The 2018 National Multistate Tax Symposium Take the lead Tax reform and fortifying state positions. February 7-9, 2018

Transcription

1 The 2018 National Multistate Tax Symposium Take the lead Tax reform and fortifying state positions February 7-9, 2018

2 Emerging technologies: Keeping your Tax department current Andy Gold, Deloitte Tax LLP Tyler P. Juckem, Anthem, Inc. Mike Sontag, Bass Berry & Sims February 7-9, 2018

3 Agenda Introduction Transforming Impacts on State Tax Moving From the Art of the Possible to what is Actually Possible Your Path Forward Q&A 3

4 Transforming the tax function through data and technology 4

5 The impact of technology We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. World Economic Forum,

6 Drivers of disruption and innovation 6

7 Trends that are reshaping our business (and tax) landscape Explosion of data Next Gen regulatory environment Improved technology Greater global footprint Business innovation 7

8 Technology & data analytics How could it help me address common pain points? Increasing volume of data, often from multiple sources Administrative burden Quick access to transactional level data Manual process Inefficiencies Impact of law changes Reliance on field for data Ability to forecast Same sets of data are being analyzed on a recurring basis Challenges with relying on IT for data State-bystate complexity Data doesn t reconcile Compliance focused vs strategic partner Data requires a lot of sorting, pivot tables, and filtering Not viewed as value add Ability to substantiate Inability to get at data to evaluate planning alternatives Errors have popped up due to missing or misunderstood data Lack of accuracy Too much time spent manipulating data 8

9 Tax trends & technology Tax department trends Related emerging technologies Data management & process automation Big Data Disparate systems Need for speed Global integration Analytics Robotic Process Automation (RPA) Optical Character Recognition (OCR) Regulatory changes & scenario planning Extract Transform Load ( ETL ) solutions Suite expectations Cognitive computing 9

10 Enhancing value through evolving technologies 10

11 Developing a Practical Tax Technology Roadmap Case study 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 key focus areas identified Expect to refresh every 18 months 11

12 Moving from the art of the possible Technology applied in practice 12

13 Key disruptive technologies are transforming the way we work 13

14 State tax analytics / dashboards 14

15 State apportionment Analytics dashboard Activity Map and KPIs for Sales, Property, and Payroll Interactive Search & Filtering Drill-Down into detail by Entity, Account, State, and Location 15

16 Data Analytics Tool State profile heat map 16

17 State tax analytics Illustrated (indirect tax) 17

18 State tax analytics Illustrated (indirect tax) 18

19 Practical analytics experience Case study Customized SharePoint site o o o o o o Contains all state compliance processes, audits, UTP, state research (approx. 7,000 processes and 10GB per year) Adding federal tax processes Long-term vision = one stop calendaring and consolidated audit support Common review process, templates, and audit-ready workpapers Customized payment and refund tracking relieved the pain point that led to funding 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 o How to implement a dashboard layer - best tool, cost effectiveness, and maintenance minimization How to best handle market vs. COP sourcing analysis 19

20 Cognitive technologies Simulating perceptual and cognitive skills to perform tasks only humans used to be able to do Planning & scheduling Knowledge representation & reasoning Machine learning Speech recognition Computer vision Natural language processing Robotics 20

21 Robotic process automation defined Computer-coded, rules based software that automates manual activities by performing repetitive rules-based tasks 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 Robotic process automation tools help businesses improve the effectiveness of services faster and at a lower cost than current methods 21

22 Robotic Process Automation (RPA) In an RPA solution robots are capable of mimicking most user actions Opening and attachments Scraping data from the web Logging into web/ enterprise applications Connecting to system APIs Moving files and folders Making calculations Copying and pasting Filling in forms Reading and writing to databases Extracting structured data from documents Collecting social media statistics Following if/then decisions/rules 22

23 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 Example tax applications 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 efile Tax Returns Download data from client ERP system Prone to errors or re-work High predictability 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 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! Open files, capture information, save files, store files Compare data points, flag differences Post tax adjustments to tax system Limited exception handling Significant manual work involved 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. 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 Operate indirect tax processes Monitor workflow and workflow sites and provide notifications 23

24 Automation opportunities in tax Tax is a common place for companies to first invest in Robotic Process Automation Automation Opportunities in Tax State and Local Compliance Federal Compliance International Tax & Transfer Pricing Estimated Payments Transfer data from provision to tax systems Rollover workpapers Tax Account Mapping Fixed Asset Reporting Allocations Processing E&P Adjustment Import Local Country Reporting Annual Reports Calendar / Reminders Intercompany Reporting Load tax adjustments to software Reconciliations Consolidation Upload TBs, other data Income Sourcing/ Basketing Refresh federal income Apportionment Factors Intercompany Transaction Processing Data Gathering Add attachments to efile Journal Entries Transactional Filings (stmts) Add new entity Indirect Taxes Partnerships Provision / Tax Accounting Data Management Data Collection Reconcile between G/L and tax engine K-1 Compilation Review Tax Packages Trial Balance Extracts / Imports Complete Tax Packages Monitoring Workflows for Status / Reminders Document Archival Procedures Preparation of Tax Forms VAT: Process Invoice K-1 Data Extraction Journal Entries Calculate Adjustments Reporting Package Preparation Managing master data Exemption certificate maintenance Check requests Investor PDF Package Creation Data Gathering Fx Rates Backup Opportunity for Automation None to Low Medium High 24

