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Transitioning from the Forms-based Review to the Data-driven Review

For decades, Tax has lived in a forms-driven world. IRS forms have always represented how we reported to taxing authorities and defined what was audited. Therefore, it’s logical that the primary focus of the traditional review process has been its main deliverable: the IRS form.

Even from a provision standpoint, external and internal reviews were based on a standard set of reports that were ticked, tied, and validated back to supporting schedules.

Today, however, we’re seeing the process shift away from a forms-driven review to a data-driven review. Here are some reasons tax departments put that practice into play:

  1. Electronic filing makes tax return deliverables sets of data rather than forms. As a result, audits now focus on underlying data instead of data presented on a form.
  2. Similarly, international and domestic taxing authorities increasingly ask for underlying data, and they base regulatory reviews upon analyzing that data rather than solely looking at the data presented on forms.
  3. Financial audits now focus more on data analytics and risk assessments and less on pure reviews and validations of provision reports.

So, while taxing authorities and auditors increasingly look to data to automate their risk analyses and reviews, tax departments have been slower to move away from manual reconciliations. This doesn’t need to be the case. With the introduction of tax technology and business intelligence systems, tax professionals can access and analyze stored data—such as source data and calculated results—to automate the review, identify areas of risk, use for scenario planning, and support recommendations to financial leadership.

The ability to store vast amounts of tax data at all levels of detail combined with the evolution of third-party tools has greatly expanded what we can do with tax data. What used to be considered best practices—such as in-depth manual reviews of forms and reports—is evolving to a much more efficient approach that frees up time to focus on other essential matters tax departments face.

By focusing on what matters, more time can be spent reviewing and understanding results that may warrant further attention, such as:

  • Whether or not materiality thresholds are met
  • Unexpected variances from prior reporting periods
  • Unexpected results going from high-level reporting in an interim period to the lowest level of detail in a year-end close
  • Incongruous results based on a change to a calculation or tax law; for example, an NOL change that does not result in a valuation allowance change

Not only can Tax review the data within the department, they can readily share it with stakeholders outside of Tax who need the information. Is your company considering moving a factory or distribution center? Tax can provide insights into the tax implications of moving. Considering buying a commercial property? Tax can determine if tax abatements or credits exist to improve the bid.

Emerging tax trends show that data-driven reviews surpass forms-driven reviews. Tax technology makes more data available and provides functionality to quickly and efficiently identify anomalies and areas of risk and materiality. A data-driven review process also helps drive the value of Tax throughout the organization.

Interested in transitioning from a forms review process to a data review process? Corptax clients can learn more by directly contacting your Account Manager, Professional Services representative, or Support Services advocate. Not a Corptax client and want to know more? Email us at

Today’s tax volatility makes now the right time to look at tax tech. Learn how we assist! Call 800.966.1639 or email

About Gary Colbert
A recognized thought leader in corporate taxation, Gary Colbert is a Senior Director on the Tax Law Analyst team. He helps clients understand market trends and evolving tax law and how they will impact their companies. Gary is a registered CPA and holds a Juris Doctor from San Joaquin College of Law.