Corporate Tax Automation

2010 Software Survey Corporate Tax Automation Current Trends in Technology Published January 2011 by: Association for Computers & Taxation P. O. Box 1093 Warwick, NY 10990 Phone: 845.987.9690 Fax: 845.987.9704 E-mail: info@taxact.org Internet: www.taxact.org

Corporate Tax Automation Current Trends in Technology Each year, the Association for Computers & Taxation (ACT) surveys its members to learn about current trends in corporate tax automation. This report is a summary of selected information from the ACT software survey conducted in the Summer of 2010. The survey canvassed tax automation decision makers and users to fi nd out what tax systems, hardware and software products are currently being used. The members were also asked to evaluate their tax automation tools, and provide feedback on their successes and shortcomings. ACT is a national, nonprofit, educational organization. When the survey questionnaire was distributed, 85 Regular Member companies submitted responses to the survey, most in the Fortune 1000 category. In addition, 74% of respondents are multi-national companies and 89% of respondents have annual sales over $1 billion. This report is distributed to all individual ACT members (Regular and Associate). For security and privacy reasons, the survey database is kept at ACT. However, as an added benefi t for Regular members of ACT, the survey database is available for consultation on issues covered in the survey free of charge. Regular members can call, fax or email in questions such as What tax software is being used by other companies in my geographic area and in my business/industry? Our staff queries the database and faxes or emails the results back to the ACT member. Regular Members can then contact other members as needed to share experiences and ideas on tax automation. Non-Members and Associate Members may also request queries, but all information is non-identifying and queries are granted on a case-by-case basis. The survey focused on the following topics: Tax software used for compliance, provision, and planning Service and reliability ratings for tax software Electronic fi ling Data collection tools Document management software Sales and use tax software Other tax software Industries - 28 % of respondents are from the Manufacturing and Process; 15% are from Retailer/ Wholesaler/ Distribution; and 9% are from Finance/ Banking/ Accounting. Membership information can be found by visiting our website www.taxact.org 1

Tax Compliance Software The longest a respondent has used their existing system is 31 years; with the average being just under 10 years. In 2010, the majority of respondents indicated that they use either CORPTAX (US Compliance/International Compliance/Insurance/ Partnership/SCorporation) or Thomson Reuters ONESOURCE Income Tax. Below is a list of all products used and the number of respondents that use each product. Other software packages used include Thomson Reuters Abacus Enterprise and Thomson Reuters PowerTax. One respondent indicated they use a hybrid of ERP and desktop applications and are in the process of implementing software. Some respondents indicated that they have a manual process. Of the 89% of respondents with sales >$1 billion, 44% indicated they use CORPTAX, 27% indicated they use Thomson Reuters ONESOURCE, and 6% indicated they use Vertex Income Tax as software for the income tax function. TTI Tax Series Outsourced Tax Dimensions CCH, a Wolters Kluwer business ProSystem fx Tax NA/None Vertex Income Tax 1% 2% 3% 3% 4% 6% Thomson Reuters ONESOURCE Income Tax 30% CORPTAX Compliance 51% 0% 10% 20% 30% 40% 50% 60% Vendor 1999 2001** 2002 2003 2004 2005 2006 2007 2009 *** 2010 AA (Sold to Vertex Inc. in 2002) 16% 20% 17% ATX 3% CCH Perform Plus 2% 3% 3% CORPTAX 33% 46% 43% 59% 61% 54% 57% 47% 52% 51% Other/NA/None 10% 8% 12% 6% 8% 8% 5% 9% 8% 4% Outsourced 3% 2% Tax Dimensions 4% 4% 4% 5% 3% Thomson Reuters ONESOURCE 41% 26% 28% 20% 16% 21% 22% 28% 28% 30% TTI Tax Series 3% 1% Vertex Income Tax 15% 11% 13% 12% 6% 3% 6% **Note that the ACT Survey for Fall 2000 was moved to Spring 2001. *** Note that the ACT Survey for Fall 2008 was moved to Spring 2009. 2 2010 ACT Software Survey

