Business Intelligence for Tax Planning: Value, Strategy, and Vision

White Papers and Research

EXECUTIVE SUMMARY OF CONTENTS

WHO:Who is my intended audience? Not tax people per se, but ERP, ETL, OLAP, BI, and data warehousing application vendors, service providers, system integrators, as well as IT personnel from business enterprises. [Page 3]

WHY: Why is this topic important (and how important is it?) to today's businesses - i.e. pure "e," "bricks and mortar," and combinations of both ("brick and click")?

Isn't there a moratorium on taxes related to Internet sales? The answer: An emphatic, "NO!"

A. The "Real Scoop" on the Taxation Issue - All Current Taxes Are Still In Force, including federal and state income, sales, and property taxes, not to mention taxes imposed by foreign countries on global sales. The moratorium only applies to the imposition of new taxes. [Page 3]

B. Exemption of Internet Sales from Sales Taxes is just the tip of the iceberg - there are a myriad of taxes that companies are currently subject to - including federal and state income tax. [Page 4]

C. Planning to reduce taxes will be a strategic requirement for enterprises operating in the New Millennium. [Page 5]

The Value Proposition for tax planning:

1. An increase in competitive advantage in the marketplace.
2. An increase to operating cash flow from reductions of "hidden" tax expense.
3. Potentially higher market valuations due to improved operating margins, financial net income, and EPS resulting from lower tax expense.
4. More efficient business combinations and dispositions from a financial and tax expense perspective.

WHAT: What new challenges face tax planners in the New Millennium?

Why the impact of: (1) Broad-based Internet Commerce, and (2) ERP/OLAP Applications and Architectures is making tax planning more complex. There is now a critical need for innovative and tax-based Business Intelligence Tools and Documentation Solutions, due to:

A. Speed of Commerce in the New Global Economy. [Page 8]

B. The New (and Changing) Complexion of M&A, including New Business Models. [Page 8]

1. Increase in U.S. acquisitions by European-based companies and mergers of European companies with large U.S. presence.
2. "Brick and Click" mergers - combinations of e-businesses with traditional "bricks and mortar" enterprises.
3. The prospect of large scale e-commerce bartering of products and services by B2B companies.
4. The emergence of significant joint ventures among traditional industry competitors.

C. The Agony (and Potential Ecstasy) of OLAP server architectures and applications - as experienced by tax planners. [Page 9]

1. Issues in the Current State.
2. ERP systems hold the promise for tax planning using current year operating data.
3. Lack of tax meta data in many ERP installations.

D. IRS Document Retention Issues.

1. The Problem.
2. ERP aggravations.
3. Role of an IRS Record Retention Limitation Agreement (RRLA).

HOW: How will tax-based BI planning capability be incorporated into existing and future applications, architectures, and service delivery models?

A. Application Development for Tax-Based Business Intelligence (BI) Tools. [Page 12]

1. Meta data requirements for tax planning.
   • a. Summary tax return data.
   • b. Detail tax data for drill down, slice and dice.
   • c. Standardization of tax meta data definitions.
2. Tax-Based BI Applications and Solution Sets.
   • a. Screens, reports, and analytic tools.
   • b. Use of Triggers to alert the tax function to tax-significant events or planning opportunities.

B. Special Tax Considerations Impacting: (1) Architecture, archiving, and deletion, and (2) Security. [Page 15]

1. Architecture, archiving, and deletion.
   • Tax Data Mart 1 - Summary reporting data.
   • Tax Data Mart 2 - Detail level supporting data.
   • Tax Data Mart 3 - Planning data and "Secret Stuff"
2. (Tax) Security.

C. Delivery of Tax Planning Capability and Services in the New Millennium.

1. Use of current operating data from the enterprise architecture environment. [Page 18]
2. Development of customized "Tax Portals" between clients and their tax advisors. [Page 18]
   • Automation of "simple" reporting and planning services.
   • Rapid Deployment of Mega Tax Projects on a cost-efficient basis.
   • Increased sophistication with regard to Benchmarking, Value Scorecard, and Industry Best Practices for the Tax Function.
   • Inclusion of the Tax Portal as an important component to a "Professional Services" Portal. The latter would be a "Master Portal" that enables proactive, real-time client consultation in connection with transactional, operating, and other vital strategic planning efforts. Candidates would include the client's financial, legal, M&A, operations, IT, and other professional advisors.
3. The Tax Consultant as Application Service Provider (ASP). [Page 22]

CLOSING COMMENTS: The Future is bright! [Page 22]

We haven't explored the potential efficiencies that can be derived from the use of wireless technology. But, in my opinion, Bluetooth is out - we're not ready to undertake the corporate tax planning function from home refrigerators! Maybe next year.

WHO IS MY INTENDED AUDIENCE?

We will be discussing the impact of taxes and the value of tax planning to businesses in general and not the convoluted intricacies of tax theory or tax law, if at all possible. Thus, readers who could benefit include:

• BI Application vendors
• ERP vendors
• ETL application vendors
• OLAP server vendors
• Data Warehousing vendors
• System Integrators
• CIOs and IT personnel in charge of BI and data warehouse solutions for their companies
• Consultants responsible for end-to-end business solutions, ERP/ETL/OLAP/BI/Warehousing installations and enhancements
• Tax department personnel who are or will become involved in technology as it relates to tax-based data extraction, planning/analysis, and storage/documentation

WHY IS TAX PLANNING AND TAX-BASED BUSINESS INTELLIGENCE IMPORTANT IN THE NEW MILLENNIUM?

A. The "Real Scoop" on the Taxation Issue - All Current Taxes Are Still In Force.

There is a common misconception that President Clinton has declared a moratorium on all taxes related to Internet Sales. For example, in the January 24, 2000 copy of Business Week, on page 42, a sidebar comment notes that, "Another boost has come from the federal moratorium on Net taxation…" There is no clarification to the fact that the federal moratorium applies to new taxes (versus existing taxes) imposed on telecommunications and Internet sales by states and other governmental bodies. Thus, existing federal and state income, sales, property, and other taxes are still in force, to the extent that they apply to telecommunications and Internet sales. Also, foreign governments are seeking ways to tax global internet commerce. For more information on this point, please see an excellent web site at: http://www.ecommercetax.com/

New Developments up to the time of publication (February 25, 2000):

