Exemption Certificate Management Solutions for Insurance, Financial & Professional Services

Although insurance, financial and professional services firms often deal with a diverse client base across multiple states, exemption certificate management is typically of little concern as the products and services they provide are generally statutorily exempt from sales tax. In addition, purchases by these organizations are almost universally subject to sales tax so the issuance of exemptions certificates is very rare.

That said, a growing issue in these industries is the appropriate taxation of digital assets such as software, particularly SaaS. Large companies operating in these industries tend to have a significant number of employees (i.e. users) in a number of locations but purchase and pay for the software in a single (or very few) location(s). Since the states look to tax these transactions based on the location of the user, this often results in the overpayment of sales tax in the purchasing state and underpayment in the states within which the employees are located.  That can be flipped on its head when the purchasing state does not tax SaaS (many do not), but a significant number of the users are located in states that do.