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Reaching The Safe Harbor with Technology

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Reaching the Safe Harbor with Technology

By Tasneem Esmael

Your future is a mirage but if there is one thing that is certain, it is called ‘Technology’. Technology is synonymous to money in a way. I am sure we all have heard the phrase, “Money is the root of all evils.” Technology can be used with the same reference by the orthodox, religious zealots. There is an Arabic verse, translation of which, says it for me, “Your deed is defined by your motive.”

So, what is your motive to invest in technology? Less carbon emission in the air will make our air cleaner. Therefore, investing in renewable energy is a good thing. Technology is bringing the world together, closer, more intimately intertwined. A friend in Pakistan recently remarked, “The world is a global village.” The days of segregated systems, departmental chaos, and information silos is over. Most of us in the industry are familiar with this phenomenon called ‘ERP.’ Enterprise Resource Planning. It is a system that helps small, medium and enterprise size businesses become leaner, smarter and agile by better managing company’s resources. ERP helps to achieve knowledge management in an organization. With ERP we integrate tax automation systems that help to simplify the world of taxation. Before we analyze how technology helps with KM, let’s first analyze what is knowledge management:

1) Data

An organization gathers data. Data can be static, factual, discrete, unprocessed and unorganized

2) Information

Refined form of data is information which is more meaningful

3) Knowledge

Knowledge is the acquired form of human learning and experience. It is not information and information is not data. But knowledge is acquired from information and information is acquired from data.

How ERPs and Tax Automation softwares help with Knowledge Management is by bringing people together from different departments on one platform, recognizes their intellectual capacities and leverages their wisdom in a company-wide system.

It is important to note that an ideal organization is one where a conducive and unpolitical environment is provided for a smoother exchange of knowledge across functional areas by using technology and established processes. A successful leadership knows how to manage the overlapping factors that is people, organizational processes and technology. None of the three areas can function independently of one another.

So, your motive to invest in technology was to manage your company’s knowledge by the use of ERP and/or a Tax Automation software. There are a few things to keep in mind that I encountered on my various ERP and Tax software implementations to be essential tools of investments for managing knowledge:

1) Change Management

Sounds pretty simple, doesn’t it. It sure is not. It involves letting everyone know who is going to be effected by the change; that you are going to make a change before you make it. No, you don’t pick up the mic and announce it. It is quite an involved system. It is a process. 1. First you propose in writing what the change is about. 2. You identify the right candidates of the change who will be affected by it. 3. Then you notify them about the change. 4. Explain them how they should effectively respond to accomplish this change 5. Keep them informed while you proceed to accomplish this change.

Two things are accomplished with utilizing this process:

a) Historical data of changing system processes is preserved

b) Leaves a trail of information for the new team or associates to act upon, saving time and company’s resources

2) Data Cleansing

It is one of the most relentless task at hand. Cleansing data is quintessential to a successful implementation, daily operation and error-free functioning of a system. A clean master data is important on the 1st day of go-live and few years down the road. Companies usually tend to forget with more important tasks at hand, they overlook the enormous data sitting in company’s systems taking space and creating clutter. It might be worthwhile to bring a fresh team on board just to clean and create a clutter-free environment if the task seems out of control for those who already have enough on their hand and there are only so many hours for the job. A re-engineering project team or consultants would make for a good investment.

3) Business Processes

Business Processes can become obsolete. A company needs to know when they should adapt to a newer version or newer and better technology. Some companies tend to keep legacy systems as it is for their strategic advantage or conform to the newer trends. Multinational and mid-sized companies tend to be more flexible with conforming to the newer trends to keep up with the industry’s ever-changing technology. It is the small to mid-size firms that tend to lag behind and overlook the necessity for change. If it makes for a good investment, it will be worthwhile to adapt to the changing world and become more techno prowess.

Investing in your future, may it be an individual, a group, a company or a nation is a worthy cause and a cause for much mind probing and thought provoking effort, an effort that should not be taken lightly but intelligently and with the right frame of mind will be a job well-done in the end.

Tasneem Esmael is the Principal Consultant at Taxnologi Solutions, LLC (“Taxnologi”). She has over 12 years of Financial Business, IT and Consulting experience helping clients with ERP implementations, re-engineering projects, sales and use tax and VAT automation.You can learn more about Tasneem on Firm’s Featured Tax Consultants page. Questions and comments can be submitted through the COMMENT feature following her posts – or by using the REQUEST link on the company’s Firm Profile.

What’s New with the Internet “Taxation” of Things?

cloudsalestaxBy Joni Johnson-Powe, JD, CPA CEO/Founder – iAccountOn

On Friday, a law suit was filed challenging the Chicago “Cloud” Tax.  If you hadn’t heard, in July 2015 Chicago “interpreted” its current 9% amusement tax to include electronically delivered entertainment such as Netflix.

While the ITFA (Internet Tax Freedom Act), the moratorium on sales tax on internet access services expires October 1, 2015, the push for a permanent ban on Internet Access taxes, has been joined by the momentum of The Remote Transaction Parity Act (“RTPA”).  In contrast to the MFA (Market Place Fairness Act), RTPA will include:

  • An initial larger inclusion of small business sellers that would be excluded from the collection requirement but phased back-in over time.
  • More protections for use of certified software providers.
  • Expanded audit protections.

Whether this new effort to “level-the-playing field” will pass this session remains to be seen. Notwithstanding the perpetual “internet sales tax” political dance on Capitol Hill, state and local tax administrators have been quite creative of late to plug shortfalls in budgets as the gap between online sales and brick-and-mortar sales continually increases.

Below are a few more examples of recent expansions, rulings and clarifications issued by state and local authorities related to the ever-changing internet economy:

Alabama – Alabama is offering an amnesty program specifically directed to online retailer’s to pay sales taxes for internet sales and keep 2% of the sales tax.

Connecticut – Effective October 1, 2015, sales of services to create, develop, host or maintain all or part of a website become taxable sales of computer and data processing services.

Nevada – Effective October 1, 2015, Nevada will expand the presumption of nexus for “click-through” (e.g. Amazon) out-of-state vendors with $10,000 or more of annual sales.

Tennessee – The Tennessee Department of Revenue has issued a notice that, effective July 1, 2015, sales of video game digital products and online use of computer software are subject to sales tax if they are accessed from Tennessee. In addition, nexus presumptions were also expanded to include “click-through” out-of-state sellers.

Texas – While researching an issue for a client recently, I came across Texas’ treatment of “cloud computing services”, such as infrastructure technology services which allow a customer to access server bandwidth and storage (“cloud storage”), as subject to sales tax under data processing classifications.

City of Denver – Recently the City of Denver updated and clarified its data processing statutes.  Under its Tax Guide, licenses to use software for a fee on servers located outside of Denver but utilized by users in Denver are subject to sales taxes.  On other hand, software development services where the buyer has title to the software during all phases of development and implementation is not taxable if software cannot be resold.

We should expect future expansions and re-interpretations as taxing authorities become more impatient with the impasse in Congress and the swift growth of internet based products and services continues. More to come…