Information technology has brought many changes to finance, accounting, and tax operations in the decades since enterprise resource planning systems first appeared. For the most part, IT-driven innovation and transformation have found their champions in finance and accounting. Tax departments have traditionally been more cautious when it came to adopting a new technology.

Recently, though, tax’s role and reputation as a technology follower have quietly begun to change. Recognizing the integral and growing role taxes play in strategic business and financial decisions, many corporate and finance leaders are seeking tax departments’ involvement in executing the enterprise agenda and exploiting technology’s potential benefits.

It is a favorable time for tax to be gaining this newfound stature. Current emerging technologies have additional potential to improve operating efficiency and uncover new insights that can drive decision-making and performance.

Three disruptive technologies in particular are worth a look: robotic process automation, cognitive computing, and big data platforms – technologies to help gather, analyze and capture value from big data. These emerging tools have the potential to enhance tax operations, as well as finance and accounting functions. In some cases, tax departments can not only be at the table, but also provide rich use cases for prototyping these new capabilities.


RPA: Engine of efficiency

RPA is the use of software routines or agents to do work. RPA is widely deployed to automate discrete, repeatable high-volume processes such as indirect tax compliance, information reporting, and filing corporate tax returns. It can be used within a single application or across multiple applications. Companies in the forefront of RPA deployment are applying software robotics across entire sets of end-to-end processes, automating repeatable, complex steps from data capture to reporting.

Consider the process of making tax adjustments for accrued vacation, for example. The actual computation is simple, but the process surrounding it is not. The calculation has to be reflected in a work paper, which needs to be signed off on and then moved to a tax application. Additional state calculations, prior-year validation, or tax journal entries may be required within the tax application before the adjustment is pushed back to a work paper and then logged into the workflow. The steps after the calculation and creation of the work paper can be handled with RPA.

Tax is well suited to serve as a beta test environment for an organization planning to spin up such RPA capabilities. Tax provides a manageable population for prototyping process automation, data sharing across applications, and generation of reports.

Cognitive technologies: Diverse applications

Cognitive systems capable of communicating, learning, and reasoning extend the power of information technology for tasks traditionally performed by humans. Cognitive has been around at least since the first time we heard “Press 1 for customer service.” Today, when on-demand streaming video services recommend a purchase, cognitive technology is doing the work.

Cognitive tools can be applied to operations that involve routine tasks and the ability to teach a computer a body of knowledge. A cognitive bot could scrutinize account detail, for example, in evaluating meal and entertainment expenses, which are often a single line item. The bot’s rules direct it to identify discrete expense types, such as game tickets, meals, or getaway travel. The bot can be taught to conduct first-pass analysis based on keywords, transaction types, and other factors, such as whether a person’s job is externally or internally facing.

The tax function could also use cognitive technology in providing level-one support to an organization. For example, a business traveler employee receives a tax notice from Spain and is unsure what to do with it. The notice is routed to the tax department, where a cognitive tool identifies and inventories it. In some cases, the tool will tie into other systems, such as research databases, which may be able to answer the question. At a minimum, the query has been captured by a smart platform for further action.

Big data tools: The ability to dig deep

Tax departments and organizations are challenged to gather, maintain, and archive data for uses such as addressing controversies or completing IRS or other tax authority examinations. Data also needs to be accounted for at deeper levels of detail for finance purposes than is required for tax’s own needs.

Big data analysis helps meet these demands using highly scalable, automated platforms to access, combine, process, and analyze large volumes of disparate data, both structured and unstructured. Big data tools and techniques now available provide a tax department the ability to access and maintain data in much more granular detail than was previously possible, without disrupting or involving the greater organization.

In contrast to RPA and cognitive solutions, which are mostly efficiency and productivity focused, big data tools are value drivers. They provide access to data that equips an organization to plan, execute, and maintain a strategy for managing tax liabilities and thus create value for the business. Drawing data from multiple sources, tax specialists can go beyond trial balances and account detail, using data analytics to drill down and really understand big data, make necessary tax judgments, and pursue value creation through actions such as indirect tax refund reviews.


Setting the stage for success

The impact of RPA, cognitive, and big data on tax is real and growing. However, they are by no means the only technologies involved. Workflow solutions, tax-specific compliance software, local country tax engines, ERP migration to the cloud – all hint at the complexity of the environments these new tools are entering. Additionally, they highlight the need for a tax technology architecture and roadmap. The architecture defines dependencies between the disparate technologies. The roadmap clarifies what will be modernized and lays out a thoughtful strategy and timetable for what will happen in the months and years ahead.

Finally, using powerful new technology tools is not easy, and it is not the day-to-day work of tax professionals. Finance and accounting, as well as IT, can help tax understand and exploit the new capabilities. As noted earlier, in some cases tax could be the perfect candidate to prototype new technology, benefitting the entire finance organization.

Copyright © 2017 Deloitte Tax LLP. All rights reserved. All materials herein are for informational purposes only, and do not constitute professional advice of any kind.

Nathan R. Andrews

Nathan R. Andrews

Nathan R. Andrews, CPA, is managing partner of tax management consulting at Deloitte Tax LLP.