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MasterTax: A PayUSA Case Study

The longevity of any business is often dependent on its ability to foster growth and expand into new markets. However, there’s a tipping point for any organization where sustaining existing business overwhelms the ability to take on more. When reached, this tipping point can strain staff and stunt business growth. The once-auspicious opportunity to pursue, acquire and onboard new business can quickly become a daunting – and seemingly impossible – task.


Since 1969, PayUSA has established itself as a market leader in payroll services. From its
first-year sales of $27,000, the Pennsylvania-based company has evolved into a multi-million dollar payroll service provider, offering technologies such as paperless payroll reports, internet payroll entry and employee self-service options. The organization has always prided itself on an exceptionally qualified staff and a foundation rooted in customer service excellence.

However, while PayUSA was helping its clients improve efficiencies and enabling them to set their sights on long-term growth, the company had reached the tipping point. With a roster of more than 700 clients, business was booming – but their processes had become so time consuming that PayUSA had exhausted its own ability to grow.

“It got to the point where we were dreading any new business, which is never a good sign,” Karen Duncan, vice president at PayUSA said. “We didn’t have the bandwidth to service any new clients.”

Full-time employees were consumed managing political subdivision (PSD) codes for each tax
collection district in Pennsylvania (over 7,000 in total), among a wide variety of other tasks. The PSD filings alone required an all-hands-on-deck approach during quarter- and year-end filings. Meeting deadlines required pulling in additional staff from other areas of the business, which halted productivity elsewhere. Working evenings and weekends were required just to keep above water, leaving little time to proactively update tax rate changes or manage discrepancies.

Establishing a Partnership

With an existing client base that was diverse and spread across multiple geographies, PayUSA knew the road ahead wasn’t going to get any easier.

Although they felt their systems were reasonably efficient, PayUSA was receiving tax and payroll information from two disparate streams, which required extensive manual intervention and maintenance. To free its staff and reopen the new business pipeline, PayUSA sought a smarter approach – one that consolidated manual touch points, automated processes and improved data management by organizing all pertinent business data into a single data portal.

It was then that PayUSA recalled a solution it had first heard about at an industry conference more than a decade earlier: MasterTax. A consolidated offering that helps automate key tax and payroll functions, MasterTax provides actionable business data in a single feed. With employee overtime pay reaching record highs and the company’s pipeline at a standstill, PayUSA decided it was time to get back on track.

Implementing the Solution

PayUSA began using MasterTax in January 2012 on the cusp of a perfect storm. “In addition to 2012 being a banner year for unemployment, we were faced with one of the most profound legislative overhauls in recent Pennsylvania history,” Duncan explained, “as Act 32
reformed the local earned income tax withholding system and established countywide tax collection districts for the remittance and distribution of local earned income taxes.”

Pennsylvania law now requires the withholding of Pennsylvania personal income tax from compensation of resident employees for services performed either within or outside Pennsylvania’s borders, and from wages of nonresident employees for services performed within the state. Every employer paying compensation subject to withholding must withhold Pennsylvania personal income tax from each payment of taxable compensation to its employees.

“Almost every employer in the state was penalized at some juncture and had to manage a flood of appeals,” Duncan said. “MasterTax helped us, and our customers, stay ahead of the curve with Act 32. Manually trying to navigate this level of change would have been an administrative nightmare!”

In spite of the myriad challenges amidst the rapidly changing business landscape, the implementation of MasterTax was seamless. PayUSA customers continued to receive the high level of customer service they had come to expect, without any interruptions.

“The timing couldn’t have been better for us,” Duncan said. “We were able to spend time
customizing the solution and processing claims rather than data entry and maintenance. It’s obvious the MasterTax software was written by people that understand what we need to accomplish.”

Day-to-Day Improvements

PayUSA was confident that revamping its tax processes would be beneficial to the company’s long-term outlook. What they soon realized was that the immediate and extensive impact the adoption of MasterTax had on the staff’s day-to-day productivity was equally as valuable.

MasterTax’s streamlined processes and consolidated data streams have helped enable PayUSA to condense what used to require a full-time effort, into a single morning’s work. Quarter- and year-end processing no longer require employees’ personal lives to be “totally disrupted,” Duncan said.

In addition, MasterTax gave PayUSA the ability to see, at a glance, the status of a given filing. By shifting to a fully-automated approach, reconciliations occur in real-time rather than after the filing is submitted. This prevents the company from, in theory, spending budget that isn’t actually available. The previous unrealistic timelines, coupled with a nonexistent margin for error, are in the past and tasks are now completed by staff with confidence and time to spare.


PayUSA had plateaued at 700 clients, with little opportunity to continue expanding. In just over one year working with MasterTax, PayUSA has grown significantly, now serving more than 1,100 clients. 2012 FIRST QUARTER tax business increased 25 percent.

Not only is PayUSA able to serve 35 percent more clients, it’s doing so using the same amount of manpower.

In the first quarter alone (Q1 2012), the tax business at PayUSA increased 25 percent, compared to 10 percent growth across all other areas of the business.

Additionally, MasterTax has allowed PayUSA to bring in new sources of revenue. While increasing new business by nearly 40 percent, PayUSA also instituted a local services tax option for its clients. In just the first quarter of 2013, PayUSA recognized more than $8,000 in local services tax revenue that otherwise wouldn’t have been captured.

PayUSA now allocates staff time and expertise more strategically and no longer requires employees in adjacent functions to abandon their tasks to assist with tax processing. Preparing for year-end used to mean putting all facets of employees’ lives – personal and professional – on hold. One misstep would trigger a chain reaction of subsequent and potentially costly delays. The tax department now completes its year-end filings in 25 percent less time using MasterTax compared to previous years.

Historically the tax department has been viewed by leadership as a cost center that performed important – but often tedious and task-based – processing activities. MasterTax has helped leadership quickly gain a deeper understanding of this critical function’s role in driving growth for the company through improved efficiencies and enhanced process management.

Going Forward

For the first time, PayUSA’s tax experts had nearly a week of down time after year-end processing in January 2013 as they waited for payroll to catch up. This level of efficiency has PayUSA poised to reclaim the aggressive spirit that helped the company achieve rapid growth in previous years. And as they look ahead to the future of their business, they’re ready to continue that growth.

“I love doing tax filing again,” Duncan said. “MasterTax has reenergized our business.”