Integrated tax management helps reduce risk, streamlines operations for energy companies
Tax compliance is no simple matter for fuel suppliers. With independent filing processes in place for excise tax as well as sales and use taxes, it’s only being made more complex — especially since they’re often interrelated in more ways than one. For example, some states only charge sales and use taxes when a company has an exemption from excise taxes — so, the payment or non-payment of one tax can impact how much the company has to pay for the others.
Despite these interrelationships, companies typically use different teams and tax management solutions (often spreadsheets) to calculate, file, and report, which leads to increased inefficiencies, tedious manual processes, and steeper costs. Most important, there is a greater risk for inaccuracy. With multiple systems in place to manage both excise taxes and sales and use taxes, tax managers will find themselves updating systems independently. This requires costly, time-consuming, and risky manual effort, as well as increased overhead for tax reporting-related IT projects and hardware and application management.
Instead of independently filing each tax type, companies should consider implementing an integrated filing process to help increase efficiency and reduce risk.
How integrated tax management streamlines compliance
Utilizing an integrated, cloud-based tax management platform, energy companies can consolidate and automate their calculation, filing, and reporting of excise taxes as well as sales and use taxes. A single team managing processes via an automated platform introduces numerous benefits for companies, including:
- Improved efficiencies: Since employees no longer have to update spreadsheets independently, companies streamline processes and reduce the risk of manual error, with fewer hands on the filing process. A cloud-based solution also makes accessing sales and use return data easy for future reporting, tax analysis, and audit support purposes. With an integrated filing platform, schedule determination and tax calculation is automated, and all returns can be generated and accessed after the fact, in one place.
- Elimination of manual processes: By ridding companies of the need to manually update spreadsheets from multiple different systems, tax managers using a single automated platform have more time to focus on more strategic work. And, with an integrated filing platform that supports ongoing compliance — ensuring monthly tax rules, rates, and forms are current for excise tax and sales and use tax — tax and IT departments don’t have worry about the tedious tracking and updating of regulatory changes to ensure accurate tax calculations, minimizing risk of over or underpayment.
- Reduced IT costs: With cloud-based deployment of integrated tax management systems, companies reduce IT costs by spending less on IT hardware infrastructure and hardware and software administration. Instead, this money can be put toward more strategic projects and efforts.
Integrating tax management for excise tax and sales and use taxes is a requirement for energy companies to keep up with today’s complex tax environment. With modern solutions, tax managers can work smarter from a single system, strengthening previously inefficient, manual, and costly processes.
Avalara gives energy companies a single, comprehensive cloud-based tax management platform. To learn more about the benefits of an integrated filing process, check out our Energy Tax Filers Survival Guide.
The 2021 sales tax changes report: midyear update
Your guide to navigating the complicated world of tax compliance and preparing for the future
Stay up to date
Sign up for our free newsletter and stay up to date with the latest tax news.