Service & Reliability of Compliance Software ACT members were asked to rate the service and reliability of the tax compliance software in the following areas: Service Area Poor Average Good Very Good Excellent Accuracy of tax law & computations: 0 7 13 41 18 0% 9% 16% 52% 23% Timeliness of tax updates: 1 7 12 36 23 1% 9% 15% 46% 29% Timeliness of efi le functionality: 2 2 14 40 21 3% 3% 18% 51% 27% Reliability: 1 4 18 40 15 1% 5% 23% 51% 19% Customer support: 0 9 23 25 21 0% 12% 29% 32% 27% Processing speed/performance: 3 7 21 34 13 4% 9% 27% 44% 17% Ease of learning: 5 14 26 25 9 6% 18% 33% 32% 11% Cost/benefi t of training: 3 13 29 29 5 4% 16% 37% 37% 6% Flexibility in computational modifi cations: 2 14 18 30 12 3% 18% 24% 39% 16% Flexibility in report generation: 4 13 21 29 9 5% 17% 28% 38% 12% Integrates with third party reporting application: 3 17 24 27 3 4% 23% 32% 36% 4% Accuracy of systems advice: 1 12 21 35 7 1% 16% 28% 46% 9% Integrates with your company IT standards: 0 10 22 32 13 0% 13% 29% 42% 17% Ease of use: 4 8 23 35 8 5% 10% 29% 45% 10% E-fi ling: 2 5 18 41 13 3% 6% 23% 52% 16% Upgrade/Purchase Plans 21% of the respondents said they were planning to upgrade or purchase a new Federal tax compliance software. The major reasons for wanting to switch systems include: More effi ciency and versatility Ease of use Desire to be on one platform Need more accurate calculations for state compliance More functionality Better integration of processes Of those respondents that switched to a new system this year, they were asked if their expectations were met. 94% of the respondents indicated they were. Others indicated an interest in staying current with available options whether they change systems or not. Location of Installation 21% of respondents are shopping for or upgrading their tax compliance system Twenty-nine percent of respondents indicated that their primary tax applications are installed inhouse, which is a decrease of 25% since 2009. In addition, for those that maintain their tax systems in-house, the majority of respondents indicated Microsoft SQL and Oracle are the primary databases. 3

Modernized Electronic Filing 85% of respondents use their income tax compliance provider to e-file their returns. Eighty-fi ve percent of respondents indicated they use their vendor to complete e-fi ling, 7% have created an in-house solution, and the remainder either outsource or use the vendor package to generate the fi le and fi le themselves. Respondents used the following tax software products for Modernized Electronic Filing (MeF): CORPTAX U.S. Compliance 44% Thomson Reuters ONESOURCE 28% Vertex Income Tax 4% TTI Tax Series efilereviewer (aggregation) 1% TTI Tax Series efilemanager (PDF generation) 1% Provision Software 52% of the respondents use inhouse or spreadsheet based applications for provision. In 2009, that number was 58% and 10 years ago it was 80%. Other solutions listed include Outsourcing and Tax Dimensions. The respondents were asked what software or solution they use for calculating their provision. The majority of the respondents indicated that they are using an in-house developed solution (52%), such as Excel. Of those respondents using a third-party application, 22% indicated they use CORPTAX (Advanced Domestic Provision/Advanced Global Provision) and 30% indicated they use Thomson Reuters ONESOURCE TaxStream Provision. Others indicated they use Global Integrator, Hyperion Essbase, Longview Tax, PowerTax, Tax Information Systems (Accenture), and combined multiple solutions. Service & Reliability of Provision Software ACT members were asked to rate the service and reliability of the third party tax provision software they use in the following areas: Service Area Poor Average Good Very Good Excellent Accuracy of tax law & computations: 6% 21% 32% 35% 6% Timeliness of tax updates: 9% 21% 31% 31% 7% Reliability: 3% 22% 31% 34% 10% Customer support: 13% 14% 35% 29% 10% Processing speed/performance: 4% 19% 36% 33% 7% Ease of learning: 5% 24% 33% 35% 3% Cost/benefit of training: 8% 18% 34% 38% 2% Flexibility in computational modifications: 11% 17% 36% 24% 12% Flexibility in report generation: 14% 20% 35% 26% 6% Integrates with third party reporting application: 13% 26% 37% 23% 2% Accuracy of systems advice: 13% 11% 44% 27% 5% Integrates with your company IT standards: 6% 14% 38% 26% 15% Ease of use: 3% 18% 42% 28% 9% 4 2010 ACT Software Survey

