A multinational biotechnology company operating research and development sites and clinical operations in both the United States and Canada.

The Challenge:

A discrepancy in purchase order alignment led to a series of study-related invoices being incorrectly issued to the client’s Canadian entity. These invoices, generated by a vendor with a presence in both the U.S. and Canada, applied Canadian Harmonized Sales Tax (HST) and Provincial Sales Tax (PST) in error. The root of the issue traced back to a misalignment between where the services were rendered (U.S.) and where the invoices were billed (Canada). Although the purchase orders were issued through the client’s U.S. headquarters, the vendor routed invoices to the Canadian affiliate, triggering tax charges that should not have applied.

Broniec’s Solution:

Broniec Associates quickly flagged the improper tax charges as part of a broader accounts payable recovery audit. Recognizing the complexity of cross-border tax compliance, our team initiated a collaborative, multi-party effort involving:

1. The client’s internal tax and purchasing departments
2. The vendor’s tax and legal teams across U.S. and Canadian operations
3. Legal review of internal purchasing instructions and invoice records
4. Evaluation of statute limitations for filing tax reclaims in both countries

Because the Canadian arm of the vendor had a longer allowable filing period with the Canadian Revenue Agency than the client, Broniec facilitated vendor involvement in the refund process to optimize recovery potential.

Results:

Following months of due diligence, document coordination, and direct engagement with both the vendor and the Canadian government, a full refund was issued in the amount of $1,167,538.79 CAD. The recovered funds were deposited directly into the client’s Canadian lockbox, bolstering cash flow and ensuring compliance with international tax treatment regulations.

This recovery not only returned over $1 million in taxes wrongly paid but also:

• Highlighted the importance of accurate cross-border invoice processing
• Sparked revisions to internal vendor setup and PO practices
• Strengthened compliance protocols for future Canadian transactions
• Reinforced Broniec’s ability to manage multi-country audits involving legal, tax, and operational complexities