A new discipline for tax: the emerging area of tax information and operations management helps CPAs add strategic value to their organizations.

Author:Allen, Susan C.
Position:Certified public accountants

Whatever your perspective--citizen, CPA in public practice, accountant in business and industry--the word "tax" can carry many negative connotations. But what if you heard that a new field within the accounting profession is seeking to transform tax from a center of compliance into a driver of value? What would pop into your mind then?

Brian Morris, CPA, executive director and leader of enterprise tax technology services with EY's Tax Performance Advisory practice, suggests that the topic of tax should evoke questions--ones crucial to the success of your business or practice. "Given the global focus on tax and its pervasive impact on businesses, the key questions CEOs, CFOs, and managing partners should be asking are, 'Do we have the right information to properly manage tax within our organization? Am I giving tax the right support and resources to perform the job I need them to? Can they accomplish their objectives? Can tax extend beyond being a cost center to add value to the organization? How do I do this?'"

The answer to those questions may be found in a new way of thinking about tax. This article examines the emerging discipline of tax information and operations management and explores how CPAs can apply this discipline to make positive changes in the tax function, both in public practice and business and industry.

"For many businesses and firms, a focus on operations is not new, but understanding the criticality and application of these principles within tax is alternative to traditional thinking," said Lauren Kovar, CPA/CITP, CGMA, director of Client Advisory & Strategy for Thomson Reuters and chair of the AICPA Tax Information 8c Operations Management (TIOM) Task Force, which was created to help fill the gap in understanding about this growing area of tax. As part of that process, the task force developed the tax operations framework (see the sidebar "The Tax Operations Framework Explained"), which provides practitioners with a blueprint for successfully implementing tax information and operations management to transform their tax function.

"In the past five years, we have seen more and more tax professionals embrace foundational tax operations and incorporate the framework into everything they do," Kovar said. "New terms such as 'taxologist' and others are being used to describe this expanded role of the tax professional."


Tax information and operations management can be defined as overseeing, designing, and controlling tax-related information and processes while ensuring that tax operations are efficient in terms of using as few resources as needed and effective in terms of meeting stakeholder requirements. Effective tax operations are an essential element of wellrun corporate tax departments and profitable public accounting tax practices. Operations are becoming the key driver for successful tax professionals, with the timeliness and accuracy of tax outcomes directly tied to the data, information, processes, and technologies that deliver those results.

"Tax implications are everywhere in business," Kovar said. "There is a tax consequence to every transaction and pretty much every movement--whether people, products, or intellectual property--made by businesses big or small. This translates into exponential amounts of data and information that must be managed in an increasingly complex regulatory environment. Tax professionals can no longer afford to employ traditional or manual methods to produce their results, bringing us to the necessity of a foundational operations approach for tax."


A recent survey from PwC and the Manufacturers Alliance for Productivity and Innovation (MAPI) of more than 100 companies found that 77% had no tax technology strategy, with the majority of those having no plans to develop one. In addition, PwC and MAPI reported that "only 7% of survey respondents' tax departments spend more than 50% of their time analyzing data. "This translates to 93% of companies not focusing tax resources effectively--in other words, a gap exists in their operations management.

Historically, CPAs and other tax professionals could work around this gap. The tax function always managed to get the job done and support the business, but this often was accomplished through sheer determination and exceptional effort. Visualize a "man behind the curtain" frantically trying to keep everything running. To the organization outside of tax, everything appears to be running smoothly, but what cannot be seen is the real effort that has gone into creating the result. As the changing tides continue to flood tax, this is no longer a sustainable model. The evolving tax landscape now prevents the "man behind the curtain" from being able to keep up.

"The way companies and providers do tax work...

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