Asset managers, streamline tax reporting with automation

Three ways automation streamlines tax operations

1. Automating data distribution and collection

Asset management tax teams often spend hundreds of hours managing outreach for tasks like Schedule K-1 delivery, W-8 and W-9 collection (along with Form 1042-S documentation for cross-border investors) and partner elections. These processes rely on email reminders and manual tracking — an approach that becomes unwieldy as investor counts grow.

Automation helps here by standardizing and tracking outreach — whether it’s partner elections in private funds or investor certifications for registered fund shareholders — giving teams a single, consistent process for all investor communications.

In a large private equity fund complex, for example, W-8 and W-9 forms need to be collected and refreshed regularly as investor information changes. “These are still paper documents in many cases,” Sen said. “Someone has to request, collect and process each one — and when you have thousands of investors, it becomes a massive undertaking.

Low-code workflow tools can now automate much of this process — standardizing requests, sending reminders, validating submissions and tracking responses in real time. Some firms implement these systems in-house, while others work with advisors to configure them around their existing platforms.

2. Modernizing inquiry management and document handling

Asset management tax teams serving private equity and fund of fund clients face a constant flow of inbound items — from state tax notices and audit requests to cross-border withholding assessments. Without a centralized system, tracking each inquiry becomes ad hoc, deadlines slip and critical notices or refund opportunities can be overlooked.

“When items are tracked manually, things can fall through the cracks,” Sen said. “We’ve seen cases in fund of fund structures where a credit or refund opportunity expired simply because it wasn’t logged or assigned to the right person in time.”

Cloud-based request management platforms can bring much-needed structure to this process. These tools allow teams to upload notices, assign ownership and monitor progress through automated reminders and dashboards. Every deliverable is tracked, and overdue items surface automatically — giving teams and their external partners full visibility into what’s been resolved and what still needs attention.

Asset managers can take that visibility further with tax compliance dashboards that consolidate deliverables by entity, fund or jurisdiction. “It’s almost like an on-demand status call at your fingertips,” Sen said. “You can see exactly where each filing stands and who’s responsible for the next step.”

Standardized document tagging adds another layer of control, ensuring records and supporting materials can be retrieved quickly during audits, reviews or investor reporting. Together, these systems replace fragmented inboxes with a real-time view of compliance activity, helping firms stay organized, responsive and audit-ready.

3. Improving data management and reporting

As asset managers modernize their tax functions, many are discovering that automating workflows is only part of the equation. Another key component is ensuring the underlying tax data is consistent, validated and accessible across very entity and service provider. Whether reconciling partnership data across feeder and master entities or aligning RIC data across fund complexes, both demand accurate, validated information that tax teams can trust and use consistently.

With data centralized and aligned, tax teams can see the status of every entity’s filings in real time, identify issues sooner and reduce the risk of mismatched reports. Instead of spending time reconciling information, they can focus on interpreting it.

Where to focus first

To effectively integrate automation into their tax reporting activities, asset managers need to start with a focused plan that reflects how their tax data actually moves through the organization. Here’s how to begin:

1. Prioritize pain points. Identify the tasks that slow reporting or create the most manual rework — for example, reconciling Schedule K-1 data for private funds or coordinating 1120-RIC schedules across registered fund entities. Tackling the most time-intensive steps first can relieve pressure quickly, while tasks with lesser demand can be automated in later phases.
2. Decide how to implement. Determine whether to adopt tools internally or partner with an external provider that already uses automation to streamline reporting. Leaner tax teams may benefit from outside support to assess where automation can deliver the greatest value.
3. Pilot with intent. Choose one repeatable process — such as Schedule K-1 data intake or investor data collection — and use it to test automation across that process. Refine the workflow, then expand automation to adjacent activities once the benefits are measurable and repeatable.
4. Strengthen governance. Document procedures, assign ownership and define how data changes will be reviewed and approved. Clear governance helps prevent inconsistencies across entities and gives teams assurance that records are complete and audit-ready.