Four Ways to Strengthen Tax-IT Partnerships

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Finance and tax transformation efforts have gained substantial ground in many companies during the past five years, thanks in part to clear objectives. These initiatives “are intended to empower tax and finance functions to deliver more strategic value to inform and influence decision-making across their businesses.” This is according to survey responses from the EY report “Why five years of transforming tax and finance functions is paying off” from 1,600 tax and finance executives at large companies around the world. 

Despite impressive progress on digital transformation, stubborn hurdles persist. Nearly half of executives who responded to EY’s survey identify the lack of a sustainable plan for data and technology as the biggest obstacle to achieving their vision for a modern tax and finance function.

A healthy, collaborative relationship with the IT function represents one of the most important enablers of that vision, so it’s important for tax leaders to work on strengthening their partnership with IT leaders. Tax leaders can do so by clearly communicating their unique, technology-related needs and challenges to their IT counterparts.

In companies where I’ve witnessed the healthiest tax-IT collaborations, tax leaders tend to convey – diplomatically, of course - the following points to CIOs and other senior IT leaders:

  1. Tax return filing deadlines drive our reporting and data collection activities. IT teams should recognize that any support they provide to the tax group related to reporting systems, data collection and data analyses should be conducted with an awareness of filing dates and related compliance requirements. 
  2. Tax departments desire a “self-service model”. Developing a self-service model for tax departments means more control over the databases and tools they need to work with to prepare their tax return filings, tax planning and eventually audit defense. It also allows IT teams to reduce the time and effort they allot to supporting the tax group. 
  3. Tax compliance is not optional. IT leaders have the difficult and unenviable task of prioritizing technology investment requests from the entire organization. While some of these investments are discretionary, tax compliance is not. That’s not to say that all tax technology purchases should be automatically green-lighted, but automation that enables or strengthens tax compliance should be clearly identified and prioritized. 
  4. Alert us to technology-investment requests related to major business changes – which likely have tax, and tax-technology, implications. IT is often among the first group in a company to learn of strategic shifts and business model changes. That’s because most of these pivots require adjustments to supporting technology or investments in new systems. When IT groups learn that their company is launching a new product line or entering a new geography, informing tax leaders of these changes can help ensure that related tax sensitivities are addressed. A new product line requires updated tax content for accurate tax categorization. Entering a new region requires updates to a tax engine’s global tax content. 

Ideally, tax leaders are aware of these types of business model changes before they occur because they have a role in scenario planning activities and/or a seat on the IT-Finance councils that exist in many larger companies. If your company has that type of oversight committee and you are not a part of it, that’s another point you thoughtfully discuss with your IT partners.

Blog Author

Michael J. Bernard, Chief Tax Officer – Transaction Tax at Vertex Inc. Vertex's Chief Tax Office (CTO) provides insight regarding the impact of tax regulations, policy, enforcement, and emerging technology trends on global tax department operations.

Michael J. Bernard

Vice President of Tax Content and Chief Tax Officer

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Michael Bernard is the Chief Tax Officer of Transaction Tax. In his role, he provides insight and thought leadership around tax department operations, U.S. indirect tax, tax risk management, and tax policy, as well as emerging tax trends. He is an executive-level tax attorney with a diverse portfolio of experience in corporate tax, administration, and finance, including a substantive knowledge of U.S. and international tax laws.

Prior to joining Vertex, Michael was in various tax leadership roles at Microsoft Corporation for 28 years, the most recent being Senior Director – Tax Counsel. Michael led teams in the following functional areas: direct and indirect tax controversy, sales and use, business license, property, tax IT, SOX, and telecommunications. He also co-led a corporate taxpayer advocacy group with the Washington Department of Revenue and was a Director on the Board of the Washington Research Council. Michael has also testified before administrative and lawmakers at both the federal and state level.

Michael earned both a J.D. and a Bachelor of Science in Business Administration from Creighton University. He is a part-time lecturer of Law in the LLM program at the University of Washington School of Law. Michael also served on the board of directors, executive committee, and chaired committees for The Tax Executives Institute (TEI) for nearly 25 years.

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