Bellatoris Consulting, LLC

Archive for October, 2011|Monthly archive page


The One Language Rosetta Stone Doesn’t Translate

In Audits, Compliance on October 23, 2011 at 11:09 PM

I’ve heard nothing but good things from people who’ve learned a new language from the Rosetta Stone program.  Pop in a disk, put on your study cap, and you can be fluent in Spanish, French, German, or even Pashto.  (I had to hit up Google for that one!)

The list of languages you can learn from Rosetta Stone is impressive.  Now, it would be super-impressive if they weren’t missing one language in particular…sales tax.

Let me demonstrate:

If I tell you that I went to a restaurant for lunch, you might be wondering if I went to a fast food restaurant, a Chinese restaurant, a steak house, a food truck, or maybe even a roach coach.  (Do you have to hit up Google for that one?)

Maybe you thought brands instead and wondered if I went to Chick-fil-A, P.F. Chang’s, Morton’s, The Rolling Stove, or even……(do roach coaches typically have names?).

Let’s show how the language of sales tax works like our restaurant example above:

You tell me that your company just bought some software.  Someone like myself who’s fluent in sales tax would be wondering if it was sold to you on a disk, downloaded, offered as a hosted service, sold via a load-and-leave service, canned, custom, sold in conjunction with a maintenance agreement, bundled with future upgrades, or even sold with consulting services.

What’s the big deal?

Picture a scene where a sales tax auditor wants to know more about a software purchase he sees in his audit sample.  If you don’t speak sales tax, your answer may get lost in translation.  (If auditors don’t understand, you may end up paying WAY more sales tax than you should!)

Since Rosetta Stone hasn’t developed a sales tax program yet, call me up and we can meet at a restaurant for some lessons.


The Connection Between Hackers and Sales Taxes

In Compliance, Nexus on October 19, 2011 at 3:56 PM

Here’s a number to digest: 1.2 days.

See if you can find space in your memory bank for that number.  (Maybe you can store it next to the spot where you keep “2.3 children in the American family.”)

Some guess that it takes, on average, 1.2 days for hackers to completely revise their plans of attack against cyber security measures.  If they fail to penetrate their target at 8:00 am on Monday, they have a whole new plan of attack and point of entry lined up by lunch time on Tuesday.

These cyber threats are happening billions of times a day.  (FYI – that’s not a typo!)

We all know that business is literally evolving at the speed of light these days.  This is true for all aspects of your business, not just cyber security.  Your company’s customers are demanding more powerful technologies, quicker delivery methods, more customizable solutions, and many other improvements to your current business model.

How does this impact your sales tax planning?

1)  If the only exposure you get to your company’s sales tax data is the monthly tax returns, then you’re falling behind the times.

2)  If your sales tax returns are done each month “the way we did it last time,” then you’re falling behind the times.

3)  If you’re not constantly analyzing how your company’s new projects and product/service offerings should be treated for sales tax purposes, then you’re falling behind the times.

Because of the speed at which your company is evolving, your sales tax planning needs to keep a similar pace in order to ensure maximized profits and minimized liabilities.

If you’ve fallen behind the times, it’s not too late to get back up to speed.  Let’s setup a FaceTime chat and figure out a game plan.  (Or we can do it the old-fashioned way and meet face-to-face instead!)


Guitar Lessons for the A/P Department

In Compliance on October 16, 2011 at 11:10 PM

When I was in grade school, my friends were into cartoons, comic books, and baseball cards.

Not me…I was into rock and roll!

At the time, I couldn’t get enough of Led Zeppelin, Jimi Hendrix, and Eric Clapton.  I even remember trying to play the opening lick of “Stairway to Heaven” on my recorder (that little flute instrument every kid got in school).

When I was 10, I somehow convinced my parents to buy me a second-hand electric guitar.  They also bought me a couple of books to help me figure my way around the instrument.  (Spoiler Alert: It was a total disaster!)

My parents eventually took me to the local music shop and signed me up for lessons with this guy named Erich.  He helped me understand the basics of the instrument, he tought me some chords, and he helped me learn some songs.  Before long, I was playing along with my favorite tunes.

I’m guessing you’re curious about the sales tax connection I’m about to make, right?  (I see you moving toward the edge of your chair!)

