Some sales tax engines generate sales tax at the point of invoice with an error rate of 4% or even higher. How do we know? Our sales tax filing software verifies sales tax information at the point when sales tax managers need to prepare paperwork for sales tax agencies. We see some of the biggest sales tax names in the business making mistakes that could end up costing your business big if you’re not careful. Why Sales Tax Engines Make Mistakes Sales tax engines are programmed to spit out sales tax on invoices, whether the answer is completely clear or not. Sales tax calculations should never stop a sale, after all. It looks automatic, and customers usually think it’s a simple calculation — multiplying their total by 6.5%, for example. A sales tax engine actually goes through a series of very complex processes to determine the correct rate.
When a sales tax engine can’t figure out the precise number, it picks the rate it thinks is right or uses a set average rate—which is nearly always wrong. When a sales tax engine can’t figure it out, in other words, it guesses. Typically these mistakes occur because of the way the sales tax engine is designed or because the information provided isn’t complete enough. Many of the most common ways sales tax engines get confused have to do with address information. Instead of stopping the sale and forcing customers and salespeople to enter the correct information, the sales tax engine accepts the errors and moves on.
Our sales tax filing software isn’t in a hurry to complete a sale and won’t let you file without fixing errors. It checks every transaction to make sure your sales tax is correct and never guesses to just get the return out the door. Instead, our software does what you would do if you had time—it double-checks every single thing. Would you trust sales tax software that guesses or verifies? If you’d like to find out what errors your sales tax engine is missing, sign up for one of our free evaluations.