Saving people money so they can live better. Wal-Mart Sales Tax Compliance. July 13, Warren Townsend Senior Director Specialty Tax

Transcription

1 July 13, 2010 Wal-Mart Sales Tax Compliance Saving people money so they can live better John Dalton Director Warren Townsend Senior Director Specialty Tax

2 Wal-Mart A Good Corporate Citizen SEATA State Alabama Arkansas Florida Georgia Kentucky Louisiana Mississippi Sales Tax Collections FYE 01/31/10 $579.2 million $ million $ million $ million $ million $ million $ million Associates Employed in State 37,583 47,108 90,259 52,545 32,175 35,348 24,518 2

3 Wal-Mart A Good Corporate Citizen SEATA State North Carolina South Carolina Tennessee Virginia West Virginia Total Sales Tax Collections FYE 01/31/10 $ million $ million $ million $ million $ million $ 5.1 billion Associates Employed in State 51,587 27,636 40,621 39,060 12, ,695 3

4 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? 4

5 Key Issues in 1. Tax Rates 2. Taxability of Items 3. Tax Free Holidays 4. Return Preparation 5

6 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 6

7 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) 7

8 Cash Register Tape Walmart MANAGER ANGEL GUZMAN ( 479 ) Example of Arkansas Receipt Codes: A = Tax 1 Only B = Tax 2 Only P = Tax 1 & 4 R = Tax 1 & 6 S = Tax 1 & % 3.500% 2.000% 3.000% 1.000% 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 8

9 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 9

10 How do we ensure rates are changed at the store? Store Personnel Looking for changes via instructions from Bentonville If registers don t update Service Manager manually refreshes the registers 10

11 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) 11

12 Tax Free Holidays Back to School Energy Star Hurricane Preparedness Firearms Food Items General Exempt Louisiana, Vermont Items exempt under set dollar threshold 12

13 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 13

14 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 14

15 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 15

16 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 16

17 Taxability Process Descriptions from buyers / internet Set up by categories / subcategories Basic Food / Juices > 50% Basic Food / Water Basic Food / Ice 17

18 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 18

19 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 19

20 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 20

21 Return Preparation Month-End Process Generates the Gross Sales Summary by state, by store Divisional sales RX sales Membership sales Service sales 21

22 Return Preparation Month-End Process Generates the Sales Tax Report by state, by store Gross sales Non-taxable sales Taxable sales Taxes collected 22

23 Example of Complexity Some states require additional disclosure: , Total sales Resale sales $ XXX,XXX Agricultural sales $ XXX,XXX Gasoline sales $ XXX,XXX Government sales $ XXX,XXX Memberships $ XXX,XXX Tax-Exempt Grocery sales $ XXX,XXX Service & Installation $ XXX,XXX Prescription Medicines $ XXX,XXX Total Deductions Cost of TPP for use Total Taxable Amount $ XXX,XXX ($ XX,XXX) $ XXX,XXX $ XXX,XXX 23

24 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 24

25 Complexity of Returns Assorted return due dates: 20 th day of the month 25 th day of the month 31 st day of the month 25

26 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 22 nd Odd years due June 30th 26

27 27