Big data analytics opportunities for smaller tax groups

“A quantified organisation takes a strategic approach to measuring what it should, not just what it can. It takes a responsible approach to using new data sources … to create value for stakeholders across the organisation, improving workforce trust and driving the organisation forward to new levels of financial, reputational and operational performance.” 

–Beyond productivity: The journey to the quantified organisation, Deloitte 

That thesis statement is relevant to tax departments in companies of all sizes, including small to mid-sized businesses (SMB).  

Smaller tax teams often wrestle with staffing crunches and limited budgets for tax-technology investments while satisfying the exact same compliance requirements that larger, better-resourced tax departments address.  

This means that smaller tax teams also face unique compliance risks. They might be unaware of the compliance requirements across all the taxing jurisdictions where their companies operate. Additionally, they may not monitor the relevant nexus thresholds that mandate registration, remittance and reporting. Even when an SMB has a handle on the tax implications of its sales activities, it may be neglecting the tax accuracy of its purchasing and procurement activities. As a result, many smaller tax groups do not have an accurate read on their indirect tax liabilities – or the magnitude of their audit risks.  

Getting a better grasp on tax and transactional data lessens these challenges. Tax data analytics tools are designed to identify the tax impacts of business activity in ways that help tax leaders determine how and where to allocate limited tax resources. Vertex’s Indirect Tax Intelligence solution leverages data from the Vertex tax engine, Vertex tax research content and ERP (including other accounting and procurement) systems to produce summary-view dashboards with metrics. These indicators keep tax teams apprised of nexus requirements, sales tax trends and variances, sales tax audit risks and more. 

A good way to assess whether this type of solution makes sense for your tax department is to ask questions like: 

• Can we quickly and easily view sales and use tax trends and variances? 
• Are we monitoring state nexus thresholds in a way that helps us proactively identify registration requirements? 
• Are we keeping tabs on changes to customer and transaction data that could heighten our audit risks? 

If the answer to any of those questions is “no”, it may be time to consider a tax data analytics tool. As more companies leverage their “unprecedented trove of new data” to become what Deloitte describes as “quantified organisations”, tax departments should consider following suit to improve their operational performance and reduce their audit risks.