Supply Resource Management Product User Group

1. Supply Resource Management Product User Group Boise Cascade and DuCharme, McMillen & Associates:Best Practices in Sales/Use Tax Verification and RecoverySherry Depew, Boise CascadeMarci Struzinski, Boise CascadeZachary Reif, DMA February 20, 2008Albuquerque, NM

2. Presentation Purpose • Presentation Purpose: • To discuss the results and perspectives that Boise Cascade has gained in working with DMA, including: • Verify that sales/use tax decisions are correct • Recover overpayments • Prevent future errors in sales/use tax decision making • Presentation Objectives: • At the end of the meeting, we will have been successful by: • Sharing the Boise Cascade case-study • Reviewing many of the metrics used to measure performance • Discussing the issues and initiatives in the adoption of best-practices BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

3. Today’s Discussion • Background • Timeline • Results • Results… how accomplished • What Resources to Use? • DMA’s Project Plan • Sample Report of Findings • Performance Metrics BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

4. Background DMA • State & Local Tax Experts • 18 Regional Offices • 200+ Staff Members • Complete Workflow Solutions • Issues Development • Tax Advisory • Overpayment Recovery • Audit Defense • Outsourcing • Tax Technology • Training • Focus on Large and Complex Clients Boise Cascade • Mfg. Wood and Paper Products • $5.8 Billion in Sales • #48 in Forbes Privately-Held Co. • 10,000+ Employees • Complex Manufacturing Process • Complex Regulatory Environment • Tremendous Internal Changes • Multi-state operations BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

5. Timeline • DMA and Boise began working together in 1998 • Audit Defense and Support – Single State • Overpayment Reviews – Multiple Locations/Single State • Training • Overpayment review – Multiple Locations/Multiple States • Training • Tax Software Implementation BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

6. Results • Over $8,000,000 in sales/use tax either recovered or pending • Overpayment reviews • Underpayment (risk) analysis • Audit defense • Issues development • DMA frequently conducts staff training to ensure that errors do not continue • DMA assistance with selecting and implementing new sales/use tax software BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

7. Results…how accomplished • Utilization of PeopleSoft ERP data • Extraction of data - queries • Manipulation/sorting/filtering of data • Pull and review of physical/electronic invoice copies • Taxability decisions via interpretation of Law • Compile findings in formal Report of Findings • Seek refund from Taxing Jurisdiction BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

8. Data Extraction Query Boise has written to provide DMA with their required information. BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

9. What Fields to Extract Query Fields BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

10. Query Criteria What Fields to Extract What Fields to Extract BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

11. What Resources to Use? • Internal • Familiar with personnel and operations • Accessibility to data/records • May lack bandwidth • May lack tax expertise • External • Primary focus and primary area of expertise • Aware of pertinent law changes • Industry knowledge • Dedicated team of professionals BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

12. DMA’s Project Plan • Kick-off meeting • Data request • Data verification • Manipulation of data • Collection of source documents • Presentation of Report of Findings • Pay only what is legally due • Training to eliminate ongoing errors BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

13. Report of Findings TABLE OF CONTENTS Executive Summary Review Process Tax Savings Summary Findings – “THE MEAT” – common issues, law changes Next Steps Recommendations Conclusion Sales Tax Refund Schedule Use Tax Refund Schedule B&O Tax Refund Schedule DMA Codes BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

14. < $3B $3B - $11B $11B - $20B $20B - $85B > $85B One 2 - 4 5 - 7 8 - 15 > 16 < 80 80 – 5,000 5,000 – 30,000 30,000 – 250,000 > 250,000 < 300 300 – 6,700 15,000 –250,000 > 250,000 6,700 – 15,000 < 1.3B 1.3B – 2.4B 2.4B – 5.8B 5.8B – 23B > 23B Median Performance Metrics DMA benchmarks hundreds of data points to identify the performance metrics and best practices of the highest performing companies. Sample of Current Data Population BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

15. 17% 12% 44% 64% 17% 12% 22% 12% 0% 0% 100% 100% 0% 0% 0% 0% 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% ERP ERP Tax software Tax software Manually calculated Manually calculated Other Other Sample Metric: As expected, specialized tax software is primarily used for sales tax calculations and use taxability determination What tax software is used for sales tax calculations? What tax software is used for taxability determinations? Median Median BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY Best In Class Best In Class

16. Sample Metric: Technology – Primary systems utilized BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

17. Sample Metric: Lower performing organizations have 5 times the error rates as a percent of transactions and 7 times the error rate as a percent of dollars Taxability Error Rate as Percent of Transactions Taxability Error Rate as Percent of Dollars 5X 7X 1 % 5 % .75 % 5 % 1st Q 3rd Q 1st Q 3rd Q BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

18. Sample Metric: Consequences and Impact Overpayments Recovered as a % of Indirect Spend Combined Overpayments and Underpayments as a % of Indirect Spend BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY 1st Quartile Median 3rd Quartile Dollar Amount of Overpayments Recovered Annually (in thousands) Interest Payments as a % of Final Negotiated Assessment

19. Best Practices • Aligns with overall company strategy • Reduces costs • Improves productivity • Promotes timely execution • Enables better decision making • Leverages existing and exploits emerging technologies • Ensures acceptable levels of control and risk management • Optimizes skills/capabilities of the organization • Promotes collaboration across the extended enterprise BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY

20. Contact Information Should you have any questions about the information contained in this presentation or about DMA and its services, please contact: Zachary Reif Title: Senior Tax Manager Office: 623-582-6655, extension 2555 Email: zreif@dmainc.com BEST PRACTICES IN SALES/USE TAX VERIFICATION AND RECOVERY