What Does Tax Transformation Mean to You?

Vertex Inc.

How do you define “tax transformation?”

It’s a crucial yet frequently overlooked question. Your answer can have major implications on your organization’s return on tax technology investments, the tax groups relationships with the finance group (and many other parts of the company) and how efficiently the tax team operates. 

Business leaders have been discussing and pursuing digital transformation for years now. More recently, tax leaders have been advancing their function’s tax transformation journeys. And the widespread pursuit of transformation has generated valuable thinking and insights on how to improve these endeavors while avoiding common pitfalls.

All that said, the way in which one tax department defines and advances transformation differs from how other tax teams approach transformation. Oftentimes, these differences are pronounced. Tax groups may pursue transformation on their own or in conjunction with the finance group and other parts of the organization. Tax leaders may or may not be involved in the initial planning stages of finance transformations that pull tax into their orbit (although they very much should be involved early in these efforts). 

By defining what transformation means to their own function, to the finance group, and to rest of the organization, tax leaders stand a better chance of gaining more valuable benefits from these initiatives. 

By define, I mean get a clear and broad understanding of what tax transformation should entail. Addressing the following questions can help cultivate this understanding:

  • How will tax add value to the business in five to 10 years? Tax transformation efforts should be designed to help the tax group add value to the rest of the company as it evolves. This requires tax leaders to assess the company’s long term strategic plans to pinpoint opportunities for the tax group to make meaningful contributions to the achievement of strategic objectives. If the company is considering a reduction in its real estate costs over the next five years, for example, what insights can the tax group share regarding the tax implications of moving to smaller venues in other cities and states?
  • How does the tax group help the CFO and the finance group? As CFOs take on larger roles in shaping corporate strategy and providing the financial data analyses used as the rationale for strategic pivots, it is more important than ever for tax leaders to work closely with finance chiefs. This helps ensure that tax is informed and involved as finance groups plan cloud migrations and other transformation initiatives. 
  • How are other groups in the finance/ERP ecosystem – and beyond -- approaching transformation and technology upgrades? While the finance-tax partnership is important, tax leaders also should cultivate and sustain collaborative relationships with many other parts of the business that have implications on the tax group’s activities, including IT, legal, compliance, supply chain management, procurement and internal audit. 

By keeping up to date on tax-relevant decisions, technology upgrades and transformation initiatives throughout the business, tax leaders will have the information they need to optimally define and execute tax transformation activities. 

Please remember that the Tax Matters 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 Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.

Blog Author

Larry Mellon, Tax Directory, Vertex Inc

Larry Mellon

Tax Director, Chief Tax Office

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Larry Mellon is a Tax Director in the Chief Tax Office, where he is responsible for providing insights, thought leadership and customer-centric direction to Vertex functional groups, supporting the continued expansion of Vertex indirect tax solutions and overall enterprise strategy. He has over 30 years of experience in sales and use tax compliance, risk assessment, jurisdictional audits, administration and management, as well as VAT compliance. Larry joined Vertex in 2005 as a Sales and Income Tax Supervisor and has served as Tax Manager since 2012, where he has played a pivotal role in elevating and advancing the company’s tax management offerings.

Prior to joining Vertex, Larry served as a Senior Tax Accountant and Property Tax Manager at Foamex International, Inc., a polyurethane and advanced polymer foam product manufacturer and marketer. Mellon also held multiple roles at The Franklin Mint and is a member of the Institute of Professionals in Taxation (IPT).