Global Consumer Product Manufacturer Recovers Overpaid Tax

An international CPG manufacturer identifies and recovers $300K in sales & use tax across four states with support by PMBA.

About the Company

The company is one of the world’s largest manufacturers of paper products. With a strong commitment to sustainable production practices, they proactively invest in solutions and technology to drive greater efficiency and quality across their facilities.

The European-headquartered company has subsidiaries in more than a dozen countries including the United States. And over the past decade, they acquired several manufacturers and built a multi-million dollar, energy-efficient manufacturing facility in the U.S.

Key Drivers and Objectives

The company had thorough policies in place for monitoring sales & use tax on purchases including self-assessing use tax on invoices without sales tax.

Due to the recent increase in purchase activity, internal stakeholders desired extra measures to detect and rectify possible over- and under-payments. As part of their corporate “best practices,” the company issued an RFP for an external party to review its policies and procedures.

After an exhaustive RFP process, the manufacturer selected PMBA, a trusted provider with in-depth industry experience, flexible billing models, a proprietary technology platform, and a commitment to correcting all identified errors.

Leveraging Technology Was Key to In-Depth Reverse Audit Success

PMBA’s recovery engineers worked closely with the company’s finance and operations teams over a period of 30 days to obtain the required data and perform an initial review. 

In the beginning, the team experienced challenges accessing the required invoices and a lack of appropriate coding of the documents to the data. Despite this, phase one of the review finished on time, largely due to PMBA’s technology solutions. Using robotic process automation (RPA), optical character recognition (OCR), and artificial intelligence, the recovery team reviewed over 2,000 documents, identified necessary data, and linked back to PMBA’s source data file.

Phase One Takeaways

Manufacturing industry sales tax recovery analytics

DIY Shortcomings

Most companies with an internal use tax process have a high likelihood of errors. Mainly due to the rapid change in state tax laws that companies find difficult to monitor. 

Most companies do not realize that the manufacturing exemption goes beyond equipment and can extend to other expenses related to the manufacturing process, such as utilities and transportation equipment.

Strategically Filing Refunds

Assessing the risk before filing a refund claim when undergoing an audit maximizes results.

The company was currently under audit in several states and expressed concern that the refund claim would have a negative impact. PMBA addressed this concern by assessing the risk and strategizing with the client on when to file the refund claim in each state. 

Final Results

All four claims resulted in a net refund of $275,000. PMBA was also able to apply part of the refund against open audit assessments and saved the company an additional $52,000 in interest. 

PMBA responded sensitively to the client’s desire to correct identified errors, and, with the finance team, established process improvements to:

  • Identify exempt vendors and issue the appropriate exemption certificates to prevent future sales tax charges
  • Correct the internal use tax matrix
  • Work with the construction group to ensure that future projects appropriately identified sales tax exemption opportunities

Why PMBA?

  • Save internal resources so you can focus on other priorities. PMBA’s demonstrated success and focused discipline in Sales & Use Tax leads to faster and more accurate results. 
  • Data that works for you. PMBA’s proprietary software and extensive database of over 100,000 vendors can quickly process more information, allowing clients to secure overpayments that other accounting or consulting firms have overlooked.
  • Maximum results. All transactions with sales & use tax are reviewed and every possible exemption is researched and applied.
  • Beyond recovery. Results show potential exposure zones and can be used for continuous process improvements and audit defense prior to future assessments.

See How PMBA Can Uncover Millions for Your Company

Schedule a free, 30-minute consultation with one of our recovery engineers.

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