1. The January 24, 2000 issue of Barron's featured an article on how the states, faced with a ban on new Internet taxes, were gearing up enforcement of existing tax law dealing with sales and use taxes. (Page 19)
2. WSJ, February 2: The federal commission on Internet tax issues considers a long-term (multiyear) extension of the moratorium on new Internet taxes. During the hiatus, "state governments would be charged with simplifying their tax structures in return for enhanced power to tax interstate commerce on the Web…Advocates for the states say extending the moratorium would give states time to find ways to tax many transactions under existing law…" [emphasis added]
3. WSJ, February 9: In exchange for agreeing to exempt sales of books, music, records, and other information and entertainment products from sales tax, both in stores and on the Internet, plus a tax break for telecommunications companies, state governments would gain new authority to collect other sales taxes on Internet and mail-order commerce across state lines. This proposal was offered by the "business caucus" of the federal commission on Internet tax issues, which includes Charles Schwab, AOL, MCI Worldcom, AT&T Corporation, Time-Warner, and Gateway, Inc. The proposal includes a five year moratorium on new taxes, leaving current taxes untouched. [emphasis added]

B. Thus, the current controversy about exemption of Internet Sales from Sales Tax is just the tip of the proverbial (tax!) iceberg. It ignores other (more important) existing taxes. Read on.

1. The current debate deals with the collection of sales taxes from customers, which applies to primarily to B2C sales. Let's assume that this exemption passes, for discussion purposes. Current literature estimates that B2C sales will comprise only about 15% of potential e-commerce sales in the future. The 85% balance (and "bread and butter") of internet commerce is expected to be B2B, according to current reports.
2. It is unlikely that B2B sales will have the benefit of a broad exemption from any type of taxes. Therefore, we can expect that companies engaged in B2B commerce will still be subject to federal and state income tax liability, for starters. This group includes all the "traditional" blue chip entities that make money. Why can't B2B sales be exempted from sales or other taxes? Well, let's think about this. Without the advent of a revolutionary change in our political system, federal and state budgets probably cannot sustain reductions in tax revenue of more than 20% to 25% in the long term, without massive layoffs or a severe degradation in infrastructure or social services. Essentially, budget revisions are pretty much a zero-sum game! If internet sales in the main can't be taxed, the revenue has to made up from other sources - meaning higher rates on other taxes, such as property taxes, or increased levies on international sales. There might even be a new tax regime, such as VAT (Value-Added Tax), a National Sales Tax, or an altogether different type of tax. Thus, in the New Millennium, the old adage still holds true - death and taxes are here to stay - despite the magic of technology!
3. The Barron's article, cited above, comes to the same conclusion. Jim McTague, the author, notes the following:
   • New taxes may not pose an immediate threat to the rapid growth of Internet retailing, but old taxes certainly do. [emphasis added]
   • If states seem a bit hysterical, it's because their sales taxes are used to fund schools, roads, and fire and police protection.
   • There are currently 2,000 (!) pieces of Internet-related legislation up for consideration, according to Emily Hackett, the Internet Alliance's state-policy director.
   • The federal government may feel the same pressure before long [that is, fear of the impact of revenue loss], citing Mark Bloomfield, president of the American Council for Capital Formation.

C. Since taxes are here to stay in the Global Economy, effective tax planning will be a strategic competitive necessity for successful business enterprises - whether pure "e," traditional, or "brick and click." The Value Proposition for tax planning:

1. 1. An increase in competitive advantage in the marketplace. Operating margins will continue to slim down in the B2B and B2C marketplace, thanks to strategic alliances, vertical integration of suppliers, on-line auctions, and other business portals. Thus, any significant cash savings that can be derived by effective tax planning will permit a more competitive pricing structure for an enterprise's products and services. The cash benefits of tax planning can come from more than just income tax savings. It can also result in positive benefit when applied to other tax regimes:
   • Sales and use taxes
   • Property taxes - both real and personal property
   • Customs and other import taxes
   • Foreign tax regimes, including VAT and local country taxes
   • Other federal taxes, including telecommunications and manufacturer's excise tax
   • Payroll and other related taxes
   • Taxes imposed on gross receipts rather than net income. Yes, pure e-plays with no taxable income, but lots of sales revenue, can still face the tax man (or is it now, "tax person"?).
   • Escheat ("unclaimed property") and intangibles taxes
2. Any potential savings derived from tax planning represent "hidden assets" to an enterprise, since very few companies currently have "a handle" on the total cost of the above-listed taxes. What is meant by this comment? Typically, financial personnel are aware of the enterprise's income tax burden, chiefly due to its effect on financial statement reporting requirements and cash flow. The other taxes listed above are typically "hidden," but can really add up to a big number in total, due to a couple of reasons:
   • First, these hidden taxes may be buried in Cost of Goods Sold, fixed assets, and G&A accounts. They may not be necessarily tied to the filing of a return.
   • Second, these hidden taxes are typically paid by the accounts payable function more or less automatically, since they are usually bundled as part of an invoice amount. Thus, no planning may take place -- in contrast to a publicized M&A transaction, for example. But, bit by bit, they add up. One part of the solution is to utilize triggers (no, not Roy's horse or a gun part, but in the data management sense) in conjunction with tax-based BI tools. Tax-based examples of triggers will be discussed later.
   • A few illustrations:
     • Sales tax. Many of you are aware of the issue of collecting sales tax from customers, under B2C. But how about the sales tax paid on equipment, or when your company buys a truck fleet? If it applies, sales tax can run as high as eight or nine percent (or more) for the purchase, in many cases. There are tax planning strategies that reduce this sales tax liability, but your tax function must be made aware of the purchase at the time it is contemplated or consummated, not after year end.
     • Personal property taxes (PPT). Again, for most companies, these taxes are automatically paid by accounts payable. In many cases, property taxes aren't even a responsibility of the tax department, but planning could result in substantial savings in this area.

       For example, take personal computers. Most states assess PPT based on their own table of economic obsolescence - and Moore's law is not a consideration. Thus, without the tax department's input, it is possible to be assessed PPT on the "fair value" of computers based on a depreciation ("lifing") table that uses a six-year, straight-line life, with a 20% residual. We all know this can't reflect reality! The author's prior experience in this area indicates that a three-year life with zero residual would be more accurate. Today, even these guidelines are too conservative.

