Presenting a live 110 ‐ minute teleconference with interactive Q&A Exemption Certificate Management in Sales Tax Compliance Sharpening Your Company's Approach to Verifying, Storing and Retrieving Certificates THURSDAY, MAY 12, 2011 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Steve Peck, Northeast Regional Tax Manager, Georgia Pacific Corp. , Atlanta Steve Peck Northeast Regional Tax Manager Georgia-Pacific Corp. Atlanta Julian Chavez, Director, Transaction Tax, Ryan , San Francisco Silvia Aguirre, President, Tax Technology Services , Raleigh, N.C. Sandy Muszelik, Senior Tax Analyst, Linde North America , Murray Hill, N.J. Sandy Muszelik, Senior Tax Analyst, Linde North America , Murray Hill, N.J. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at1-800-926-7926 ext. 10 .
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Exemption Certificate Management in E ti C tifi t M t i Sales Tax Compliance Seminar May 12, 2011 Julian Chavez, Ryan Silvia Aguirre, Tax Technology Services julian.chavez@ ryanco.com saguirre@ ttsllc.com Steve Peck, Georgia-Pacific Corp. Sandy Muszelik, Linde North America smpeck@ gapac.com sandy.muszelik@ linde.com 5
Today’s Program Experiences With Certificate Management At Georgia Pacific Slide 7 – Slide 11 [S t eve Peck] Introduction To Key Concepts Slide 12 – Slide 21 [Julian Chavez] Procedures For Gathering, Validating Certificates On-Site Slide 22 – Slide 25 [Julian Chavez] Alternatives For Storing Certificates, Retrieving When Needed Slide 26 – Slide 37 [S ilvia Aguirre] Working With Technology Already In Place Slide 38 – Slide 42 [S ilvia Aguirre] Slide 43 – Slide 47 Experiences With Certificate Management At Linde Experiences With Certificate Management At Linde [S andy Muszelik] 6
Steve Peck, Georgia ‐ Pacific Corp. EXPERIENCES WITH CERTIFICATE MANAGEMENT AT GEORGIA PACIFIC AT GEORGIA ‐ PACIFIC 7
Georgia ‐ Pacific: Background G i P ifi B k d • Georgia-Pacific LLC formerly a Fortune 500 company. Approx. $25B sales, ~100,000 g y p y pp $ , , customers • Sells tissue, paper products, pulp, wastepaper, lumber and sheathing, chemicals, etc. • Approx. 200 domestic manufacturing facilities; significant presence world-wide • Purchased by Koch effective y/e 2005; privately held, family of 40-plus LLCs • Primarily selling wholesale for resale domestically, but with some retail customers • Abide by the normal rule: Selling TPP is taxable unless customer for ship-to [or pick- up] location can furnish a resale/mfg. exemption certificate Corporate Credit now centrally managing • Discovered more customers are taxable d bl • Centralization has aided compliance, including ease in obtaining for audits • More attention to specific state rules and requirements on certificates • 8
Georgia ‐ Pacific: EC Evolution G i P ifi EC E l i • Until recently, company had a decentralized environment. Each division y, p y managed its own, with plants across the country responsible for obtaining and holding each of their customers’ EC. • Not enough control points to reduce missing EC exposure to an g p g p acceptable level • Hard copy files/folders at various plants, even though sales is handled by corporate p • Adds/changes often overlooked, or state update requirements • Decision was made that satisfactory control could only be obtained through centralization at corporate [Atlanta HQ] through centralization at corporate [Atlanta HQ] Facilitated Tax Dept. to obtain ECs more readily for audit • Aligned with corporate strategy toward procurement centralization • Identified taxable customers for operations to bill tax d f d bl f b ll • Cross-customers (between entities) more readily noticed/handled • 9
G Georgia ‐ Pacific: EC Process i P ifi EC P Exemption certificate process Salespersons engage a new customer. Customer completes paperwork for credit application and ECs for all ship-to states. C Credit application and EC sent to Corporate Credit dit li ti d EC t t C t C dit Credit will pursue EC with business/salesperson, if credit application received • without any EC completed. Credit does a “sniff test” to make s re info is reasonable look for missing or incorrect Credit does a “sniff test” to make sure info is reasonable, look for missing or incorrect data. They then input into the credit management system (CMS). Credit will also periodically runs sales reports by systems, to look for new customers, customer ship-tos that may have been overlooked (perhaps new LE). p y (p p ) One billing system interfaces directly with CMS for customer billing of tax info. Credit is contacted to provide ECs for sales and use tax audit purposes. Credit also has excellent leads on whom to contact, how to obtain sales reports. , p 10
Georgia ‐ Pacific: EC Process (Cont.) G i P ifi EC P (C ) EC centralization benefits More/tighter controls with central/standard oversight At the ready for audit, with advance notice ready for auditor when that section of review commences i Cross-entity and state issues more readily recognized, tapping all the operations sales systems Visibility to taxability of customers and direction in billing compliance Billing of tax Visibility to taxability of customers and direction in billing compliance. Billing of tax was low priority before; more attention with Koch and “right under their nose” Proximity to resources involved with billing, since that is also centralized Participation/collaboration between Credit and Tax facilitated; sharing of knowledge p ; g g and resources [10 th – 7 th floor, same building] Key stakeholders also proximate 11
Julian Chavez, Ryan INTRODUCTION TO KEY INTRODUCTION TO KEY CONCEPTS 12
O Overview i Exemption certificate management starts with having a good understanding of each state’s documentation requirements for understanding of each state s documentation requirements for supporting an exempt transaction. There are various types of exemption certificates that cover an array of transactions. Understanding what types of transactions are covered by an Understanding what types of transactions are covered by an exemption certificate and the period of time the certificate is valid are fundamental to managing this process. These understandings are key to designing an exemption certificate d t di k t d i i ti tifi t management system that will work with your company’s culture and accounting systems. Let’s briefly review the basics. 13
C Common Types Of Certificates T Of C ifi • Resale certificates • Manufacturing • Manufacturing • Research & development • Pollution control/green construction • Agricultural • Not-for-profit (not all states exempt non-profit entities) 14
R Resale Certificate l C ifi In many states, a purchase of tangible personal property for resale is not subject to sales or use tax, provided the sale is properly documented. A resale certificate is a signed document that supports the exempt nature of a transaction and indicates that the purchaser intends to resell the goods. It is a criminal offense to give a resale certificate to the seller for taxable items that the purchaser knows, at the time of purchase, are purchased for its use rather than for resale, lease or rental. h d f it th th f l l t l Depending on the amount of tax evaded, the offense may range from a misdemeanor to a felony. 15
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