Many years ago, I created a sales tax matrix for a client’s Accounts Payable department.  For every state where they did business, the matrix detailed how each of their major purchase categories should be treated for sales tax purposes.

While this was a tremendous tool, it ended up not working.  (Cue the sound of an out-of-tune guitar).

Much to my chagrin, my client decided to just hand the matrix over to the Accounts Payable department without giving me the chance to train them on how to use it.

After a few months (and a ton of mistakes), we decided it was time to set up a “lunch-and-learn” for the group so I could teach them how to properly use the matrix.  It worked like a charm!  (Cue the sound of Jimi Hendrix going nuts on his Strat).

It was a quick tune-up that helped harmonize the Accounts Payable department with the sales tax matrix.  After that training session, they were making consistent sales tax decisions and finally using the matrix to its fullest potential.

If you’ve invested in a rockin’ instrument like a sales tax matrix, then think of how I tried to teach myself to play the guitar.  Consider some lessons from a pro to make sure you get the most out of your investment.  (Like I did with Erich!)

I’m always ready to accept new students who want to be sales tax rockstars too.  Let’s have a jam session!


Do You Hear What I Hear?

In Compliance on October 13, 2011 at 12:30 PM

Can you recognize the sound of money?

Think of the shuffling sound a stack of bills makes when a cashier counts out your change.

Think of the jingling sound coins make when you swish them around in your pocket.

If you’re lucky, you can also think of the clanking sound quarters make as they fall into a slot machine’s metal tray!

My sensitivity to the sound of money goes even deeper than that.  A couple of years ago, I had a plumber do some work in my master bathroom.  The next day, I heard the distinct sound of money.  It came in the form of a slow drip in my dining room!

Turns out, my ears were correct.  The dripping sound evolved into a major repair in the bathroom and the dining room below.

That leads me to a sales tax question (SURPRISE!!!).  What does money sound like at  your company?

“We just won the contract!”

“We found a vendor across the country that can save us a ton of money!”

Those are fairly common sounds of money for companies.  Have you heard any of these:

“No, we didn’t factor in sales taxes when preparing our bid.”

“That vendor didn’t charge us sales tax because they’re not located in our state.”

When you underpay your sales tax liabilities, you’re flushing profits down the toilet.  The same goes for not factoring your sales tax costs into your bids.

Eventually, you’ll get audited and the state will make you pay.  If you pay it upfront (when you’re supposed to), you can build that cost into your pricing structure.  If you pay it under audit, that money comes straight out of your pocket.  Sure, you can try to go back to your customer after-the-fact, but many people feel as if that’s an unwise business decision.

Since sales tax impacts virtually every aspect of your business, it can be nearly impossible to keep tabs on everything.  Keep you ears open and listen to what your co-workers are saying.  Your bottom line will fatter as a result.

 


A Myth about Automated Phone Systems

In Audits on October 11, 2011 at 1:33 PM

You’ve got a question, so you dial a toll-free number.  When you immediately hear the automated phone system, do you roll your eyes in frustration?

A friend once told me about a sure-fire way to get past automated phone systems and transferred to a live human being.  [I’m guessing that I’ve got your attention now!]

His secret was simple…swear into the phone.  [He was dead serious!]

Funnily enough, I never tried his trick until today.  I called my bank after noticing a problem with my online bill pay service.  The automated phone system picked up and the fun began.

I won’t tell you the bank’s name because I’d feel weird about that.  However, if you want to see what I had to deal with, call their phone number: 1-800-WELLS-FARGO

There were tons of options to choose from, none of which fit the description of what I needed.  After a minute or two, I started entering “0” a bunch of times on my phone while
saying “HELP!”  No dice.

That’s when the cloudy-looking thought bubble came from the top of my head.  I saw my friend’s face and he was saying to me in a ghostly tone: “It’s time to unleash the beast.  Swear into the phone!”

So, I gripped the phone tightly and yelled, “SHUT THE FRONT DOOR!”

It didn’t work; no live human being answered my cry for help.  [Maybe I should have used stronger language??]

Is there a lesson we can learn from automated phone systems that would relate to sales taxes?  HECK YEAH!

How we handle sales tax audits is a prime comparison that comes to mind.  Although you’re working with a live human being from the taxing jurisdiction, these front-line auditors often shield their superiors from taxpayers and consultants with warrior-like protection.