     • Customs duties. Let's look at customs duties imposed by foreign countries on goods shipped from the US to Europe. Depending on the classification of the goods (and this endeavor can be a long-term career in itself) duties can range from 4% to more than 20%. However, in the customs world, one important rule needs to be mentioned. The duties are only imposed on the value of goods imported that represents tangible property. Thus, where a substantial part of the value of an item of automated machinery lies in embedded software (e.g. programmable ROM), this value can be subtracted from the dutiable value of the item. A reduction in duty could translate into a lower sale price for the item in the foreign market - a competitive advantage to the US selling company. Again, most tax departments aren't accountable for customs duty reductions (although they might wish to be, for Value Scorecard purposes).
3. Improved operating performance as reported in Financial Statements, leading to (usually) higher valuations for publicly-traded companies and upcoming IPOs. Effective tax planning ideas and strategies that reduce federal, state, and foreign income taxes could reduce income tax expense in the company's Profit and Loss Statement, increasing net income and earnings per share. Further, reductions in tax expense for sales, property, customs, VAT, and other taxes may also increase cash flow as reported in the Statement of Cash Flow for the enterprise. The current price volatility in the shares of technology and e-business enterprises indicates that the securities markets assign an extremely high beta factor to anticipated and/or expected financial results. Thus, every additional increment to EPS is an important factor.
4. More efficient business combinations and dispositions from a financial and tax perspective. M&A transactions are taking place with greater frequency than ever before - and they are bigger than ever. In many, if not most cases, there is not sufficient time or resources to consider the possibility of a more tax efficient structure before the deal is put to bed. Why is this important?
   • The "pooling of interests" method of accounting for combinations is on its last legs, and the life of financial goodwill is being shortened (increasing the amount of goodwill expense deducted in the book P&L). Thus, it is vitally important to ensure that every avenue has been explored to cast the transaction in its most favorable light for financial statement presentation, and to minimize the possibility of creating a post-transaction structure that is not tax-optimal.
   • Many times, there are tax planning ideas that can be incorporated into a deal with little effort, and without substantially altering the basic economic premises motivating the individual parties. However, these avenues are frequently not explored, due to the time factor problem.

WHAT NEW CHALLENGES FACE TAX PLANNERS IN THE NEW MILLENNIUM?

WHY THE IMPACT OF: (1) BROAD-BASED INTERNET COMMERCE, AND (2) ERP/OLAP APPLICATIONS AND ARCHITECTURES IS MAKING TAX PLANNING MORE COMPLEX

Given the importance of effective tax planning, it now cannot occur without the development of innovative, tax-based Business Intelligence Tools and Documentation Solutions. In the prior section, we discussed the importance and benefits of tax planning for the business enterprise. In the New Millennium, new tools and solutions will be required to achieve this goal.

Why? This section will elaborate on the reasons. Following that, I will describe the components of my envisioned methodology and tools.

A. Speed of Commerce in the New Global Economy. Many tax people (and tax departments) know the disappointment of being the "last to know" about a major transaction or a change in operating strategy. Although companies acknowledge the importance of considering tax ramifications in all aspects of their operations, the common reasons for not timely contacting the tax department are:

1. It would take too long for you to respond, due to complexity of the calculations,
2. It would take too long to get you the required data, or,
3. Even if we wanted to, we're not sure we could get the data you need, or in time.

B. The New (and Changing) Complexion of M&A, including New Business Models. Closely related to the first point, the tax world is trying to sort out the consequences of transaction profiles and operating structures that are either new or becoming more common. For instance:

1. Due to the impact of the Euro currency and increased global commerce, many large European firms are acquiring US companies. It is the author's experience that new European owners are (usually) not fully aware of how large an impact that US tax planning (or the lack of it) can have on their global tax expense. This does not mean that European companies are unsophisticated; this is just the manifestation of different cultures and tax regimes. Yes, these so-called "inbound" transactions have been around for ages, but never on the scale of today - e.g. the acquisition of Chrysler Corporation by Daimler Benz.

   Alternatively, large European companies are combining, each of which has substantial business in the US. This trend is being accelerated by favorable changes in European tax law. For example, a "proposed change in Germany's corporate tax law could trigger the most extensive corporate restructuring [of Europe's companies] since the end of World War II," notes the an article in the WSJ . (January 31, page A24)

   Examples of transactions already announced in Year 2000:

   Glaxo Wellcome acquiring Smithkline Beecham for $76 billion.
   Vodaphone Air Touch of Britain combining with Mannesmann of Germany in a $183 million deal, noted by The New York Times (January 4, Page 1) as a watershed in European corporate behavior and a harbinger of more to come.

2. Pure e-businesses are now combining with "bricks and mortar" enterprises. These mergers are now called the "on-line/off-line" business marriage, or "brick and click" arrangements. For a current example, see the February 9 issue of the WSJ, "'Bricks and Clicks' Deals May Proliferate As Firms Unlock New Economy Assets," page C1.

   This is a new business model (in addition to B2B) that the tax world has yet to deal with in depth, as to issue definition and resolution. From the perspective of existing tax theory and application, the analogy is that of moving from classical Newtonian mechanics to quantum mechanics when it comes to accurately projecting what the tax liabilities of the new (combined) entity will be - that is, other than adding the numbers of the two entities together in a pro forma manner. Timely access to the correct essential data will be a critical factor. Under the current state of tax technology and process, this will not be a fun project - 'nuff said! The largest example of an online/offline combination thus far is the AOL/TimeWarner merger for $165 billion.

3. E-commerce bartering of products and services. Bartering has always been a "thorn in the side" of income tax authorities, primarily because of issues related to reporting, asset valuation, and the computation of income or loss. In the past, these so-called "in-kind" transactions, although not infrequent ($16 billion last year, or 0.2% of the economy), did not usually involve big players. But no more. For example, the WSJ recently profiled a number of up-and-coming dot-com startups which aim to create major markets in commercial bartering. It still remains to be seen whether this is a concept that can be taken seriously, but since three of the dot-coms in the WSJ article garnered VC funding in amounts of $45, $50, and $55 million, respectively, it may not be a passing fancy.
4. Large joint ventures among traditional industry competitors. The Internet has blurred the boundaries between "enemies." Companies who normally are fierce competitors are joining forces to create Internet "ecosystems." Why? To create new markets which will be beneficial to their industry (and to them) in the long run. For a current example, see the WSJ, January 31, page A1.

   Why is this important for tax planning? Typically, these joint ventures involve the use of corporate partnerships. The taxable income of these entities flow up to their respective corporate partners. Tax planning could result in a reduction of federal or other taxes to be paid by the partners which are attributable to the joint venture. For example, if one of the partners has a substantial presence in a particular state, and the other does not, it may be possible to have an agency agreement in the partnership that may spare the second partner from having to file in that state as a result of the partnership. The savings could be incorporated into the partnership sharing arrangement. Yes, there are issues to be surmounted here - but hey, that's why tax consultants get paid the Big Bucks!!

