Chief tax officers (CTOs) are integral to the fabric of TEI, with their own roundtable discussion group and their participation in all aspects of the organization. Recently, TEI held a CTO discussion group session regarding the role and prevalence of tax technologists and surveyed CTOs on several issues, including whether their organization employed a tax technologist. To find out more about the survey, we convened a roundtable in August, moderated by senior editor Michael Levin-Epstein, that included these participants: Kelly Necessary, partner, tax transformation, at FORVIS LLP, a public accounting firm; Cheria Coram, senior manager, tax data enablement, at Starbucks; Bryan Quadros, director, tax technology and operations, at Labcorp; and Vikesh Patel, director of the tax innovation and technology team at Home Depot.
Michael Levin-Epstein: What should members know about the CTO survey?
Kelly Necessary: We had a collective 100 chief tax officers from across the country participating in our panel discussion, held on June 22, 2023. During the session, we proposed a couple panel questions. I think the most telling one was, “Do you, as chief tax officer, have a tax technologist within your team?” And the results revealed that nineteen percent do have [at least one] dedicated tax technologist, generally somewhere between one and five people dedicated to tax technology. Forty percent of them have a tax team member taking on a dual role, split between tax technology and other tax responsibilities. A whopping forty-one percent said they are 100 percent relying on IT or someone in finance to help them accomplish some of their tax technology goals, or are not addressing tax technology at all.
Levin-Epstein: Where does the survey stand right now in terms of reporting the results?
Cheria Coram: I guess I’ll take that one. I’ll just clarify that this was set up as a live roundtable discussion with heads of tax that are members of TEI. It’s part of the CTO Roundtable series. We were excited to join, to cover this topic of what is the role and relevance of the tax technologist, why it is becoming increasingly more important. And so we had about 100 heads of tax on the call, like Kelly mentioned. During this virtual meeting, we did a few of the polls. Right now, to the best of my knowledge, there was not an intention to do a broader survey beyond those on the call or formally report the results beyond those who joined the call. So, hopefully that probably answers your question. But maybe you were thinking the format of what happened was different. I guess we could say from, like, where we see this going, I do see this as a continuing topic of interest for heads of tax. I think that the role of the tax technologist and how heads of tax think about their operating team model, what their talent pool looks like, what their skill set looks like—any tech or data skills they’re expecting of their team—I think that topic continues to be of high relevance, and so I definitely anticipate a version of this conversation to continue in future CTO Roundtable discussions.
Definition of a Tax Technologist
Levin-Epstein: What’s the definition of a tax technologist? Anybody want to tackle that one?
Coram: I want to volunteer Bryan.
Bryan Quadros: Perfect. So, I know there’s a lot of terminology, starting with “tax technologist” or “taxologist,” in many instances. Regardless, one of the things that I see from a tax technologist, and really from a technologist’s world perspective, is someone who’s able to be a tax and technology liaison in the tax department, who can address technology needs, technology trends, and considerations, along with driving digital deployments of those technologies. In many instances you’d have, tax departments [that], as the poll has shown, assign a technology-inclined team member away from their day to day to lead or perform tax transformation efforts. Often, issues with that historically have been, well, inefficient or slower adoption of automation and/or technology. This trend is becoming more evident as the volume of data exponentially grows and tax compliance becomes more complex. So, my definition of what a tax technologist’s role is: someone who can communicate and translate the need(s) from a tax technical perspective, while aligning the interest from an IT architecture perspective.
Levin-Epstein: So, what skills do you think a tax technologist should have to assume that role?
Vikesh Patel: I can take this one. Going to Home Depot, where there was no tax technology team and we’re building one out, I think what I look for in a person is a problem solver. And what does that mean? It’s the ability to understand the technology solutions available. Because most of the time, technology is not the answer; it’s understanding the current process and improving the process and layering on the technology solution. People start thinking that a tax technologist has the answer to everything and technology will solve all my problems, but more so it’s understanding the process, bringing some standardization around there, putting some covenants around it. And then, the technology portion is the last part of it. It’s identifying that problem and then finding the solution via technology. So, what we kind of look for in a role is someone that appreciates technology, because technology can be learned, but [also has] the ability to solve these problems and take a step back and understand end-to-end that “Where’s my issue? Where is my manual intervention? Where can I put an automation tool or leverage some sort of technology tool available in the market to help my tax department succeed and make right decisions?”
Necessary: I’ll add that, with the influx of data into tax and the agility of some of the more self-service tools available, it takes a creative and proactive person to take a fresh look to how things were once accomplished in tax and challenge the status quo, to see data through a different lens.
