Multistate Tax Symposium Take the lead Tax … technologies: Keeping your Tax department current...

The 2018 National Multistate Tax SymposiumTake the lead—Tax reform and fortifying state positions

February 7-9, 2018

Emerging technologies: Keeping your Tax department currentAndy Gold, Deloitte Tax LLPTyler P. Juckem, Anthem, Inc.Mike Sontag, Bass Berry & Sims

February 7-9, 2018

3Copyright © 2018 The National Multistate Tax Symposium: February 7-9, 2018 Copyright © 2018 Deloitte Development LLC. All rights reserved.

• Introduction

• Transforming Impacts on State Tax

• Moving From the “Art of the Possible” to what is Actually Possible

• Your Path Forward

• Q&A

Agenda

4

Transforming the tax function through data and technology


The impact of technology

“We stand on the brink ofa technological revolutionthat will fundamentallyalter the way we live,work, and relate to one another. In its scale,scope, and complexity, thetransformation will be unlike anythinghumankind has experienced before.”

World Economic Forum, 2016


Drivers of disruption… and innovation


Trends that are reshaping our business (and tax) landscape

Explosion of data

Improved technology

Business innovation

Greater global

footprint

Next Gen regulatory

environment


How could it help me address common pain points?Technology & data analytics

Manual process

Impact of law changes

State-by-

state

complexity

Quick access to transactional level

data

Challenges with relying on IT for

data

Ability to forecast

Inability to get at data to evaluate planning

alternativesAbility to

substantiate

Not viewed as value add

Data doesn’t

reconcile

Increasing volume of

data, often from

multiple sources

Lack of accuracy

Compliance focused

vs strategic partner

Inefficiencies

Administrative burden

Reliance on

field for data

Errors have popped up due to missing or

misunderstood data

Too much time spent manipulating data

Same sets of data are

being analyzed on a recurring

basis

Data requires a lot of sorting, pivot

tables, and filtering


• Big Data

• Disparate systems

• Need for speed

• Global integration

Robotic Process Automation (RPA)

Optical Character Recognition (OCR)

Extract Transform Load (“ETL”) solutions

Regulatory changes & scenario planning

Tax department trends Related emerging technologies

Cognitive computing

Analytics

Suite expectations

Tax trends & technology

Data management & process automation


Enhancing value through evolving technologies


• Created a cross-functional core team

• Identified and flowcharted all tax technology tools, including both internally created and licensed processes, and compiled current cost structure

• Ideation session at our annual staff meeting to identify what’s working well and what’s ripe for improvement – as well as get buy-in on the “current state”

• Challenged prior technology decisions – has the landscape changed?

• Demonstrating ROI though efficiency is key to funding technology investments at our company – no budget for the “nice to have”

• Current and future state maps finalized by core team December 2017 – 3-5 key focus areas identified

• Expect to refresh every 18 months

Developing a Practical Tax Technology RoadmapCase study

12

Moving from the “art of the possible”

Technology applied in practice


Key disruptive technologies are transforming the way we work


State tax analytics / dashboards


Activity Map and KPIs for

Sales, Property, and Payroll

Drill-Down into detail by

Entity, Account, State, and Location

Interactive

Search

&

Filtering

State apportionmentAnalytics dashboard


State profile heat mapData Analytics Tool


State tax analyticsIllustrated (indirect tax)


• Customized SharePoint site

o Contains all state compliance processes, audits, UTP, state research (approx. 7,000 processes and 10GB per year)

o Adding federal tax processes

o Long-term vision = “one stop” calendaring and consolidated audit support

o Common review process, templates, and audit-ready workpapers

o Customized payment and refund tracking – relieved the pain point that led to funding

o Challenges – consistency, space, rollover process, and managing workloads

• Refinement of comprehensive self-developed apportionment, modification and provision/true-up templates

• Third-party modeling and research tools

• Currently open:

o How to implement a dashboard layer - best tool, cost effectiveness, and maintenance minimization

o How to best handle market vs. COP sourcing analysis

Practical analytics experienceCase study


Simulating perceptual and cognitive skills to perform tasks only humans used to be able to do

Cognitive technologies

Computer visionSpeech

recognition

Machine learning

Knowledge representation

& reasoning

Natural language processing

Planning & scheduling

Robotics


Computer-coded, rules based software that automates manual activities by performing repetitive rules-based tasks

Robotic process automation defined

Robotic process automation tools help businesses improve the effectiveness of services faster and at a lower cost than current methods

