How the Tax Reclaim Industry Adapted to COVID-19

If you were to tell us this time last year that 2020 would see the global economy contract 4.3% while the U.S. stock market would increase 20% – even as unemployment hovered around 7% – we wouldn’t have believed you. We also wouldn’t believe that the year would bring a long-awaited shift away from paper records AND a significant increase in participation in tax processes, but indeed, that is exactly what we saw.

Earlier this week, GlobeTax convened a webinar to discuss these changes and make sense of how the tax recovery marketplace was impacted by COVID-19.

In a wide-ranging conversation, the below participants explained how governments, market infrastructure, and their own organizations adapted to the pandemic, providing a bright spot in an otherwise dismal year.

  • Kevin Scully, Group Operations Manager at PNC
  • Walter Barys, Senior Vice President and Head of Global Network Management at U.S. Bank
  • Joe Dooley, Senior Vice President of Relationship Management at American Stock Transfer (AST)
  • Leann Maurice, Vice President of Depositary, CSD, and Issuer Services at GlobeTax

Below, we summarize the top three takeaways from the conversation:  

1. Businesses Rose to the Challenge Through Clear Communication with Partners

Although each organization adopted a different strategy to weather the storm and transition to a work-from-home environment, all participants shared a commonality: effective communication with partners was vital.

GlobeTax’s Leann Maurice discussed how, throughout the pandemic, her team reached out to representatives in each market to track changes and stayed in close contact with DTCC to ensure that all market requirements were consistently updated. This close collaboration with DTCC helped Participants stay informed. Through a variety of channels, GlobeTax notified Participants of any new requirements and whether these changes would be temporary or permanent.

Similarly, as Relationship Manager at AST, Joe Dooley ensured that all of AST’s clients were able to conduct their meetings through the pandemic by offering an innovative virtual meeting package. Joe noted that despite the extra effort, “There was a tremendous take up, and it really helped the companies. Being able to hold meetings virtually checked off all the boxes for them.”

Among these examples, one lesson remains clear: the industry found stable footing for clients and stakeholders alike through diligent and innovative communication methods

2. Digital Processing Significantly Eased the Tax Election Process

Arguably the biggest impact of Covid-19 was that many markets suspended the required physical copies of documents, and instead permitted electronic copies and virtual signatures. This shift allowed our clients and partners, such PNC and U.S. Bank, to even more efficiently submit information and make elections on time through CA Web.

U.S. Bank’s Walter Barys commented favorably on this evolution: “The effort from GlobeTax coordinating rules modification with tax authorities on not needing to provide physical forms – that was huge. We have a lot of smaller clients that don’t have the ability to provide physical documents, so that was a bright spot for them. Like most things with GlobeTax, it flowed very well.”

3. Participation Rates Soared

At the beginning of the year, GlobeTax would have been pleased to see participation rates remain steady – or at least not fall too precipitously. However, as the months passed, a surprising trend revealed itself: participation rates increased.

Panelists partly attributed the trend to the recent enhancement of GlobeTax’s ESP system, which now allows for “bulk upload” of investor information for all events in all markets. This system enhancement, coupled with new requirements that allow digital documentation, made it easier for market players to submit the information required to support tax reclaims despite other challenges they may have been facing. GlobeTax hopes that these increased participation rates signal a bright future for the industry beyond the pandemic.

As we look forward to 2021, the question remains: how will tax reclamation processing continue to evolve? As 2020 demonstrated, necessity breeds innovation. We will continue to monitor and summarize this evolution as the year unfolds, so stay tuned for an invitation to our next webinar in Q2.

If you weren’t able to attend our webinar, click the button below for instructions on how to watch the recording.

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