supply resource management product user group
DESCRIPTION
Supply Resource Management Product User Group. Boise Cascade and DuCharme, McMillen & Associates: Best Practices in Sales/Use Tax Verification and Recovery Sherry Depew, Boise Cascade Marci Struzinski, Boise Cascade Zachary Reif, DMA February 20, 2008 Albuquerque, NM. Presentation Purpose. - PowerPoint PPT PresentationTRANSCRIPT
Supply Resource Management Product User Group
Boise Cascade and DuCharme, McMillen & Associates:
Best Practices in Sales/Use Tax Verification and Recovery
Sherry Depew, Boise CascadeMarci Struzinski, Boise CascadeZachary Reif, DMA
February 20, 2008Albuquerque, NM
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Presentation Purpose
Presentation Purpose: To discuss the results and perspectives that Boise Cascade has gained
in working with DMA, including:• Verify that sales/use tax decisions are correct• Recover overpayments• Prevent future errors in sales/use tax decision making
Presentation Objectives:
At the end of the meeting, we will have been successful by: Sharing the Boise Cascade case-study Reviewing many of the metrics used to measure performance Discussing the issues and initiatives in the adoption of best-practices
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Today’s Discussion
Background Timeline Results Results… how accomplished What Resources to Use? DMA’s Project Plan Sample Report of Findings Performance Metrics
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Background
Boise Cascade
Mfg. Wood and Paper Products $5.8 Billion in Sales #48 in Forbes Privately-Held Co. 10,000+ Employees Complex Manufacturing Process Complex Regulatory Environment Tremendous Internal Changes Multi-state operations
DMA
State & Local Tax Experts 18 Regional Offices 200+ Staff Members Complete Workflow Solutions
• Issues Development• Tax Advisory• Overpayment Recovery• Audit Defense• Outsourcing• Tax Technology• Training
Focus on Large and Complex Clients
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Timeline
DMA and Boise began working together in 1998 Audit Defense and Support – Single State Overpayment Reviews – Multiple Locations/Single State Training Overpayment review – Multiple Locations/Multiple States Training Tax Software Implementation
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Results
Over $8,000,000 in sales/use tax either recovered or pending• Overpayment reviews• Underpayment (risk) analysis• Audit defense• Issues development
DMA frequently conducts staff training to ensure that errors do not continue
DMA assistance with selecting and implementing new sales/use tax software
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Results…how accomplished
Utilization of PeopleSoft ERP data Extraction of data - queries Manipulation/sorting/filtering of data Pull and review of physical/electronic invoice copies Taxability decisions via interpretation of Law Compile findings in formal Report of Findings Seek refund from Taxing Jurisdiction
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Data Extraction
Query Boise has written to provide DMA with their required information.
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What Fields to Extract
Col Record.Fieldname Col Record.Fieldname
1 A.BUSINESS_UNIT - Business Unit 17 C.TAX_AUTHORITY_CD - Tax Authority
2 A.VOUCHER_ID - Voucher ID 18 C.UNPOST_SEQ - UnPost Sequence
3 A.VOUCHER_ID_RELATED - Related Voucher 19 C.BUSINESS_UNIT_GL - GL Business Unit
4 A.INVOICE_ID - Invoice Number 20 C.ACCOUNT - Account
5 A.INVOICE_DT - Invoice Date 21 C.DEPTID - Department
6 A.VOUCHER_STYLE - Voucher Style 22 C.PRODUCT - Product
7 A.VENDOR_ID - Vendor ID 23 C.PROJECT_ID - PC Project
8 D.NAME1 - Name 1 24 C.CHARTFIELD1 - GL Project
9 A.ENTERED_DT - Entered on 25 C.OPEN_ITEM_KEY - Open Item Key
10 C.ACCOUNTING_DT - Accounting Date 26 C.MONETARY_AMOUNT - Monetary Amount
11 A.GROSS_AMT - Gross Invoice Amount 27 C.DESCR - Description
12 C.TAX_CD_SUT - Tax Code - Sales and Use Tax 28 C.PO_ID - PO Number
13 C.TAX_CD_SUT_PCT - Sales/Use Tax Code Percent 29 C.JOURNAL_ID - Journal ID
14 C.SALETX_AMT - Sales Tax Amount 30 C.JOURNAL_LINE - GL Journal Line Number
15 C.USETAX_AMT - Amount 31 A.DESCR254_MIXED - More Information
16 C.VOUCHER_LINE_NUM - Voucher Line Number
Query Fields
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What Fields to ExtractWhat Fields to Extract
Query Criteria
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What Resources to Use?
