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Requirements Gathering: A Transaction Tax System Implementation’s Most Important Phase

The following is a guest post by Diane Yetter, founder of The Sales Tax Institute.  For more about Diane and The Sales Tax Institute, see the guest blogger box after the post.

The first phase of any transaction tax systems implementation should be the evaluation and gathering of all the business and tax requirements. A best practice is to complete this phase before a solution is selected, but this rarely occurs. Deciding on the optimal solution is dependent on these requirements. Choosing the solution before the requirements are known can lead to incurring more costs than necessary or making compromises. Therefore, you ideally want to do all requirements gathering first.

Of all the phases of a tax system implementation, requirements gathering is by far the most important.  The efforts of the entire team – tax and business stakeholders - are needed during this phase. If this phase is limited either by time, resources or participation by key stakeholders, underdeveloped or undiscovered requirements will create challenges throughout the remainder of the project.

Ideally, the requirements gathering phase should be led by someone knowledgeable in the following items:
  1.  The potential tax systems being considered
  2.  The financial system the tax engine will be connected to
  3.  The business
  4.  The tax issues facing the business and the industry
Using someone who is familiar with all of these components is a best practice as this individual will be able to identify the issues related to the requirements. This person will also be able to understand and propose solutions on how these requirements can be handled. 

The following are some (but not all) of the questions that will aid in evaluating the project plan and system functionality:
  • Is the project part of an overall ERP replacement or upgrade or is it a stand-alone tax system project?
  •  Is the project an upgrade of an existing tax engine, a replacement of an existing tax engine or a new solution?
  • Are there limitations in the current systems that need to be enhanced?
The following are some (but not all) of the questions that will help shape the business, tax and systems requirements.
  • Which jurisdiction are included in the project?
  • Will there be changes in taxation that may affect customers?
  • Can tax groups be established for products or customers?

Requirements gathering is just one topic that will be covered in the Sales Tax Institute’s upcoming Best Practices in Systems Implementation webinar on February 21.  Join Diane Yetter of the Sales Tax Institute and Kai Ranabargar of Tax Technology Group to hear how understanding the best practices in systems implementations helps companies to reduce errors, increase productivity, and potentially avoid audit fines, penalties and the labor costs to fix mistakes found in an audit.  For additional details and registration, click here


The above was a guest post by Diane Yetter.  Diane is President and Founder of YETTER, a sales tax consulting firm, and a strategist, advisor, and renowned speaker in the field of sales and use tax. Diane is also Executive Director of Sales Tax Institute offering sales and use tax classes and training.




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