In my view, tax practitioners are no different than other industry professionals when it comes to analytics—the more analysis you do surrounding your work, the better you tend to perform. If you’re not measuring it, you’re probably not improving it.
That’s why tax data analytics are so important. You need to have insight into your assets, valuations, and practice so you can track your progress and compare it against previous years—and continue to improve year after year. Continuous analysis shows you’re making a concerted effort to save your company (or your client) money, which means you’re more likely to be viewed as a successful practitioner or consultant.
In general, there are three types of tax data analytics you should be doing:
- Operational management analytics
- Operations analytics
- Strategic analytics
Each of these is discussed in more detail below.
Tax Data Analytics: 3 Areas
1. Operational Management Data Analytics
Operational management analytics refers to analyzing the data surrounding your assets for better insight into valuation. This type of data could come from various parts of an organization, or even from outside the organization, and may include things like:
- Fixed asset data.
- Data from the field describing your assets.
- Data from external sources about the marketability or economics of those assets.
- General financial data (for instance, from a Form 10-K) that can help clarify the financial condition of a business.
- Industry analyst reports.
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2. Operations Data Analytics
Operations data refers to the data surrounding your daily operations. It will give you an idea of how you’re doing in terms of collecting the operational management data listed above. It might include things like:
- What is the current status of certain tax filings/payments/appeals?
- What is the accrued tax? Tracking how much you pay on an annual basis will help you do predictive tax analytics, estimating how much you’ll pay in taxes for an upcoming fiscal year or quarter.
3. Strategic Data Analytics
Strategic data shows how well your tax department or service is performing. For example:
- How much did you pay in taxes last year vs. this year? If your business has grown, have the taxes relative to the investment gone down or up?
- Do you have any penalties?
- How many appeals have you filed?
- What was the success rate of those appeals?
When it comes to benchmarking your data analysis, tax consultants will naturally have comparative results across companies and can easily benchmark across clients. But if you’re a corporate tax practitioner, you don’t have that. Instead, you can talk with colleagues in similar industries to get an idea of benchmarks. Other times, data analysis simply revolves around how efficient you are as an organization: Have you completed a certain number of returns or tax bills, and with how many professionals on staff? For those types of metrics, you’ll have to come up with your own benchmarks, perhaps measuring from one year to the next.
Tax Technology & Data Analytics
There are several off-the-shelf analysis tools available for tax practitioners. While Excel still seems to be most popular tool (everyone loves spreadsheets), it doesn’t necessarily provide structure and security. (Structure refers to a particular way of collecting and organizing data so that it can be easily used for analysis. Security means anyone with access to the file can change it—plus, auditing the changes in spreadsheets can be cumbersome.)
In contrast, a software application utilizing databases forces a structure and security on your data, which is good—it retains data accuracy even while you slice and dice it in many ways. Using visualization tools like Tableau on accessible structured data can also give you a way to visualize the data, so you and your target audience (some of whom prefer numbers and others whom prefer charts) can easily see emerging trends. In addition to Tableau, other analytics tools include: SQL Server Reporting Service (“SSRS”), MS Power BI, and many others. If you do not have in-house BI experts, then you may find it preferable to have certain visualizations customized in your property tax application.
Need structured data sets for better tax analytics? CrowdReason property tax software easily and quickly gathers the data you need for analysis.
MetaTaskerPT extracts unstructured information from tax notices, bills, and returns, and verifies it and funnels it into our tax management software TotalPropertyTax (TPT), making it easy for you to extract the now-structured and contextual data and use it in conjunction with BI tools like Tableau. In addition, CrowdReason software can provide custom BI visualization within the application and/or create a number of custom analytical reports.
Need to run custom data analytics? CrowdReason can help.
At CrowdReason, we’re always willing to add specific custom data sets into our software for clients who need them. For example, one of our clients wanted a “percent good” report to compare assessed values to the reported cost. Such a report highlights instances where the percentages vary greatly—for instance, where they were being assessed at 35% of their reported cost in one state or jurisdiction and 50% in another. This information would be useful for every organization—not just the client who requested it—which is why we made this new reporting function available for everyone using our software. If you have a specific need related to tax data analytics, let us know how we can help.