FORVIS recently participated in a panel discussion alongside tax technology leaders from three prominent corporations in the United States. The panel presented to chief tax officers (CTOs) at some of the nation’s leading organizations to dive deeper into the role of tax technologist within tax departments. As data management and automation continue to be a trending topic in tax, so does a tax technologist. Here’s what we’ve learned.
Availability and agility of technologies useful to tax continue to grow exponentially, especially in recent years. As data and automation tools become less expensive and more self-service, the role of technology within the tax department is becoming increasingly important and is expected to become a permanent component of tax department operations in the future.
As you consider whether a tax technologist is right for your organization, you must consider other variables that may correlate, such as the overall operating budget (considering insource versus outsource), enterprise systems and software tools (and expected replacement of/upgrades to such systems), impacts of tax legislation, human capital changes, and more. Given all of the above, and as enterprises continue to evolve to the cloud, many tax executives are considering a dedicated tax technologist to help drive efficiency within the organization and transform tax into a forward-looking function. We’ll describe current trends driving this need for a tax technologist and help you learn how to establish this role at your organization.
Current Trends in the Tax Department
With more information than ever at your fingertips, you not only may be struggling to automate but also may be at a point where you’re trying to turn tax inputs and outputs into valuable information that aligns with your organization’s needs. Finance and IT transformations also have allowed more access to technologies for tax departments. Significant tax legislation, like Pillar Two, is putting more data and tax calculation requirements on the tax department.
We’re seeing the necessity of clean, accurate data continue to be prominent with larger enterprise resource planning (ERP) implementations. With the evolution of Cloud ERP, tax is now getting a seat at the table and is aligning its ecosystem with IT and finance departments.
A surplus of information and available technology has led to an increasing amount of data leveraged by enterprises and a requirement for tax teams to work quicker and faster with that data. Self-service tools are enabling tax departments to manage data themselves.
As a result, the accounting industry has seen an influx of non-CPAs, primarily professionals with a focus on data analytics or data science.
Leading With Data
The influx of data and the availability of new, no-code, and low-code technologies within the tax department have opened the door for tax executives to look at data differently. Tax has traditionally been a data consumer, but now, tax teams are generating data that is useful for analytics. We’re seeing tax teams adopt a more data-centric approach to operations, moving away from a singular focus on deadlines and deliverables.
One recent example of legislative impact in driving a tax data mindset is playing out with the Organisation for Economic Co-operation and Development’s Global Anti-Base Erosion (GloBE), commonly referred to as Pillar Two. Safe-harbor analysis and compliance with the new GloBE calculation will require the acquisition of large amounts of “new” tax data. In addition, much of the data needed for the GloBE calculation and respective safe-harbor tests are derived from tax outputs such as the provision calculation or compliance software. Pillar Two is one example where teams are being required to start re-examining data sources and how the data is being collected and transformed. As a result, tax organizations will begin to work more closely with finance and IT systems and may consider data repositories to relate and store the data, and also tools to transform the data and/or analytics to compare this “new” tax data across periods and/or jurisdictions.
Enter the Tax Technologist
Looking to the future of tax and its integration with data, your organization may identify the need for a tax technologist, but how do you go about getting the role set up? Does it need to be a full-time role or are there alternatives? The role of a tax technologist will vary greatly depending on your company’s budget, appetite for technology, and how far the company is on its technology journey. There’s not a one-size-fits-all approach.
A poll of the 100 CTOs during the session revealed that 19% of participant enterprises have incorporated a dedicated tax technologist role on their tax teams. Approximately 40% of participants are asking a tax team member to spend part of the time focusing on tax technology efforts. These statistics support the need for a technology focus in the tax function. However, 41% of those polled continue to either rely heavily on IT alone (15%) or do not yet have any formalized focus on tax technology (26%). While the concept of the tax technologist is gaining momentum, there is not yet full adoption across tax.
We’ve seen that some departments may have more than one—and even more than five—dedicated tax professionals who work closely with finance and IT teams on data sets within enterprise systems. While some departments may have co-sourcing agreements with external providers, others still integrate tax technology work as part of a current employee’s role within the organization, or they rely heavily on IT.
When considering the role of a tax technologist, it has proven effective to start small and grow into the role fit for your organization. Here are some small, suggested steps that we’ve seen tax leaders take:
- Allow your team members to have the space to explore technologies and reward them for their initiative.
- With current staff and in recruiting, look for those passionate about process and/or technology improvements. Since many accounting programs are now focusing on data tools and analytics, new college graduates may already show interest and experience in technology.
- Lean on consultants to assist with the implementation of one small automation project and leverage the project to build the return on investment (ROI) and show your tax teams “what’s possible” through the use of technology.
- Leverage others’ knowledge—perhaps by bringing in a consultant on an hourly basis or scheduling corporate roundtables—to help train your team on tools and technologies and/or bridge knowledge gaps in discussion with IT.
- Build an ROI over time, as once you see the benefit and ROI of the opportunities that come with tax technology, you can extrapolate to the broader set of tax pain points to assist in building the case for a dedicated technologist.
Technology and data are not going away, and the requirement for tax to adopt and adjust will increase as data and technology continue to integrate throughout the enterprise. Where the tax department was once a user of data, it is becoming a generator of data for an organization. The opportunities that come with integrating tax technologists into your organization can help provide efficiencies that you wouldn’t otherwise have and may become a required skill set as we look toward future technological advancements and continued tax legislation changes.
The Tax Transformation team at FORVIS can assess your current tax department structure and find areas where efficiencies could be introduced. If you’re not ready to implement a dedicated tax technologist, we can collaborate with you to bring in technologies, train your teams, and help your business stay on top of trends, helping you better prepare for the future of tax. If you have any questions or need assistance, please reach out to a professional at FORVIS or use the Contact Us form below.