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Indirect Tax

The Tax Technology Transformation: Getting Started

Thomson Reuters Tax & Accounting  

· 5 minute read

Thomson Reuters Tax & Accounting  

· 5 minute read

According to the Thomson Reuters 2022 State of the Corporate Tax Department report, almost two-thirds of all corporate tax departments are either at or near the beginning of their tax technology journey. As a result, understanding how to manage the transition to a more automated, technologically sophisticated department is a top priority for many tax leaders.

Leading a tax team through the organizational transformation necessary to adopt and implement an automated tax engine is no easy task, however. Where does one start? And what does the decision-making process look like?

Do you need tax technology?

The first step in any major technology investment before starting a transformation is determining what problems the company or department is trying to solve, what the company’s short and long-term goals are, and where tax technology fits into the whole picture.

Every tax department has different technology needs and ideas about how far and fast they should go with automation, but there are a number of common triggers that lead a company to conclude that it needs the help of an automated tax solution. Before embarking on a tax technology journey, then, it’s worth taking a step back and assessing whether the need is really there.

Some common factors that indicate a need for tax automation are:

  • A team that works too much overtime
  • A heavy reliance on spreadsheets and other manual processes
  • Unacceptably high error rates
  • A fear of being audited and/or fined
  • Actually being audited or fined because of inaccuracies and/or lack of compliance
  • Mistakes due to corrupted files or mishandling of documents
  • The extra burden and stress of M&A activity has stretched everyone too thin
  • Everyone is exhausted from doing more with less for too long

Other business-related reasons can also play a role, such as:

  • A management push for greater efficiency and higher profit margins
  • Expansion plans that require new, more effective processes
  • Moving operations to the cloud has become a priority
  • Relying solely on an ERP system for tax is no longer sustainable
  • More accurate tax calculations are needed to reduce risk and exposure
  • Outsourcing isn’t working well and has become too expensive
  • Some processes are automated, but integration is spotty

There are other good reasons for using an automated tax engine, but if more than half of the circumstances cited above sound familiar, chances are that your company could benefit tremendously from a tax technology upgrade.

What next?

No matter what reasons a company has for investing in automation, or how much work may be involved in convincing upper management to consider it, the next step in any technological transformation involves a significant amount of research and communication.

Research: The more the better, in order to understand the value of tax technology to the enterprise and gather solid facts about the technology’s likely impact on the organization, including ROI, process changes, workflows, data handling and competitiveness.

Communication: An ongoing dialogue with all stakeholders—upper management, other department heads, and especially IT—is crucial. Understanding everyone else’s plans, needs, capabilities, and challenges from the start will save time and aggravation down the road.

Create a vision: Buy-in from the top is preferable (and often essential), so it’s important to create a “vision,” or paint a picture, of the many benefits that flow from incorporating automation into the tax function.

In order to get upper management and the tax team itself on board with such an important transformation, people need to be able to:

  • imagine how the new system will benefit them personally, and the business as a whole
  • understand why technological improvements are necessary
  • envision how the planning and implementation process will unfold

In addition, upper management will want to know what the up-front costs are, what ROI they can expect, what the organizational impact is likely to be, and how soon the system will pay for itself.

In any case, when articulating a vision, tax leaders need to be able to identify the problem(s) the department and company are dealing with, and why tax automation is the necessary logical solution.

Explain the pain

As for the problems (or challenges, if you prefer), leaders must “explain the pain” of work stress, tax inaccuracies, poor compliance, inefficient processes, and whatever else is preventing the tax department—and the company as a whole—from reaching its full potential.

On the solution side, leaders must at the very least explain how automation will help the tax department serve the business more effectively, take pressure off the tax team, establish the tax department as a strategic profit center rather than a cost center, streamline operations, and help position the company for future growth.

All of the above themes will resonate up and down the org chart. But don’t kid yourself: in the current business environment, when everyone is bracing for a recession, there is likely to be pushback against any “unnecessary” spending, even if the business case for it is rock solid. So be prepared.

Make a tax transformation plan

If you make it to this point and heads around the table are still nodding in agreement, congratulations are in order because you are now ready to start developing a detailed project plan, which will become your organization’s technological roadmap.

There is still a long way to go (it’s called a journey for a reason), but the first few steps are often the hardest. Now it’s time to put together the plan and set it in motion.


Attend our free webinar where speakers will share how tax automation can help a business like yours by implementing enterprise-grade tax technology.


Below are a few resources to get you started in your tax transformation:

Forrester Consulting Report: Total Economic Impact Study 

How to Make the Business Case for Technology Implementation

The Journey of a Taxologist



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