The benefits and challenges of automating the income tax reporting process are described in a new research study by Financial Executives Research Foundation (FERF), Trends in Income Tax Reporting Automation, by FERF Research Associate Thomas Thompson Jr.

The study is based on interviews with senior financial executives in a variety of industries about their own tax-automation experiences. Among those many benefits being realized from tax automation are:

• Reduced tax-cycle time;
• Less effort and more accuracy associated with tax data collection and transaction entries;
• Increased process visibility and control;
• Greater regulatory compliance and process standardization;
• Increased financial transparency and comprehensive audit trails;
• Fewer deficiencies identified by Sarbanes-Oxley reviews; and
• Freeing up of resources for more higher-value tasks, such as tax planning, modeling and analysis.

In addition to the benefits, most executives commented that the primary obstacles to tax automation are time and budget, along with traditional “change-management” issues.

U.S. FEI members may download the full study for free at the FERF bookstore.