Coram: I will agree with that, and I’ll emphasize that point. I agree with everything Vikesh said. It’s just adding that curiosity and then innovative thinking with a growth mindset. Keeping up with technology available and supported, tying that to capabilities. And what I mean by capabilities is, What outcome results from what that tech is doing for the user, and what does that mean to the business or the people on the back end of that? But needing to be able to reimagine what’s possible, questioning the current state—and being passionate about it. I think those are really key factors that we look for. It is a little bit of a unicorn role; we’re wanting people to understand lots of things with tax and finance and accounting and tech. I do want to separate data, just because data has become—because of the volume of data, the granularity of data, the level of data needed for our end reporting, both from a financial reporting standpoint and to tax authorities—data on its own has become its own skill set and focus area for a lot of us. So, that’s a lot of a skill ask, but if you don’t have that innovative thinker’s mind, questioning the process and being able to challenge and rethink from a process mindset, you can only go so far knowing the tech only, I guess is what I would say.
Quadros: I’ll probably add just one more layer, talking about tax, data, and technology. Tax legislation and overall taxing authorities are being more influenced from a digital and data perspective. As a result, tax considerations are becoming more prevalent in finance roundtable discussions. This is where a tax technologist can serve as more of a project manager, focusing within not only the project itself from a technology implementation but also from a change management perspective. These are aspects of what a tax technologist can contribute from a technical, solution, and experience architecture standpoint. Often, these segments are overlooked which have major adoption and compliance implications, given the heavy reliance on just the technology itself. It is critical to account for potential friction points, as well as looking at the various application gaps and consolidation opportunities.
Coram: Change management and change leadership is another key one to underline, I think, for this role.
Levin-Epstein: Are you surprised that four out of five chief tax officers said that there was no dedicated tax technologist at their firm?
Necessary: I work 100 percent of my time consulting with tax departments, and I’m not surprised by that statistic. Even though there’s this influx of new technology, tax departments are still focused on fulfillment of the normal tax requirements, given recent legislative changes and increases in data requirements. I think also many tax departments are seen as a cost center and not a profit center, and a lot of the technologies that are available for their use are just now becoming more prevalent in their IT and/or finance groups. Availability and knowledge of these tools are working their way downstream to tax departments. This statistic is pretty common based on what I see in the marketplace. On the positive side, I think we’re going to have a rapid change in that statistic over the next year or so as data and technology continue to become more and more important in enterprises.
Levin-Epstein: If you’re making the case for a tax technologist at a company that did not have a dedicated tax technologist, what would you say?
Quadros: I can start off answering that question. Finance, as we know today, is transforming from your traditional financial reporting into cross-functional roles in driving digital transformation and driving long-term performance. You’ll find in many studies and surveys that CFOs in the future will continue to have broader digital and value-driven responsibilities. The reason for that is related to the continuous change in how digital and data are transforming how businesses operate globally. These engagements include how data is governed from a PII [personally identifiable information] and GDPR [European General Data Protection Regulation] standpoint, to a business’ digital presence, as well as digital and data engagements to gain better analytics leading to better business performance.
In general, tax practices have also evolved and continue to do so. There has been a transition from physical records, including general ledger paper to digitizing of Excel work papers, to now the adoption of cloud-based tax provision and compliance solutions. Therefore, what’s the use case for a tax technologist? Well, it’s being relevant. We’ve seen many historical contexts where businesses falter or struggle to drive value for not being relevant or noncompliant from a tax accounting perspective. So, when we talk about tax technologists and how tax is changing, we need to ask ourselves, How is the financial system today? How’s that transitioning? How can we drive long-term value? A tax technologist is understanding these topics and able to promote and empower the tax department in this continuous improvement journey.
Coram: I definitely have something to add. I would give the advice to someone else: the heads of tax on the call, especially the ones that would like to have one, they just don’t have one now. For putting together the business case, I think it comes down to something Kelly mentioned earlier for shifting the perception of the tax department from that “back-office compliance shop.” And this is true for finance in general, right? Not just compiling recorded data into different recons and forms for end reporting, but shifting to be an actual strategic partner back to the business. Going from handling data to actually garnering insights from that data and being able to leverage that for things that your business cares about. Now, what is relevant and valued by your C-suite is going to be specific to your company. But you should know what that is, right? And if you don’t, I would say go up to your C-suite and find out what their strategic pillars are. What are they putting their investment dollars in? And anchor your own goals for your tax operations, positioning your tax department for the future of your business, of your finance, of your tax team—anchor to those, and you’re more likely to be successful in winning that business case, because you’re anchoring to things that the business has already valued. The one last thing I would say about the data shift is—and this applies to automation in general—I think there has been a focus on leveraging tech and automation to do the same thing faster. You heard us talk about process before, so I won’t repeat that. But I think there’s a shift not to just doing what you did before faster, but actually to rethink and change how things are being done to create value. Now, what is valuable to your organization? That might be defined differently, but that shift to a value creation center is key.
Levin-Epstein: Vikesh, do you have something to add?
