72 VIEWPOINT Exploring the benefits of automation for use tax Managing use tax is a complicated and time-consuming process, but automation can help businesses to overcome its challenges The sales tax landscape is complex and ever changing. In 2023 alone, there were 11,192 sales and use tax rate updates in the USA, and 85,836 taxability updates in the USA and Canada. While managing sales tax is complicated, that’s just one side of the tax compliance coin. Managing use tax can be an even more complex and time-consuming process for businesses. Audit risks are also high – a recent Avalara survey of accounts payable departments, accounting, finance and tax professionals found that of the respondents whose businesses had been audited within the past three years, 63 per cent said consumer use tax was a “substantial” part of the audit process. Use tax is an indirect tax levied on the use, storage or consumption of tangible personal property or services, and is paid for by the purchaser. With so many different regions and tax changes, it’s easy for businesses to make mistakes in use tax compliance. Without the right systems and processes in place, underpayments and overpayments are inevitable, and both have financial implications and inherent risk. Businesses can benefit from streamlining vendor use tax management by automating complex tasks in the procurement process. AvaTax for Accounts Payable helps businesses manage consumer use tax compliance within the AvaTax platform. The solution empowers businesses to use prebuilt integrations or APIs for management of use tax on their purchases, ensuring compliance with use tax regulations. The AvaTax for Accounts Payable integration for Microsoft Dynamics 365 delivers accounts payable functionality into customer workflows. This ensures they can calculate accounts payable tax on purchase orders and invoices, adjust the amount charged by the vendor or the tax rate/percentage, review journal entries created with accounts payable tax accruals and post the entries to their general ledger. A key benefit of AvaTax for Accounts Payable is its ability to check rates according to jurisdiction, product taxability and any special rules that may affect a sale. By identifying and correcting overbilled tax on purchases, the solution can keep businesses from overpaying. Another benefit of the integration is the centralised configurations provided within AvaTax, which can apply to both real-time and batch transactions with a hybrid design. The solution is also designed to provide a single location for businesses to view, act on and report on purchase transactions. Businesses using AvaTax for Accounts Payable will also be able to take advantage of other Avalara solutions. Built into the unified Avalara Platform, the solution delivers seamless integration with applications including Vendor Exemptions, Returns and Reporting. Greg Chapman is senior vice president and general manager of AvaTax at Avalara GREG CHAPMAN: AVALARA “It’s easy for businesses to make mistakes in use tax compliance ”
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