Bot is software programmed to

perform repeatable tasks

Using recorders and easy programming

language, robots are programmed to replicate repetitive human tasks

RPA operates in the

User Interface layer

It is able to automate

rules-based work

without compromising

the underlying IT

infrastructure

RPA replicates human

interactions with

proven technology

It mimics common tasks

such as queries,

cut/paste, merging, and

button clicks

RPA can be

implemented at the

desktop or in the

virtual environment

Flexibility to quickly

deploy robots directly

onto existing desktops

(PCs, laptops) or

virtually (virtual

machines) to save on

additional hardware

costs


Opening email and attachments

Logging into web/ enterprise applications

Moving files and folders

Copying and pasting

Filling in forms

Reading and writing to databases

Scraping data from the web

Making calculations

Connecting to system APIs

Extracting structured data from documents

Collecting social media statistics

Following “if/then” decisions/rules

Robotic Process Automation (RPA)

In an RPA solution robots are capable of mimicking most user actions


Criteria for selecting processes to automate

Criteria Typical examples and questions Automation

High number of systems used

Process should typically require employees to access multiple independent systems to complete the process

High transaction volume / value transaction

Candidates for robotic automation need not necessarily be limited to high-value transactional processes. Any process that is labor intensive, high throughput time, or high-cost impact errors is a good candidate

Prone to errors or re-work

Manual activities in the process today result in a substantial number of errors due to human operator mistakes, e.g., flexibility of work-force, complexity of work, or infrequency of activity

High predictability

The process needs to be defined in terms of a set of unambiguous business rules that describe the process. No need for full documentation today, but it certainly helps!

Limited exception handling

Simpler processes with little exceptions in delivery are excellent candidates for robotic automation in the beginning. When learning, the organization can expand to processes which are complex or error prone.

Significant manual work involved

Processes with little automation support today and large chunks of manual work involved benefit more from Robotics, although the process does not need to be completely ‘straight through processed’

Example tax applications

• eFile Tax Returns

• Download data from client ERP system

• Open files, capture information, save files, store files

• Compare data points, flag differences

• Post tax adjustments to tax system

• Operate indirect tax processes

• Monitor workflow and workflow sites and provide notifications


Tax is a common place for companies to first invest in Robotic Process Automation

Automation opportunities in tax

None to Low Medium High

Opportunity for Automation

Automation Opportunities in Tax

Federal Compliance International Tax & Transfer Pricing

State and Local Compliance

Refresh federal income

Add new entity

Journal Entries

Transactional Filings (stmts)

Add attachments

to efile

Intercompany Transaction Processing

Apportionment Factors

Data Gathering

Estimated Payments

Local Country Reporting

Allocations Processing

E&P Adjustment

Import

Fixed Asset Reporting

Rollover workpapers

Transfer data from provision to tax systems

Tax Account Mapping

Annual Reports

Income Sourcing/ Basketing

ConsolidationUpload TBs, other data

ReconciliationsIntercompany

ReportingCalendar / Reminders

Load tax adjustments to software

Data CollectionReconcile

between G/L and tax engine

Exemption certificate

maintenanceCheck requests

Preparation of Tax Forms

Document Archival

Procedures

Monitoring Workflows for

Status / Reminders

Managing master data

K-1 Compilation

Investor PDF Package Creation

K-1 Data Extraction

VAT: Process Invoice

Complete Tax Packages

Trial Balance Extracts / Imports

Review Tax Packages

BackupFx RatesData Gathering

Reporting Package

Preparation

Calculate Adjustments

Journal Entries

Indirect Taxes Partnerships Provision / Tax Accounting Data Management


RPA tax examples

Indirect tax compliance – sub processes

Efiling

Use tax reconciliation

Pulling invoices

Tax provision – sub processes

Direct tax compliance – sub processes

And more….


BO

TP

ER

SO

N

Direct taxRPA in action

DATA COLLECTION & MANAGEMENT

RECONCILIATIONCALCULATION/ RETURN PROCESSING

E-FILINGREPORTING

Gather, reformat, and move data; monitor submission; maintain data and systems

Generate returns for e-filling and run e-file diagnostics

Perform reconciliations between source data and calculations; identify anomalies to focus human review

Execute calculations in Microsoft Excel and/or tax systems

Extract and manipulate data for internal and external reporting purposes

Run macros to calculate tax adjustments in Microsoft Excel

Perform processing steps in tax software, such as consolidation

Extract data from tax systems to finalize documentation

Attach files to specific returns

Perform analytic review of resulting calculations

Generate returns and run e-file diagnostics

Identify errors and notify users

Launch data collection packages; load GL data

Push completed tax adjustments into tax system

Master data updates across systems

Monitor updates to GL data

Perform validation tests various data elements (state apportionment, fixed assets)