C. The Agony (and Potential Ecstasy) of OLAP server architectures and applications - as experienced by tax personnel. ERP architecture and OLAP server applications have transformed the face of Business Intelligence - but typically, not for tax planning or compliance. We have Executive Dashboards, query and report, and analytic capability for financial, marketing, and HR decision-making, among others, but the BI market has not yet focused on the value and sales potential of tax-based BI applications or enhancements. I am not being critical of the industry - there are obviously other priorities that need to be addressed first - but I do believe the time has come for tax-based BI tools.

1. Current State issues. Typically, any type of tax-based functionality for BI is the result of custom software development for a specific enterprise, or, enhancing an existing BI application on a case-by-case basis. ERP vendors are now responding with some tax BI capability, typically in spreadsheet format. However, the current Solution Set has yet to measure up to the robust 3-D tools and analytics available in other BI areas, such as sales analysis.
2. This current state is unfortunate, because ERP technology makes possible tax planning on a more or less timely basis (i.e. the frequency of the production data extract, which is typically at least monthly), rather than with the use of prior year numbers.
3. Ironically, ERP systems can pose an unexpected problem for the tax department. Can one extract the required tax data from the system or related enterprise data warehouse, assuming that it was even populated therein? Consultants are well aware of deemed successful (said with tongue-in-cheek) ERP installations -- until it was discovered by the tax department that the necessary meta data definitions for tax compliance, much less planning, had been overlooked in the initial ERP and ETL application programming.

   Another horror story: "Efficiently" designing the entity structure as a single entity, consistent with management reporting and accountability, without considering that the tax department would need revenue and expense data for income tax reporting, and income allocation, broken down by separate states. For those of us in the tax world, the song, "Cry Me A River" comes to mind.

D. IRS document retention issues. Unlike the transience of operational data stores that are tied to OLTP systems, tax data must be retained for specified periods of time, which may run to years, or in some rare cases, the life of the enterprise itself.

1. The Problem. Tax supporting data must be available for IRS auditors when requested, or two bad things (at a minimum) might happen.
   • Deductions could be disallowed for lack of documentary support, increasing the company's tax burden retroactively, and subjecting it to interest and penalties.
   • The IRS agent may take the position that there was an incomplete filing. Under this scenario, there is authority for the IRS to assess income tax on just the gross income of the company, without allowing any deductions. Yes - this is theoretically possible in the cruel world of taxes!
2. Why this issue is aggravated with an ERP architecture?
   • First, when ERP data is archived, the "links" are broken in the thousands of tables that relate to data applicable to the period in question. Thus, while some of the required tax data can be saved in flat file format, the tax function may no longer be able to drill down to the detail level to answer specific questions posed by the IRS (or other) auditor.
   • Secondly, assuming that the required data can stored multidimensionally in an enterprise or tax data warehouse, there are also issues that relate to how the tax audit should be conducted. Ironically, in this circumstance, there may be too much data available. We don't want the IRS auditor to have a field day conducting "fishing expeditions" within our enterprise (or tax) database. More on this in the next section.
   • Thirdly , the so-called "paperless office" concept has not been embraced by taxing authorities. In many situations, a copy of the original invoice (or purchase contract) is required to support a deduction or the purchase price of an asset. In the property tax arena, some states even require presentation of the original invoice, although this policy may be growing infrequent.
3. Role of an IRS Record Retention Limitation Agreement (RRLA)

   The IRS has recognized the issues presented by ERP document retention, as described above. In the last few years, it has issued definitive (and stringent) requirements as to how taxpayers using automated systems should retain important records to support federal tax audits. In a 1998 pronouncement, it released other important information about Record Retention Limitation Agreements. These are contractual agreements entered into between the taxpayer and the IRS that serve to limit normal;the amount of information to be retained for subsequent federal audits. This is an important concept that will receive further attention in the next section, in connection with data requirements and archiving. In the meantime, here are a few important things to remember:

   • RRLAs are allowed by the IRS as a convenience to the taxpayer. There is no legal requirement on the part of the Service to enter into one. Indeed, certain IRS districts issue them, and others will not entertain them unless there are special circumstances.
   • Pros and Cons. Not every taxpayer wants to enter into a RRLA, since the taxpayer must (in essence) allow the Service entry into its ERP system environs in order to jointly craft the data requirements. Additionally, the IRS reserves the right to "check out" the taxpayer at any time to ascertain that it is adhering to the terms of the agreement. On the other hand, an RRLA, if drawn properly, could be an "out" for those taxpayers which would otherwise be subject to massive and impractical data retention requirements.
   • RRLAs are fragile arrangements. They no longer apply if there is a significant change to the taxpayer's enterprise structure. For example, if AOL and/or Time Warner had existing RRLAs prior to the merger, they would no longer apply to the new entity. A new RRLA must be obtained. Thus, M&A activity effectively destroys the force and effect of these agreements. The current marketplace is therefore a boon for those consulting firms that wish their clients to be protected (on a continuing basis) by RRLAs.

HOW WILL THE REQUIRED BI TOOLS FOR TAX PLANNING BE INCORPORATED INTO EXISTING AND FUTURE APPLICATIONS, ARCHITECTURES, AND SERVICE DELIVERY MODELS?

In the prior sections of this paper, we have explained the importance and value of effective tax planning strategies for "bricks and mortar," "brick and click," and pure "e" entities. We also described the challenges facing the tax planning efforts of traditional and e-commerce enterprises in light of the Global Economy and new business models. Lastly, our discussion highlighted a few unexpected obstacles presented by ERP/OLAP architectures.

This final section presents a vision (that is, read this to say, "Best Guess!") as to how tax planning functionality will be incorporated into existing and new BI applications. We will also set forth a few ideas as to how these developments can play a role in expanding the present dimension of tax (and other) service delivery by consulting firms.

A. Application Development for Tax-Based Business Intelligence Tools.

1. Meta Data Requirements for tax planning.

   As is the case with any BI application, the "source of the Nile" for tax-based intelligence begins with meta data definitions. They flow from the data dictionaries of ERP systems and their related ETL applications, to the enterprise data warehouse, and finally to the OLAP server environment that will drive the BI tools. My thoughts as to how the process will evolve:

   • The starting point - summary tax return data. Initially, we can go a long way by looking at the data requirements for income (and other) tax returns - federal and state. There is a cadre of tax professionals that believe that data from tax compliance and reporting is just that - not sufficient for tax planning. However, under the 80-20 rule, I would submit that a substantial amount of the initial data that tax planners look at is found in the tax returns of taxpayers. Whether it is reorganizing a company's structure for state income taxes, or investigating the feasibility of an idea for federal income tax, the first item(s) most professionals look at is the income tax return. Thus, tax return data, organized at the summary or aggregate level, by entity -- that is, indexed and "cubed" for multidimensional queries in a tax data mart -- is the best place to start. This information can be taken from the enterprise's tax compliance engine, and populated in a tax data mart.