Patel: Yeah, I was going to add on to your latter point, and just to the question itself: How do you make a justification for a tax technologist role? The tax team deals with multiple [enterprise resource planning] systems, various offline files. Data gathering takes too much of your time, and you cannot solely focus on the tax technical work. It’s becoming reactive. If regulations, legislations are changing, you’re still gathering your sources of data to figure out how does this impact me as a corporation or a company. Well, now you have the ability through the technologist to gather this data and tell it to paint a picture, tell a story for you in real time, right? The ability to do scenario planning in real time because you have that data that you can trust—it’s validated, it’s been sourced. Data has been put in automated fashion. There is governance and controls around it. So, you’re no longer spending all this time trying to figure out, How do I get the data? And the second part is just IT, ability to rely on IT. Now, most companies’ IT is backed up or it’s stretched thin. You’re at the mercy of when they have some availability, when they have some funding. Well, you have a source within your team with that tax technologist role—the ability to understand technology and come up with a quick solution rather waiting a couple of months for IT to even look at or pick up a ticket. By that time the scope of the project has already changed. Now, what do you do? We have to wait on the queue again, creating the ticket and wait and hope for IT to pick it up sooner rather than later. Well, now you can react in real time with that tax technologist role. If something was changing in the data, if we need to move it to a different step, the [job] for a tax technologist is to understand what the problem is and kind of engage and come up with a solution in real time.
Necessary: That’s a great point, being able to lead and react ahead of the IT queue. Because they are often stretched thin.
Impact of AI
Levin-Epstein: So, there can’t be a roundtable without talking about AI. Isn’t it sort of inevitable that, with the rise of AI and the capability of AI, it’s going to be harder for companies to justify not having a tax technologist on the staff?
Coram: I think it depends on their use in application of AI. We’re already seeing a lot of AI in use, whether it’s in your business operations, supply chain, or it’s creeping into finance, including tax. I think that could be leveraged even without having the expertise to stand up and sustain that tech within your team. Just thinking of the continuum of skill sets needed for these different things, I think that deploying and sustaining that does require, I would argue, a higher skill set without having heavy support from IT and/or outside vendors to have that happen. And sometimes it’s more effective just to lean out into a SaaS [software as a service] solution for some of those things. So, I guess my short answer is, I personally don’t think the AI trend is going to be as key of a trend factor for why tax technologists will show up more in the next one to three years. I do believe it’s going to be because of data and the prevalence of low-code, no-code applications.
Necessary: I will add that in today’s tax departments, the major pain points are not around a need for some sophisticated AI or machine-learning solution. Most tax pains focus on acquiring their data efficiently, being able to manage the data, and being able to automate to help satisfy all of the tax compliance and accounting rules and deadlines. I do hope that this influx of AI and ChatGPT increases the conversation about technology so that there will be somewhat of an intangible value to tax as they continue to emphasize the need for a technologist. I hope it’ll help create more conversations about technology between finance, IT, and tax.
Levin-Epstein: Anything else to add?
Necessary: The variations of and the types of roles of a tax technologist can vary greatly. If you don’t have the budget currently, my recommendation would be to start small. Identify someone in your team to focus on some of these self-service technologies and see if you can find a small bite of the apple, build a pilot, and show return on investment or benefits that are possible within tax.
Quadros: Yes, adding a little bit of color commentary to what Kelly just mentioned: a tax technologist is someone that can facilitate process enhancements, drive better business performance and data transparency, encourage continuous improvement mindsets, and really encourage better business partnering across the entire organization. These efforts can start from small proofs of concept to inspire self-analytics and encourage IT to be focused more on the technical architecture. The goal is not to take a siloed approach but instead to build a better partnership with IT. Not building that relationship is an oversight and is an area a tax technologist is capable of helping with.
Coram: I’ll underline both what Kelly and Bryan have just shared. The one other thought that I’ll add is [that] as you think of your own technology goals, strategy—“road map” is a term thrown out a lot for tax technology—as you think about that, also layer in thinking of your people and your process and your data. I’m a firm believer that your technology strategy goals and road map need to have equal thought given to a data strategy and a people/talent strategy to have the combination be successful.
Levin-Epstein: Vikesh, you get the last word.
Patel: Awesome. To round it all up, I think if you’re making a role for a tax technologist, or if your department head doesn’t want a role for a tax technologist, I think to be a successful tax department, it’s just having an organizational culture that fosters innovation. If you don’t have that, I feel like tax departments [have a] compliance-first mentality, and that means innovation takes a second seat. It comes second and it’s ancillary. I think that paradox and that mindset needs to shift, because now, more days technology is leading the way, and the compliance comes second. So, by fostering that culture that kind of rewards curiosity and learning and that data literacy, I think tax departments can facilitate more cross-functionality. And then they have that problem-solving mentality if you have a tax technologist or if you don’t have a tax technologist. To be a successful tax department is appreciating the technology and innovation that’s available to you.
Levin-Epstein: That’s a good way to end it. Thanks, everyone.