Managed Services is Taxing Work for Tax Automation MSP

By Doug Barney

Vertex, Inc. began in 1978 selling tax reference manuals, decades before managed tax services were even a concept.

Now much of the company’s growth is based on its managed services that take much of grunt work out of handling taxes and out of the hands of enterprise customers. These managed services first launched in 2006, some 26 years after the company itself formed.

Despite a wide variety of tax services and tools, deployed in myriad of ways, managed services are really driving growth. In fact, managed services revenue was up 81 percent last year, and these services drove client growth by 47 percent.

Much of Vertex’s service business revolves around the outsourcing of both tax returns and exemption certificates.

The 35 year-old company processes more than 115,000 returns each month, and handles more than $1 billion in overall tax funds.

One issue driving outsourcing is the ever increasing complexity of today’s tax codes.

"Corporations of all sizes continue to face an increasingly complex sales and use tax environment, and the heightened audit scrutiny associated with this means companies must find new ways of managing tax processes." said David Henkin, VP of Managed Services for Vertex Inc. "Our clients need more time to look upstream."

With a tough economy, increased and sometimes rabid competition, and more and more tax laws, corporate tax departments are feeling the brunt. Instead of getting more resources to handle the onslaught, they usually get less. And by being bogged down with lots of manual filing and processing of returns, there isn’t enough time for more critical, strategic functions such as making sure the corporation is in compliance with regulations, and making sure an audit can be defended successfully.

For corporations, returns are kind of like low hanging fruit – these are easy to pick off and hand over to a service provider. Meanwhile the bigger fish, use and sale taxes returns, can be filed by the corporate tax department. "Our customers are looking for more efficient ways to gain greater visibility into processes that impact their compliance," said Henkin. "A managed service solution is a strategic move for them that can be implemented quickly, with low risk."

Edited by Brooke Neuman

MSPToday Editor at Large

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