Sales and use tax are two of the most complex concepts that accounts payable departments handle. While keeping track of the thousands of individual sales tax districts is already difficult when paying taxes on tangible property, the challenge is compounded when the tax is due on a service.

According to an article published recently in the Sales and Use Tax Monitor, many organizations struggle with proper sales tax reporting in their accounting systems, especially when it comes to services. The problem isn’t with the software’s ability to process sales taxes on services, but with employees not recording the data accurately.

For example, the tax manager for Johns Manville Corp in Denver has been working with his procurement team to get them to focus on coding services correctly on the front end, which makes back-end processing much easier. The goal is to have department supervisors across the organization reporting the types of services purchased, the jurisdiction, and whether sales tax was paid at the time of purchase.

Manville says that many of his organizations sales tax problems are the result of a recent ERP implementation. While the system is more than capable of handling sales tax, the issue has taken a back seat while the organization focuses on the actual technology rollout.

The full story, including wholesale distributor Costco’s struggles with sales taxes on services, can be found in the TAPN News.