Supply Resource Management

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Supply Resource Management Product User Group
Boise Cascade and DuCharme, McMillen
AssociatesBest Practices in Sales/Use Tax
Verification and RecoverySherry Depew, Boise
CascadeMarci Struzinski, Boise CascadeZachary
Reif, DMA February 20, 2008Albuquerque, NM

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Presentation Purpose

• Presentation Purpose
• To discuss the results and perspectives that
  Boise Cascade has gained in working with DMA,
  including
• Verify that sales/use tax decisions are correct
• Recover overpayments
• Prevent future errors in sales/use tax decision
  making
• Presentation Objectives
• At the end of the meeting, we will have been
  successful by
• Sharing the Boise Cascade case-study
• Reviewing many of the metrics used to measure
  performance
• Discussing the issues and initiatives in the
  adoption of best-practices

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
RECOVERY
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Todays Discussion

• Background
• Timeline
• Results
• Results how accomplished
• What Resources to Use?
• DMAs Project Plan
• Sample Report of Findings
• Performance Metrics

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
RECOVERY
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Background

• DMA
• State Local Tax Experts
• 18 Regional Offices
• 200 Staff Members
• Complete Workflow Solutions
• Issues Development
• Tax Advisory
• Overpayment Recovery
• Audit Defense
• Outsourcing
• Tax Technology
• Training
• Focus on Large and Complex Clients

• Boise Cascade
• Mfg. Wood and Paper Products
• 5.8 Billion in Sales
• 48 in Forbes Privately-Held Co.
• 10,000 Employees
• Complex Manufacturing Process
• Complex Regulatory Environment
• Tremendous Internal Changes
• Multi-state operations

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
RECOVERY
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Timeline

• DMA and Boise began working together in 1998
• Audit Defense and Support Single State
• Overpayment Reviews Multiple Locations/Single
  State
• Training
• Overpayment review Multiple Locations/Multiple
  States
• Training
• Tax Software Implementation

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Results

• Over 8,000,000 in sales/use tax either recovered
  or pending
• Overpayment reviews
• Underpayment (risk) analysis
• Audit defense
• Issues development
• DMA frequently conducts staff training to ensure
  that errors do not continue
• DMA assistance with selecting and implementing
  new sales/use tax software

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Resultshow accomplished

• Utilization of PeopleSoft ERP data
• Extraction of data - queries
• Manipulation/sorting/filtering of data
• Pull and review of physical/electronic invoice
  copies
• Taxability decisions via interpretation of Law
• Compile findings in formal Report of Findings
• Seek refund from Taxing Jurisdiction

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Data Extraction
Query Boise has written to provide DMA with their
required information.
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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What Fields to Extract
Query Fields
Col Record.Fieldname   Col Record.Fieldname
1 A.BUSINESS_UNIT - Business Unit   17 C.TAX_AUTHORITY_CD - Tax Authority
2 A.VOUCHER_ID - Voucher ID   18 C.UNPOST_SEQ - UnPost Sequence
3 A.VOUCHER_ID_RELATED - Related Voucher   19 C.BUSINESS_UNIT_GL - GL Business Unit
4 A.INVOICE_ID - Invoice Number   20 C.ACCOUNT - Account
5 A.INVOICE_DT - Invoice Date   21 C.DEPTID - Department
6 A.VOUCHER_STYLE - Voucher Style   22 C.PRODUCT - Product
7 A.VENDOR_ID - Vendor ID   23 C.PROJECT_ID - PC Project
8 D.NAME1 - Name 1   24 C.CHARTFIELD1 - GL Project
9 A.ENTERED_DT - Entered on   25 C.OPEN_ITEM_KEY - Open Item Key
10 C.ACCOUNTING_DT - Accounting Date   26 C.MONETARY_AMOUNT - Monetary Amount
11 A.GROSS_AMT - Gross Invoice Amount   27 C.DESCR - Description
12 C.TAX_CD_SUT - Tax Code - Sales and Use Tax   28 C.PO_ID - PO Number
13 C.TAX_CD_SUT_PCT - Sales/Use Tax Code Percent   29 C.JOURNAL_ID - Journal ID
14 C.SALETX_AMT - Sales Tax Amount   30 C.JOURNAL_LINE - GL Journal Line Number
15 C.USETAX_AMT - Amount   31 A.DESCR254_MIXED - More Information
16 C.VOUCHER_LINE_NUM - Voucher Line Number      
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Query Criteria
What Fields to Extract
What Fields to Extract
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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What Resources to Use?

