End-to-end tax compliance module embedded into SAP S/4HANA for a U.S. retail and distribution enterprise, automating multi-state filings, real-time calculations, and audit-ready reporting.
About the client
A U.S.-based enterprise in the retail and distribution sector, operating across 15+ states with a large-scale SAP S/4HANA ERP infrastructure and complex multi-jurisdiction tax compliance requirements.
Introduction:
In 2024, Devox Software was brought in under an NDA to help a fast-growing US retail and distribution company with tax compliance. Despite implementing SAP S/4HANA, the client was struggling with fragmented tools, slow tax filings and growing audit risks. We delivered a full-cycle tax engine — fully embedded in SAP, integrated with Avalara and built in just eight months. Today, the system processes thousands of transactions per day, applies tax rates in real time in more than 15 states, and handles filings in full compliance with SOC 2 regulations. The result: faster month-end closings, no penalties and a finance team freed from manual labor.
Project Team
Composition:
To hit aggressive deadlines, we assembled a cross-functional team with strong expertise in SAP and cloud integration:
The team worked across three time zones and kept up a fast delivery pace through daily syncs and shared DevOps visibility.
Challenges:
Although SAP was already in use, the path to standardized control automation was not easy. The project involved several complex levels — both technical and organizational:
Results:
BUSINESS OUTCOMES
60% faster month-end closes. Manual tax reconciliation and report generation that used to take over a week now takes just hours. The finance team closes the books days earlier, freeing time for analysis and strategic planning.
Zero compliance penalties in the first year. With real-time tax calculations, automated filings, and full audit trails, the client passed internal audits cleanly and avoided late fees or inaccuracies across more than 15 U.S. jurisdictions.
Scalable tax compliance across state lines. The system now supports thousands of daily transactions with automatic application of jurisdiction-specific rules — from ZIP+4 accuracy to marketplace facilitator logic — allowing the business to expand without reworking tax operations.
Shift from manual work to strategic oversight. By automating lookups, returns, and filings, the finance and tax teams now focus on review and exception handling, not data entry — reducing burnout during peak periods.
Built-in audit readiness. Every tax event — overrides, exemptions, filings — is timestamped, user-attributed, and stored securely. The platform provides clean, drillable reports for auditors without additional prep.
TECHNICAL OUTCOMES
Real-Time Tax Engine Integration.Every SAP transaction — from sales orders to incoming invoices — now triggers real-time calls to Avalara AvaTax, applying current tax rates at the federal, state, county, and city levels with ZIP+4 accuracy: no more manual tax rate management or outdated lookup tables.
SAP-Integrated Filing & Reconciliation Dashboard. A custom Fiori-based dashboard provides tax teams with insight into accrued taxes by jurisdiction. Reports are automatically generated in formats specific to each country and are ready for internal review, export, or electronic filing.
Automated E-Filing with Full Audit Trail. In supported countries, tax returns are automatically submitted via an API or secure SFTP. For all other countries, the system generates validated XML and PDF files. Each tax return, adjustment and reversal is logged with a timestamp and user ID, facilitating audits and helping teams to reliably track changes.
Enterprise-Grade Security and Compliance (SOC 2). All data at rest (PostgreSQL on AWS) and in transit (between SAP and Avalara) is fully encrypted. Role-based access in SAP strictly controls who can view or change tax data. The integration layer follows the principle of least privilege and all sensitive actions are logged.
Robust Middleware Orchestration Layer.A Node.js service hosted on AWS and SAP BTP manages the data exchange between the systems and enables the aggregation, formatting and transfer of control data in the background. This decoupling ensures high availability during peak loads and enables the system to be scaled without interrupting the core SAP processes.
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