Maintaining a Custom SAP Integration for Fuel Excise Tax
- Sales and Use Tax
- June 6, 2016 | Gary Davis
It took a long time to implement , but you did it. The custom build is done. Your SAP solution is at last ready to handle the complexities of fuel excise tax.
This is when the real work begins.
With the ever-changing nature of the The excise tax landscape , not to mention the increased focus of is ever-changing and governments are increasing their focus on collections and compliance, so that means any custom solution within the SAP platform is destined to will require frequent updates (monthly or even weekly!) with input from multiple parties and on a monthly or even weekly basis . In these scenarios Typically , the tax team typically becomes is responsible for monitoring new rates and requirements, which they pass are then passed on so to the IT can code team for coding and test testing updates to critical pricing modules.
While this arrangement may Change can be manageable for small companies doing business in just a handful of states or in industries where changes to tax law updates are periodic , it can cause major headaches . But for rapidly growing fuel suppliers and distributors , change can present big challenges .
Whether you've recently executed completed a custom excise tax build or are preparing about to launch one, it's time to prepare get ready for the three key complexities and costs challenges that come after implementation . :
1. Ongoing Research
When building a custom excise tax solution for SAP, many companies either overlook or misjudge how much time will be is needed for future critical updates. Fuel excise taxes change so frequently—we've seen rates updated as often as weekly in some states —that , so system maintenance virtually quickly becomes a full-time job. If your company does business in numerous tax jurisdictions, ensuring these new regulations and rate changes are reflected in the system can quickly turn into a costly and time-consuming process.
This is one element challenge you can't afford to cannot overlook. If you recall Remember what happened to Spirit Airlines and its fuel supplier in 2014? It's easy to see how just Just ONE missed excise tax change can result in major audit liabilities. Compounded over months or years, even a small rate change that's not reflected in your SAP can lead to hefty fines, back taxes and interest payments under audit. (Note: Spirit was not at fault here. They simply paid bad invoices from their fuel supplier for several years. When their fuel supplier (unnamed) was audited, the error was discovered.)
2. Regular Updates
It's not uncommon for jurisdictions to make excise tax changes with very little notice . This not only , which makes them easy to miss, but can also cause a ripple effect on hard to manage when they affect IT development and operations schedules. Because most custom excise solutions involve tax logic embedded as custom code, the teams responsible for these rate tables will need to be prepared to make updates to the code at a moment's notice. Any other projects they're handling—and the people waiting on them—will need to be put on hold if you don't want , in order to avoid the risk of increased audit liabilities.
This is especially true if you do business in a state where rates and requirements are known to change frequently. Any news that a governing body municipality is considering opportunities to raise revenue through excise taxes should put your IT specialists on alert that they may be called upon at any time to drop everything and make changes .
3. Customer Inquiries
How many times has your support team fielded calls from concerned customers questioning the tax rates applied to invoices? And how many hours are spent rerouting those calls in an effort to track down the right explanations and avoid short pays?
Custom solutions can make these time-consuming inquiries even more complicated. As invoices Invoices are filled with unintuitive excise tax charges, so your customer service team will need to be equipped with detailed documentation so they can to respond quickly and accurately to questions and disputes. Otherwise, customers may withhold payments.
Unfortunately, this detailed documentation isn't always easy to accomplish available with a custom build. Developers are focused on building, not documenting, and the resulting " black box " of complex code can leave many users mystified. One simple customer question can lead to a full-blown IT and tax research project , as users attempt to untangle and explain tax charges.
There is a better way.
For an organization to To remain both profitable and compliant, its your SAP excise tax solution will require constant attention. Still not sure unsure if your company stands to may be impacted by unplanned costs or limited resources? See how quickly you can answer the following:
• Who will be is responsible for tracking tax rule changes?
• Will updates to custom code take precedence priority over other IT projects?
• What process will be followed when When your company enters a new taxing jurisdiction , what processes exist to account for this change ?
• How well is your customer service team able to handle billing disputes?
If your answers to these questions are yet to be determined, it may be time to rethink how excise taxes are identified and calculated in SAP. You can get more insight into these ongoing needs and associated costs, as well as an alternative solution, in our latest white paper.
Click here for more insights in the white paper: The Hidden Costs of Building or Maintaining an Excise Tax Calculation Solution for SAP.