Previously, we shared our vision, and this week we want to share our mission. While our vision focuses on the “Why” our mission is about the “What”. What is our team going to build to help achieve our audacious goals?
As an early-stage company there are many things to focus on but you inevitability have to build your product. Beyond fundraising, theorizing about the competition, team building and studying the market, eventually shipping your product will have to take place.
At ModernTax, this is a daunting, but exciting, element of our business. The US tax code is a constantly evolving algorithm and has a huge impact on a large number of people and businesses. The way consumers and businesses access their data online seems to be constantly developing too. Just this week the IRS reneged on a plan to require all online account holders to verify with a selfie.
Aside from the changes to the US tax code, there is the question of who ModernTax wants to solve problems for. This matters when resources are tight, but all we can be assured of is we need to solve problems for the largest amount of people, businesses, and government agencies as we possibly can.
For us, the question is do we help consumers pay their taxes in more efficient and transparent ways or streamline the process, or do we help them receive their refunds in a more seamless modern way? On the business side, do we help businesses automate tax compliance and capture more upside with tax credits? Or, do we help the actual government itself, or a mixture of all three? These questions impact our team dynamics and the type of team and culture you will want to build.
We know for a fact that outside of the 70,000 or more people who work at the IRS, there is a very small percentage of people who want to build technology to help the government collect more tax revenue. Then there is the consumer problem — there’s a large number of people that want their taxes to be more transparent but how many of those people want to dedicate their careers to solving these problems?
Our mission statement needs to be inclusive, but it also needs to firmly establish what exactly we will be building and who are the ideal people to help us do it.
The black box that is the US tax code
We know the experience of over 11 million businesses and 160 million individual households who submit tax forms each year is not seamless. We know the calculation of tax withholdings, payments, credits, and refunds happens in a fragmented array of tax software, and we know the U.S. tax code is one big ever-changing algorithm. We also know the Internal Revenue Service is consumed with backlogs of old tax returns paired with a consistent staffing shortage. They now are responsible for administering stimulus and child tax credit payments to middle-to-low income Americans among the other services it provides to businesses and large enterprises. With this knowledge, we know there are a plethora of jobs to be done at the IRS and to serve the individual American taxpayer and the businesses.
Financial technology software has made great strides in the past ten years and more and more consumers and businesses are relying on applications to manage the way they do business, spend money, track expenses, and make decisions. We can send payments to our friends instantly (Venmo), we can track our bills and cancel subscriptions with a simple click (Truebill), we can check out at dinner without ever interacting with the server (Toast).
When it comes to taxes we are starting to see new tools to help but it seems very early and far behind fintech in general. Sure, I can access R&D tax credits earlier through a platform like MainStreet. I can submit my taxes myself on TurboTax, and I can get access to my refund by increasing my paycheck with a new upstart like ColumnTax.
Taxpayers and business owners manage all of these transactions on our phones and we can get real-time data on each event. Tax transactions and decisions are not like that. The money withheld from our paychecks seems to flow down a never-ending black hole and we store a foray of documents into Dropbox folders, junk drawers, and the kitchen table only to wait until the last minute to figure out what we owe or what we are owed.
With the emergence of modern finance we are now selling stock or crypto, day-trading, and investing in more and more asset classes in a growing gray area when it comes to the US tax code. In many cases, there is no easy way to know exactly how much we should be withholding for taxes, how to estimate liability, and how to make the best decisions in one of the two things we all experience — taxes being one and death being the other.
At the end of the year, we reconcile these transactions to find out if we owe or are owed. In many cases, we again rely on a dedicated tax advisor to do the job for us or our business.
Our tax records, after we submit, sit in a form that is not machine-readable — so we rarely ever know how current we are with each taxable event that happens. Nearly 95% of all American households are owed money at the end of the year and zero percent of these transactions and refunds happen in real-time.
Long ago we wanted to solve these problems for the individual taxpayers who needed real-time tax refunds. Then we wanted to help the tax advisors (accountants & CPAs) automate their process of collecting the data to submit returns. But these solutions did not impact enough people.
Now, we think about how we can make tax in general easier for 11 million businesses and all 160 million taxpayers.
Here is what we came up with:
The mission of ModernTax is to enable every organization to request taxpayer permission to data to enhance product experiences in native applications.
It is crucial to make all of this data open, accessible, and transparent with the use of technology in the next ten years, or millions are bound to suffer consequences. The user experience as it relates to taxes needs a facelift and we are helping make that possible.