Taxation
Taxation - and tax compliance - can be a confusing and time-intensive but necessary burden for any accounting/finance team, regardless of the size of the organization.
Often, the task of taxation is left to companies outside of the organization that are familiar with all of the tax rates associated with the countries, states or provinces, counties, and cities and towns.

Tax regulations vary greatly by jurisdiction, country, industry, and service type. Successful organizations often build revenues on more than one product or service offering and in more than one region/tax jurisdiction. Bundled products, each potentially with unique tax regulations, can be difficult for tax managers to account for in a subscription revenue model. Companies unable to apply taxes appropriately risk revenue leakage and regulatory scrutiny.
Savvy tax engines enable companies to calculate tax for customers and services, which can be presented clearly and accurately on a customer statement.
Such offerings can be packaged inside the billing engine or provided by a third party that utilizes API integration to pass customer and tax information quickly and securely from one system to another. Some companies use a mix of tax services and the basic tax calculations available in CPQ and Billing platforms. Ideally, tax calculation would be an integrated component in all transactions. To achieve the best taxation function, it is critical to collect requirements for tax at the beginning of a CPQ project.
Key Taxation Terminology
Nexus
The contact defined by a tax authority that is required between a seller and a state to trigger a requirement for the seller to register, and then collect and remit sales tax in the state.
Tax Code
Can also be known as a “goods and services type” is a code that determines the taxability of your products and services. For example, a tax code exists for “Restaurant industry – bar supplies” as well as “Advertising - public relations” and thousands upon thousands of other products and services.
Legal Entity
A company (or organization) with taxation responsibilities, such as tax filings, created under one of a variety of options for structuring corporations (Sole proprietorship, C Corp, etc.) Legal entities can be known by many different terms, for example, named differently in various vendors’ systems. An example of this could be ATG US vs. ATG Canada vs. ATG London.
Tangible Personal Property
Property that can be moved or touched, for example, inventory and business equipment. It is important to understand how the state defines TPP and IPP.
Intangible Personal Property
Non-physical/intangible inventory such as stocks, bonds, or intellectual property. It is important to understand how the state defines TPP and IPP.
Estimated Tax vs. Actual Tax
Estimated tax is typically calculated to appear on the Quote, while Actual tax during the time of sale and is presented on the Invoice.
Exemption Certificate
When a jurisdiction’s rules allow for a sale to be tax-exempt, this certificate validates the tax-exempt purchase to the seller.
Notice & Reporting Requirements
Require out-of-state sellers that are not currently collecting and remitting applicable taxes to report sales information for tax purposes to the state (through registration for a sales/use tax permit in that state) or to the consumer (each one... and to provide a list of your customers to the state).
Remittance
Sending the tax collected from the customer to the appropriate party with a local or federal tax authority.
Taxation Components

Rate Calculation
Determining the correct tax rate is a challenge, as taxability and rates can differ across a multitude of factors such as, tax nexus, which is determined by customer, vendor, distributor locations, and even server location (could be international or domestic), software versus services, including recurring/subscription selling models for tangible and intangible personal property, transactions taxable in separate locations based on the sourcing or method of delivery, and sales tax holidays or tax-exempt transactions.
Over time, there will be several factors that are likely to add additional complexity to calculating your business’ tax obligations. Rules and regulations are regularly subject to change and as the business expands, higher volumes will need to be accommodated with speed and scale.
Estimated tax can be calculated and provided during quoting or ordering, while actual tax will be available upon invoicing. This is just another effect of the frequency of changes in tax rates.
Tax engines will require data points such as product tax code and account shipping address (or other relevant tax calculation address), legal entity, etc. to correctly calculated tax obligations and amounts. Based on the system’s configuration options, these attributes can usually be used to create tax treatments and rules for standardization.
File & Remit
Companies are required to register to file and remit tax with a local or federal tax authority where they have nexus. The responsibility to file, and to determine where to file, lies with the business. Businesses must also plan for a variety of filing schedules based on jurisdiction or holidays, and different jurisdictions will have variations in their methods for filing.
Certificate Management
If certificates expire it may result in the business being liable for paying an uncollected tax as they would be unable to prove tax was not due on a particular sale. An organization must monitor the renewal periods of their exemption certificates and implement a process to mitigate this risk.
There are different types of exempt organizations, and under a state’s statutes, different purchasers may and may not be exempt. Common examples of exemptions are:
- The federal government (states are prohibited from taxing direct sales)
- State/local governments and government contractors
- Non-profits (including hospitals) and charitable organizations
- Schools, churches, PTAs
Tax Compliance
What triggers a tax nexus for your business? It is advisable to assess your business’ risk of owing taxes well in advance to manage compliance. Particularly for businesses utilizing recurring billing, there is a repeated source of sales tax risk associated.
ATG Cognizant recognizes the challenges customers face with managing complex tax structures. The rates and rules for sales tax, consumer use tax, and value-added taxes are dynamic and always updating, and so are the diverse products a company sells. Empower and expand global sales by maximizing profit with the most up-to-date and accurate tax calculations and collection.
"Many tax platforms offer streamlined integrations with multiple systems: CRM, Billing, Finance, E-Commerce, and more. The flexibility of custom rules-based logic allows customers to meet the unique tax needs of the business. An intuitive user interface that enables updates to rules, registrations and exemptions helps reduce maintenance costs. Transparency and accuracy are important not only for the taxes charged to customers, but also for remittance reporting to tax authorities. Precise and error-free reporting is critical for reconciling returns. With a tax package, reports and remittances can be automated, reducing compliance risks and saving time."

