Case Study: Consumer Goods / Food Products
BACKGROUND
ABC Company is a large consumer goods company that sells many famous brands of consumer goods to distributors and also directly to consumers. They manufacture and distribute their products and also dedicate significant resources to market research to gauge how their brands are performing. They were particularly interested in finding ways to save money throughout the company's operations so they could strategically expand their budgets in various areas, especially marketing and advertising. One area that piqued their interest was tax.
CHALLENGE
ABC Company made millions in purchases every month to push forward their operations. They purchased raw materials, equipment, office supplies, software, and sophisticated market research and advertising services. Many of their invoices had sales tax on them, and they wanted to identify opportunities for sales tax refunds. Unfortunately, their invoicing system was quite outdated and very manual, requiring a user to click into every single invoice and wait several seconds for an invoice to display. ABC Company asked Mo to figure out a way to review their invoices within a reasonable timeframe, analyze the purchases, and file sales tax refund claims to recover funds.
SOLUTION
Mo realized the inefficiencies of their invoicing system and quickly developed a bot software program to pull invoice and payment information and organize them for easy review and refund identification. Several million in refunds were identified in the state of New Jersey, mostly related to market research information services purchased in NJ. Although information services are generally taxable in NJ, it was discovered that ABC company personnel from all over the country were using these services. Mo calculated an allocation percentage based on user location and applied this to the NJ sales tax charged to come up with a refund claim.
RESULTS
New Jersey did not easily concede, and their tax auditors and regulatory services branch contested the amount of refund. Mo anticipated NJ would not immediately accept the allocation percentage and proof used for the refund claim and had already prepared in advance two other allocation percentage methods to present to the state. After several meetings, the state accepted most of the refund claim and granted $1M in sales tax refund!
CONCLUSION
ABC Company, like many other companies, is looking for funds to invest in their current strategies to help increase market share. Although sales tax is not an area one would first think could potentially help with this, there are hidden refund opportunities that just need the right experience and time to be uncovered. With some help from technology and strategic planning upfront, companies can file successful refund claims and fund their budgeting needs with the money they recover.
AT A GLANCE
CHALLENGES
Outdated and manual invoicing system that made it difficult to identify sales tax refund opportunities.
Millions in purchases every month to push forward their operations, many with sales tax on them.
New Jersey contested the amount of refund claimed by ABC Company.
BENEFITS
Several million in refunds were identified in the state of New Jersey.
ABC Company was able to recover $1M in sales tax refund.
Funds were made available to invest in their current strategies and increase market share.
TIME AND RESOURCE SAVINGS
Bot software program quickly developed to pull invoice and payment information.
Invoices were organized in a manner for easy review and refund identification.
Mo had already prepared in advance two other allocation percentage methods to present to the state.
FINANCIAL SAVINGS
Several million in refunds were identified in the state of New Jersey.
ABC Company was able to recover $1M in sales tax refund.
Funds were made available to invest in their current strategies and increase market share.
EXPERTISE
Bot software program quickly developed to pull invoice and payment information.
Invoices were organized in a manner for easy review and refund identification.
Mo had already prepared in advance two other allocation percentage methods to present to the state.
ADDITIONAL BENEFITS
ABC Company can now file successful refund claims with some help from technology and strategic planning upfront.
The right experience and time can uncover hidden refund opportunities.
The recovered funds can help fund their budgeting needs.
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.
