Your sales tax obligations depend on knowledge and that knowledge often resides in a professional tax specialist (usually an accountant) who helps your company meet its sales tax obligations.
This is a complicated time for sales tax obligations – and a difficult time to hire a sales tax accountant to manage it. Accounting is beset by a triple threat: a looming wave of retirement, a lingering great resignation of younger professionals and a talent pipeline of new graduates that’s slowing to a trickle.
Where does that leave you as you try to navigate your divergent sales tax obligations in the thousands of jurisdictions nationwide?
Scary numbers
Numbers, ironically, best illustrate the current accounting problem.
More than three out of every five respondents (62.24%) in the most recent Taxconnex annual sales tax survey struggle to find and retain in-house accountants to handle their sales tax obligations.
For respondents, the staffing struggle also meant curtailing business growth (19.23%), more errors in sales tax calculation (17.58%), more frustration from existing staff (21.43%) and, perhaps scariest, a growing lack of confidence in being prepared for an audit (22.53%).
More generally, accounting talent pool concerns are pressing even for accounting firms, as enrollment rates of accounting students continue to fall. The accounting education pipeline is drier than ever even as accounting degrees require many additional course hours.
“There were about 1.65 million accountants and auditors in the U.S. in 2022, up 1.3% from the previous year but down 2.6% from 2020 and down 15.9% from 2019,” reads a recent Wall Street Journal article on accounting’s latest great resignation. “More than 300,000 accountants quit their jobs between 2019 and 2021, data show.”
Why does accounting, which has trumpeted itself as a creative field of trusted business advisors and one that defies stereotypes of monotonous work and limited career paths, even have a talent problem?
“Accountants have long been viewed by people in the profession as underpaid and undervalued compared with positions in tech and banking. Now the foot soldiers of the profession are leaving the field in droves,” reads the WSJ. “Accountants cite low salaries, mundane tasks, burnout and the threat of new technology like generative AI as reasons for considering other industries.”
How to fill the need?
You have two initial ways to address your need for sales tax expertise: acquire in-house or outsourced accountant services.
With outsourced accountant services, you risk that a professional versed in the tax code of the U.S. and your state (generally required to file tax returns and provide tax planning and business advice) is also up to speed on the myriad of ever-changing states’ sales tax regulations. The odds might be long that your accountant who serves you well in non-sales tax compliance will also have the knowledge necessary to serve your needs of nationwide sales tax obligations.
An in-house accountant is the other initial solution – and, yes, such a position often is part of the career trajectory of accountants weary of working at a public accounting firm. But aside from having to provide salary, benefits and other requirements of an in-house employee, you’re also faced with the talent dearth discussed before and, again, that most accountants versed in tax prep and planning don’t know the sprawling field of states’ sales taxes.
If you or your non-accounting staff have to pick up the slack to cover your sales tax obligations, ask some frank questions: How many of your staffers will it take to handle your current and future sales tax obligations? What resources will they need to handle this new responsibility? What will be their reaction to the new workload?
There’s another consideration for choosing an in-house accountant: The legal liability is all yours if you miss a compliance matter.
You can outsource sales tax functions to a variety of software companies and other specialty firms, but again, ask questions:
- What’s the vendor’s focus? Do they specialize in tax compliance at the state and local levels?
- What’s their customer service? Are they based domestically or offshore? How many professionals will they dedicate to you?
- Are they experienced with auditors?
Don’t let sales tax compliance overwhelm you. Rely on sales tax experts to maintain your compliance. Contact TaxConnex to learn what it means when sales tax is all on us.