Read Microsoft PowerPoint - SEATA Sales Tax Compl 0710.ppt text version

July 13, 2010

Wal-Mart Sales Tax Compliance

John Dalton Director Sales Tax Compliance

Saving people money so they can live better

Warren Townsend Senior Director Specialty Tax

Wal-Mart A Good Corporate Citizen

SEATA State

Alabama Arkansas Florida Georgia Kentucky Louisiana Mississippi

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Sales Tax Collections FYE 01/31/10

$579.2 million $ 375.7 million $ 765.4 million $ 506.7 million $ 246.0 million $ 495.4 million $ 285.8 million

Associates Employed in State

37,583 47,108 90,259 52,545 32,175 35,348 24,518

Wal-Mart A Good Corporate Citizen

SEATA State

North Carolina South Carolina Tennessee Virginia West Virginia Total

Sales Tax Collections FYE 01/31/10

$ 542.3 million $ 244.6 million $ 663.1 million $ 281.5 million $ 126.8 million $ 5.1 billion

Associates Employed in State

51,587 27,636 40,621 39,060 12,255 490,695

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Sales Tax Compliance

Today's presentation is dedicated to . . . .

Three types of people:

1. Those who make it happen! 2. Those who watch it happen! 3. Those who wonder ­ what happened?

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Sales Tax Compliance

Key Issues in Sales Tax Compliance

1. Tax Rates 2. Taxability of Items 3. Tax Free Holidays 4. Return Preparation

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Rates

Nationwide Business ­ 7,600 rates Specific Store/Club issues Rate Notifications ­ State, City, County changes CCH, state websites, occasionally post cards Annexation by a city Information follow-up Stores split by two counties i. e., North Carolina food tax Native American Reservations Tribe and State Wal-Mart.com Destination Sales

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What's so hard about a Rate?

January & July changes are usually more active Usually at least 400 stores affected 8,359 yearly rate changes Arkansas General rate (State, County, City) Food rate (portion of State, County, City) Prepared Food Rate (Little Rock 2%) Donuts, Deli items, Snack Bar Alcohol rate (beer/wine)

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Cash Register Tape

Walmart MANAGER ANGEL GUZMAN ( 479 ) 565 - 0274

Example of Arkansas

Receipt Codes: A = Tax 1 Only B = Tax 2 Only P = Tax 1 & 4 R = Tax 1 & 6 S = Tax 1 & 7 Sales Tax Rates: Tax 1 = General Merchandise Rate Tax 2 = Food Rate Tax 4 = Prepared Food Rate Tax 6 = Wine Rate Tax 7 = Beer Rate

7.500% 3.500% 2.000% 3.000% 1.000%

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How do we insure rates are changed at the store?

Automated

Maintenance sent from Bentonville Smart System holds rate maintenance for two weeks Notification of changes to a store Guidance for midnight upload Automatic upload reboot midnight time stamp Controller updates store

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Sales Tax Compliance

How do we ensure rates are changed at the store?

Store Personnel Looking for changes via email instructions from Bentonville If registers don't update Service Manager manually refreshes the registers

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How do we ensure rates are changed at the store?

Rate Change Reports run for every store in the state Manually review expected rates versus store controller Differences are resolved, manually updated from Bentonville, within 15 minutes Wal-Mart Tax associates are in our offices from Bentonville 10:45 CST (11:45 EST) until all rates are confirmed (potentially 2:30 a.m. for west coast stores)

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Tax Free Holidays

Back to School Hurricane Preparedness Energy Star Firearms Food Items

General Exempt Louisiana, Vermont Items exempt under set dollar threshold

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Sales Tax Compliance

Sales Tax Holiday Implementations

Track legislation year round Items ­ Notify merchants of items included in holiday Qualified items are segregated from General Merchandise Tax 1 category now becomes Tax10 category Rates ­ Store Smart System ­ at midnight, rate changes to zero End of Holiday ­ rate returns to Tax 10 category

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Sales Tax Compliance

Difficulties with Sales Tax Holidays

Indentify items that qualify Example: yellow highlighter may not be eligible for the school supply holiday Prepare for customer calls Change tax when we should Stores have been provided documentation from state websites which include: copies of the qualified items State Department of Revenue telephone numbers

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Taxability of Items

Items in a Supercenter ­ 500,000 SKU's Items in a Sam's Club ­ 50,000 SKU's New Items each day 2,500 Wal-Mart 500 Sam's Club New Items assigned for year ended 1/31/10 ­ 554,427 Tax Flag Staffing: 5 associates Request letter opinions on gray areas

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Sales Tax Compliance

Key is Uniform Definitions

AR, GA, KY, TN, NC ­ By Streamline definitions Colorado ­ state/city have exact statues, but define food differently Streamline Matrix Juices = Soft Drinks Candy / Food RX / OTC Clothing / Accessories

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Taxability Process

Descriptions from buyers / internet

Set up by categories / subcategories Basic Food / Juices > 50% Basic Food / Water Basic Food / Ice

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Taxability Process

System defaults to Taxable PO created to purchase item Buyer creates SKU number SKU number goes through computer system To Tax where item number is assigned From Tax Flag Setting to store receiving system Item arrives at stores taxed correctly

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Return Preparation

Returns 1,800 returns filed monthly Annually: last year over 23,000 returns were filed Staff Seven accountants trained in sales tax Difficulty is in preparation of the return Complexity of return by state Detailed information requested by state Gross Sales Tax by physical location We prefer electronic returns

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Return Preparation Daily Process

1. Tax is collected from the customers at the cash register 2. Sales report is generated in store's business office (reconciliation of cash & sales) 3. Sales/Tax information posted daily to the store's general ledger at home office

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Return Preparation Month-End Process

Generates the "Gross Sales Summary" by state, by store Divisional sales RX sales Membership sales Service sales

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Sales Tax Compliance

Return Preparation Month-End Process

Generates the "Sales Tax Report" by state, by store Gross sales Non-taxable sales Taxable sales Taxes collected

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Sales Tax Compliance

Example of Complexity

Some states require additional disclosure:

1. 2. 3. 4. 5, 6. 7. 8. 9. Total sales Resale sales Agricultural sales Gasoline sales Government sales Memberships Tax-Exempt Grocery sales Service & Installation Prescription Medicines Total Deductions Cost of TPP for use Total Taxable Amount

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$ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX $ XXX,XXX ($ XX,XXX) $ XXX,XXX $ XXX,XXX

Complexity of Returns

Difficulty in correctly reporting to state, city & county:

AR has 146 locals on return AL requires return by jurisdiction State returns County returns City returns ALATAX return KY, a state we like

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Complexity of Returns

Assorted return due dates:

20th day of the month 25th day of the month 31st day of the month

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Sales Tax Compliance

Return Payments

Electronic Funds Transfer (Preferred by Wal-Mart) ACH credit - transfer ACH debit ­ transfer Checks Money Orders Prepayments Complexity: North Dakota's May return is due in June Even years ­ due June 22nd Odd years ­ due June 30th

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Sales Tax Compliance

Information

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