TaxXML BASC

[John.Glaubitz@vertexinc.com]

Greetings,

It's been awhile now since our last communication at which point it was
suggested that we begin to share some ideas and working documents within
the sub committee and submit suggestions for business drivers and candidate
initiatives by the next phone conference on 4/23.

While there haven't been any suggestions for initiatives, a few good
documents have been submitted, including an interesting sample schema for a
tax amount structure (is this OAG?) from Alex and a business case and
presentation on XBRL's approach to taxation from Walter.  Each of these
documents could generate a good deal of discussion, but they also highlight
the point that there is a lot of work going on in several different
organizations related to the standardization of tax information in XML.
Part of our task should be to understand how TaxXML fits into this diverse
effort to evolve standards for tax-related XML and what we can contribute.

It seems that the tax-related information included in documents fits into
one of three categories:
1.    Tax information as a part of a financial document
      The information necessary to determine a tax liability and that needs
      to be included in the reporting of that information is found in
      numerous financial records such as invoices, purchase orders, GL
      accounts and other records of taxable business activity. Most of
      these documents are in the domain of other groups that are focused on
      business transactions and reporting.  The function of TaxXML here
      would be to verify that the tax information included in financial
      documents is complete and appropriate and to work with the other
      organisations to include any additional requirements.
2.    Documents that are used in a tax context
      Some documents such as registrations and remittances may have a
      general structure or template that may have some specific
      requirements when used in a tax context.  TaxXML may need to
      recognize how these documents need to be enhanced or specified to
      support tax requirements.
3.    Documents that are specific to tax administration
      Some documents such as tax filings may be specific to the tax domain.
      Here it may be the responsibility of TaxXML to establish the template
      that may be used by other organizations in the same way that we will
      take advantage of financial documents.

How we work with each of these may vary, but it may be the task of the TASC
to determine how the tax-related requirements could be implemented in these
instances.  The BASC will need to determine what those tax-related
requirements would be.

With this perspective on our work, what should we choose to work on?  Up to
this point there have not been any specific proposals on what the initial
focus of the business analysis should be other than some comments in email
and our phone conference.  To put something on the table for either
approval or rebuttal, I'd like to suggest that the committee focus
initially on indirect taxes.  I went with this since I know it was of
interest to a number of our members and the new directives coming shortly
for indirect taxes make it a timely discussion.

If this is our direction, I would recomment that we break the problem down
and start with the tax determination process for indirect taxes.  This
would include identifying what information is required to determine the tax
and what information is inherent in the result of that determination.
Since the information used to determine tax is generally specified by those
documents that define business activity we can identify what those
documents are, what those documents should contain and where standards are
being developed to describe those documents such as the work that's been
submitted.  The results of tax determination may also be included in the
same documents or may be described in other documents.  Again we can
identify what those documents are, what information those documents need to
contain to fully describe the tax result and where standards are being
developed to describe those documents.

Following this work, we could either continue focusing on indirect taxes in
terms of tax filing, tax remittance, tax registration, etc. or stay with
tax determination and shift the focus to corporate income tax or other tax
types.  I would like to establish a game plan for working through these
options, but the path may become more obvious once we begin to work through
the details.

To proceed initially I believe we should clearly define what we mean by
indirect taxes.  From there we should decide what is included in the scope
of that definition, analyze and model the information, research existing or
developing standards for context and additional criteria and develop
recommendations for the information in a form that can be used as a
specification for the Technical Analysis sub committee.

Please provide feedback on any of what I've proposed or provide any
counter-proposal.  I'd like to generate a discussion that will lead to an
agreement on our path forward.  Once that agreement is reached, we can put
together some more formal documentation on our direction and plan and begin
to work the problem.  In addition, I'd like to get some ideas for any
agenda topics for next week's conference call.

Thanks
John

John Glaubitz
Vertex, Inc.
+1 484 595-5877
john.Glaubitz@vertexinc.com