Preparing for
Tax Automation

Step 1: Don’t Let Tax Be an Afterthought in ERP Projects

One of the most common mistakes in ERP migration projects is treating tax as an afterthought. Often, tax departments are looped into ERP planning too late, resulting in rushed implementations and costly errors. To avoid this, tax professionals need to be involved early and consistently throughout the ERP project.

Why early involvement matters:

• Align tax with broader business processes. Early engagement ensures the tax department’s needs are fully integrated with the overall ERP design, avoiding mismatches between tax processes and other business functions.
• Avoid costly fixes. If tax is addressed too late in the project, teams may need to retrofit solutions or rely on manual workarounds that are inefficient and prone to error.
• Ensure tax compliance is prioritized. Tax compliance rules and regulatory changes are complex and vary across jurisdictions. Involving the tax team early guarantees that these complexities are built into the ERP configuration from the start.

Being involved early means the tax department can guide critical decisions about automation tools, tax engine selection, and data workflows, all while reducing the risk of tax compliance being overlooked in the ERP transformation.

Step 2: Assess and Document Your Current State

A detailed understanding of your current tax environment is crucial to planning for future automation. Take the time to assess your data, processes, and technologies, documenting any inefficiencies or gaps. This assessment will help you prioritize where automation will have the greatest impact.

Key Actions:

• Review your tax-relevant data for consistency and accuracy
• Map out how data flows through various systems and identify bottlenecks
• Document the touchpoints where manual processes slow down efficiency

Step 3: Improve Tax Accuracy Today

Improving tax accuracy should be a top priority. Small errors can lead to overpayments, penalties, and non-compliance issues, all of which affect your company’s bottom line. By enhancing tax accuracy before migration, you’ll ensure a smoother transition and position your department for greater success post-automation.

Focus Areas:

• Conduct a transaction tax review to identify overpayments and exposure risk
• Implement immediate corrective action to address any tax miscalculations
• Create and refine tax matrices that can be mapped into future-state automation systems

Step 4: Streamline Exemption Certificate Management

Exemption certificates are a vital part of sales tax compliance, yet many departments still manage them manually, which can lead to errors, inefficiencies, and significant compliance risk. Tax departments can begin automating exemption certificate management now to ensure a smoother transition to a future-state tax engine.

Immediate Initiatives:

• Digitize certificate metadata and implement solutions to automate certificate tracking
• Conduct a certificate refresh campaign to update existing records and ensure compliance

Step 5: Prepare for Tax Registrations

With new economic nexus rules and evolving compliance requirements, tax registrations are more complex than ever. Automation can simplify this process, but it’s important to begin planning now by identifying where your company needs to register and remain compliant.

Next Steps:

• Conduct a nexus study to assess your company’s tax obligations in various jurisdictions
• Automate the process of managing tax registrations for more efficient compliance

Step 6: Plan for Future State and Vendor Selection

The transition to automation isn’t just about upgrading technology—it’s about rethinking the entire tax function. Begin outlining future-state design by defining the goals, workflows, and technologies that will support the tax department moving forward. This is also the right time to evaluate potential tax engine vendors and find the right solution for your business needs.

Key Considerations:

• Define specific requirements for the future-state tax function
• Research tax engine vendors and assess their fit with your department’s needs
• Collaborate with stakeholders to document measurable criteria for success

Ready for the Next Step? DMA Can Help.

Taking these proactive steps to prepare for tax automation may seem overwhelming, but with the right partner, it doesn’t have to be. DMA’s experienced tax technology team is here to help guide you through the entire process, from the initial assessment of your current environment to vendor selection and beyond.

Our transaction tax and tax technology teams work together with you to implement solutions that ensure accuracy, compliance, and efficiency—both today and in the future.

Contact us to learn more about how DMA can support your tax department in preparing for upcoming automation projects.