Notify user of reconciliation exceptions

Populate management reporting packages

Save final files and reports in designated location

Review resulting reportsReview any issuesReview resulting files

Complete complex/judgement-based calculation elements

Review any issues

Monitor workflow for completed returns

Workflow updates and document management

Monitor inbox or portal for receipt of data

Notify user reports are available/publish reports to portal

Maintain updated reporting packages during close cycle

Action those items manually or via bot

Complete tax account reconciliations



Indirect taxRPA in action

DATA COLLECTION & MANAGEMENT

RECONCILIATIONCALCULATION/ RETURN PROCESSING

E-FILING REPORTINGB

OT

PE

RS

ON Review any issues

Extract information from calendar or filing preparation spreadsheet

Submit return information using state’s e-file website

Generate confirmation

Query ERP database and save data in Microsoft Excel

Query tax software database and save data in Microsoft Excel

Compare data between ERP and tax software; algorithms

Notify users about reconciliation exceptions

Review exceptions

Gather data from source systems

Validate and cleanse data

Perform calculations or validations

Convert into format required for transmission/mailing

Load data file or create form

Review any issues

e-File monthly sales and use tax returns in local jurisdictions

Create sales and use tax data files from ERP and tax software to perform a reconciliation

Extract, validate, and cleanse data from source systems to prepare sales, use, or excise tax returns

Review any issues

Create Microsoft Excel file with Customer and Exemption Certificates

Create Customer in tax software

Create Exemption Certificates in tax software

Maintain customer codes in tax software and confirm synchronization with ERP

Identify errors and send to super user via e-mail

Gather data from ERP, filing calendar, and returns database

Run compare queries and various calculations on the data to identify errors and anomalies

Initiate workflow to route anomalies to key individuals for review and input

Extract, validate, and control total data for audit; identify anomalies in order to address in advance

Review any issues

Document in calendar for audit trail





What is Data Wrangling?

Data Wrangling is the process of retrieving raw data and making it useful for analysis and reporting

1

Staging and

Preparation

Analysis

Integration

Layer

Extraction

2

3

Provide seamlessworkflow across

modules to simplify user experience

Benefits of Data

Wrangling

Applicability of

Data Wrangling

• Automation

• Integration

• Data Accessibility

• Autonomy

• Data detail

• Data reconciliation

• Apportionment

• Compliance

• Provision

• Indirect Tax


Considerations

Data Wrangling

What is needed vs what is available

Where located

How can I get it

Data extraction techniques/technology—how can it help?


Framework and functionality of our portal

Master/

General

Ledger

data

Direct compliance/provision

Tax calendar

Operational

data

Insurance

Indirect taxes

Audit Management

Knowledge/social

Transfer pricing

Knowledgemanagement

Formsframework

Search & versioning

Data management

Documentmanagement

& emails

Tracker & notes

Data collection/

surveys

Dashboards Analytics

Security

Workflow

Master Data


Tax portal - value adds

ETRimpact

Businessimpact

Risk profile

• Connected tax processes connected corporate functions

• common user interface, workflow, and document management platform

• Transparency and accountability supported by global calendar

• Access and reporting to key tax department filings, documents, and data

• Effective communication through integrated tools and processes

• Searchable through key tags and key word search capability

• Documented and controlled workflows supporting efficient processes throughout the tax department

• Increased efficiency and productivity

• Advanced search, bulk assignments, and drag-and-drop capability

• Designated idea repository and tax data analytics platform

• Ability to prioritize and track planning ideas and future projects

Fewer silos

Risk mitigation

Faster access to one version of the truth

Standardized processes

Efficiency gains

Improved planning

• Corporate enterprise platform, reducing inefficient methods of information sharing

• Facilitates self-service, lower support costs, and consolidation of disparate platforms

Cost savings


The tool uses machine learning to develop artificial intelligence.

Cognitive technologyIndirect tax – use case

Client Raw Data Import

Raw Data Taxability

Taxability Identification &

Validation

Data Cleansing

Consolidation and Data Mapping

Insights

Interactive & Predictive Insight

Generation

Opportunity

Savings ConsiderationsIdentification / Prioritization

Structured Data GL, AP, EDI, and other structured

data

Non-Structured Data

Invoices, PO’s, contracts, etc.

Hypothesis Validation

User interacts with data and validates taxability decision

Tool gains artificial intelligence through taxability validation of the structured data and OCR-captured data to enable fasterand smarter insight generation

Machine Learning Process

Robust Insight Generation

33

Getting started


`Identify “Pain Points”

Standardize processes

Assess the “Art of the Possible”

Develop automated data

solution

Apply data analytics

Data health check

Explore opportunities

to apply artificial

intelligence

Some ways to get startedLeveraging the power of data and technology

35

Questions?


Contact information

Mike Sontag

Bass Berry & Sims LLC

[email protected]

Andy Gold

Deloitte Tax LLP

[email protected]

Tyler P. Juckem

Anthem, Inc.

[email protected]

mailto:[email protected]




This presentation contains general information only and the respective speakers and their firms are not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The respective speakers and their firms shall not be responsible for any loss sustained by any person who relies on this presentation.

About DeloitteDeloitte refers to Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about to learn more about our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2018 Deloitte Development LLC. All rights reserved.

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Multistate Tax Symposium Take the lead Tax … technologies: Keeping your Tax department current...

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