WLN Columns

A Better Way to Decipher the Tax-Code Puzzle

As the captive financial services company for Mercedes-Benz USA and for Daimler Trucks North America, Daimler needs to manage a multitude of tax-code changes and updates across the passenger car industry and the heavy and medium trucking industry throughout the United States, Canada and Mexico.

Daimler Financial was running three separate systems to support the tax implications of passenger car customer loans, customer leases, and a third for truck leases. Because these three IT systems do not have the automatic tax code updates, every new rule or modification to a tax code had to be made in three separate systems.

The potential for error is high when tax code changes are not up to date and the tax assessed is not accurate, which can negatively impact our customer service, customer relationships and ultimately our bottom line.

The solution? Daimler Financial is taking the proactive approach with Vertex by implementing new IT systems and processes aimed at reducing the risk of unforeseen tax-code changes to ensure data accuracy and data transparency. This solution manages tax processing implications across different industries, jurisdictions and internal information technology systems.

Financial’s operations in Europe is using the Phoenix system owned by CGI as a common platform with common data input and reporting tools to significantly reduce errors resulting from data merged from disparate systems.

Daimler Financial’s team in the Americas knew that tying into this platform and replacing its three systems with a single one was the best strategy to start achieving data accuracy and transparency while ultimately reducing complexity and achieving cost savings.

But given the complex leasing tax structure in the United States compared to Europe, the single common platform did not have tax technology robust enough to crunch through the nuances of the U.S. and Canadian tax codes for vehicle leasing and vehicle purchasing transactions.

As a result, Daimler Financial’s Americas is working with the Vertex Consulting team to integrate Vertex O Series Lease Tax North America as the tax service search engine on the new Daimler custom platform. A 2012 “go-live” launch is planned. The Daimler Financial Services Office of Tax Affairs is looking forward to having a system that provides monthly tax code updates highlighting tax rate, logic and law changes for all jurisdictions in the United States and Canada.

By proactively putting the systems and the processes in place to get accurate data at the outset, we will be able to compare year-over-year costs of audit-related activity to calculate the savings resulting from accurate tax data.