Companies often experience frustration when implementing a tax engine with SAP, DMA has extensive experience with SAP and Taxware, ONESOURCE Indirect Tax, and Vertex. We have identified gaps between SAP and the tax engines and created aftermarket productivity tools. The utilities extend the reach of your tax system into additional areas of compliance, internal reporting, audit defense, file and data management, as well as the automation of a tax system implementation. These unique applications are licensed directly with you and are time-proven performers with a robust install base.
SAP GL Reconciliation Utility
Each month, tax system users find that SAP general ledger tax transactions do not reconcile to the sales tax system’s audit file for a variety of reasons (e.g., manual journal entries to the tax accounts, processing errors, software bugs in SAP and/or in the tax system). Manual balancing of the audit files to the general ledger can be a very time-consuming process. Therefore, many SAP users do not reconcile to the tax system audit file. This often results in non-compliance and/or not fully using the advantages of the tax system audit file (automated returns generation and advanced reporting) due to the differences with SAP’s general ledger. Implementing DMA’s SAP GL Reconciliation Utility will enhance process controls and increase tax compliance accuracy. It compares all postings to the SAP tax liability account with the corresponding entries in the tax system audit file. The comparison is done at a document level using document number and posting date to match postings between SAP and the tax system.
Address Validation & Tax Jurisdiction Code Assignment Utility
DMA’s Address Validation & Tax Jurisdiction Code Assignment Utility is a robust solution using point-in-polygon methodology and industry standard geospatial functions to assign an address (latitude and longitude) to the proper tax jurisdiction. It provides real-time and batch validation, CASS formatting of address data information, and automatic assignment of Taxware, ONESOURCE Indirect Tax, or Vertex tax jurisdiction codes for address data based on exact street address (latitude/longitude) rather than just city/state/zip or zip+4. The Address Validation & Tax Jurisdiction Code Assignment Utility:
- Avoids manual user intervention (pop-up windows) during tax jurisdiction code assignment when an address/zip code falls into multiple counties or municipal boundaries which can be especially helpful in batch (EDI, Internet) processing
- Prevents users from saving an invalid address
- Determines the proper tax jurisdiction code automatically
- Integrates with mapping software applications to add mapping capabilities for address visualization
- Determines tax jurisdiction for places not associated with a street address
- Reduces cost associated with returned or undeliverable mail due to incorrect addresses
- Increases tax compliance and eliminates the need for tax adjustment postings due to the assignment of incorrect tax jurisdiction codes
- Integrates third party address validation software with your external tax calculation software (Taxware, OneSource Indirect Tax, and Vertex) seamlessly with SAP
- Assigns a Taxware, OneSource Indirect Tax, or Vertex tax jurisdiction code to each address automatically
SAP Tax Debit/Credit Utility
When an invoice or credit memo with incorrect tax is issued to a customer, it is necessary to post a tax only debit/credit adjustment to the customer account without affecting the original sales transaction. Incorrect sales/use tax calculations commonly result from the following:
- Tax-exempt customers present tax exemption certificates after sales orders/invoices are entered into SAP. Until the certificate is entered into the tax system, tax is calculated on all sales transactions for this customer.
- The customer master record in SAP contains an incorrect tax jurisdiction code due to the fact that the zip code falls into multiple tax jurisdictions.
- A customer orders a product that is usually consumed. A tax exemption request is made for an order due to using the product for a tax-exempt purpose such as manufacturing.
- SAP materials are assigned to the wrong product code, and the error is detected after the product has already been used in sales documents.
- Tax rate changes were not applied in a timely manner to a tax system.
- A customer returns a product to a location different than the original ship-from location.
DMA’s SAP Tax Debit/Credit Utility simplifies the posting of tax adjustments in SAP and the proper reporting of these postings in audit files/registers for Taxware, ONESOURCE Indirect Tax, or Vertex. It also handles tax adjustments to general ledger and customer accounts. The SAP Tax Debit/Credit Utility:
- Requires minimal user input fields including: posting date, reference billing document and tax debit/credit amount; and automatically determines all other relevant information such as jurisdiction codes, tax rates, tax base amounts, revenue accounts, posting keys, document types, etc.
- Generates the required and accepted accounting document via SAP ‘Call Transaction’ technology automatically
- Allows customer service users to make tax adjustment postings since no authorization for the SAP FI module is required, or it can be configured to ‘park’ tax adjustment postings so they can be reviewed by the accounting and/or tax department
- Provides a simple user interface, making it almost self-explanatory and eliminating the need for extensive user training
- Allows customer tax credits to be posted after a tax exemption certificate has been entered into the tax system
- Works for all SAP releases of 4.6C or later
AP Tax Validation Utility
Tax departments typically review accounts payable (AP) transactions periodically to validate whether the correct tax amounts have been paid to vendors or accrued and paid to taxing agencies. These reviews can be very time consuming since they are either based on:
- Paper copies of vendor documents, or
- Multiple SAP documents (purchase order, goods receipt, invoice document) that must be pulled together to retrieve all of the information that might influence the tax decision (expense account, cost center, order, WBS element, shipping location, material description, material group, etc.).
DMA’s SAP AP Tax Validation Utility allows users to efficiently identify significant tax overpayments/underpayments or accruals on AP transactions. The data analysis tool identifies errors caused by the incorrect use of tax codes and the incorrect assignment of account or jurisdiction codes. This utility streamlines the review process, helps identify the root cause of errors, enhances internal controls, and aids in reducing tax inaccuracy gaps. The utility is beneficial in pre-empting tax inaccuracies and is a strategic tool for expediting and minimizing sales/use tax audits.
Specifically, the SAP AP Tax Validation Utility is a custom SAP program that analyzes procurement activity for a given time period. The utility creates a report that includes all relevant tax information for each procurement item. The report retrieves this information and compiles it into an ‘ALV’ grid display allowing the reviewer to quickly ‘zoom’ into potential problem areas (e.g. documents posted to a certain account or cost center; documents posted by a certain user; documents above a certain dollar threshold). The report also allows for drill-down into the related SAP documents and associated master records for each line item on the report.
SAP Goods Movement Use Tax Accrual Utility
DMA’s SAP Goods Movement Use Tax Accrual Utility helps simplify and automate non-standard, complex transactions subject to consumer’s use tax accrual. Typical activities subject to consumer’s use tax include:
- Material movements (i.e. goods issued to cost center)
- Relocation of large assets (accrual for jurisdictional tax difference)
- Free-of-charge sales orders (promotional material)
- Material consumed to fulfill all-inclusive service contracts
The “standard” SAP system does not provide a mechanism to automatically calculate and post consumer’s use tax for certain complex business activities like those listed above. DMA’s utility is a batch process that analyzes SAP material documents, sales orders, service orders, and asset masters. For each identified activity, the following steps are performed:
- Determine relevancy for tax accrual
- Identify value of goods (raw material cost, purchase price, or standard cost)
- Identify place of consumption
- Identify accrual jurisdiction
- Calculate consumer’s use tax accrual amount
- Generate consumer’s use tax accrual posting in the G/L and Tax Audit file. The tax accrual posting will reference original consumption documents (e.g. material document, sales order, etc.)
The utility can be executed in ‘proof’ mode which allows a tax manager to review the proposed accrual postings prior to them actually taking place. This utility helps reduce tax inaccuracy gaps and minimizes subsequent audit costs (staff time and potential assessments).