of services
BENEFITS
Identifying overpaid sales tax
Mitigating risk of future sales tax audits or disputes
Allocating resources towards core activities
TIME AND RESOURCE SAVINGS
Making adjustments to sales tax engine and compliance procedures
Avoiding future errors and overpayments
Reducing time and resources spent on sales tax audits and disputes
FINANCIAL SAVINGS
Recovering $1.6 million in overpaid sales tax
Achieving significant cost savings for the business
Allocating resources towards core activities
EXPERTISE
Performing reverse sales tax audit
Reviewing purchase invoices and relevant documents
Working directly with auditor to ensure approval of refund claim
ADDITIONAL BENEFITS
Preventing future errors and overpayments
Ensuring sales tax compliance procedures are accurate and efficient
Demonstrating the importance of regularly reviewing purchase invoices for proper sales tax compliance.
OUR MISSION
What sets us apart from other sales tax consulting firms is our commitment to offering top-notch services without charging exorbitant fees typical of other firms.
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We believe that every business deserves quality sales tax consulting that is accessible and affordable, and we have built our practice around this core value.
