While the silos still stand in many corporate tax departments, in others the outlines of a truly integrated tax function for the 21st century are starting to appear.

Here’s the second part of my interview with Jason Rinsky, SVP of corporate taxation with DRS Technologies, a supplier of products, services, and support to military forces and intelligence agencies worldwide (the first part is here). Rinsky tells how his vision of a technology-enabled, streamlined tax process translated into tangible benefits at DRS.

Cummings: You mentioned that there was some duplication of effort in DRS Technologies’ tax work. Was that to some extent structured into the systems that you had?

Rinsky: It was structured within the processes that we had. Most tax departments that I had worked with viewed their tax function in terms of multiple different processes. They had a tax provision process, they had a tax return process, they had an audit process and a planning process, and although they attempted to interconnect the different areas, in many respects they were doing the same portion of the job a couple of different times over the course of a year.

What we wanted to do at DRS was to come up with a true vision in terms of how the cycle should work. Were there ways to move from point A to point Z within the cycle without duplicating effort within the department as well as outside of the department? We wanted to use tax technology to allow us to in essence go directly from a trial balance — and specifically from trial balances on different ERP platforms — into a tax provision. That would allow us to have the provision be prepared within a very, very time-constrained cycle, and then immediately be able to roll that information directly into a tax return so that there was no duplication of effort between the provision process and the return process.

Cummings: Two areas where there has been, historically, a disjunction in many tax departments …

Rinsky: Unfortunately, the older systems and the prior technology didn’t afford you a means of being able to do it any better. The exciting part about the software that exists today is that now, more than ever, you have the ability to loop these different processes into one big cycle. You can roll in your state tax planning and compliance, your research, your whole dataflow for your transactional taxes, and you wind up with a tax process that’s automated to the point where you’re no longer requiring so many bodies to data-gather, to get the numbers together.

It’s not exactly “at the press of a button” — my team always makes fun of me for saying that! — but you’re able to start doing analytical variance review and figuring out from a tax standpoint if a particular answer makes sense. And if it doesn’t make sense, you can start asking questions without having to go through the process and the time period associated with getting your information to the point where you can do the analysis. You’ve effectively leapfrogged over months and months of work so that you’re already starting on day one with the more difficult and analytical and, quite honestly, more fun areas.

Cummings: What other benefits did the integration achieve?

Rinsky: If you’re being reactive and it takes you a period of time to prepare your tax return and your provision — and both of those cycles historically are reactive, they wait until the end of the year — if you have to wait before you start asking some of those questions, a lot of the issues are “out of sight, out of mind” for the people who were involved with them from a transactional standpoint.

If, instead, you have a process in place that allows you to do real-time data-gathering and in real time come up with variance analysis, you’re now asking your questions of the folks that were involved in the transactions either while the transaction is still in the process of being implemented or immediately after it has occurred. Which again saves time, because then they don’t need to get themselves back up to speed in terms of what their thought process was at the time. You’re able to leverage the intelligence that they have in real time.

It turns the whole tax function into a collaborative function so that you’re running in real time with the other functional areas of the organization.

To be continued … ###