Guide to building your direct tax department tech stack

When Sue Voight, Senior Solution Consultant, and Jake Mattern, Principal Solution Consultant at Thomson Reuters Corporates Solutions Consulting, posed a critical question to a packed conference session: “For those using both [ONESOURCE] Income Tax and Tax Provision, are you leveraging the system-to-system integration?” only a few hands went up. This moment perfectly encapsulates the challenge facing direct tax professionals today — we have powerful tools at our disposal, yet many departments operate with fragmented, manual processes that drain efficiency and increase risk.

The reality is stark: modern direct tax departments juggle multiple software applications, often connected by nothing more than manual data entry and Excel spreadsheets. As Mattern shared from his industry experience, “We had about 60 M-1 workbooks for the 60 returns that we had… we used basically the same workbook for the returns as we did for the provision. That’s two different versions of that same file times 60 — that’s 120 Excel files that needed to be maintained each year.” This isn’t just inefficient; it’s unsustainable in today’s complex regulatory environment.

Jump to ↓Assessment phase: Where is your direct tax department today?

Tool selection phase: Matching solutions to direct tax pain points

Implementation phase: Building your integrated ecosystem

Optimization phase: Advanced automation and analytics

Your strategic roadmap forward for building a direct tax tech stack

Assessment phase: Where is your direct tax department today?

The hidden costs of fragmented systems

Before building your integrated tech stack, you need an honest assessment of your current state. Many tax departments still rely heavily on manual processes for data transfer between provision and compliance systems, creating unnecessary risk and consuming valuable professional time that should be focused on strategic analysis.

Consider the provision-to-compliance disconnect that plagues many departments. When asked about using the Provision migration tool to flow adjustments into compliance systems, typically only one person in a room of experienced professionals raises their hand. This represents a massive, missed opportunity — adjustments completed during provision work should seamlessly feed into compliance preparation, eliminating duplicate data entry and reducing errors.

Conducting your integration gap analysis

Start with these critical questions: Are your Income Tax and Tax Provision systems talking to each other? Can you automatically flow tax adjustments, state tax rates, and apportionment data between systems? If you’re manually re-entering data that already exists in another system, you’ve identified your first integration opportunity.

Look beyond the obvious connections. Foreign Inclusions calculated within the International Tax Calculator data should flow into Provision. Final tax return adjustments should automatically feed into provision processes for RTP calculations. Estimated payment data can be populated across all relevant systems (Calendar, Provision, and Compliance).

Quantifying the impact

Document the time your team spends on manual data transfer, duplicate data entry, and reconciling differences between systems. This baseline measurement becomes crucial for demonstrating ROI as you implement integrated solutions. Most departments discover they’re spending substantial time on activities that could be automated through proper system integration — time that could be redirected to strategic tax planning and analysis.

Understanding the data management layer

The key to modern direct tax efficiency lies in what Thomson Reuters calls the “data management layer” — solutions that connect your source systems to tax applications with maximum automation. As Mattern explains, “Everything kind of above that represents solutions to help you leverage and connect your data from your source systems into your tax applications with as much automation and efficiency as possible.” This isn’t about replacing your core tax systems; it’s about creating intelligent bridges that eliminate manual processes while maintaining data integrity.

Data Hub vs. Data Flow: Strategic decision making

For centralized data management, ONESOURCE Data Hub functions as your tax data warehouse. “Data Hub is going to be a data lake or a data warehouse. It’s on the platform. It is a way to consume data from any size or shape, get it structured, validated, enriched, and ready for downstream use, and it can be connected into your applications,” explains Mattern. This solution excels when you’re getting data, such as trial balance data, from multiple systems, different subsidiaries, or various data formats that need standardization before flowing into tax applications or processes.

ONESOURCE Data Flow addresses a different challenge — data collection and workpaper or process standardization. Instead of managing dozens of individual Excel workbooks, Data Flow provides what Mattern describes as “one template and one point of management. So, if next year I’ve got five new adjustments, I don’t have to update 120 different files throughout the year. I just add those five new adjustments one time to a template, and it’ll cascade down to all of those requests in real time.”