Internal• Familiar with personnel and operations• Accessibility to data/records• May lack bandwidth• May lack tax expertise
External• Primary focus and primary area of expertise• Aware of pertinent law changes• Industry knowledge• Dedicated team of professionals
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DMA’s Project Plan
Kick-off meeting Data request Data verification Manipulation of data Collection of source documents Presentation of Report of Findings Pay only what is legally due Training to eliminate ongoing errors
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Report of Findings
TABLE OF CONTENTS
Executive Summary Review ProcessTax Savings Summary
Findings – “THE MEAT” – common issues, law changes
Next Steps Recommendations ConclusionSales Tax Refund ScheduleUse Tax Refund ScheduleB&O Tax Refund ScheduleDMA Codes
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Performance Metrics
US based purchases ($US)
Products / Services purchased
Products / Services sold
BU / Locations
Revenue ($US)
2 - 4 5 - 7 8 - 15 > 16
< $3B $3B - $11B > $85B$11B - $20B $20B - $85B
One
80 – 5,000 5,000 – 30,000 30,000 – 250,000 > 250,000< 80
15,000 –250,000 > 250,0006,700 – 15,000
2.4B – 5.8B
< 300
Median
< 1.3B 1.3B – 2.4B
300 – 6,700
5.8B – 23B > 23B
DMA benchmarks hundreds of data points to identify the performance metrics and best practices of the highest performing companies.
Sample of Current Data Population
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Sample Metric: As expected, specialized tax software is primarily used for sales tax calculations and use taxability determination
What tax software is used for sales tax calculations?
Median
Best
In
Class0%
0%
100%
0%
12%
12%
64%
12%
0% 20% 40% 60% 80% 100%
ERPTax softwareManually calculatedOther
Best
In
Class
What tax software is used for taxability determinations?
Median
0%
0%
100%
0%
22%
17%
44%
17%
0% 20% 40% 60% 80% 100%
ERPTax softwareManually calculatedOther
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Sample Metric: Technology – Primary systems utilized
-------------------------------Percent Utilizing---------------------------------------
Primary System Oracle People-Soft
Other ERP Home
Grown
Out-Sourced
Purchasing 20% 5% 60% 15% 0
Payables 20% 5% 65% 10% 0
Order-to-cash 19% 0 48% 29% 4%
Goods Movement 10% 0 58% 32% 0
ERP Spread-sheets
Home-grown
Journal Entries
Primary system for
inter-company
32% 11% 37% 20%
ERP Taxware Sabrix Vertex Manual
Tax software used for sales tax calculations
11% 22% 6% 50% 11%
Tax software used for use tax determinations
19% 12% 6% 44% 19%
Outsource Corp Sales Quantum Returns
Fastax Manual
Process for filing tax returns 6% 22% 22% 17% 33%
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YSample Metric: Lower performing organizations have 5 times the error rates as a percent of transactions and 7 times the error rate as a percent of dollars
1st Q 3rd Q
1 % 5 %
5X
Taxability Error Rate as Percent of Transactions
1st Q 3rd Q
.75 % 5 %
7X
Taxability Error Rate as Percent of Dollars
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Sample Metric: Consequences and Impact
Dollar Amount of Overpayments Recovered
Annually(in thousands)
$392
$875
$2,632
0.03
0.12
0.19
Overpayments Recovered as a % of Indirect Spend
Combined Overpayments and Underpayments as a % of
Indirect Spend
0.09
0.19
0.32
0.12
0.20
0.36
Interest Payments as a % of Final Negotiated
Assessment
1st Quartile Median 3rd Quartile
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Best Practices
Aligns with overall company strategy Reduces costs Improves productivity Promotes timely execution Enables better decision making Leverages existing and exploits emerging technologies Ensures acceptable levels of control and risk management Optimizes skills/capabilities of the organization Promotes collaboration across the extended enterprise
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Contact Information
Should you have any questions about the information contained in this presentation or about DMA and its services, please contact:
Zachary ReifTitle: Senior Tax ManagerOffice: 623-582-6655, extension 2555Email: [email protected]