Case Study: Insurance
BACKGROUND
ABC Company is a national insurance firm, providing a variety of policies to individuals and businesses across the country. Despite their prominent position in the industry, they grappled with significant challenges concerning their sales and use tax system. ABC Company was not effectively utilizing their current sales tax software, and their monthly review of purchases for self-assessing use tax was inadequate. Furthermore, a recent audit by a state jurisdiction exposed significant purchases where use tax had not been correctly accrued.
CHALLENGE
ABC Company's challenges centered around their improper usage of their sales tax software and ineffective monthly reviews to identify use tax that needed self-assessment. The company was at risk of facing serious financial implications due to a recent audit by a state jurisdiction that revealed numerous purchases where use tax was not appropriately accrued.
SOLUTION
Mo proposed moving their use tax data review process outside of their current software due to the many variables and factors affecting taxability. Over three months, Mo was able to identify the taxability of their vendors and created a vendor taxability checklist. This tool was used to review monthly purchases and determine taxability. Mo also established a system to automatically pull material invoices monthly for review, enabling him to catch both underpayments and overpayments before filing returns.
RESULTS
With Mo's system, ABC Company could respond effectively to future state notices and mitigate concerns about significant underpayments or overpayments. Impressed by the results, ABC Company asked Mo to continue overseeing their monthly compliance process.
CONCLUSION
Mo's expert guidance and innovative approach to sales and use tax compliance led to significant improvements for ABC Company. His work mitigated the risks associated with improper use tax accrual and improved the company's ability to respond to state notices. The successful intervention saved the company significant resources and financial strain from potential future audits and ensured their sales tax compliance process was in expert hands.
AT A GLANCE
CHALLENGES
ABC Company was not using their sales tax software effectively.
Monthly reviews of purchases to identify self-assessed use tax were inadequate.
An audit found significant purchases where use tax was not correctly accrued.
BENEFITS
Mo created a vendor taxability checklist and a system to review invoices monthly.
Significant improvement in the company's ability to respond to state notices.
Mo continues to oversee their monthly compliance process.
TIME AND RESOURCE SAVINGS
ABC Company did not need to hire a full-time employee for their monthly compliance process.
Allows the company to focus on their core business activities.
FINANCIAL SAVINGS
ABC Company saved significant costs on potential future audits.
They did not need to hire a full-time employee, reducing payroll expenses.
EXPERTISE
Mo provided expert guidance on use tax data review process outside of their existing software.
Identified the taxability of vendors and created a vendor taxability checklist.
Set up a system to review invoices monthly to catch underpayments and overpayments.
ADDITIONAL BENEFITS
ABC Company outsourced their monthly compliance process to Mo, allowing them to focus on their core business.
The company experienced an improvement in responding to state notices and mitigating tax issues.
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.