Sales & Use Tax Software The majority of respondents who automate the sales and use tax function use a third-party system. The remaining respondents either use in-house developed spreadsheet and database systems or outsource. In addition, several respondents indicated that they use multiple systems for this function. 30% 25% 20% 15% 10% 5% 0% BNA Sales & Inhouse/Excel ADP Taxware Outsourced Use Tax Rates and Forms Thomson CORPSALES Reuters Sabrix Thomson Reuters ONESOURCE Unknown/NA No software Vertex Sales & Use Tax (Leasing, Retail, O Series, Returns, L/Q Series) 5

Other Tax Software In the other tax areas, respondents used a variety of software applications to manage tax deadlines, tax audits, collect data, manage documents, address FIN48 requirements, and fi le auxiliary tax forms. 27% of respondents use off-the-shelf tax calendar programs. This is down from 42% in 2009. Tax Calendar Software Tax calendar software manages the administrative aspects of fi ling tax returns for multiple companies in multiple jurisdictions. All tax departments need to track tax return due dates and work-in-process status. Twenty-seven percent of the respondents use off-the-shelf software programs associated with their compliance product such as, CORPTax s CORPCalendar, CORPTAX Workspace, Thomson Reuter s ONESOURCE Calendar, Vertex Tax Calendar, Time Value - File in Time, RedMoon Solutions etaxcalendar, and TTI Tax Series etaxcalendar. Sixty percent of respondents indicate they use an in-house solution such as Access, Excel, or SharePoint to manage the tax calendar. FIN 48 Software 2009 was the fi rst year the ACT membership was surveyed about FIN 48 software. During 2009, about 76% of respondents used an inhouse software solution for FIN 48, which primarily consisted of Excel spreadsheets. For 2010, that number has decreased to 66%. An additional 16% indicated that they have a manual process and do not use software. Others who responded indicated that they use CORPTAX Tax Contingency, DMI48/DMI48 Lite/DMI48 Essential, Longview Tax, Thomson Reuters ONESOURCE Uncertain Tax Positions, TTI Tax Series etaxprovision FIN48, or Vertex Income Tax Domestic/International Provision. 39% of respondents automate the tax audit function, which is up from 24% in 2009. 6 Tax Audit Software Keeping track of the Information Document Requests (IDRs) from a tax audit, the E-mails you sent to the subsidiary accountants asking for the support, and who is researching which tax liability issue can be overwhelming at best. How do tax departments automate this area? Most respondents still rely on in-house developed spreadsheet and/or database applications. Thirty-nine percent of those respondents who automate the tax audit function use a third-party developed application such as BNA s Corporate Tax Audit Analyzer, RedMoon Solutions AuditRoom, and Thomson Reuters ONESOURCE Audit Manager, or TTI Tax Series AuditTracker. Tools used to build custom systems included MS Excel and MS Access. 2010 ACT Software Survey

Fixed Asset/Tax Depreciation The majority of respondents use the Fixed Asset Depreciation module which comes with their accounting software such as Oracle, SAP, PeopleSoft, Lawson and JD Edwards. The leading stand-alone Fixed Asset/Tax Depreciation systems used were from Best Fixed Assets with other companies using the following solutions: PowerPlan Power Tax, RedMoon Solutions Fixed Asset Manager, CCH CorpSystem Fixed Assets, DDA, E&Y, Excel with Sage Software, FAS, Real Asset Management, Inc. Most respondents used the Fixed Asset Depreciation module that is built into their accounting system. Property Tax Systems About 61% of respondents automate the Property Tax function with 62% of this number utilizing third party software. The leading third party developed systems include: Tax Compliance, Inc. PTMS, Thomson Reuters ONESOURCE Property Tax, and PowerPlan Property Tax. Some respondents indicated that the property tax compliance function is outsourced (9%). Thomson Reuters Unknown, BNA, 1% No ONESOURCE 3% software/manual Property Tax, 13% process, 12% BNA CORPTAX, 1% Tax Compliance, Inc PTMS, 19% In House (Access, Excel, etc), 24% No software/manual process In House (Access, Excel, etc) N/A PowerPlan, 4% Outsourced, 8% N/A, 15% Outsourced Payroll Tax Systems Sixty-one percent of responding companies use ADP for their payroll tax calculation, 1% use Vertex Payroll Tax Solutions, and the remainder either outsource, utilize their ERP system, or the payroll tax function is outside of the tax department. Transfer Pricing The majority of responding companies indicated that this function is not applicable to their company (27%) which is down slightly from 2009 (32%). Others indicate that the transfer pricing function is outsourced or they use internally developed applications. The remaining respondents use applications such as Thomson Reuters ONESOURCE Transfer Pricing, Ceteris, and Transfer Pricing Architect. 7

