By Rob Starr, Big4.com Content Manager
Deloitte has recently released a tax data analytics and visualization solution enabling organizations to address tax planning and compliance needs related to state net operating losses (“NOLs”) across multiple entities and state jurisdictions.
State NOL Insight includes several features like a calculation engine to analyze utilization, limitation and expiration based upon state-specific NOL rules, data analytics, and visualization of state NOL data and forecasting, along with separate tracking of state NOLs for tax provision purposes.
Andrew Gold, partner, Deloitte Tax LLP, who specializes in multistate tax services and innovation, helped us to understand this broad-based tool that is both scalable and flexible.
- What was the impetus for State NOL Insight?
Organizations face a variety of challenges in tracking and properly applying their state net operating losses (NOLs). These challenges include extracting relevant historic state NOL data by year, entity, state return and researching and applying the non-uniform state NOL laws, which often too vary by jurisdiction, year, filing method, and entity type.
This data can also reside in multiple spreadsheet files and in archived tax returns. The process to update and maintain these spreadsheets is often manual and prone to inefficiency and errors as multiple users interact with the files.
Understanding these challenges and potential risks, we developed a multistate tax technology solution, State NOL Insight, to offer organizations better tracking of their NOLs across multiple entities and state jurisdictions.
- What does it do?
Essentially, State NOL Insight has the potential to make manual inputs and large spreadsheets used by many organizations obsolete.
It is a web-based, data-analytics solution that captures a taxpayer’s state NOL-related data and uses it for tax planning, compliance and provision purposes. It tracks both book and tax NOLs by entity, filing group, jurisdiction and year, with the ability to apply applicable IRC Sec 382, SRLY and state jurisdictional NOL limitations.
The tool leverages a complex calculation engine driven by configurable state specific NOL rule sets that enable scenario planning, centralized state NOL tracking, and standard and ad-hoc reporting that will facilitate the preparation of state NOL carry-forward schedules for state tax compliance or tax provision needs.
- How will it benefit Deloitte’s clients?
State NOL Insight will help tax professionals take control of their state NOLs by providing increased transparency into state NOL balances, mitigated risk through the use of a database driven platform and improved planning related to NOL limitations, utilization and expirations.
Organizations will have access to broad-based data analytics and visualization that will provide a deeper, strategic view into state NOL tracking and reporting. It will enhance documentation, improve quality related to state NOLs and deferred tax assets, and provide a more efficient data analytics and reporting functionality for organizations.
Another benefit is the tool is updated regularly with state tax rules and computation changes, giving users the ability to perform forecasting and scenario planning, such as re-computing state NOL amounts or valuation allowances.
- What makes State NOL Insight different?
Unlike traditional approaches to state NOL tracking and reporting, Deloitte’s State NOL Insight uses an effective database platform that provides a single, controlled location in which a company’s state NOL data resides. It is also scalable for both large and small organizations.
The tool was designed by Deloitte’s multistate tax practitioners, with many years of state NOL experience, and our multistate tax technology specialists. State NOL Insight’s implementation is supported by a national multistate tax technology services team to tailor the solution to a company’s specific situation and needs.
- What’s in the future?
State NOL Insight is just another example of how Deloitte is helping organizations apply data analytics and technology to address their tax needs in a new way.
Deloitte is developing a suite of applications to address some of corporate tax departments’ biggest challenges, including in the areas of partnership taxation, state apportionment, legal entity structuring, credits and incentives and indirect taxes.
We are applying some of the latest analytics tools and emerging technologies such as machine learning, optical character recognition and robotics to help organizations gain deeper insights from their data and transform the way certain tax processes are performed, which will free-up time for tax departments and enable them to be more strategic within their organizations.
As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. This article does not constitute tax, legal, or other advice from Deloitte LLP, which assumes no responsibility regarding assessing or advising the reader about tax, legal, or other consequences arising from the reader’s particular situation.