Reflecting on the Thomson Reuters Direct Tax Live event, I was struck by how often the term API was used during presentations and panel discussions. It became so frequent that I lost count and outstripped the far trendier name dropping of AI (mentioned only once)! What was even more fascinating was that, despite the heavy usage, many senior tax leaders at the event didn’t quite know what an API was, or what it actually does — aside from allowing information to pass between systems.
This observation resonated with me because it’s something I’ve seen time and again when kicking off tax technology projects. There’s plenty of interest, but not much knowledge.
This article aims to change that.
However, let’s start with a word of caution: This is an introduction to help those unfamiliar with APIs better understand them, not a deep technical dive.
Where Can You Find the Allusive API?
You might be surprised to learn that you’re probably using APIs every single day—multiple times a day in fact. Let’s take a simple use case: ordering an Uber. The maps you see while tracking your driver aren’t provided by Uber’s own map database. Instead, Uber uses Google Maps, which they access via an API.
APIs are everywhere, quietly powering many of the technologies we rely on daily and are particularly of use when wanting to connect to third party systems.
What Exactly is an API?
API stands for Application Programming Interface. It’s a set of rules and mechanisms that allows one software application (or component) to interact with others. But let's make this even simpler.
Think of an API like a waiter in a restaurant. You (the Client) requests an order with the waiter (API), the waiter takes that order to the kitchen (the system or application known as a Server), and then the waiter returns with your food (response). Just like this process happens without you needing to know exactly how the kitchen works, APIs handle data transfer between systems without you needing to worry about the technical details.
APIs in Everyday Life: The Uber Example
To illustrate this further, let’s revisit the Uber scenario. Every time you request a ride, Uber’s app sends out multiple API requests to different services, for example:
Google Maps API: To show you where your driver is.
Payment API: To handle your payment securely.
Notification API: To send you updates on your driver’s status.
These APIs work together seamlessly to provide you with a smooth experience.
A Deeper Dive: ONESOURCE and API Requests
Now, let’s bring this closer to the tax world and use an example involving ONESOURCE. Imagine you need to transfer tax disclosures from ONESOURCE Corporate Tax to ONESOURCE Statutory Reporting as part of the statutory reporting process. Here’s how the API process would work:
Request access to the ONESOURCE platform using a username and password.
If permission is granted, ONESOURCE provides an access key, known as a Bearer Token.
Request the tax disclosure data from ONESOURCE Corporate Tax.
Receive a response containing the data.
Decode the data.
Repackage the data in another API request.
Submit the data to ONESOURCE Statutory Reporting.
Receive confirmation that the process was successful (or failed).
The process might sound complex, but the beauty of an API is that it automates all these steps. What could take hours manually now takes minutes or even seconds, all while ensuring data accuracy.
What Does an API Look Like?
To make this even more tangible, here’s an example of an API request in ONESOURCE for retrieving a full tax computation:
Or with example fields completed:
GET retrieves data, while PUT and POST send or update data on the server, ensuring systems stay up-to-date.
The return or response will contain the requested tax data and will look something like this:
and continues for 572 pages in font size 11. ONESOURCE uses a REST API which responds in a format known as JSON.
The entire process is smooth, automated, and error-free.
How Can You Use APIs in Tax Technology?
APIs aren’t just for developers. They can be embedded into Excel, used in Robotic Process Automation (RPA), or even integrated into code like Python. For those in tax, I highly recommend using Alteryx, which allows you to run an entire tax automation process in a single workflow.
If you want to see this process in action, using Alteryx, watch this YouTube video.
Key Benefits of APIs for Tax Professionals
So, why should tax professionals care about APIs?
Speed: Automate complex, time-consuming processes in minutes.
Accuracy: Reduce the risk of human error when transferring data.
Scalability: Handle large datasets without worrying about manual entry.
Efficiency: Free up time to focus on higher-value tasks like analysis and strategy.
The result? APIs are the backbone of efficient, accurate, and scalable tax technology solutions. By integrating APIs, you can retrieve and submit large amounts of information between ONESOURCE or any API-enabled software solution reliably and without error.
Wrapping Up
If you’re reading this, it’s likely you’re not looking to implement these processes yourself but are considering how to improve your tax technology stack. If so, let’s talk about how we can help you achieve your goals with the power of APIs. 🌟
Have you encountered challenges with integrating tax systems? Share your thoughts and let's discuss how APIs can streamline the process for your organisation.
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