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Managing Sales and Use Tax Compliance for a P-Card Program

Two Reports Related to P-Card Programs and Tax Compliance 


Sales and Use Tax Survey Results and
Recommendations for End-User Organizations

A collaborative U.S. research study conducted by
Application Design Resource, LLP and the
National Association of Purchasing Card Professionals

Introduction

To obtain a clearer view of how end-user organizations approach sales and use tax compliance, the NAPCP and Application Design Resource, LLP (ADR) jointly conducted a survey of the end-user community. The 42-question, online survey was open for responses between December 1, 2010, and January 31, 2011. Tax-exempt entities were not within the scope of the survey. Respondents were from organizations that: 1) are subject to sales tax within the U.S. and 2) currently manage a card program for which transactions are made in the U.S. The survey directed respondents to focus on non-travel expenses paid with a Commercial Card (e.g., P-Card, One Card, etc.).

Survey topics included:

  • organization annual expenditures and card program demographics
  • receipt requirements and retention practices
  • estimated prevalence of Level II data (tax amount) and the related accuracy
  • process for accruing use tax or, if no process is established, the stumbling blocks for doing so
  • data utilized for use tax accrual, frequency of accrual, accuracy and time spent to manage the process
  • whether card transactions are included within state audits
  • degree of difficulty in providing documentation requested by auditors
  • use tax assessments
  • impact of audit results on the card program
  • role of cardholders, the tax department and card program management team in tax management
  • external resources utilized (e.g., consultant, technology provider)
  • support from the card issuer

The complete report of survey results (30+ pages of content) highlights possibilities for improvement in end-user approaches to tax compliance. It also draws out some best practices. Providers, too, should take notice, as results indicate an opportunity to partner with end-user clients in this respect, which can lead to future program growth.

Availability of Survey Results

The complete report is complimentary to NAPCP members. It is also available for purchase by non-members (e.g., complimentary subscribers) from the online NAPCP store; as a bonus, the complete report of state tax authorities' survey results is included.

An executive summary of the end-user tax survey results is complimentary to NAPCP members and subscribers.

Related Webinar

A May 2011 webinar presentation that addresses the end-user survey results and provides guidance on tax audits is available for purchase.



State Tax Audits of P-Card Transactions

Survey Results from State Tax Authorities

Introduction

As a second, separate survey in December 2010, the NAPCP invited state tax authorities (excluding the five states that do not impose sales tax) plus the District of Columbia to participate in a survey related to their auditing practices. Specifically, the purpose of this survey was to obtain a clearer view of the sales tax requirements and audit process in each state to help end-user organizations:

  • develop an appropriate sales and use tax management process, including documentation and retention practices
  • better prepare for state sales tax audits

The survey was open for responses through February 18, 2011. It addressed elements such as:

  • how P-Card transactions are selected for review by state auditors
  • transaction documentation to support sales tax paid
  • retention of paper receipts and/or electronic/imaged versions
  • preparing for a tax audit

States that completed the survey include: California, Colorado, Florida, Missouri, Nebraska, New Jersey, New York, Ohio, Oklahoma, Rhode Island, South Dakota, Texas, Utah, Washington and Wisconsin.

Availability of Survey Results

The complete report, which reflects responses by state, is complimentary to NAPCP members and is part of the tax report package available for purchase by non-members from the online NAPCP store. In addition, an overview of the states' responses is provided within Appendix C of the complete report of end-user survey results.

 

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