Senergy finds relief for chronic use tax pain

Based in Irving, Texas, Senergy Medical Group, the distributor for Dr. Tennant’s BioModulator, provides at-home devices and nutrition products to help patients manage chronic pain and cellular health. The company markets through in-person events and an ecommerce website.

Consumer use tax is owed by a buyer when sales tax is not paid in full by the seller. Unlike sales tax, use tax can be triggered after a transaction, based on how and where products are used by the buyer. 

Senergy had been managing its consumer use tax tracking and payments in-house, but soon found the task to be both labor-intensive and prone to error. Due to some of the complexities of their purchasing processes and the expectation that all was well if they simply paid the tax on their vendor invoices, Senergy found they hadn’t been assessing their consumer use taxes properly. 

“Unfortunately, we did get caught in an audit,” says the company’s Chief Financial Officer Linda Taylor. “They found several thousand dollars that we were missing in consumer use tax.”

Already an Avalara AvaTax and Avalara Returns user, Linda knew that automation would provide a better, smarter way than maintaining complicated spreadsheets or creating expensive custom solutions. 

“I told them when they hired me that I don’t do taxes,” she laughs. “That’s just not my area of expertise. My reason for reaching out to Avalara was to prevent us from going down that use tax rabbit hole again.” 

Because manually verifying tax rates on each incoming invoice can be challenging, Avalara Consumer Use checks rates according to jurisdiction, product taxability, and any special rules that may affect the sale.

Linda finds Avalara Consumer Use is preventing potential trouble in multiple ways. “It’s picking up what I would have never thought to look for,” she reports. “‘Our vendors charged sales tax so we’re OK,’ was my opinion. It’s also catching transactions from vendors in other states that may not have nexus in Texas, so they’re not charging tax.” 

As far as audits go, Linda is confident that Senergy is prepared. “We know once an audit is done, they’re going to come back again,” she says. “We’re prepared now, because we can show them that we’re making a good-faith effort to make sure we approach use tax correctly. We also have our receipts in the system, and we can pull them up at a moment’s notice without a lot of digging.” 

Linda has also discovered other benefits to using Avalara Consumer Use. “We have ordered items on the internet that we use for cost of goods, and unknowingly the person that placed the order paid sales tax,” she explains. “I don’t always have all the answers when I get an invoice, but with Avalara Consumer Use we were able to look very closely at these and find out that we need to provide our sales tax exemption certificate. We can now avoid paying sales tax on that particular item going forward.” 

“I was really grateful when Avalara offered this product,” Linda concludes. “I was beating myself up trying to figure out how I was going to solve this problem, and I really did not have a handle on it. I knew I needed expert assistance, but never dreamed that Avalara could step in and take care of it. I was just totally amazed and am very appreciative.”