Challenges in Sales Tax Compliance: Managing Cash Flow and General Ledger

Sales Tax Liability Monitoring:
Sales tax collected should be recorded as an approved liability on the balance sheet and regularly reconciled to avoid holding unremitted funds that belong to tax jurisdictions.
General Ledger Reconciliation:
Compare billing system outputs with G/L accruals to ensure accuracy. Reconcile discrepancies and identify which liabilities are due to specific tax jurisdictions.
Ownership and Accountability:
Assign clear responsibility for sales tax compliance within your organization—typically to accounting or treasury—to ensure timely reconciliation and remittance.
Common Compliance Errors:
Issues include ACH debit blocks, untracked use tax on untaxed purchases, misrecorded tax rate changes, and improperly handled vendor discounts in the general ledger.