Estimates and Extensions Seventy-three percent of respondents use an in-house solution to calculate estimates and extensions. Third party software solutions respondents indicated they use CORPTAX U.S. Compliance, Thomson Reuters ONESOURCE Income Tax, and TTI Tax Series. 78% of the respondents continue to use in-house or spreadsheet based applications for planning purposes Income Tax Planning Software Respondents used the following tax software products for Income Tax Planning tasks. The majority of the respondents (78%) are still using internally developed Excel programs. Some respondents are using third party software such as CORPTAX U.S. Federal Planner, CORPTAX U.S. State Planner, Thomson Reuters TaxStream, Thomson Reuters ONESOURCE State Analytics, and Longview Tax. Document Management/Workfl ow The leading third party software for Document Management/Workfl ow is Sharepoint with CORPTAX Workspace, Documentum, Thomson Reuters ONESOURCE Workfl ow Manager, Deloitte Tax Controversy Manager, and ISSI LiveLink next in line. In 2010 only 36% of respondents to the survey indicated that they have not addressed this area or are using in-house solutions such as Lotus Notes, Excel, and Network File Servers to manage documents. This is down from 65% in 2009. 39% of respondents have not addressed automating the management of their exemption certificates Exemption Certifi cate Management The leading third party software for managing exemption certifi cates is Vertex Exemption Certifi cate Management, followed by Ryan CertiSoft CM and Thomson Reuter s ONESOURCE Sales & Use Tax Exemption Certifi cate Management. The majority of respondents either have not addressed this area (39%) or use an in-house solution. Data Collection Fifty-one percent of respondents use an internally developed solution for collecting data. Software solutions include Thomson Reuters ONESOURCE Data Flow, CORPTAX Data Collect, CORPTAX GDX, CORPTAX Offi ce, Vertex Data Collect, and TTI Tax Series edatacollector. 8 2010 ACT Software Survey

Interest and Penalties Thirty-nine percent of respondents use TimeValue, followed by DMI (InterestNet or LargeCORP), C&C Instant Interest, and Thomson Reuters ONESOURCE Income Tax for calculating interest and penalties. Value-Added Tax (VAT) Software solutions for VAT include Thomson Reuters Abacus, Thomson Reuters Sabrix VAT Manager and Vertex Value Added Tax O Series. 76% of respondents said this area is either not applicable, or they are using an in-house solution. The chart below refl ects the countries where responding companies reported using software for VAT: Corporate Governance and Legal Entity Management Several respondents (29%) have a manual process for this area. Third party software solutions used include CORPTAX Visual Org, CORPTAX Entity Management, Thomson Reuters ONESOURCE Entity Manager, Superviewer, Bridgeway s Secretariat, Blueprint Oneworld, Global Corporate Manager, WorldRecords, HCue. Other Respondents indicated the following tools are used for other needs. Additional tools are CCH IntelliConnect; CORPTAX Offi ce; E-Forms; First American Proxix - US Tax Jurisdiction Assignment; GainsKeeper; RedMoon Solutions Section 382 Solution, etaxportal, IntelyProjects, IP6Sigma for Tax, Like-Kind Exchange Matching, and PowerOLAP; Ryan Tax Decision ERP, Tex-Tax, and eextract; Superforms; US Tax Advantage Sec 199; Thomson Reuters Checkpoint, ONESOURCE R&D Credit Manager, and Trust Tax. 9

About ACT Founded in 1981 by a group of corporate tax professionals, the Association for Computers & Taxation (ACT) is the preeminent association for corporate tax professionals who are interested in advancing operational effectiveness through the broad use of technology. A national, nonprofi t educational organization, ACT is designed to provide a forum for tax professionals to stay abreast of trends in technology and to learn best practices that will help today s tax departments reach new levels of operational excellence. ACT accomplishes this by publishing bi-monthly electronic newsletters, conducting tax automation surveys, sponsoring conferences, hosting bi-monthly educational webinars, and providing a forum for members to network with fellow corporate tax and information technology professionals to exchange information on advances in tax automation. Why Join ACT? If it is your job to minimize the corporation s tax burden and to ensure timely fi lings in a continually evolving environment, then ACT is for you. Changing tax laws, business mergers, and employee turnover make your job increasingly more diffi cult to perform. Automated tax systems can help you deal with these challenges, but more often than not, the rapid advance of technology causes even more problems. Sorting through the alternatives is complex and time consuming. ACT can help you by providing a forum for sharing information, keeping you up-to-date on what new technologies work in the tax department, and fi nding solutions that fi t your company s needs. Copyright 2010-2011 Association for Computers & Taxation (ACT) P. O. Box 1093, Warwick, NY 10990. All rights reserved. Data contained in this report is solely based on the ACT software survey conducted in the Summer of 2010. This report is published to document and explore current trends in tax automation. This survey report has been distributed to all members of ACT. Copies are available to non-members for a charge. Please contact 845-987-9690 to purchase. This publication may not be reproduced in whole or in part, in any form, or by any means, without written permission from ACT, P. O. Box 1093, Warwick, NY 10990. 10 2010 ACT Software Survey