     Due to length, structural examples of how tax data can be organized for query and drill down is the subject of another White Paper. For those interested, the author has set forth in detail the planning functionality of a number of tax-based star schema cubes, organized by Subject Area, at his web site, http://ebusinesstaxman.com.

     Note: In the income tax world there are two basic sets of books - financial statements and tax accounts. In a few words, the desired result of income tax planning can be summarized as follows: Defer, or indefinitely postpone, the reporting of income, and/or accelerate the reporting of deductions, in the company's tax return. Furthermore, these goals must be achieved with minimum impact to the company's financial net income, which directly translates to earnings per share. In order to do this, the tax function must be able to look at both the ERP database, which is related to financial reporting, and the tax compliance database, which is related to tax return reporting.

     As noted above, the tax regimes for sales/use and property tax, among others, are quite different than for income tax. This disparity translates to more meta data definitions. However, the income tax arena should provide enough discussion material for the purposes of this White Paper.

   • Tax data at the detail level for drill down. This is the new frontier. In the past, tax directors only received summary data for tax returns from operating units. If data at the atomic or individual transaction level was required, this usually necessitated a special request to the operating business unit. The response time to obtain such "favors" traversed a time continuum from "quick" to "never," depending on proactivity and political clout considerations. However, as noted in the prior section, the advent of ERP and OLAP servers could prove to be of great benefit to tax planners, provided that their functionality is expanded to encompass tax needs. Since all ERP and ETL (Extract, Transform, and Load) applications rely on meta data dictionaries for their functioning, the addition of tax meta data definitions to these programs would be a real breakthrough. Tax professionals would then possess the same type of access to detail level tax data, on a more-or-less current basis, as finance and accounting personnel have to financial and managerial reporting data.
   • Standardization of tax meta data definitions in the application software and data warehousing industry. This issue runs parallel to the focus on standardization of financial statement formats and definitions by a number of ERP and/or OLAP server vendors. Under the rationale that tax return data elements comprise about 80% of the needs of tax planners, the development of standard name conventions tied to the specific tax data elements would allow enterprises to "mix and match" their ERP, ETL, OLAP, and BI applications - or better yet, allow end-to-end solutions between separate companies that can be efficiently integrated in a merger. Currently, we are talking about extensive mapping exercises and custom software development projects to accomplish these goals.

     A number of leading vendors have already come a long way with meta data integration - for example, Oracle's Common Warehouse Model (CWM) initiative. In this example, we could incorporate our standard tax meta data definitions into CWM's master data model, of which tax would be one of its core classes. The tax core class could then be divided into submodels, or tax subject areas.

     A significant breakthrough would be the acceptance of a standard set of tax meta data definitions by major vendor groups, such as the OLAP Council.

2. Tax-Based BI Applications and Solution Sets
   • Screens, Reports, Drill-Down, Slice & Dice, and other Analytic Tools for the tax-oriented user. Similar to users of financial BI applications, tax-based solution sets will require their own views and tools - in 3-D, not just in spreadsheet format. (It is acknowledged that, for example, EXCEL has 3-D capabilities and pivot tables, but I am speaking of tools more robust than this.) These will consist of standard views for the high-level user, such as Executive Dashboards, and tools for complex, detailed data access for the sophisticated tax planner. The latter will include the capability for ad hoc queries and "what-if" analysis. Tax planners have a number of standard tax planning questions and approaches, which can be incorporated into standard views with the capability for further inquiry into detail data. (My other White Paper has more description on this point.)
   • Use of Triggers to alert the Tax Function to tax-significant events or planning opportunities. As I mentioned above, the use of ERP packages allows the enterprise to gain operating information on a (more or less) real time basis. For many enterprises today, tax planning, especially on a global scale, relies on using prior year information rather than what is currently happening. The development of tax-based BI applications will now allow the tax function to perform its planning using current year numbers as they evolve, and to change or modify tax strategies as the facts change.

     Using triggers in the tax world: Most tax people have had the "privilege" of discovering a negative tax event after the year's end, usually during the tax accrual process or preparation of the tax return(s). The conversation typically follows along the lines of, "Gee, if we had only known about this during the taxable year, we could have done something positive from a tax perspective - but it's too late now. I think we just might have to pay the additional tax and try to fix it this year." With the proper BI tools, the tax department can be notified (i.e., "triggered") if certain tax-significant events occur, as they are reported within the ERP environment. Typically, these would include items that could have negative EPS impact for the company if the tax function were not made aware of them during the year. Examples include (with apologies to nontax professionals):

     • Unplanned decrement in a LIFO layer
     • "Renegade" dividend distribution by a lower-tier foreign subsidiary without notification to the US parent
     • Business activity or asset investments in a new state
     • Sale of products or services in a new foreign country by a wholly-owned foreign company
     • Acquisition of significant tangible or intangible assets by an operating unit

B. Special Tax Considerations Impacting: (1) Architecture, Archiving, and Deletion, and (2) Security

1. Architecture/Archiving/Deletion: Similar to the concept of "The Three Pillars of Wisdom," the unique intricacies of tax law may ultimately require the use of three tax data marts. Let me explain.
   • Tax Data Mart 1: Summary tax return data for all entities. As described above, this repository would contain summary data that is included in each of the lines of the separate returns. Also included would be information on all related return forms, such as carrybacks on Form 1139, amended returns (e.g. Form 1120X), and claims on Form 843. This data mart would also retain the results of all federal and state examinations, including the adjustments to taxable income, and related interest and penalty calculations. Lastly, tax accrual computations for financial reporting and estimated taxes would also be here, along with the return to accrual reconciliation(s). In essence, Tax Data Mart 1 would be deemed the financial tax accrual, tax reporting, and tax compliance information repository. This data mart would be accessible by the IRS and other taxing agencies in connection with their audits.
   • Tax Data Mart 2: Detail level supporting data for tax returns and data required to be maintained by an RRLA. The obvious question here is, why isn't this data a part of Tax Data Mart 1, since it is tax return related data? Initially, this will probably be the case. For example, the top level (aggregate) totals of most categories in Tax Data Mart 2 will be required to tie (or reconcile) to the summary totals contained in the return line items contained in Tax Data Mart 1. However, as time evolves, there are functional differences as to why a separate data mart may be more practical.

