Sales tax verification for invoices with multi-destination shipments

Find out interesting insights with Shaun Walker, SOX Compliance Manager, Norfolk Southern

Moderated by Sherry, Financial Technology Consultant at Hyperbots

Don’t want to watch a video? Read the interview transcript below.

Sherry: Hello, and welcome to all our viewers on CFO Insights. I am Sherry, a financial technology consultant at Hyperbots, and I’m very excited to have Shaun Walker here with me, who is a seasoned internal audit leader with a wealth of experience in driving risk management, compliance, and governance initiatives across diverse industries. Thank you so much for joining us today, Shaun.

Sherry: Today we’ll be talking about handling sales tax verification for invoices with multi-destination shipments. To get us started with the interview, how do Hyperbots handle invoices with line items shipped to different destinations?

Shaun Walker: It’s an AI tool that treats each line independently. It identifies and extracts its unique destination address from the invoice with the shipping details, and this allows it to apply specific tax rates based on where each item is shipped. For example, if office furniture is shipped to New York and IT hardware shipped to California, Hyperbots will process each one separately and ensure that the correct tax rate is applied based on the destination.

Sherry: What role does state and local tax information play in Hyperbots’ tax verification process for multi-destination shipments?

Shaun Walker: State and local taxes vary widely. Hyperbots pulls data from data dictionaries for each destination and references both state and local tax rules. For instance, if New York has an 8.875% combined state and city tax rate for certain goods, and California has a 7.25% state rate, Hyperbots applies these distinct rates accurately for items shipped to those locations, ensuring compliance with each jurisdiction’s tax laws.

Sherry: To dive deeper into the topic, can you explain how Hyperbots manages the categorization of each line item for tax purposes when items are shipped to multiple states?

Shaun Walker: It categorizes each line item based on its product type and applies relevant tax rules to each destination. For instance, a software license delivered digitally to Texas might be exempt, whereas computer hardware shipped to California would be taxable. Hyperbots reference these tax distinctions and apply the correct tax treatment.

Sherry: How does Hyperbots address tax thresholds in different states for multi-destination shipments?

Shaun Walker: Some states impose tax collection only after certain purchase thresholds are met. Hyperbots track cumulative purchases to each state and apply tax once the threshold is reached. For example, if California requires tax only after $500 in cumulative purchases, Hyperbots will monitor the total spend per California and begin applying tax once the threshold is met.

Sherry: How does Hyperbots verify and correct any tax discrepancies for invoices with multiple shipping destinations?

Shaun Walker: Hyperbots verifies each line item’s tax application independently and flags discrepancies if the tax code doesn’t match the destination’s requirements. For instance, if a vendor applied a flat tax rate across all items shipped to different states, Hyperbots would detect this and recommend the correct rate for each location. This real-time validation minimizes errors.

Sherry: Could you summarize the main benefits of using Hyperbots for tax compliance on multi-destination shipments?

Shaun Walker: Hyperbots offers end-to-end automation. It ensures compliance with state and local tax laws for each destination without any manual intervention. It accurately categorizes and applies tax rates for each item, reducing the risk of error, saving time, and preventing compliance issues. For example, if an invoice has items shipped to three different states with unique tax rules, Hyperbots handles these seamlessly, delivering accuracy across all jurisdictions.

Sherry: Thank you so much for that insightful conversation, Sean. It’s clear that Hyperbots is quite the tool for robust handling of sales tax verification for invoices with multi-destination shipments.

Shaun Walker: Absolutely.