Mark Anderson
Principal Consultant
at ATG Cognizant
People, Process, and Technology of Taxation
People
Taxation is a domain primarily owned by the Finance organization, while three other company orgs directly touch taxation processes.
FINANCE
Finance - Billing
Operations
I.T.
Process
ATG maintains a set of over 100 key business processes to support the management of customers and revenue for enterprise clients. Twenty-three of these processes originate or are impacted by, the Taxation domain functions. Below is a list of those processes, grouped by the org primarily responsible for the stated process:
Tax Processing & Filing
Methods used to streamline complicated taxation rules and regulations, including the accurate filing of corporate income and sales tax information.
Actual Tax Calculation
The process of calculating the actual tax to charge the customer, at the time of invoice.
Exception Certificate Management
The methods of managing registration, storage, and renewal of all applicable exemption certificates, preventing the company from paying taxes where they aren’t owed.
Tax Determination
The method to define how tax will be applied and where for each entity.
Financial Statement Preparation
Production of accurate, auditable, and presentable financial statements in the most efficient manner possible.
Currency Conversion
The point within a multinational company's sales cycle where currency is converted. This conversion may occur at the transaction or during the commissioning process, and must be carefully monitored to ensure accurate conversion rate and payment amount, and to enable standardized reporting.
Update Tax Rates
Refers to updates to tax rates with regulation changes at local and federal levels.
Assign Nexus
The process of determining the contact required between a seller and a tax authority has occurred, assigning the appropriate jurisdiction or nexus for taxation regulation.
Tax Filing & Remittance
The methods used to track filing requirements, complete filings, and remit taxes to the appropriate tax authority as determined by nexus.
Jurisdiction Registration
The process of registering for the identified tax authority as determined by nexus.
Estimated Tax Calculation
The reference to the calculating of the estimated tax during the sales cycle, typically during quoting.
Sales Reporting
Collecting and analyzing data to inform on key sales and company performance metrics, including revenue and cost analyses, individual and team performance, employee churn, and sales to business model alignment.
Bill Day Usage Processing
The process of invoicing usage that has been accumulating since the previous statement/invoice period. Bill day usage processing includes calculation of charges, potential overage, decrementing credit balances, and managing rollover and pooled usage constructs.
Bill Run Operations
Tasks and functions associated with initiating and maintaining the billing process, including bill cycle management, usage file management, payment batches, credit card rejects, etc.
SOX/Regulatory Compliance
The ability to provide proof of internal controls to prevent fraud and material misstatements.
Order Management - Orchestration
The business processes related to customer orders for products or services. Typically important when there are complex products and services that span multiple provisioning and fulfillment options. Bundling of disparate products, or bundling of products and services (PS, Training, etc.) can add to the need for Order Management.
Cross-Training of Monetization Ecosystem Components
Process for training organizational resources
Data Stewardship Across Monetization Ecosystem
Process of assigning ownership and sources of truth for data within the organization.
Maintenance & Oversight of Monetization Ecosystem
Process around assuring that all touchpoints and connections in the ecosystem are optimized and working to their full potential.
Monitoring & Testing of Vendor Functional Releases
As ecosystem components release updates and patches, each is checked and tested to confirm all systems are working together as required by the business' requirements.
Security Oversight of Monetization Ecosystem
Process for maintaining and controlling access and permission to ecosystem components.
Vendor Management of the Monetization Ecosystem
Management of ecosystem component vendors including proactive communication of changes and general relationship nurturing.
Daily, Periodic, or Ad Hoc Reporting (ETL, Report, Dashboard)
Movement of data between domains to create a single source of truth for reporting and dashboarding. Includes key metrics such as revenue analytics and other KPIs
Technology
The solutions found in the Taxation domain consist of internal, OOTB, or custom tax engines (such as in Salesforce Billing), and third-party tax engines with integrations. Prebuilt integration to these tax services with your quoting and billing systems is a critical consideration. Custom integrations are costly and negatively impact timelines and risk. Prebuilt integrations also bring benefits like access to a supported database of millions of tax rates and rules.
Taxation Vendors

