Corporate Tax Technology: Stepping into the Future

One of the highlights of Thomson Reuters SYNERGY Conference 2020—which was attended by more than 3,000 corporate tax professionals—was a powerhouse panel discussing the future of tax technology.

The roundtable discussion featured four industry leaders with a cumulative 85 years of experience in corporate tax management. All four are recipients of the Taxologist Award, which recognizes tax professionals who excel in the use of technology to maximize tax function effectiveness.

They addressed:

1. Key challenges that tax technology can help overcome including process inefficiency, tax reform compliance, and cost reduction.
2. Leading practices and success factors such as process assessment, technology and talent alignment, and change management
3. The future of tax technology including advanced tools and the need for a strategic roadmap to deploy them effectively.

The panel consisted of:

• Sheila Carlson, tax manager—transfer pricing, Hyatt Hotels Corp.
• Ryan Lynch, chief technology and information officer, Global Tax Management.
• Sandy Faulkner, global tax reporting director and technology lead for JELD-WEN, a global manufacturer of windows and doors.
• Sharon Rosiak, tax technology director at Thomson Reuters and previously tax manager technology lead at DuPont and Martin Marietta.

The increasing importance of corporate tax technology, they noted, can be seen in the impact of COVID-19—including the challenge of managing year-end closing activities with tax team members working remotely from home.

“Overnight, we all became decentralized tax departments,” Lynch said. This elevated the importance of tech tools that improve collaboration and transparency in day-to-day workflow, document management, data management, and other tasks. Lynch noted that even tech-savvy teams were challenged when they could no longer rely on face-to-face updates, hallway chats, and office whiteboards to move projects forward. “It's nice to see more people embrace the technologies and leverage them more,” he said. “It's definitely been a shift.”

Key Challenges Solved by Technology

Process Efficiency: At JELD-WEN, the tax department recently implemented a workflow solution that improved collaboration and access to information in order to strengthen company’s quarterly and annual tax reporting processes. “This gave us a lot of insight into the status of various tax returns and tax reporting packages as we moved through the close process,” Faulkner explained. “(Before,) when we didn't have these tools, it was hard to know and understand where those processes stood. Being remote you have more challenges keeping updated and being proactive in communication, which are key factors to success.”

Tax Reform Compliance: Another essential task for technology, panelists said, is keeping pace with regulatory changes as they’re enacted around the world. Faulkner noted that corporate tax departments are still waiting for final guidance on the 2017 U.S. Tax Cuts & Jobs Act.  “The challenge of keeping up with that is really key to our technology focus for this year,” she said.

Cost Reduction: Carlson said her department had three tech priorities prior to the pandemic—international tax planning, international tax compliance, and transfer pricing documentation. “We had all these great ideas for 2020 and then COVID hit,” she said. That led to staff reductions and other budget cuts—and the need to re-prioritize technology adoption while managing workloads and expenditures. “Obviously, we need to work smarter, not harder, with less workforce and certain industries not doing well,” Carlson noted. The Hyatt tax team moved forward to implement solutions that streamlined the process of managing international tax reform and will revisit other tech needs as the economy stabilizes.

Tax professionals attending the roundtable were asked for their tech priorities for improving efficiency, and answers included ERP upgrades, transitioning to cloud-based financial systems, adopting specific tactical tools, and aligning workload with resources. For some, this will mean lobbying for more resources and for others it will require managing with less. It’s clear from the wide range of responses that each company’s tech journey is unique and requires a thoughtful, bespoke strategy to increase automation and efficiency.

Leading Practices and Success Factors

Operational Assessment: When adopting new tax technology, the panelists noted, it’s important to first map your current operational landscape, identify needed process changes and the technology required to make them, and confirm that tax team members are getting the full value from existing technology. “We start a lot of conversations with, ‘What's my return on investment on this technology?’” Lynch explained.  “And part of the answer is [dependent on] how much your people are going to extract out of it.”

Carlson recommended tax departments assess their processes continually so team members’ experiences, positive and negative, are evaluated while they’re fresh in mind. For example, convene your team immediately after tax season to review what went well, what did not, and what changes can be made to improve outcomes before next year. 

“Ask yourself, ‘How can we make our processes more efficient? How can Accounting help us define our best practices to make our lives easier?’” she said. “How can you use new technologies to make next tax season even better? Maybe it's exploring additional products for workpapers to streamline the process.”

Technology and Talent Alignment: It’s also important to assess talent gaps. Rosiak recommended corporate tax leaders determine whether they need to provide tech training to tax professionals, tax training to tech experts, or recruit people with a hybrid set of skills.

Carlson noted that it’s important to ensure senior staff are trained to use, and benefit from, new technologies, so they won’t be tempted to revert to old, less efficient practices.

Change Management: It’s essential, Lynch said, to identify and engage all stakeholders at the start of a technology project, solicit their input and feedback, and keep them informed throughout the initiative. It’s also important, he said, to engage stakeholders “not just on the details of the product functionality items, but [also on] the plans, the needs, the urgency, the vision, what success looks like, all of those things. That really, from my perspective, drives things forward right from the beginning. Handling that upfront is extremely important.”

“Even after the project,” he continued, “when you're evaluating it and celebrating it and communicating about it—that's all part of change management so that the next project gets people to buy in.”

The Future of Tax Technology

Bringing it All Together: Lynch painted a bold picture of smart, streamlined corporate tax management built upon application programming interfaces, data analytics, and artificial intelligence and machine learning. In his vision, tax technology will soon replicate Alexa and Siri.

“I think data management tools, like alternatives to [Microsoft] Power Query, are going to replace Excel and tax departments,” he said, “Someday I'm going to have a conversation with [the ONESOURCE Income Tax application] and ask it to summarize the changes it came up with for my tax return based on new legislation . . . because it's self-querying my data on a regular basis.”

The availability of technology, however, is not enough. In addition, company leadership must be motivated to provide the resources to adopt it. “Whenever companies are ready,” Lynch said, “the technology will be there.”

Engaging Internally: One approach that can make it easier for corporate leaders to OK a tech upgrade is aligning the tax tech stack with the company’s existing foundation. “Have a conversation with other departments within the company to talk about some of the technology they’re are using,” Carlson said. “[Otherwise,] you could be unaware of different types of technology that your company currently licenses.”

Creating a Roadmap: It’s also important, Faulkner said, to stay up-to-date on new tech solutions available in the market in order to inform long-term strategic planning. “You have to know where you are today,” she said, “and have a roadmap to what's next.”

It’s important to bring the tax team and other stakeholders on the journey. “Take everyone with you,” Faulkner said. “Show them your vision, help them see the value in that roadmap so you can make your way toward it. . . . Maybe it's a five-year plan rather than the one-year plan or the six-month plan that you would like,” she continued, “but knowing where you're going and bringing everybody along and is key to continuing that technology evolution, wherever it takes us.”

Rosiak echoed the importance of keeping abreast of new tax technology capabilities and noted that Thomson Reuters ONESOURCE is developing next-generation solutions that leverage APIs, automate data management, and use AI to streamline processes and unearth actionable insights. She advised tax leaders to understand their teams’ processes, operational gaps and challenges, skillsets, and tech options, including apps already licensed within their companies.

That’s the key to building the successful corporate tax department of the future—bringing together the process, the people, data and the technology.