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Process Details

  • Inputs: Prior year tax returns and workpapers,Current year chart of accounts and final trial balance data,Fixed asset register details (cost, accumulated book depreciation, placed-in-service dates),Details of book-to-tax differences,Legal entity structure and jurisdictional filing requirements,Apportionment factor data (sales, property, payroll by state),Access to supporting documentation repositories,Tax compliance calendar and specific form requirements.
  • Outputs: Populated tax workpapers and lead schedules,Draft calculations for tax depreciation and other common tax adjustments,Supporting schedules for various tax return line items (e.g., state apportionment, M-schedules),A consolidated package of data ready for import or direct input into tax preparation software,List of data gaps, inconsistencies, and items flagged for tax specialist review,Audit trail of data sources and transformations.
  • Systems: ERP Systems (SAP, Oracle NetSuite, Microsoft Dynamics 365),Tax Provision Software (Thomson Reuters),Fixed Asset Management Systems (Sage FAS, BNA Fixed Assets),HRIS/Payroll Systems (Workday, ADP, Paychex),Document Management Systems (SharePoint, OpenText, Box),Microsoft Excel

Corporate Income Tax Return Data Collection and Preparation

Agnostic

Use Case Overview

An AI agent that automates the gathering of financial data, supporting schedules, and relevant documentation from various internal systems required for the preparation of federal, state, and local corporate income tax returns. The agent assists in populating initial tax workpapers and schedules, identifying book-to-tax differences, and preparing data for input into tax compliance software.

Challenges

  • High potential for costly errors from manual data handling.
  • Significant time and resources are spent on repetitive, low-value work.
  • The manual process is difficult to scale without increasing headcount.
  • Process bottlenecks lead to delays and missed deadlines.

Solution

This use case solution follows these general steps at a high level:

  1. Tax Data Requirement List Ingestionuses a predefined checklist of required data elements for specific tax forms (e.g., Form 1120, state equivalents) and schedules based on prior year returns and current tax law
  2. General Ledger (GL) and Trial Balance ExtractionAccesses the ERP System to extract final trial balances and detailed GL activity for relevant legal entities and periods.
  3. Fixed Asset Data Extraction & Tax Depreciation Calculation Support Retrieves detailed fixed asset records (acquisitions, disposals, existing assets) from the Fixed Asset Sub-ledger within the ERP System
  4. Book-to-Tax Difference (M-Schedule Items) Data GatheringIdentifies and extracts data for common M-1/M-3 schedule items (e.g., meals and entertainment, penalties, tax-exempt interest) by querying specific GL accounts or analyzing transaction descriptions within the ERP System
  5. Supporting Schedule Data Collection a) State apportionment factors (sales, property, payroll), b) Details for capital gains and losses from investment records or the Fixed Asset System, c) Information for tax credits and incentives from specialized tracking spreadsheets or modules
  6. Data Validation, Gap Identification & Flagginga) Performs basic validations (e.g., ensuring trial balance foots, checking for missing data in critical fields), b) Flags items with discrepancies, missing documentation, or those requiring complex tax technical judgment for review by tax professionals

Primary Benefits

  • Increase EfficiencyDramatically reduce the time and manual effort required to complete the process.
  • Enhance AccuracyEliminate human error to ensure data integrity and reduce financial risk.
  • Empower EmployeesFree your team from monotonous tasks, allowing them to focus on strategic work that requires their expertise.
  • Improve ScalabilityHandle growing volumes of work without a proportional increase in operational costs.
  • Ensure TransparencyMaintain a complete, auditable trail of every action the AI agent takes, described in plain English.

Related Use Cases

FAQ

How does the agent access data from so many different sources? +

The agent is built on the flexible Kognitos platform, which uses a variety of connectors to securely access your key systems. It can query ERPs (like SAP or Oracle) directly for GL and fixed asset data, connect to HRIS or payroll systems for apportionment factors, and even extract structured data from designated spreadsheets stored in secure locations like SharePoint or network drives.

How does the agent identify potential book-to-tax differences (M-Schedule items)? +

The agent is configured to extract data related to common M-schedule items. For example:
Querying Specific GL Accounts: Automatically pulling the full detail for accounts like “Meals & Entertainment” or “Penalties & Fines.”
Analyzing Transaction Descriptions: Flagging transactions, across broader expense accounts, that may require further book-to-tax analysis (keywords e.g., “golf,” “sponsorship”)

How does the agent handle items that require complex tax technical judgment? +

The agent’s role is to gather and flag, not to make final tax determinations. When it encounters an item known to require human expertise (e.g., complex capital gain calculations, R&D credit eligibility), it gathers all the relevant source data and explicitly flags the item in its output for review by a tax professional.

Can Kognitos integrate with my existing business systems? +

Kognitos functions as a comprehensive AI automated platform, delivering intelligent business automation solutions that optimize workflows and reduce manual effort. Kognitos integrates directly with all major ERP, CRM and productivity solutions for stable and durable automations.

How is the agent updated to reflect changes in tax law or new required schedules? +

The agent’s logic is built upon the initial “Tax Data Requirement List.” This checklist is designed to be easily updated by your tax team in plain English on the Kognitos platform. If a tax law change requires new data to be collected (e.g., for a new tax credit), your team can simply add that requirement to the list, make necessary configuration changes, and the agent will include it in its next run.

Our returns are complex. Can the data requirement checklist be tailored for our unique legal entity structure and state filing requirements? +

Absolutely. The checklist can be customized with different data requirements for each legal entity and for each specific federal or state return you file. It can be configured to pull different apportionment factors or gather specific data for state-level tax adjustments, ensuring the data collection is precisely tailored to your filing obligations.

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