It’s Time for the Tax–Procurement Mind-Meld

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Procurement organizations can drive tax compliance. Tax departments can drive procurement value. Procurement is automating at a rapid clip. Tax, ditto. 

Evidence of a strong partnership between tax and procurement functions is increasingly clear, and businesses that get it right can achieve substantial benefits. A new Vertex white paper, The Critical Connection Between Procurement and Tax, explores this important dynamic. 

The differences in mindset between the two functions can be significant, making the partnership even more critical. Tax departments are focused on correct transaction tax determination of goods and services purchased by the procurement group. Procurement leaders focus on delivering exceptional experiences to internal customers, enabling them to make important purchases with greater speed and ease. Yet, procurement platforms rarely possess the functionality needed for accurate tax determinations, and procurement teams are not familiar with constantly changing tax rules and rates.

Those issues should stimulate an exchange of viewpoints – a great first step in ramping up this valuable collaboration. The white paper lays out what tax should know about how procurement is evolving. For example:

  • The shift to outsourcing that we saw in the early 2000s has reversed as procurement organizations turn to automation to extract more value from their data. 
  • Efficiency is an increasingly important goal for procurement operations, as they strive to make purchasing processes as easy as they are on the top retail platforms. 
  • Digital transformation is under way as these organizations move beyond homegrown tools and the procurement functionality of ERP systems.

Procurement teams also need to know some important information about tax challenges, such as: 

  • Sales tax rules in the U.S. are constantly changing – a good example is the Wayfair decision. Real-time tax reporting requirements are on the rise in many countries.
  • Data-intensive compliance requirements are driving more tax teams to implement advanced tax automation, and some of these platforms offer integration capabilities for procurement systems.

A tighter tax-procurement connection can help procurement leaders ensure that the value of their cutting-edge platforms isn’t diminished by tax calculation errors and manual follow-ups that diminish the department’s efficiency. And it can help tax leaders identify and close potential compliance gaps. It’s time to get some great minds thinking alike – a move that will help the organization as a whole prosper over the long-term. 

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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