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What Is Tax Technology?

Posted by Brandon Van Volkenburgh on Mar 30, 2020 8:00:00 AM

What Is Tax Technology?

There’s a sea change happening in the tax industry: Where the focus was once on compliance, it’s now about value—ensuring fair taxes are being paid, managing tax risk, evaluating the tax consequences of business activities, and more. Underlying this shift to a more strategic tax practice—and enabling it to happen—is a new reliance on tax technology. In this article, we’ll look more closely at what tax technology is, and how it’s changing tax practices for the better.

What is tax technology?

In our view, tax technology includes any type of software, program, platform, or digital tool that supports the digitization of tax processes and enhances the work of tax professionals. (Tweet this!)

There are two areas of focus in this tax technology definition: the technology itself, and the impact of that technology on the work we do. Let’s take a closer look at each.

Technology For The Tax Function

A variety of technologies can already be leveraged in modern tax operations, and it’s likely that the options will only continue to increase as time goes on:

  • Robotic process automation (RPA)—Designed to automate simple processes, RPA is useful for the many tax activities that are manual, repetitive, and highly logical. Data validation, report generation, and data entry are examples of low-value tasks that can be handled by RPA tech tools rather than humans.
  • Smart process automation (SPA), also known as intelligent process automation—SPA takes RPA a step further with machine learning, enabling a smarter automated workflow. Machine learning means computers can “learn” how to perform a task over time, allowing SPA tools to take over tasks like classifying documents or assets and labeling unstructured data.
  • Artificial intelligence (AI)—Computer systems that can perform human-like tasks are slowly becoming a reality. Though few AI tools are currently available for the tax function, this type of tax technology will have advanced data analytics capabilities that will improve tax teams’ performance.
  • Cloud computing—Many tax departments are also starting to take advantage of cloud applications—web-based applications that are delivered via the Internet rather than being “installed” on a machine. Becoming more virtually-enabled means teams are no longer locked to physical devices, and can work from anywhere, anytime.

Tax practices are currently employing these types of tax technologies in almost every area of tax, using them for everything from tax management and data extraction to document management, returns filing, forecasting, bill-paying, and more.

Start taking advantage of the latest technology today with CrowdReason automation solutions—get in touch to see it in action!

Impact On Tax Practice

A vital aspect of tax technology is its effect on the practice: It should elevate the work product and therefore the value of the tax team itself.

Tax departments have always had challenges, but today those challenges are amplified due to an unprecedented amount of data, tax regulations, and deadlines. Managing these aspects has become a major burden, straining resources and preventing teams from innovating, problem-solving, and strategizing—activities that deliver real value and make it possible to compete on a global scale. More so than ever before, practitioners are seeing the benefits of tax technology, and are ready to embrace it.

Before adopting any new tax technology, then, it’s important to identify the impact it will have on your practice. Depending on its application, one or more of the following questions may apply:

  • Will it save time on a specific process or processes, freeing up your team for strategic thinking and planning?
  • Will it decrease risks and errors in your process, for example, promote higher-quality data or minimize penalties?
  • Will it allow you access to more data and better insights so you can provide better service?
  • Will it give you greater control over the tax management cycle, making your team more agile and flexible?
  • Will it reduce stress on your team members, creating a better working environment?
  • Will it modernize your tax practice, allowing you to attract better talent?

Consider your future vision for your department, and plan a tax technology strategy that will help you get there.

Support Your Tax Technology With The Right People

Implementing tax technology is easier and more successful for companies that have talented professionals in place to nurture and support the change. The uptick in technology adoption has created new opportunities and career tracks that tax departments should pay attention to.

  • Some higher-education institutions (like this one at Texas A&M) now offer a “Tax Technology” track focusing on how to evaluate, choose, and implement the right type of technology at the right time. Graduates from programs like these will be well-positioned to manage and lead departmental or organizational change efforts.
  • A taxologist is an emerging role within tax departments. Distinguished from a “tax technologist” (someone with an IT background who has learned tax skills, or vice versa), a taxologist drives organizational change by implementing corporate-wide tax technology solutions. They tend to have a stronger background in tax than technology, but have the ability to identify and address areas where technology could be helpful.

Tax Technology + People = Better Tax Practice

It’s important to remember that technology isn’t about replacing people—it’s about people and technology working together to produce better business outcomes. (And about people working less like robots and more like humans!) If you’re part of a property tax team and would like to see how technology could transform your department, talk to us at CrowdReason. Our next-generation solutions incorporate on-demand labor, workflow, and machine learning technologies that help property tax teams perform at a higher level. If you have challenges you’d like to solve, please get in touch.

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Topics: Tax technology