Client
Headquartered in the US, our client is an international manufacturer and supplier of chemicals and materials. The company has over 15,000 employees and operations throughout North America, Europe, and Asia.
CHALLENGE
Our client encountered significant tax compliance issues due to incorrect material group mappings in its Vertex tax automation system. This problem led to unnecessary tax payments on items that should have been exempt, particularly within West Virginia, where the manufacturing exemption is broad. The issue also extended to other jurisdictions where the client operates, causing widespread compliance challenges and overpayments.
SOLUTION
DMA performed a comprehensive overpayment review for the client, identifying and addressing the incorrect tax application on various material groups that had either not been mapped correctly or had been newly added without proper mapping. The review covered multiple jurisdictions, including West Virginia, Texas, Mississippi, and others.
Our team initiated corrective actions by filing numerous claims for tax refunds across these states, which involved addressing historical tax periods and implementing solutions to prevent future errors. We established an ongoing agreement to provide continuous support and updates for the client’s tax technology setup, ensuring accurate mapping of material groups across all affected jurisdictions.
RESULT
Our intervention led to a notable recovery of $1.8 million in tax refunds for one year in West Virginia, with similar recovery efforts underway for subsequent years. The claims filed achieved an impressive approval rate of 98%. Additionally, our work in other jurisdictions has yielded significant results, with substantial tax savings identified and recovery efforts planned for Texas, Mississippi, and potentially more locations.
The continuous support and improvements to our client’s tax technology framework have rectified past overpayments and optimized their tax compliance processes across all affected states. This proactive approach has enhanced the client’s operational efficiency and provided substantial financial benefits.
WHY DMA
Many companies face challenges with tax compliance due to incorrect or incomplete material group mappings in their tax automation systems. These issues are not unique to any single organization but are common across industries, impacting a company’s financial accuracy and operational efficiency. DMA regularly addresses such problems for a diverse range of clients, helping them recover significant amounts of overpaid tax and optimize their tax processes.
The successful resolution of these issues has a broad and positive impact on tax compliance and financial health for every one of our clients. By addressing mapping errors and implementing robust solutions, we have helped prevent future tax issues and streamlined tax processes across multiple jurisdictions. This comprehensive approach demonstrates DMA’s expertise and commitment to delivering valuable results and long-term benefits for our clients.
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