Membership Benefits & Privileges Reduced rates at conferences ($200 less per person). Conference sessions include lectures by experts in the corporate tax automation fi eld, panel discussions, breakouts, roundtables, and vendor demonstrations. ACT Publications and Webinars including: Bi-monthly enews newsletter, bi-monthly webinars, annual ACT software survey and other survey publications. Access to the private areas of the ACT website, www.taxact.org. The ACT website provides members with the monthly Tax Tech e-newsletter, private discussion forums, a job bank, links to useful tax/ technology websites, archives of past publications, member directory, online membership maintenance and online conference registration. ACT database of computer hardware & software used in corporate tax departments allows you to contact tax professionals with similar hardware and software environments to discuss the pros & cons of computer tools before you make the investment. Comparison of Benefits & Privileges of Membership In general, Associate members (vendors and consultants) enjoy the same membership benefi ts and privileges as Regular members. Exceptions are outlined in the following table. Regular and Associate Members CAN: Receive general publications such as Newsletters, Bulletins, Conference Brochures and Annual Corporate Tax Automation Surveys. Serve on a committee. Receive Conference Fee Discount Attend open sessions at the ACT conferences. Access the public and all member areas of the ACT Internet site. Contribute educational articles for publications business with ACT and speak at conferences. Distribute ACT brochures to clients and link to including the ACT website. Regular Members CAN; Associate Members CANNOT: Participate in the annual ACT Membership Survey or access identifying member information in the ACT Membership Survey Reports. Chair a committee; serve as a Board Member or Offi cer. Vote in Annual Elections. Attend closed sessions at ACT conferences. An example of a closed (Regular Members Only) session would be the Tax System Users Panel. Sessions are closed to promote candid feedback from members. Closed sessions are labeled as such in the Conference Brochure. Access the Regular Member Only areas of the ACT website. No Member may advertise or conduct unsolicited members. Presentations and articles should be educational in nature, and not a sales promotion. No Member may mass mail or spam ACT member list or the ACT Board members. Associate members should also read over the Vendor Guidelines and Rules of Conduct that can be found on the ACT website under the link for membership rules. Membership termination could occur if the above rules or Rules of Conduct are violated. Under no circumstances should an ACT member or attendee be verbally attacked regarding your products/services at an ACT meeting. 11

Membership Application Please print or complete online at www.taxact.org. Membership Type (check one): Regular Associate Please complete one application per address location. Photocopy as necessary. Company Name: Address: City, State Zip: Primary Contact Information Name: Title: Email: Mail Stop/Room #: Phone: Tax Fax: Additional Individuals Name: Title: Email: Name: Title: Email: Name: Title: Email: Mail Stop/Room #: Phone: Tax Fax: Mail Stop/Room #: Phone: Tax Fax: Mail Stop/Room #: Phone: Tax Fax: Amount Due Regular members pay $485 per legal entity. # of legal entities x $485 = $ due. Associate members pay $200 per person. # of individuals x $200 = $ due. Payment Method Bill me for $. Payment is due within 30 days. Enclosed is my check for $. Make check payable to Association for Computers & Taxation. Charge my credit card for $. Card type: Visa MC Amex Discover Card # CVI# Exp. (please type or print clearly) Cardholder s name: Signature: On behalf of my company, I hereby apply for membership in the Association for Computers & Taxation (ACT) and agree to comply with the requirements of the by-laws and regulations adopted by the Board of Directors. My dues payment, along with this signed application, provides membership through 12/31/11. Date: How did you hear about ACT 12 2010 ACT Software Survey