     First, the information required to be retained by the IRS under an RRLA will be (obviously) more detailed than the summary data contained in the tax returns. This mart must contain data for drill down and slice/dice by the tax examiner. It will be multidimensionally indexed in a manner different than that required for data retrieval from tax returns - that is, it must answer questions related to "why" we reported a tax item in a certain manner, rather than "what" we reported. Of course, I realize this difference can (also) be easily handled by use of different star schema cubes within a larger data mart architecture that includes Tax Marts 1 and 2.

     Second, record retention rules set forth in the tax law and the enterprise's specific RRLA (if it has one) will impact archiving of tax data in this data mart in a more complex fashion. In Data Mart 1, archiving return information will be much simpler, as I believe that the data can be saved in flat file format and still be accessed at a later time. However, in Data Mart 2, the use of flat file format will break the (multidimensional) links that would allow an IRS agent to use slice and dice, as well as drill down techniques, to obtain the level of detail he or she may wish to have. This would constitute an express violation of the spirit (and letter) of an RRLA, and may void it for the year in question -- a special problem that will need to be addressed by IT staff.

     Third, and closely related to the second point, the multitude of Statute of Limitation rules relating to tax data directly impacts the date as to which certain tax data can be safely deleted from the database. Of course, under classic data warehousing rules, data deletion is a rare event, so this issue may appear to be a moot point among many IT professionals - especially when the cost of storage continues to decrease. However, in today's tax world, most tax practitioners would argue in favor of deleting data if it can be at all legally defensible. The reason: It removes the "hanging sword" issue. Put in another way, it is a de facto enforcement of the Statute of Limitations as it applies to taxable years - once a taxable year is closed to audit, and cannot be reopened again due to other circumstances, we want to "purge" the files to make sure the IRS and other taxing authorities can't find a way to "reopen" them again. We want to make sure the tax issues in that year (or years) are put to bed - permanently. It helps us (and our clients) sleep better at night!

     IT people also need to know that the Statute of Limitations is frequently extended (with taxpayer consent) during the course of an IRS exam, so no hard and fast rules can apply to any particular taxable year.

     Of course, having said all of the above, there is data within a taxable year that may not fall under the (general) three or six year Statute of Limitations. For example, tax data related to the valuation of the stock of a subsidiary acquired in an acquisition is required to be kept until the subsidiary is disposed of or liquidated - a period which may be for the life of the parent company. Other rules addressing tax-free exchanges or asset acquisitions require that the relevant asset data be maintained until it is ultimately disposed of or abandoned. Thus, in an ideal scenario, we tax people would like to purge most of the tax records related to a particular year (e.g. most G&A expenses) when it is possible to do so under the general Statute of Limitation rules, but unfortunately, not everything.

   • Tax Data Mart 3: Planning, What-If Scenarios, and "Secret Tax Stuff." This tax data mart must be separated from the first two marts. For those of you not in tax, there is quite a bit of tax legal history revolving around the IRS' attempts to subpoena a company's tax planning files, typically in connection with a tax controversy or litigation. The current status of the law is that this information is off limits to the Service's clutches - as long as it is not commingled with the taxpayer's other tax files which were used for the tax return, the financial tax provision, and estimated tax payments.

     Information in this tax data mart would contain, for example:

     • Planning strategies and scenarios in connection with the acquisition or disposition of business entities. This would include what-if computations using analytical, tax-based BI tools, which are saved for future reference.
     • Data relating to IRS and other types of audit defense pertaining to current and upcoming examination years. This would include potential research relating to different positions to take on various tax issues, and the related tax, interest, and penalty ramifications of each alternative.
     • Letters, memos, and tax research protected by the attorney-client privilege, as well as the recently enacted CPA-client privilege
     • Other confidential information related to tax matters
2. (Tax) Security. For purposes of this discussion, security does not mean security from viruses or hackers. The focus is on the IRS and other taxing authorities who will be accessing Tax Data Marts 1 and 2 in connection with a tax examination or just "checking around" to determine whether or not the tax data in the mart is up to the document retention standards required by the Service or by a related RRLA.

   Here, we are moving in an opposite direction from that of an "open" enterprise architecture that encourages inquiry and investigation, which is the operating philosophy of OLAP and data warehousing. We don't want the Commissioner's agents to feel free to search the innards of our enterprise information system. The goal is to allow the person to access the tax data required to support the company's tax position with regard to a particular item, and no more.

   The above limitation may cause a problem in OLAP server environments. Typically, in response to an ad hoc query, the operating priority is as follows: Look to the summary data, and then to the detail data within the respective tax data mart(s). If this result is insufficient, the server may then decide, in the spirit of client service, to visit the Enterprise Data Warehouse and related environs (assuming a RDBMS architecture tied to a "pure" MOLAP environment for planning) to determine if the "Mother Lode" has the requested information. This we do not want to happen in an IRS or other tax examination.

   The thought of a taxing authority embarking on a generalized "fishing expedition" in a client's enterprise data warehouse or operational data store makes tax professionals queasy. Thus, there must be safeguards in place to ensure that this result does not occur. I believe there are many ways to achieve this goal, including password protection and security levels - in fact, this discussion may appear trivial to IT professionals - but sometimes, "accidents" do happen. Therefore, I am not trying to make a mountain out of the proverbial molehill. I just want to highlight the concern, since the ultimate consequences could be grave - literally and figuratively.

C. Delivery of Tax Planning Services in The New Millennium

Here are a few of my personal thoughts as to how the Internet, hardware technology, and software (including BI) tools will transform the business model for the delivery of tax planning services.

1. Tax planning will be performed with "real time" numbers, instead of historical data. As already mentioned, the tax department will be able to plan using current operational data instead of prior year numbers. Business intelligence tools will "trigger" the existence of tax significant events. The tax return process will serve only to report the results of effective tax planning for the reporting year, rather than be the catalyst to identify needed tax planning.
2. Development of customized "Tax Portals" between clients and their tax advisors. This thought is different than that of generalized, tax-based websites where visitors can access generic content, such as tax laws, new developments, and planning ideas. My concept is that of a one-to-one, collaborative tax data site which would be accessed by only the corporation's tax function (and other designated key people) and its tax advisors. On-line access would take place individually, or more importantly, simultaneously, for joint, proactive planning. The site will be web-based (using VPN encryption or new technology), and would basically allow tax consultants access to Tax Data Marts 1, 2, and 3, its tax compliance engine (to run "what-ifs"), as well as current operational information of tax significance. Obviously, the use of state-of-the-art personal authentication tools will be a must.

