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Taxes are an inevitable part of doing business. But card-based payment technologies can assist with some of the administrative headaches.

E-business may be making companies more efficient and productive, but that hasn't relieved them of one of their more onerous chores: complying with numerous local, state and federal tax rules.

If anything, it raises new challenges. As companies buy online from more geographically dispersed vendors, the job of tracking state sales and use tax liabilities and IRS compliance is evolving. Even though Congress has imposed a moratorium on new Internet sales taxes, more than 7,000 state and local jurisdictions, some overlapping, already tax most retail purchases at various rates. The move from paper to electronic record keeping has other tax implications, most notably in how companies document deductions for travel, entertainment and office supplies.

Fortunately, technology is creating solutions to its own opportunities. Advanced corporate procurement systems, coupled with payment card solutions such as the MasterCard Corporate Purchasing [Card.sup.TM], can simplify the tracking of sales and use taxes. And card-based expense-reporting systems generate loads of data that can not only slash administrative costs and strengthen management controls, but also enhance tax record keeping.

Sales and Use Taxes: Untangling the Data

When companies buy supplies and equipment, they, like consumers, are taxed on the value of the purchases. Depending on the state and the nature of the transaction, vendors may add on the tax and remit it to the appropriate government agencies. When buying from out-of-state suppliers, purchasers may need to pay a use tax in lieu of a sales tax to the states and localities where the products or services are used. In any case, corporate buyers are obliged to pay tax at the time of the transaction -- and prove it if necessary. Failure to do so can result in stiff penalties.

Traditionally, authorities have accepted paper invoices as evidence that tax obligations have been met. But most e-purchases don't generate such documents. Sophisticated electronic procurement software from companies like Captura Software, Clarus Corp. and CommerceOne do a good job of estimating sales and use taxes, but they don't prove that they have been paid. However, corporate purchasing cards, which are often used in conjunction with such systems, can help.

# posted by Medical Information : 11:37 PM