Perspectives

Technology solutions for the property tax life cycle

Streamlining compliance through property tax automation

For many tax departments, property tax compliance is an annual exercise in data wrangling. But new software solutions can alleviate the burden in each phase of the property tax life cycle and help you say goodbye to error-prone manual processes.

Taking on a perennial challenge

For businesses, property tax compliance is complex and challenging:

  • High volumes of asset and financial data can increase risk and the time it takes to file business personal property renditions.
  • Complications may arise when fixed asset systems or enterprise resource planning (ERP) systems are implemented or upgraded.
  • Multiple fixed asset systems acquired during M&A activity may not be fully integrated for years after closing, making data sourcing burdensome and time consuming.

Many businesses rely on offline or top-side adjustments via manual entry and manipulation, which can be prone to errors. Meanwhile, state and local jurisdictions are adopting different approaches to determining values that need to be calculated quickly and accurately.

The challenges cross industry lines and are common in both large and small tax departments.

Fortunately, tax technology has been evolving and adapting to solve challenges throughout the property tax life cycle. While some technologies address specific issues, broad-based solutions intended for integration in every step of the property tax process can offer added benefits. Establishing and following a property tax technology road map can help transform your tax department, applying automation to reduce time to file, help mitigate risk, and ultimately lower risk by improving audit readiness.

Potential issues in the property tax life cycle solved with technology

Technology in each phase of the property tax life cycle

The value of a property tax technology road map

Spreadsheets are fast, powerful, and flexible tools, but lack of internal documentation of procedures and knowledge turnover can lead to:

  • File versioning issues
  • Large files with unorganized sheets
  • Unverified formulas
  • Processes passed between resources without much review

Due to these issues, tax technology transformation often includes an advanced software solution to reduce human error while increasing productivity. Software solutions are becoming increasingly accessible through secure, online software-as-a-service offerings. These allow more users to access and use systems from decentralized locations. However, advanced technologies can be difficult to implement and maintain.

To start a successful technology transformation, consider using a property tax technology road map with manageable short-, mid-, and long-term milestones.

  • Short-term milestones are achievable within one year. Implementing automation or spreadsheet macros to eliminate repetitive work is a good short-term milestone.
  • Mid-term milestones are achievable in about five years. They should be significant achievements that help propel your tax department and company forward with a positive strategic business impact.
  • Long-term milestones will most likely never actually be achieved—the business landscape is too volatile—but they can serve as guiding beacons for shorter-term goals. A good example is a complete ERP and financial system upgrade.

As you navigate your property tax technology road map, continually review roles, processes, and system architecture to keep technology up to date; promote buy-in; and anticipate or address new issues. A leading practice is to front-load investment in research, complete a robust round of requests for proposal, and participate in an extensive solution design to properly scope technology implementation projects. During implementation, you should rely on industry best practices and learn from comparable companies of similar size and asset base. An agile implementation approach can help to solve problems in a manageable way.

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