Written by: Justin Reinard

As technology continues to evolve at an unprecedented pace, companies currently on SAP ECC, Oracle R12, and other legacy systems are faced with the inevitable need to migrate to newer systems, often SAP S4Hana and Oracle Cloud ERP, respectively. ERP migrations will require downstream modifications to the tax landscape and necessitate transaction tax policy updates and new tax technology automations. With anticipated automation projects looming in the near future, tax departments must think holistically and be proactive in utilizing the lead time to prepare for digital transformation.

Tax departments can proactively implement several key initiatives to optimize operations and lay a strong foundation for the impending technology shift.


Before embarking on any automation project, tax departments should conduct and document a comprehensive assessment of their current-state data, technology, and processes. This involves identifying the data sources, analyzing data quality, and evaluating the efficiency of existing tax processes. By understanding the enhancement opportunities of the current system and processes, tax departments can identify areas where automation and change management can significantly increase efficiencies and tax accuracy. This assessment will help prioritize automation efforts and streamline the future-state design.

  • Review all tax-relevant data and processes for accuracy, completeness, and consistency
  • Document customer interaction and experience related to exemption certificates and the current process for obtaining, validating, and renewing customer exemption certificates
  • Identify any data quality issues or master data gaps that need to be addressed
  • Identify and document the sources of tax-related data wrangling at month-end for compliance file preparation
  • Map out the flow of data through various systems and processes
  • Identify upstream business processes, manual interventions, and potential areas for tax-relevant change management
  • Understand the dependencies and interconnections between different tax processes
  • Determine the volume and complexity of transactions handled by the tax department



Tax departments can improve various aspects of their tax landscape now to prepare for and facilitate upcoming automation projects. This includes addressing tax accuracy, exemption certificate management, and tax registrations. By proactively taking steps to enhance and streamline these processes, tax departments can improve efficiency, reduce non-compliance risks, and prepare for the future state of tax management.


Achieving tax accuracy is critical to minimize overpayments and exposure, avoid penalties and interest, and mitigate risks. Overpaid taxes affect a company’s bottom line and, for tax exposure identified under audit, penalties and interest can be up to 50% of the tax liability. Tax departments can engage in projects that focus on enhancing tax accuracy, recovering overpayments, and creating matrices that can be mapped to a future-state tax engine.

  • Transaction tax audit
    • Perform a data-driven transaction tax overpayment and exposure analysis to understand data attribute enhancement opportunities to leverage during digital transformation and to increase tax calculation and reporting accuracy
    • File refund claims, if applicable, in key jurisdictions
    • Perform a root cause analysis on data attribute mappings causing inaccuracies
  • Create and refine tax matrices based on review findings
  • Provide tax-relevant shortlist and train requisitioners and accounts payable professionals on tax considerations


Exemption certificates play a crucial role in managing sales tax compliance. However, manually tracking and managing these certificates can be time-consuming and prone to errors. Auditors are becoming increasingly more stringent about exemption certificates being available during a sales transaction audit. If the certificates are unavailable, the auditor can assess tax on the transaction, even if it should be exempt.

Automating exemption certificate management can significantly reduce the risk of non-compliance and improve efficiency. Tax departments can get ahead of a future tax engine automation by implementing solutions that automate the collection, validation, renewal, and storage of exemption certificates. These solutions can then be rolled into the future-state tax engine.

  • Perform a certificate refresh campaign
  • Digitize certificate metadata and images
  • Enhance the change management process


Tax registrations are an integral part of compliance, especially for businesses operating in multiple jurisdictions and based upon relatively new economic nexus rules. Managing tax registrations manually can be a complex and tedious task. Automation can streamline this process by leveraging technology to identify transaction count and gross sales comparative to state economic nexus thresholds. Tax departments can proactively determine new registration and associated tax requirements to remain compliant in their operating jurisdictions via configurations in a future-state tax engine. By automating tax registration processes, tax departments can improve accuracy, reduce the risk of non-compliance, and free up valuable time for more strategic tax activities.

  • Perform tax registration study (physical and economic nexus)
  • Pursue voluntary disclosure agreements, if applicable
  • Register in applicable jurisdictions to calculate and remit with future-state tax calculation and compliance solution



Tax departments need a well-defined, comprehensive future-state design plan to prepare for future automation projects that will guide tax engine selection and implementation and set the stage for continuous improvement and innovation. This is also an opportune time for tax departments to address additional aspects of their tax environments, such as merging disparate technologies across countries and expanding automation for use taxes and purchasing.


After performing a comprehensive current-state data and process audit, tax departments can identify gaps, document enhancement opportunities, and begin a future-state design plan. This plan encompasses the desired state of the tax function after automation implementation and establishes a roadmap for achieving it.

  • Collaborate with key stakeholders to define the specific requirements, functionalities, and workflows of the future-state tax function
  • Define and document measurable criteria for assessing the success of future-state design
  • Evaluate return on investment, and based on the ROI assessment, determine the budget allocated for implementing the future-state design
  • Explore near-term projects, such as tax review and recovery initiatives, that can generate cost savings to offset the expenses associated with automation
  • Create a wish list of future-state that can be leveraged to define the overall automation and process improvement project


A wide range of tax engine vendors are available in the market, each offering different features, functionalities, and pricing models. Evaluating and comparing these vendors can be overwhelming, especially when considering factors such as regulatory compliance, scalability, integration capabilities, and user experience. Tax departments can begin their market research now to identify potential future-state automation solutions.

  • Evaluate various vendors and assess their expertise and compatibility with the organization’s future-state requirements
  • Request detailed proposals from shortlisted vendors that outline their solutions, transaction tax content, and ability to accommodate desired future-state requirements
  • Create client-specific use cases to be leveraged during the vendor demonstrations
  • Develop a scoring method to evaluate the shortlist of vendors and determine the optimal solution based on your specific business requirements, industry, footprint, and desired functionality
  • Engage with vendors to conduct product demonstrations and proof of concept sessions


DMA Can Help

DMA can help tax departments make the most of the time leading up to future automation projects. Our tax and technology professionals partner with you on proactive preparation to ensure a smooth transition and position your team for long-term success in the evolving tax and technology landscape. DMA’s Transaction Tax and Tax Technology services can facilitate and manage all aspects of your pre-automation projects.

DMA understands that tax policy, compliance, and automation must all work in tandem to mitigate tax compliance risk, identify enhancement opportunities, and maximize resources. Our comprehensive TRANSACTIONTAX360™ approach combines our jurisdiction- and industry-specific expertise with our suite of solutions and ERP experts to ensure your transaction tax administration is accurate, efficient, and automated.