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ASCII Group tackles MSP sales tax issues with new service

ASCII Group President Jerry Koutavas showcased a new service to steer MSPs through complicated sales tax codes.

The ASCII Group Inc., a membership-based channel partner community, has introduced a new service to help managed service providers (MSPs) work out complex tax code issues specific to IT services. The service aims to help MSPs understand what instances they should charge sales tax related to their service offerings in all 50 states.

Jerry Koutavas, president of the ASCII Group, based in Bethesda, Md., said the organization decided to develop the MSP sales tax service to address the many questions raised by members on the organization's discussion boards. "Our members were talking about how difficult it was to get not only a straight answer from the states, but, more importantly, simply just going through the tax code if they were doing business outside of their home state," he said at the organization's MSP Workshops and Peer Networking event this week in Waltham, Mass.

MSPs in particular, Koutavas said, can have a difficult time getting answers to their questions from people on the state level. "The problem is that essentially … if you're a small business and you're calling a state up and saying, 'I sell managed services and provide a variety of services' … the average state employee is going to be a little befuddled on getting you the right answer, understanding the business and what have you."  

Koutavas said the MSP sales tax discussion among ASCII members "became very heated," leading the ASCII Group to search for a resource that would help.

The ASCII Group formed a committee of members that compiled a list of the questions, and then partnered with an authority on corporate sales tax to get the answers. While the ASCII Group doesn't want to disclose the name of the company they're working with, based on the contract it has, Koutavas said the company is "well-versed in the technology market."

A lot of [MSPs] are simply going, 'You know what? I'm just going to charge sales tax for everything.' And they're leaving money on the table.
Jerry Koutavaspresident, ASCII Group

"Based on the questions the committee posed initially when we asked the states for advisement, we took those questions and found a resource that is truly geared for the Fortune 100 audience. And they said they would make a library specifically for managed services providers for the ASCII community," he said.

The ASCII Group now has a system for pulling reports for all states, with a full audit trail to provide definitive answers to its members. Additionally, the organization will receive automatic updates when states change or reinterpret a sales tax law and relay these updates to members.

"We're taking that enterprise-level-strength research house, and summarizing and filtering [information] down for managed services providers specifically," he said. "It's definitely going to be a good asset for [MSPs] to leverage and not only keep their accountants honest, but to ensure that they should try to keep as much as their money as possible from a cash-flow perspective. A lot of [MSPs] are simply going, 'You know what? I'm just going to charge sales tax for everything.' And they're leaving money on the table," Koutavas said.

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