Making the right choice for your direct tax department

The decision between tools comes down to your specific workflow design. When it comes to data collection, as Mattern notes, “Really, to me, it’s: what do you want that process to look like? How do you want to design that process, and what do you want the end user experience to be?” If you need local controllers to book entries or access tax reports, Global Access might be optimal since it integrates directly with ONESOURCE Tax Provision. If you need flexible data collection that can support multiple downstream processes, Data Flow offers greater versatility.

Organizations implementing integrated data collection tools consistently report significant improvements in both preparation efficiency and data accuracy. The key is matching the tool to your specific process requirements rather than forcing your processes to fit the tool.

Implementation phase: Building your integrated ecosystem

Starting with natural integration points

Begin with the highest-impact, lowest-risk integrations. As mentioned in this session, allowing the tax adjustments calculated during Provision to flow into your returns can eliminate duplication of effort. Conversely, once the returns are completed, allowing the final tax adjustments to flow back into the Provision can automate your RTP process. This single integration eliminates hours of manual data entry while ensuring consistency across your provision and compliance processes.

Addressing IT concerns strategically

Many integration projects stall due to IT security concerns about connecting directly to ERP systems. Mattern offers a practical solution: “Sometimes, IT might say ‘We don’t want anything connected to the ERP system or finance systems.’ By creating an inbound/outbound closed loop process through an SFTP server, we can bridge the gap and make IT happy as well as streamline the data from the ERP system into ONESOURCE. Think of it as a secure desktop folder where data gets dropped; ONESOURCE retrieves it without direct ERP connection.”

Preparing for Global Minimum Tax compliance

Pillar 2 compliance demands integrated data flows that many departments aren’t prepared for. As outlined in the session, “Some of the tools to gather data for Pillar 2 come from Tax Provision. There’s certain items like profits before tax, your tax expense — those things are going to be able to flow directly into the Orbitax platform where GMT resides.” Companies with integrated tax technology platforms are better positioned to meet Global Minimum Tax compliance deadlines successfully. Start building these connections now: XML data from Income Tax and CbCR reporting create a comprehensive data picture.

Optimization phase: Advanced automation and analytics

API-powered efficiency gains

APIs unlock advanced automation opportunities. Voight highlights a practical example: “One of the biggest use cases I see is using an ONESOURCE Income Tax API to send all of your returns to PDF. Think about it – printing state returns can be labor intensive and time-consuming. Using the API, all returns can be sent to PDF for all jurisdictions without even logging into the software.” Another example of API usage that is growing in popularity is E-filing – from generating the XML, to adding attachments to submitting the XML to the various jurisdictions. Departments implementing automated reporting tools consistently save significant time on routine data extraction tasks.

Democratizing data access

OData (short for Open Data Protocol) is a common industry standard that simplifies the creation and consumption of RESTful APIs. It provides non-technical tax professionals with direct access to system data without programming knowledge. As Voight emphasizes, “Most of us are accountants, we’re not programmers. This is going to give you that simple, non-technical way to grab the data” for analysis, dashboards, and executive reporting. Using OData allows companies to query the data they need for the visualizations that are meaningful and relevant to their company.

Your strategic roadmap forward for building a direct tax tech stack

Building an integrated direct tax tech stack isn’t about technology for technology’s sake — it’s about creating sustainable competitive advantage through operational excellence. Start with assessment: identify your highest-impact integration gaps. Move to selection: match specific tools to your pain points rather than implementing everything at once. Focus on implementation: begin with natural integration points that deliver immediate value. Then optimize: layer in advanced automation as your team’s confidence grows.

Remember Voight’s key insight: “No two companies are the same on what works best for them.” Your tech stack should reflect your unique processes, team capabilities, and strategic objectives.

Ready to transform your direct tax operations? Explore Thomson Reuters ONESOURCE Direct Tax to learn more about how it can help your team.