Taxing My Patience

The Issue: Our buyer in the Asheville office is ordering supplies that are exempt from sales tax because they are used to create a product sold for resale. In order not to pay tax we don’t owe, we need to provide the supplier with a North Carolina certificate of exemption for resale.

Small Business Resolution: The invoice comes into the payables clerk, who matches it to the packing slip and purchase order, identifies it as an inventory purchase and enters the invoice in the accounting system to be paid without the sales tax. When she cuts the check, she encloses a copy of the certificate. The supplier reverses the sales tax charge and marks our account or the particular items as exempt for future orders.

The Corporate Resolution: The invoice comes to the payables clerk in Mexico, who matches it using the three way system described above. She doesn’t pay the sales tax, but she doesn’t provide an exempt certificate. The supplier gets a short check and calls the buyer to resolve the situation. The buyer doesn’t have an exemption certificate, so she asks the Accounting Manager (yours truly) for a copy of it. Except I don’t have it either, because I don’t really run the department. I only do the month and year end closing and reconcile balance sheet accounts. So I ask the senior accountants in Chicago (who I’ve worked with on sales tax issues before) for the certificate or who else to ask. They respond that they don’t have it either, and forward my request to the payables clerk. She responds that she doesn’t have it, that it is the buyer’s responsibility to provide it to the supplier.

I point out the futility of this exercise, but by this time, we’re in the midst of the month-end closing, so we’re all too busy meeting deadlines to fix it.

By this time, my manager the controller gets involved. He asks me for the information I have about the issue, and I forward the emails to a coworker in our Arizona office so she can put everything together for him. He schedules a conference call. The tax department is involved and aware of the issue now, but they refuse to provide the certificate until my manager identifies the items that we’re purchasing. My manager forwards this request to me, but again, I don’t have that information. So, I request it from the buyer who asked me for the certificate.

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I don’t know how this little fairy tale ends yet. I only know that since we got swallowed by the Borg, it now takes at least seven people, a dozen emails, one conference call and three months to send a sales tax exemption certificate.

Maybe that’s why they offer such stellar mental health coverage…

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