Case Study: Pharmaceutical company Meeting broad sales and use tax needs through outsourcing Background Goals A multinational pharmaceutical company was The company sought to keep current on its in a period of rapid growth, mostly through sales and use tax compliance issues, relieve acquisition. The strategic need to identify and demand on its already overburdened accounting close deals quickly to meet its growth goals left staff to allow them to focus on supporting its little time for detailed due diligence on sales and growth goals, and capitalize on opportunities to use taxes. What’s more, many of the companies automate its sales and use tax function. being acquired were actually larger than the acquiring company and had considerable multi- Our role state operations. All of this created significant The company chose to outsource its sales and use post-transaction requirements, as company tax operations to McGladrey.

We assisted with: staff had to identify and address any potential prior-period sales and use tax exposure and ongoing compliance issues and work to integrate the acquired entities into the company’s overall • Managing sales and use tax compliance in all required jurisdictions • Providing sales and use tax integration sales and use tax process. This included an support, including evaluation, quantification evaluation of data sets; integration and retention and resolution of prior-period exposure, of legacy data; and dealing with the results of integration analysis, and day-to-day organizational restructuring, which often led to the closure of sales tax accounts among other compliance matters • Optimizing sales and use tax technology compliance requirements. Further complicating solutions to improve the efficiency matters, the taxability of the company’s products and effectiveness of its sales and use varied state by state based on specific products and customers.

With each acquisition, adding new product categories and customers made accurate categorization increasingly difficult. The result? The company found itself falling behind on filings and receiving a steady stream of notices tax operations • Managing all sales and use tax audits and notices • Addressing sales and use tax issues that arise in the normal course of business from taxing jurisdictions all over the country. The results In addition, the company was in the midst of McGladrey worked with the company to an enterprise resource planning (ERP) system understand the full range of issues it faced in 46 implementation. While the company knew the states by leveraging the efforts of our national ERP system provided opportunities to automate team of sales and use tax professionals.

The many sales and use tax functions, it did not company now has a resource that not only offers have the time, resources or experience to take proven capabilities with respect to the company’s advantage of that opportunity. full range of issues, but also has the elasticity and . scalability to ramp up as necessary to address the volume and complexity of its sales and use tax needs during acquisitions. Today, the company is able to: • Keep current with its sales and use tax filings, thus reducing unnecessary penalty and interest expenses • More accurately address exemptions and other opportunities to avoid overpayments • Timely address outstanding sales and use tax issues among its acquired companies and efficiently integrate and retain legacy data • Build effective tax technology capabilities tailored to the company that automate many sales and use tax functions, improving both accuracy and efficiency and positioning the company to better manage its sales and use tax challenges going forward • Pursue an aggressive business growth strategy, confident in its sales and use tax management 888.811.1023 www.mcgladrey.com This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute assurance, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. McGladrey LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person. McGladrey LLP is an Iowa limited liability partnership and the U.S.

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