ESSENTIALS
Founded: 2004
HQ: Seattle, WA
Company Type: Public
Website: www.avalara.com
Delivery Method: Cloud
OVERVIEW
Avalara lives and breathes tax compliance, so its customers don’t have to. Avalara is building a cloud-based tax compliance solution to handle every transaction in the world. Avalara’s customers experience demanding tax obligations that are imposed by state, local, and other tax authorities around the world, they use Avalara for efficient and more accurate solutions to manage those requirements.
PRODUCT & SERVICES:
- Sales Tax Automation
- Sales Tax Compliance
- Tax Return Filing Services
- Exemption Certification Management
- Ecommerce Integrations
- Tax Insights
TARGET MARKET
Avalara’s target market are companies of all sizes that face tax challenges such as company growth, tax complexity, compliance risk, process inefficiency, employee burnout, and much more.
CUSTOMERS
- Zillow
- Roku
- Converse
- Thule
- ThinQ

ESSENTIALS
Founded: 1987
HQ: Alphen aan den Rijn, Netherlands
Company Type: Public
Website: www.wolterskluwer.com
Delivery Method: Cloud and On-Premise
OVERVIEW
Wolters Kluwer is a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. Wolters Kluwer enables customers to make critical business decisions by providing expert solutions that combine extensive domain knowledge with specialized technology and services. They enable tax and accounting professionals and businesses of all sizes to drive productivity, navigate change, and deliver better outcomes.
PRODUCT & SERVICES:
- CorpSystem
- Accounting Publications
- Accounting Research Manager
- IntelliConnect
- Tax Solutions
- Audit Services
- TaxWise
TARGET MARKET
Wolters Kluwer target market includes a wide range of industries that include many fortune 500 companies.
CUSTOMERS
- Nissan
- United Airlines
- Walmart
- Novartis
- Dell

ESSENTIALS
Founded: 2013
HQ: Woburn, MA
Company Type: Privately Held
Website: www.taxjar.com
Delivery Method: Cloud
OVERVIEW
In June of 2021 TaxJar was acquired by Stripe, with the vision of uniting commerce and compliance to help grow the GDP of the internet. With over 20,000 companies that rely on TaxJar to stay tax compliant they are an industry leader. Founded on the basis of helping ecommerce merchants spend less time on sales tax and more time on growing the business.
PRODUCT & SERVICES:
- Sales Tax Complicance
- Tax Filing Remittance
- Tax Calculation
- Ecommerce
- Accounting
- API
- Nexus Insights
TARGET MARKET
TaxJar's target market extends through small businesses to mid-size and large enterprises, with a focus on those who take part in Ecommerce.
CUSTOMERS
- Land Rover
- Shein
- Curology
- Quip
- Mailchimp
- Eventbrite

ESSENTIALS
Founded: 1978
HQ: Kind of Prussia, PA
Company Type: Public
Website: www.vertexinc.com/
Delivery Method: Cloud
OVERVIEW
Vertex – with more than 40 years of experience they are pioneers in tax automation. They provide customers worldwide with distinction and provide comprehensive solutions that enable global businesses to transact, comply, and grow their business with confidence. Vertex integrates with key technology partners that span ERP, CRM, procurement, billing, POS and e-commerce platforms.
PRODUCT & SERVICES:
- Sales Tax Automation
- Sales Tax Compliance
- VAT
- Managed Services
- Implementation
- Corporate Tax
TARGET MARKET
Vertex's target market is mid-size to large enterprises in a wide range of industries with complex tax needs.
CUSTOMERS
- Patagonia
- Walmart
- Lego
- Toyota
- Starbucks
- Bright Computing

ESSENTIALS
Founded: 2008
HQ: Toronto, ON
Company Type: Public
Website: www.thomsonreuters.com
Delivery Method: Cloud
OVERVIEW
Thomson Reuters streamlines accounting, tax filing and reporting process to mitigate the risks of audits and penalties with the industry's most powerful portfolio of tax and accounting software for corporations. Thomson Reuters ONESOURCE tax software helps you stay up to date with corporate tax and trade compliance amid regularly changing state, federal and international tax laws and regulations. Boost collaboration with departments and partners and ensure seamless corporate tax and trade compliance, no matter where your company does business.
PRODUCT & SERVICES:
Thomson Reuters OneSource for Tax:
- Corporate and Indirect Tax
- Statutory Reporting
- Tax Provisioning
- Workflow Manager
- Integrations
TARGET MARKET
Thomson Reuters primarily targets legal firms, accounting firms, corporations, and governments.
CUSTOMERS
- Endeavor
- Target Corporation
- Levi Strauss
- Amazon
- Netflix
- The Hershey Company

ESSENTIALS
Founded: 1979
HQ: Wilmington, MA
Company Type: Private
Website: www.sovos.com
Delivery Method: Cloud
OVERVIEW
SOVOS provides complete, continuous, and connected solutions. SOVOS provides solutions for tax determination, continuous transaction control compliance, and tax regulatory reporting.
PRODUCT & SERVICES:
- Value-Added Tax
- Sales and Use Tax
- Tax and Regulatory Reporting
- Shipping Compliance
- Integrations
TARGET MARKET
SOVOS targets organizations primarily in the Retail, manufacturing, Financial Services, Digital Services, Insurance, and New Economies Industries.
CUSTOMERS
- Microsoft
- The Home Depot
- Phillips