Case Study: Creating a Powerful Income Tax Process – How Integrating Asset Systems Will Help

1. Case Study: Creating a Powerful Income Tax Process – How Integrating Asset Systems Will Help Presented by: June 2008

2. Introductions Susan Rich • Manager, Income Taxes, Pitney Bowes Kelley Lear • Managing Director, Red Moon Solutions Stephanie Malin • Product Line Leader, Vertex Inc.

3. Session Objectives • Current process and pains collecting, validating and reconciling fixed asset data with respect to the following areas: • Domestic compliance • State tax compliance • Property tax • Audit response (e.g., RARs, Unclaimed Property) • ROI Considerations for Fixed Asset Automation • Discuss the integration Pitney Bowes will use going forward to streamline their process and automate using Red Moon Solutions® Fixed Assets Manager™ and Vertex® Income Tax Solutions - Domestic™

4. Who is Pitney Bowes? • World’s leading provider of mailstream solutions, a global provider of hardware, software and services that help its customers manage the flow of information, mail, documents and packages.  • 2007 Revenue - $6.1 B • Global expansion • Since 2000, Pitney Bowes has invested $2.5 billion in 85 acquisitions • Evolving tax department • Domestic and International • Tax department personnel -

5. Who is Red Moon Solutions? • Specialty Tax Software & Services Provider • FAM™ • LKEM™ • PowerOLAP® • Founded by Jim Shedivy • Andersen Partner in charge of Tax Technology Enterprises • CIO for Andersen • Headed up Milwaukee tax practice • From 7 – 20 Years Tax Technology Experience: • Ex-Andersen & Accenture employees • Senior personnel

6. Who is Vertex? Income Tax Suite of Solutions • Comprehensive family of products and services in sales, consumer use, value added, and income tax • 30 year history in global tax management solutions • Thousands of customers worldwide in all major industries • Over 3,000 software implementations • Extensive ERP partnerships • Full range of Consulting and Data Management Services • Corporate headquarters: Berwyn, PA • European headquarters: London, England

7. BEFORE: Fixed Asset Workflow Foreign (Great Plains) LS Book Type Setup

8. Fixed Asset Challenges • Different fixed asset systems and many acquisitions • SAP • JDE • PeopleSoft • QAD • Disposition tracking challenges • Summary asset information • Reconciliation • Domestic Compliance • Manual data entry • Time consuming – combining SAP & FAM data • Extensive detailed review required

9. Other Tax Areas Affected • Property Tax • Data Imports from SAP • Some manual process for JDE and QAD entities • By location – down to the street address • AuditDefense • Current audit exposure – need detailed depreciation by location for each asset • Manually tracked in Excel • Would like to show leadership tax savings through audit defense efforts • Trouble getting data out of their data warehouse for tax compliance and audit defense

10. Fixed Asset Roadmap - Today FUTURE • Standardized on FAM for acquired companies • FA data input/import for tax depreciation data • FAM generates 4562, 4797, 4684, 6254 and input in summary into Vertex Domestic TODAY

11. Asset Management Challenges • Burdensome controls due to Manual Processes • Requires detailed reviews • Many manual controls • Extremely time consuming • Reconciliation

12. Potential Impact on Financial Statements • Incorrect profit & income tax • Mismatch of depreciation between book and tax • Continued depreciation on books for disposed assets • Domino effect on deferred taxes • Audit risk & credibility with auditors • Incorrect property tax • Unrecorded asset detail for classifying property • Incorrect insurance costs and inadequate coverage • Paying for disposed assets • Missing new purchases • Poor purchasing decisions • Duplicate assets acquired • Poor SOX compliance • Inadequate controls and processes

13. Financial Example

14. Incorrect information and errors in fixed asset inventory data are a near universal problem – resulting in significant and unnecessary tax overpayments of 8% to 20%- Asset Management Resource (AMR)

15. Fixed Asset Roadmap - Future TODAY • Consolidate all acquisitions on FAM • Import tax data • Provision Data Integration • Tax System Integration • International data for 1118 FUTURE

16. AFTER: Fixed Asset Workflow Provision TaxStream™ Provision TaxStream™ Import Book Data General Ledgers FAM – Tax Depreciation Calculations and Tracking Future Acquisitions FAM™ ALL Filings – 4562, 4797, 4684 and 6254 Int’l Data– 1118 Generate & Integrate Vertex®Income Tax Solutions– Domestic Compliance™ International Compliance – CORPTAX™ Provision TaxStream™ XML E-File Aggregated File

17. Leverage, Expand, Improve, Support • Consolidate systems where possible • Streamline • Reconciliation and reporting • Property by location • Data integration • Workflow • Audit cycle • Integrate where it makes sense Get Out of Your Comfort Zone – Minimize Excel Use!

18. Streamline workflow • Reduce manual steps • Integration • Automated process for moving FAM™ data into Provision • Automated process for moving GL data into FAM™ • Automated process for moving data from FAM into Vertex® - Domestic ™ • Automated process for moving data to CORPTAX® International Compliance™ • Reconciliation reports • Detail • Summary • Excel

19. Leverage Technology • Certified Development Partners • Form data exported from FAM™ and imported into Vertex® Income Tax Solutions - Domestic™ • Form 4562 • Form 4797 • Form 4684 • Form 6252 • 1118 – International Compliance Data • Vertex® Income Tax Solutions - Domestic™ then validates and creates all filings consolidated within efile XML and transmits to IRS

20. 1. Fixed asset data is brought into Fixed Assets Manager 2. Fixed asset data is exported out of Fixed Assets Manager 4. Tax forms are generated annually in Vertex Domestic Compliance 3. Fixed asset data is imported into Vertex® Income Tax Solutions - Domestic™

21. Integration Demonstration • Red Moon Fixed Assets Manager™ (FAM) to Vertex® Income Tax Solutions - Domestic™ • Simple export and import • Easy to do • Easy to learn • Data controls….

22. Benefits & Value to the Tax Department • Flexibility • Ability to react quickly to changing business needs • React quickly to new acquisitions • Ability to work fast to supplant changing workforce • Time - $$$ • More tax team time to analyze and maximize tax positions • Increase cash flow • Goal to reduce effective tax rate (resulting in increased book income) • More challenging work assignments • Tax savings reports • Better work-life balance

23. Evaluate Your Fixed Asset Process • Consider Regardless of Vendor: • Accounting book to tax • Tax depreciation book to provision • Tax depreciation - domestic, international, and state compliance • Property tax • Planning • Audit response and defense • Look at overall controls • Cost/Benefit • Export/Import • Tighter and more accurate integration • Alternative reporting tools

24. Return on Investment - ROI • Please see ROI handout • Consider IT and tax team time to extract data from accounting or other systems • Consider tax team time to reconcile data • Consider points of re-keying – time and potential error rates • Consider downstream tax effects – across all areas • Consider audit risk • Consider over and under payment of property tax and insurance

25. Thank you for joining us today If you have additional questions or for more information, contact us at: Susan Rich 203-351-7653 susan.rich@pb.com Stephanie Malin (484) 595-6128 stephanie.malin@vertexinc.com Kelley Lear (941)379-7108 kelley.lear@redmoonsolutions.com