The front-line auditors are great at handling routine matters, but they often fall short when more complicated issues arise.  Audit supervisors have a greater level of expertise, but their schedules are crammed.

When there’s a dispute with a front-line auditor’s findings, it’s best to try to resolve the matter with that individual first.  Think of it like calling your bank in search of your account balance.  The phone system is perfect for that.

If the issue is more complicated, and the auditor is not able to adequately resolve the matter, you may have to get a supervisor involved.  [Taxing authorities are not immune from mistakes!]  Think of it like calling your bank if you suspect that someone has stolen your credit card number.  You’ll definitely need to speak to a live human being for that.

Be patient with the process and try to respect the chain of command.  Just like an automated phone system, yelling swear words at your front-line auditor probably won’t expedite your request to speak with his/her supervisor.

 


Look to a Punk Rocker for a Sales Tax Lesson

In Refunds on October 4, 2011 at 11:53 AM

In college, I took a class on non-profit management.  As people piled in on the first day, not one familiar face entered the room.  As the seats in the classroom filled, only a couple remained open (one of them was next to me).  Just as I made that observation, my new neighbor walked through the door.

Multi-colored hair, facial piercings, tattoos, denim jacket with assorted patches, crazy jewelry….this guy looked like he just walked off the set from a 80s hair band video.  He sat down in the chair next to me, extended his hand and said, “Hey, I’m Uncle Kenny.”

I shook his hand and introduced myself as Grandpa Derek.  (Actually, I didn’t say that….but how awesome would that have been!)

When I asked Uncle Kenny what his major was, he said, “I haven’t really declared a major but I’m really into fireworks so I think I’m going to go the Computer Science route.”

Wow!  I immediately assumed that Uncle Kenny was looking for cooler ways to blow up stuff through his college education.  This was going to be an interesting semester.

As it turns out, Uncle Kenny was referring to the coding language called “Fireworks” and he was an honest-to-goodness computer genius.  At first blush, I thought he was just some goofball.  As I got to know him better over the course of the semester, I realized that I was experiencing another one of those “Mom was right” moments.  You really can’t judge a book by its cover.  Uncle Kenny proved to be incredibly smart, friendly, and a very hard worker.

Believe it or not, I’m taking this trip down memory lane in honor of National Sales Tax Refund Claim Month.

When you’re doing a review of your Accounts Payable processes, looks can be deceiving.  Just because you see an invoice from a large well-known company doesn’t always mean the sales tax was correctly charged.  Large well-known companies make sales tax mistakes too, so remember what your mom told you and “don’t judge a book by its cover.”

P.S. – In case you were wondering, Uncle Kenny liked to be called “Uncle Kenny” because he had a young nephew that really tugged on his heart-strings.  He had a few health emergencies after birth and was lucky to be alive.  Kenny loved him very much and talked about him all the time.  Yet another reason why I felt like a heel in judging this guy so wrong when I first saw him.


The Forgotten October Celebration

In Refunds on October 3, 2011 at 11:59 AM

Most people know that October is noted for being the breast cancer awareness month as well as the time we celebrate Columbus Day and Halloween.  For sales tax aficionados like myself, we also know that October is National Sales Tax Refund Claim Month!

How should someone celebrate such an occasion?  Great question!  Here are some examples of opportunities that are worth celebrating:

1) Accounts Payable Review: Click HERE for an example of an opportuniy you may find in such a review.  Typically speaking, A/P groups are measured by their speed instead of their accuracy.  The default often becomes: “If In Doubt, Tax It.”  Go get some of that back!

2) Bad Debt Review: Click HERE for a discussion on why bad debts can present an opportunity for getting sales tax refunds.

3) Targeted Transaction Review:  Diving into your records head-first may result in discovering random refund opportunities.  Instead of a shotgun approach, try a rifle-shot approach.  Examine your business practices and look at specific areas instead.  You may find it easier to see a consistent pattern of errors that will make your efforts pay off quicker.  One example: does your company do sale/leaseback transactions?  If so, double-taxation often happens with those.

Do a little fall-cleaning and try to dust off some sales tax refund opportunities.  It’ll make cruising into year-end a much smoother ride if you have some cash coming back in the door.

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