Every month, our client receives a routine funds request related to sales and use tax filings. Like many businesses, these requests are part of the normal rhythm of staying compliant. Numbers to approve, payments to process, and little reason to question the details behind them.
But even routine processes can hide costly errors.
The Challenge
In a recent monthly cycle, the client received a funds request from the compliance entity for Tennessee Sales and Use Tax totaling $17,850.
At first glance, nothing seemed out of the ordinary. However, as part of Protea’s standard process, we performed a reasonability check. A simple but critical step to ensure that the requested amount aligned with expectations based on historical trends and underlying data.
Something didn’t add up.
What We Found
Digging deeper, we traced the issue back to how the underlying data was being interpreted from DTC reports.
C7 provides two types of order reports:
- One that shows accurate totals per order, but without SKU-level detail
- Another that shows individual SKU details
The compliance entity had used the SKU-level report to calculate sales tax.
On the surface, this might seem reasonable, but this report duplicates key order-level figures like subtotal and shipping totals across every SKU line.
This meant that:
- Order totals were being counted multiple times
- Shipping amounts were significantly overstated
- And ultimately, the taxable base was inflated
For example, one order appeared to have a subtotal and shipping total exceeding $1,900, when in reality the correct order total was only $431—duplicated across multiple lines.
This pattern repeated across the dataset.
What We Did
We worked closely with the internal team to:
- Identify the source of the discrepancy in the reporting structure
- Reconcile the correct totals using the appropriate order-level data
- Separately calculate accurate shipping and tax figures
- Provide a clear breakdown of the issue along with supporting documentation
By isolating the correct methodology, we were able to rebuild the tax calculation on a reliable foundation.
The Outcome
Once corrected, the Tennessee Sales and Use Tax liability was recalculated to $9,984 – down from the original $17,850 request.
That’s a reduction of $7,866.
Beyond the immediate savings, the client gained:
- Confidence that filings are accurate
- Clarity into how tax calculations are derived
- Protection against ongoing overpayments
Why This Matters
Errors like this don’t always come from complex mistakes, they often stem from how data is interpreted.
Without a careful review, duplicated values and reporting nuances can quietly inflate costs month after month.
At Protea, our role goes beyond processing numbers. We interrogate the data, challenge assumptions, and ensure that what our clients pay is exactly what they owe—nothing more.
Because in accounting, accuracy isn’t just about compliance—it’s about protecting the bottom line.