25 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. 25

26 PERSON BOT RPA in action Direct tax DATA COLLECTION & MANAGEMENT Gather, reformat, and move data; monitor submission; maintain data and systems RECONCILIATION Perform reconciliations between source data and calculations; identify anomalies to focus human review CALCULATION/ RETURN PROCESSING Execute calculations in Microsoft Excel and/or tax systems REPORTING Extract and manipulate data for internal and external reporting purposes E-FILING Generate returns for e-filling and run e-file diagnostics Launch data collection packages; load GL data Monitor inbox or portal for receipt of data Push completed tax adjustments into tax system Master data updates across systems Workflow updates and document management Monitor updates to GL data Perform validation tests various data elements (state apportionment, fixed assets) Complete tax account reconciliations Notify user of reconciliation exceptions 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 Maintain updated reporting packages during close cycle Populate management reporting packages Save final files and reports in designated location Notify user reports are available/publish reports to portal Monitor workflow for completed returns Generate returns and run e- file diagnostics Attach files to specific returns Identify errors and notify users Review resulting files Review any issues Perform analytic review of resulting calculations Review resulting reports Review any issues Action those items manually or via bot Complete complex/judgement-based calculation elements Action those items manually or via bot 26

27 PERSON BOT RPA in action Indirect tax RECONCILIATION Create sales and use tax data files from ERP and tax software to perform a reconciliation CALCULATION/ RETURN PROCESSING Extract, validate, and cleanse data from source systems to prepare sales, use, or excise tax returns E-FILING e-file monthly sales and use tax returns in local jurisdictions DATA COLLECTION & MANAGEMENT Maintain customer codes in tax software and confirm synchronization with ERP REPORTING Extract, validate, and control total data for audit; identify anomalies in order to address in advance Query ERP database and save data in Microsoft Excel Gather data from source systems Extract information from calendar or filing preparation spreadsheet Create Microsoft Excel file with Customer and Exemption Certificates Gather data from ERP, filing calendar, and returns database Query tax software database and save data in Microsoft Excel Compare data between ERP and tax software; algorithms Notify users about reconciliation exceptions Validate and cleanse data Perform calculations or validations Convert into format required for transmission/mailing Load data file or create form Submit return information using state s e-file website Generate confirmation Document in calendar for audit trail Create Customer in tax software Create Exemption Certificates in tax software Identify errors and send to super user via 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 Review exceptions Review any issues Review any issues Review any issues Review any issues Action those items manually or via bot Action those items manually or via bot Action those items manually or via bot 27

28 What is Data Wrangling? Data Wrangling is the process of retrieving raw data and making it useful for analysis and reporting 2 Benefits of Data Wrangling 1 Extraction Staging and Preparation Integration Layer Analysis 3 Automation Integration Data Accessibility Autonomy Data detail Data reconciliation Applicability of Data Wrangling Provide seamless workflow across modules to simplify user experience Apportionment Compliance Provision Indirect Tax 28

29 Data Wrangling Considerations What is needed vs what is available Where located How can I get it Data extraction techniques/technology how can it help? 29

30 Framework and functionality of our portal Search & versioning Knowledge management Forms framework Document management & s Tracker & notes Transfer pricing Knowledge /social Tax calendar Audit Management Direct compliance /provision Master/ General Ledger data Indirect taxes Operational data Insurance Data management Data collection/ surveys Security Workflow Dashboards Analytics Master Data 30

31 Tax portal - value adds Business impact ETR impact Risk profile Fewer silos Risk mitigation Faster access to one version of the truth 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 Standardized processes Documented and controlled workflows supporting efficient processes throughout the tax department Efficiency gains Increased efficiency and productivity Advanced search, bulk assignments, and drag-and-drop capability Improved planning Cost savings Designated idea repository and tax data analytics platform Ability to prioritize and track planning ideas and future projects Corporate enterprise platform, reducing inefficient methods of information sharing Facilitates self-service, lower support costs, and consolidation of disparate platforms 31

32 Cognitive technology Indirect tax use case The tool uses machine learning to develop artificial intelligence. Robust Insight Generation Raw Data Data Cleansing Taxability Insights Opportunity Client Raw Data Import Consolidation and Data Mapping Taxability Identification & Validation Interactive & Predictive Insight Generation Savings Considerations Identification / Prioritization Machine Learning Process User interacts with data and validates taxability decision Structured Data GL, AP, EDI, and other structured data Non-Structured Data Invoices, PO s, contracts, etc. Hypothesis Validation Tool gains artificial intelligence through taxability validation of the structured data and OCRcaptured data to enable faster and smarter insight generation 32

33 Getting started 33

34 Leveraging the power of data and technology Some ways to get started `Identify Pain Points Standardize processes Data health check Assess the Art of the Possible Develop automated data solution Apply data analytics Explore opportunities to apply artificial intelligence 34

35 Questions? 35

36 Contact information Andy Gold Deloitte Tax LLP Tyler P. Juckem Anthem, Inc. Mike Sontag Bass Berry & Sims LLC 36

37 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. 37

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