   The concept of corporate portals is not new - this idea is not just idle dreaming. In fact, IT readers are already aware of vendor packages which will set one up if the user's needs are not excessively complicated. These services would even include the application programming to link up with the client's ERP system. The lead article in the March 7 issue of PC Magazine, "Get Ready for 21^st Century Business," is dedicated to corporate computing, and discusses corporate portals in depth - so I guess its time has come!

   A few of the tax service innovations that are made possible with this type of portal:

   • Automation of "simple" tax reporting and planning services. Many tax services that normally would require tedious computations and a fee may be performed for nominal charge or even given to the client as part of a service bundle. For example, the impact of a piece of potential tax legislation, tax planning idea, or tax product that doesn't require extensive research or "fine-tuning" can be run through the client's tax database and compliance engine using an agent or bot. (Tax data elements would already be mapped to the tax-based BI tool, or better yet, there would be standard conventions available for tax meta data.) The tax savings or detriment can be immediately communicated to the proper parties in Internet Time. No need to call and set up a meeting, get authorization, get data, review data, call client with follow up questions about data, perform, report, and then send a fee invoice.

     I believe this level of service will evolve to be the norm, rather than a special case, if consulting firms expect to stay in business. Why would they agree to this type of arrangement? It is also my personal opinion that, with the passage of time, tax planning fees will be tied more and more to the achievement of a client's strategic goals, using tax-based Balanced Scorecard criteria, Benchmarking, and Key Performance Indicators (KPIs). Thus, I expect billing for "piecemeal" work and ad hoc projects will decline. This perspective is consistent with the "Consultant as Business Partner" concept of the last couple of years. The balance of the ideas in this section will leverage off this philosophy.

   • Rapid Deployment of Mega Tax Projects on a cost-efficient basis. There would be substantial savings in: (1) The up-front investment of time by the tax consultants, and (2) tax fees paid by the client, in the implementation of large, multifaceted tax projects. As mentioned above, the current trend is not to "mess around" with a number of small tax projects, but to have the client undergo an integrated, comprehensive, and analytic review of, say, its state and local tax structure, or the tax-efficiency of its international product sales and services.

     The goal in these mega projects is to develop and implement an overall tax strategy that results in positive EPS benefit for a number of years. Not surprisingly, these large tax initiatives are costly for both the tax consultants and the client. Put in this light, any technological advances that can significantly reduce the total cost of these projects will result in a higher number of them being commissioned, and more frequently. [Fellow consultants, are you listening?] In order to understand the opportunities here, we must first look at the cost dynamics of a "typical" mega tax project.

     First, tax specialists from many different areas of expertise must "bombard" the client personnel with detailed questions about its past and current operations. Usually, client resources are so scarce that it is here that the initiative first begins to die a slow death. Another problem that frequently arises is that each separate tax specialty usually asks its questions to the same people, who are typically operating personnel and not tax department individuals. Furthermore, many of these questions are the same (an overlap in the Venn diagram of necessary tax data). This causes annoyance, budget questions, and timeline concerns - who pays for this, what am I getting out of this, and how can I meet my internal department deadlines without additional help?

     Second, the time spent by the tax advisors in this stage is usually done "on the come." That is, in the mega project business model, the professional consultants initially make an investment (of personnel and other resources) in the client. The hope is that meaningful tax planning ideas will be gleaned from this initial investigation, leading to a profitable followup project later. It would not be unusual for a firm to spend the equivalent of $500,000 (or more) of otherwise billable time performing this step.

     Tangential observation: Investments of this type and magnitude by consulting arms of Big 5 firms give the SEC the proverbial "willies," if the firm is also the auditor. This fact pattern is not uncommon. The issue here is that the Big 5 auditor has such a financial stake in the outcome of the mega project that it is no longer independent with regard to issuing financial statements for the client. Therefore, any significant reduction (by use of technology, or otherwise) in this "financial stake" by the CPA firm can be helpful in retaining independence.

     Third, once the required data is gathered, there needs to be a period of internalizing the information to come up with beneficial ideas. Assuming that such ideas arise, the next step involves intensive sessions of "number crunching" and detailed analysis, repeated over and over. What will be the tax savings of implementing a particular idea or strategy? What will be the cost of implementation? Is there an unfavorable impact on financial earnings or business operations? Will the client be violating loan covenants? Will the restructure cause problems with intellectual property or state law? As with the above, the client's tax advisors usually proceed with this exercise at their own expense - at least initially.

     With all of these points in mind, imagine the savings and efficiency of using a client tax portal. Each separate list of tax questions can be answered by having each tax expert independently query the client's tax data mart structure, with minimal disruption to the client's operating personnel. [Furthermore, under the 80-20 rule, a standard list of queries by each tax specialty would be fed into the client's portal for automatic retrieval. Each respective tax specialist would then receive a "book" of desired information before actually visiting client personnel. Under this procedure, only company-specific data (i.e. the remaining 20%) will need to be retrieved by ad hoc query, or by talking to operating and tax personnel.]

     Next, the burden of computing the tax benefit of various ideas and strategies can be significantly lightened through the use of tax-based BI applications to capture the information needed for "what-if" scenarios. Since this is a secure site, the OLAP server can feel free to tap into the ERP and related data warehouse to satisfy the query, if necessary. The client's tax compliance engine, as well as the tax data contained in the various tax data marts will ensure that all relevant prior and current tax return data, including audit adjustments, will be integrated into the final computational result. Without the availability of these tools, the potential tax benefit of an idea is typically derived using gross assumptions (sometimes - or should I say "usually" -- based on historic data) to simplify the calculations.

     The above discussion makes possible an additional, intriguing, observation: The aggregate savings from the reduction of: (1) The consultant's investment expenditures, and (2) the use of client resources during this initiative, could significantly defray the cost of initially installing and/or integrating a tax-based BI and data mart solution into an existing ERP architecture. The result: A much quicker ROI and additional incentive to proceed with one or both projects - which, incidentally, are also prime candidates for the so-called Second (or is it Third) wave of ERP implementation we have all been reading about.

