Managing Sales & Use Tax Compliance with Dynamics AX and CCH Sales Tax Office

Managing Sales & Use Tax Compliance with Dynamics AX and CCH Sales Tax Office Phil Schlesinger, Product Manager-Sale & Use Tax Adam Fry, Integration Development Team Lead

Topics for Discussion • How states and localities are addressing their revenue shortfalls • How tax exposure and audit risk is created • Overview of sales and use tax audits • How sale tax automation can reduce tax exposure and streamline the process • Team AX & CCH Sales Tax Office • Questions and answers

State Sales & Use Tax Revenue Shortfalls “This is an awful time for states fiscally, but they are more concerned about 2011, 2012, 2013 and 2014” Scott Pattison, Executive Director of National Association of State Budget Officers, 2009

What are states doing to address their revenue shortfalls? • Increasing tax rates at an alarming rate • Beefing up enforcement efforts • Looking at ways of increasing their taxable bases – services and digital goods • Expanding nexus – “click-through nexus” • Investing in technology • Main Street Fairness Act – July 2010

State Sales & Use Tax Revenue Shortfalls Reporting Period Decline Increase States w/ Declines 1st Qtr 2009 8.3% 40 2nd Qtr 2009 9.5% 41 3rd Qtr 2009 8.9% 42 4th Qtr 2009 5.3% 41 1st Qtr 2010 0.5% 34 2nd Qtr 2010 5.9% 7 Source: The State Tax Report, Nelson A. Rockefeller Institute of Government

How is sales & use tax exposure and audit risk created? • Not collecting tax when you have a legal obligation • Not imposing tax on a taxable transaction • Not collecting enough tax • Not self-assessing and remitting tax on untaxed “taxable” purchases • Not remitting tax that you have collected

Why states conduct audits? • Desperate need for revenue • Full compliance is difficult and costly • Lack of effort to comply • Erroneous interpretation of statutes • Higher priority on customer relations • Illegal activities take place

Where do auditors typically focus their time and attention? • Primary focus • Exempt sales • Claimed statutory exemptions • Exemption certificate documentation • Untaxed purchases • Secondary focus • Systemic issues – tax rates, rounding, jurisdictional identification, sourcing

Sales & Use Tax Automation • Reduce or eliminate tax exposure and audit risk through • Quality taxability and tax rate content • Interactive customer exemption management • Customizable consumer use tax configuration and processing • Other customizable features (i.e. overrides, SKU mappings, exemptions )

Sales & Use Tax Automation • Streamline the sales and use tax function • Minimizing manual processes • Minimize human error • Save time and frustration • Shift resources to other tasks • Minimize disruption caused by employee turn-over

Team AX & CCH Sales Tax Office Adam Fry

Sales Tax Office for Dynamics AX STO Administration Module AX Client STO Calculation Module STO Service Wrapper AX AOS STO Web Service Interface STO for AX (x++ code) STO Database AX Database

Questions & Answers

Managing Sales & Use Tax Compliance with Dynamics AX and CCH Sales Tax Office