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Indirect Tax: Your Complete Tech Toolkit

Tax Technology At the Speed of Business - Vertex Inc.

Indirect tax is a notoriously tough nut to crack for even the most tech-savvy organizations. But tax leaders can call on a surprisingly broad array of automation solutions. A Tax Executive article, The Changing Landscape of Indirect Tax, takes a close look at some of the most powerful options. The authors are members of Deloitte’s US indirect tax practice.

Any automation initiative should start with a step back, the authors note, to review all areas of the indirect tax life cycle, including “master data setup; indirect tax calculation; tax computation and posting; and preparing, populating, and submitting tax returns. From there, companies can determine areas of immediate exposure or potential opportunity.”

Artificial intelligence (AI) plays a significant role in those next steps. AI technologies that combine visual analytics and dashboard capabilities are particularly useful, enabling companies to identify error rates and the potential causes of tax over-or underpayments. Additionally, machine learning (ML) algorithms, specifically those that use unsupervised learning methods, can potentially predict the future taxability of transactions. 

Many AI platforms incorporate a tax table that can help companies calculate a potential refund and overpayment exposure, and identify potential risks before an audit.

In addition to AI and ML tools, the technology options include:

  • Globally integrated tax platforms, which automate manual engagement tasks, connect and centralize tools, and leverage technology to create an intuitive digital experience;
  • Technology-enabled return preparation that enhances efficiency and quality;
  • Data analytics dashboards, which provide visual representations using heat maps and tax-trend analyses;
  • Assistance with automated monthly compliance data extraction processes;
  • Smart optical character recognition.

With change agents like the Wayfair decision, the rise of remote work, constantly changing taxability guidance, and other factors, the indirect tax landscape remains challenging, the article concludes. Innovative technologies like these “are key to efficiently managing the entire indirect tax life cycle.”

Disclaimer

Please remember that the Vertex blog provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in the Vertex blog are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

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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