Review of Sales Tax Preparation Applications - 2004

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• August 2004 Issue
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According to U.S. Census Bureau and state figures, there are about 8.7 million business entities that file more than 130 million sales and use returns annually. In addition to 45 states that require assessment and reporting of sales taxes by merchants, there are hundreds of other taxing entities, including city/county governments, school districts and transportation authorities that require reporting. For concerns doing business in multiple jurisdictions, keeping up with rate and reporting changes in each of the areas is a challenge that grows more complex as the business expands its reach. In some areas of the country, even doing business in just a few counties can be a headache if the preparer is trying to handle the reporting manually, which can be a tedious and error-prone exercise.

Sales tax compliance software automates much of the process of filing sales and use tax returns and provides additional safeguards against error by providing a variety of reporting and managerial tools as well as up-to-date rates for jurisdictions in which a company does business.

Although all of the products in this review section are designed for sales and use tax compliance, they vary considerably in their focus and scope, just as individual businesses vary in their reporting requirements. While a few are geared toward near-universal compliance for multi-state concerns with dozens of monthly returns, most were developed for smaller businesses with sales in just one or a handful of states. Additionally, most of these programs can be used either by a public accountant or in-house by a business.

While reviewing programs, we consider areas of functionality that professionals advise us are of the greatest or growing concern to them and their clients.