     Another idea: Numbers would need to be run to determine feasibility, but the above proposal would also be an excellent joint venture project between a Big 5 firm (or other auditor) and a separate IT consulting practice. The latter would include the spun-off MC arms of the "you-know-what."

   • Increased sophistication in the use of Benchmarking, Value Scorecard, and Industry Best Practices for the Tax Function. As already alluded to above, information in the client's Tax Portal can be linked (and compared) to other large public information databases - for example, SEC, Compustat, and Big 5 public client information. There are literally hundreds of such databases. Evaluations can now be made between the company and its industry competitors from a tax perspective. For example, the system could alert the client's tax department that Competitor A's effective tax rate for its European sales is 1.75% lower than the Company's own rate, after adjustment for product mix, volumes, and other factors. Of course, there may be special circumstances that may explain the disparity, such as A's use of net operating losses in a country, but there is value in just being aware, and pursuing an analysis - especially if a key operating officer were to ask the same question at a later time.

     As industry Best Practices continue to evolve in the tax arena, bots or agents in the client's tax portal will evaluate whether or not its tax circumstances justify adopting a new Best Practice or KPI, and report back to its tax advisors and the company tax function.

   • Membership in a master "Professional Services Collaborative Portal." I envision that the Tax Portal will (ultimately) be a component of a much larger Professional Services Portal, with data marts tailored for planning queries related to financial reporting, legal, tax, IT, and other disciplines. The purpose of this master site is to offer online, proactive collaboration with all professional disciplines whenever the client contemplates or initiates, for example: (1) A major transaction, (2) changes in business structure or operation, (3) entrance into new markets, or (4) development of a new product or service.

     Experienced tax advisors have all had the experience of proposing a planning idea, only to have it vetoed later by another professional discipline, such as financial reporting or legal, because it conflicts with a more important operating (or other) priority. A lot of this "spinning the wheels" activity can be efficiently eliminated if all the professional disciplines could have a central body of organized information from which to draw on, which would be used in conjunction with Knowledge Management tools to post new developments and service initiatives. Under this system, all the advisors would (should) be current as to each of the other's significant activities with respect to the client.

     Thus, following up on the "Consultant as Business Partner" philosophy, all consultants should feel empowered to stay up to date with a client's activities on a continual basis - including industry developments and the actions of competitors.

     Example: The client is undergoing the process of restructuring its global line of credit with its consortium of lenders. Lawyers, bankers, and the company's CFO and Treasurer are working on the loan agreements and finalizing the requisite tranches. As a concession to the lenders, it is decided that the client's exceptionally profitable German and Canadian subsidiaries will co-guarantee the US parent's credit line, in return for a more beneficial cost of capital.

     Sounds good from a financial and operating standpoint - a win-win situation and a seemingly innocuous set of facts -- but this set of facts could be disastrous from a tax point of view. I promised that I wouldn't get involved in tax theory, but the above structure could (would) result in a meltdown from a US tax perspective. The outcome could be big bucks paid in taxes, and a big hit (increase) to the client's global tax expense. (For those of you who are curious as to what the tax issue is, please show this example to your international tax person and watch the expression on his or her face.)

     In the "old" days, it would be untypical for the parties involved in crafting a global line of credit to consult a tax professional, without special circumstances. The standard explanation: Too many parties involved, and not enough time. For tax, the problem would have been discovered much later, perhaps when preparing the tax return, or worse, on audit. With the use of a professional services portal, the credit line restructure could have been revealed to a tax professional accessing a knowledge sharing application. The role of this application would be to report significant consulting activity - the project, and the parties involved. The tax person could have then accessed a financial or legal sub-portal that would have contained highlights of the new credit facility, as well as any source document (drafts and/or final).

3. The professional tax advisor as Application Service Provider (APS) for tax and other portals. Under this service alternative, the tax consultant (in concert with a suitable IT firm, as explained above) will provide the software, hardware, and other infrastructure necessary to allow the client company to perform effective tax planning. Its ERP system and/or enterprise data warehouse, as well as its tax compliance engine, will be connected to the ASP using "big pipes." The ASP environment will house the required tax meta data definitions, the tax-based ETL and OLAP server applications, BI tools, and the Tax Data Marts. The tax compliance engine could also be included, depending on vendor and other non-tax constraints. This structure would also be the foundation for the client's Tax Service Portal.

   In this arrangement, the client would thus derive all the advantages of the ASP concept from a tax planning viewpoint - tax meta data requirements updated as tax laws and company requirements evolve, use of the most current technology and front-end BI tools, as well as competent backup systems and available additional storage. The ASP structure could be extended to the portals of all the other professional services, to ultimately comprise the Professional Services Collaborative Portal described above.

   I will note one challenge (out of many) that will need to be overcome - the client concern that its sensitive data is "right next" to its competitor's in the server farm or storage network. In my opinion, this fear of maintaining confidentiality has always been more psychologically motivated, than a true technical concern. It relates back to Big 5 (then Big 8) practice, when an existing client threatened to take its business elsewhere if the particular Big 8 firm also took on a major competitor as an audit, tax, or MC client. I am confident that a solution will be devised so that all parties' concerns can be put to rest.

CLOSING COMMENTS

The Future is Bright!

Tax-based BI tools will play an important role in making the new tax service vision a reality. It is easy to conclude that the service delivery advancements noted here are too expensive, too complex, and too far away in time, to contemplate. I urge the reader to think back three, even two years. How has technology changed our lives and our world since that point? A few of the events and developments have been highlighted in this White Paper. We should take our personal timelines and divide them by a factor of three or four. The result will be probably closer to the true date of occurrence - if not sooner. As with B2C and B2B, the vendors and service providers who grasp the vision and act now will RULE.

This White Paper gives but a hint of what is to come in the tax planning world. For example, I haven't yet speculated as to the tax service possibilities that could emerge from wireless (read, "web-enabled phones and palm-tops") collaboration, utilizing the Tax Portal concept. The vision will depend on the functionality ultimately delivered by AWP (Wireless Access Protocol). However, I remain ambivalent about espousing Bluetooth technology. I guess I'm not emotionally ready to embrace corporate tax planning using my home refrigerator! Maybe next year.

Alan Yong has over twenty years of consulting experience with Big 5 (then, Big 8) firms, working with enterprises ranging from startups to large conglomerates and multinationals. His background as a former electrical engineer and subsequently, tax partner, has allowed him to develop an expertise that melds tax practice with IT and Knowledge Management. Alan welcomes visitors to his business web site, http://ebusinesstaxman.com, as well as your suggestions and comments, at ebiztaxguy@yahoo.com .

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