• Internal
• Familiar with personnel and operations
• Accessibility to data/records
• May lack bandwidth
• May lack tax expertise
• External
• Primary focus and primary area of expertise
• Aware of pertinent law changes
• Industry knowledge
• Dedicated team of professionals

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DMAs Project Plan

• Kick-off meeting
• Data request
• Data verification
• Manipulation of data
• Collection of source documents
• Presentation of Report of Findings
• Pay only what is legally due
• Training to eliminate ongoing errors

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Report of Findings
TABLE OF CONTENTS Executive Summary Review
Process Tax Savings Summary Findings THE
MEAT common issues, law changes Next Steps
Recommendations Conclusion Sales Tax Refund
Schedule Use Tax Refund Schedule BO Tax Refund
Schedule DMA Codes
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Performance Metrics
DMA benchmarks hundreds of data points to
identify the performance metrics and best
practices of the highest performing companies.
Sample of Current Data Population
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Sample Metric As expected, specialized tax
software is primarily used for sales tax
calculations and use taxability determination
What tax software is used for sales tax
calculations?
What tax software is used for taxability
determinations?
Median
Median
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Best In Class
Best In Class
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Sample Metric Technology Primary systems
utilized
-------------------------------Percent Utilizing--------------------------------------- -------------------------------Percent Utilizing--------------------------------------- -------------------------------Percent Utilizing--------------------------------------- -------------------------------Percent Utilizing--------------------------------------- -------------------------------Percent Utilizing---------------------------------------
Primary System Oracle People-Soft Other ERP Home Grown Out-Sourced
Purchasing 20 5 60 15 0
Payables 20 5 65 10 0
Order-to-cash 19 0 48 29 4
Goods Movement 10 0 58 32 0
ERP Spread-sheets Home-grown Journal Entries
Primary system for inter-company 32 11 37 20
ERP Taxware Sabrix Vertex Manual
Tax software used for sales tax calculations 11 22 6 50 11
Tax software used for use tax determinations 19 12 6 44 19
Outsource Corp Sales Quantum Returns Fastax Manual
Process for filing tax returns 6 22 22 17 33
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Sample Metric Lower performing organizations
have 5 times the error rates as a percent of
transactions and 7 times the error rate as a
percent of dollars
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Sample Metric Consequences and Impact
Overpayments Recovered as a of Indirect Spend
Combined Overpayments and Underpayments as a of
Indirect Spend
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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1st Quartile
Median
3rd Quartile
Dollar Amount of Overpayments Recovered
Annually (in thousands)
Interest Payments as a of Final Negotiated
Assessment
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Best Practices

• Aligns with overall company strategy
• Reduces costs
• Improves productivity
• Promotes timely execution
• Enables better decision making
• Leverages existing and exploits emerging
  technologies
• Ensures acceptable levels of control and risk
  management
• Optimizes skills/capabilities of the organization
• Promotes collaboration across the extended
  enterprise

BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
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Contact Information
Should you have any questions about the
information contained in this presentation or
about DMA and its services, please
contact Zachary Reif Title Senior Tax
Manager Office 623-582-6655, extension
2555 Email zreif_at_dmainc.com
BEST PRACTICES IN SALES/USE TAX VERIFICATION AND
RECOVERY