1. Oxley and SSAE 16 Type II Compliant
Electronic Certificate (ECM) solutions that
give you control over your document
management governance and processes
cost-effectively.
1
Sales Tax Exemption Certificates
Larry Powers
ISSI/TEAMS
ISSI provides industry-leading, Sarbanes
Confidential and Proprietary - ISSI
2. 2
Agenda for Presentation
The Regulatory Challenge for Governance
What is Exemption Certificate Governance
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Policy?
Assembling the best ”Governance Team”
ECM Governance Metrics
Setting the Mission and Strategy
Best Practice Data Policies
What are my Integration Points?
Technology Enablement Success
Conclusions and Q/A
3. 3
ISSI/TEAMS
Founded in 1994, ISSI conceived and developed
imaging software specifically to help
corporations get control of the sales tax
exemption certificates and tax planning/audit
strategy that goes with this process. The
decision to use technology to streamline
certificate management was made, and TEAMS
was developed as an on-premise solution with
complementary tools and utilities, then moved to
SaaS environment for a more fluid delivery
model and to meet industry demand for a hosted
model.
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4. 4
The Governance Challenge
Increasing Regulatory Scrutiny.
Transaction Taxability Encompasses:
Today: Sales and Use
Tomorrow: VAT
National and International
Expand Compliance Efforts.
Reduce compliance cost and effort.
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5. 5
Exemption Certificate Governance
Policy
Cost Reduction
Risk Reduction
Effort Reduction
Compliance Improvement
Short Term Impact
Long Term Results
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6. 6
Inhibitors - Certificate Governance
Diffused compliance responsibility
No central authority
Many departments play a part
The framework is crucial to success
Lack of visibility
Limited understanding of true risk
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7. 7
ECM Governance Metrics
Reduction in
Assessments, interest and penalties.
Accruals.
Resources spent
Preparing for and defending audits.
Acquiring and reviewing certificates.
Researching and correcting errors.
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8. 8
Percentage of Revenue
A Measure of Relative Impact.
A Means for Audit Assessment.
Statistical Sampling that can hurt
or help.
Used as a means to proportionally
determine compliance.
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9. exemption certificates as a percentage
of the total number of exempt customers
and as a percentage of revenue.
9
More ECM Governance Metrics
Number of valid exemption certificates
as a percentage of the total number of
exempt customers and as a percentage
of revenue.
Number missing, incomplete or invalid
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10. Even More ECM Metrics
Response time on certificate acquisition
10
campaigns.
Response levels on certificate
acquisition campaigns.
Tax accrual accuracy.
Time spent preparing Tax accrual
calculations.
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11. 11
Data Policies
Standardization
Quality Control
Compliance Rules
Data Ownership
Flow of Data
Synchronization Rules
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12. 12
Data Policy Impact
Data Sources: Data Uses:
Master Customer File
Master Vendor File
Order Entry
General Ledger
Exemption Certificates
Exempt Status
Determination
Sales Tax Calculation
Tax Accruals
Contingent Reserves
Calculation
Reverse Audits
Audit Defense
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13. 13
Document Indexing
Customer Name
FEIN
Customer Bill To Address
Customer Ship To Address(es)
Customer E-mail
Customer Phone
Customer Fax
Unique Customer ID
Effective Date
Expiration Date
State Registration Number
Signature
Current Certificate Status
Certificate Type:
MTC Multi-State Resale
SSTI Multi-State
State Issued
Blanket Exemption
Single Purchase Exemption
Direct Pay Permits
Exempt Use
Non-Expiring
Limited Life
Description of Purchase
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14. What happens when customer or vendor
14
Data Synchronization
Which system’s data takes priority?
How, when and at what interval data is
exchanged?
How are data conflicts resolved?
Where and when is new customer or
vendor data entered?
records are deleted?
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15. 15
The Sales Tax Process
Determine tax-exempt status of the
customer placing an order.
Calculate sales tax owed.
Collect exemption certificate.
Review certificate for sufficiency.
Reverse audit to determine overall level
of compliance and determine specific
gaps and audit exposure.
Respond to state audit documentation
requests and defend the audit.
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16. Respond to state audit documentation requests
16
The Use Tax Process
Request determination that a purchase is use
tax exempt.
Determine the taxability of said transaction.
Prepare and deliver an exemption certificate to
the specific vendor.
Document use tax-exempt transaction for
future reference.
Perform periodic Use Tax accrual calculations.
Reverse audit to determine overall level of
compliance and determine specific gaps and
audit exposure.
and defend the audit.
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17. 17
“Gotchas” for Additional Complexity
Drop Shipments
Streamlined Sales Tax Project
Direct Pay Agreements
What is and is not taxable?
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18. 18
Sufficiency Review
A minimum set of sufficiency rules
would include checking:
That the proper form was used.
That it was signed and dated.
And may also include:
A specific seller’s name
A description of purchase
A valid certificate registration number (form
and format).
Expiration Dates.
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19. 19
Forms and Statutory Compliance
Each State has their own
May be transaction specific
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SSTP
May expire
Change frequently
21. 21
Document Capture
Paper Delivery
Pot luck
Needs scanning
Easy for customers to fax or mail
Electronic Delivery
Improved document capture
Better indexing
Correct Forms first time
Fewer errors
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22. 22
Technology Enablement
Platform
SaaS
Traditional Self-hosted Delivery
Hybrid Models
Reliability
Transparency
Who has the staff?
Who has the expertise?
When do we need help?
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23. 23
Security
At a minimum, SAS 70 Level II Certified
Multi-tenant versus Single-tenant
Commingling Data:
Instances
Customer Files
Certificates
Single Sign-on
Offshore versus Onshore
Hosting
Services
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24. 24
Benefits of ECM Governance
Reduce the cost to acquire and handle
exemption certificates.
Eliminate errors and confusion.
Increase ECM compliance.
Minimize audit risk and exposure.
Satisfy Customers and Staff.
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25. 25
Thank you for your time!
Larry Powers
Chief Strategy Officer, ISSI/TEAMS
http://www.teamscert.com
lpowers@issimage.com
650.383.8527
Confidential and Proprietary - ISSI