I recently met with a corporate controller of a technology firm and discussed sales tax outsourcing with her. One of her concerns with outsourcing was the potential to damage her relationship with the jurisdictions where they file. She described how committed they are to filing timely and to respond to a notice with great urgency. (She had the notice prevention mindset as described in my previous post.)
I described this relationship with the jurisdictions as “jurisdictional equity”. Like any other relationship, you want to make deposits in advance of needing to make a withdrawal. Making deposits in the jurisdictional relationships means filing timely (or even early) and resolving notices with urgency and professionalism. An outsourcing firm with the wrong mindset can quickly spend all the equity that you’ve worked so hard to build up over time.
Some indicators of the outsourcing firm’s mindset on jurisdictional equity include:
- Do they talk about notice management or notice prevention?
- Do they file the returns “on-time” or early?
- Do they hold your funds for payment of taxes until the due date or do they pay in advance?
Don’t overlook this seemingly simple item.