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™™ A COLLECTION OF DISCUSSION GROUP RESPONSES 26 May 2009 FINANCE PRACTICE TAX DIRECTOR ROUNDTABLE TM.

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Presentation on theme: "™™ A COLLECTION OF DISCUSSION GROUP RESPONSES 26 May 2009 FINANCE PRACTICE TAX DIRECTOR ROUNDTABLE TM."— Presentation transcript:

1 ™™ A COLLECTION OF DISCUSSION GROUP RESPONSES 26 May 2009 FINANCE PRACTICE TAX DIRECTOR ROUNDTABLE TM

2 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 2 INDEX OF DISCUSSIONS Discussion SubjectKey TakeawaySlide Mileage Reimbursement Rates All the respondents use the standard IRS mileage reimbursement rate, additionally none of them have changed their policy in the last six months Slide 6 VAT/GST Research Tools for UK and Asia Pacific 45% of the respondents use International Bureau of Fiscal Documentation's products (www.ibfd.org) to address VAT/GST issueswww.ibfd.org Slide 7 Printer to Employee Ratio While 37.5% of the respondents have one colored printer for their Tax departments, 27% of the respondents have 10:1 Employee:Printer ratio Slide 8 Modelling Obama’s Proposed Tax Changes 80% of the respondents have not prepared any model to evaluate the impact of the deferral changes proposed by President Obama. Slide 9 Taxes for DSO calculation 42% of the respondents include Sales Tax/VAT/PST/GST in Accounts Receivable for DSO calculation, while 33% of the respondents have varying country-specific accounting practices. Slide 10 Certification of Business Unit Data 80% of the respondents do not require certification of accuracy for Tax information provided by subsidiaries, Finance, or other groups. Slide 11

3 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 3 INDEX OF DISCUSSIONS (CONTINUED) Discussion SubjectKey TakeawaySlide Quarterly Tax Provision Majority of the respondents (62%) take anywhere between one to seven business days to complete their quarterly tax entries. Slide Internal Tax Accounting Function 71% of the respondents have restructured their Internal Accounting function to take on some additional Audit activities. Slide APIC Pool Change Disclosure Despite the recent decline in stock prices, 93% of the respondents have not exhausted their APIC pool (Additional Paid-In-Capital). Slide Request for Internal Audit Reports While 67% of the respondents received requests for Internal Audit Reports from IRS, 50% of the respondents were able to refuse the request successfully. Slide 18 TaxStream Provision Software Implementation While majority of the respondents (50%) depend upon a third-party consultant for implementing TaxStream Provision Software, 33% complement consultants with internal staff. Slide 19-20

4 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 4 INDEX OF DISCUSSIONS (CONTINUED) Discussion SubjectKey TakeawaySlide Global Compliance Calendar While there is a multiplicity of external providers that build and market compliance calendars, 62% of the respondents use Internal or Excel-based Compliance Calendar. Slide Scanned vs. Hard copy of Residency Certificates 100% of the respondents believe hard copy of Residency Certificates are needed to allow paying royalties subject to treaty rates of withholding. Slide 23 FIN 48 Tabular Rollforward 62% of the respondents include FIN 48 additions associated with 2007 tax return positions in additions for prior periods. Slide 24

5 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 5 DISCUSSION GROUPS IN THE TAX TERRAIN  Audit and Controversy Management Audit and Controversy Management  FIN 48 FIN 48  IFRS IFRS  Indirect Taxes Indirect Taxes  Tax Accounting and Compliance Tax Accounting and Compliance  Tax Law Tax Law  Tax Positions Tax Positions  Tax Technology Tax Technology  Transfer Pricing Transfer Pricing To subscribe to any of these groups, write to Harpreet at

6 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 6 MILEAGE REIMBURSEMENT RATES Question In the current cost conscious environment we are revisiting our Mileage Reimbursement Rates. We would like to know: 1. Does your company reimburse at the standard IRS mileage rate for business travel or do you reimburse at some other rate? If so, how do you determine the rate? 2. Has this policy been changed in the last six months? What is the Mileage Reimbursement Rate used by your company? Issue—Mileage Reimbursement Rates used for business travel. Key Takeaways All the responding companies use the standard IRS mileage reimbursement rate None of the responding companies have changed their policy in the last six months. The policy is modified when the IRS changes its rates Have you changed this policy in the last six months? n = 34. Click here to access the discussion thread June 05, 2009 “We continue to adhere to our long-standing policy of following the published IRS mileage reimbursement rate for business miles driven by employees in the U.S.” Vice President of Taxation | Utilities Answers from Our Members “Reimburse at the IRS rate. Rate was changed at year end, when new IRS rate went into effect.” Accounting Policy and Research Director | Utilities

7 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 7 VAT/GST RESEARCH TOOLS FOR UK AND ASIA PACIFIC Question We are interested in VAT/GST Research Tools to Address UK and Asia Pacific. Any suggestions/insights would be highly appreciated. Our situation: We are one of the major banks in Canada, thus we are strong on Canadian indirect tax knowledge and experience, however we also have operations in the UK and Asia Pacific such as Singapore, Australia, Japan, Korea, China (and Hong Kong), and India. We do not have a lot of knowledge and experience with indirect taxes in these other countries so we are looking for an effective indirect tax research tool to help us understand the legislation and administration of sales taxes in these jurisdictions. We have come across two of them - VAT Forum and PwC ITWH. At the surface, they do not appear to be anywhere near as complete as TaxNetPro, which we use for Canadian sales tax research. Issue—VAT/GST research tools to address Indirect Taxes in UK and Asia Pacific. Key Takeaways 45% of the respondents use International Bureau of Fiscal Documentation's products (www.ibfd.org) to address VAT/GST issueswww.ibfd.org Other tools utilized by respondents include: Lexis Nexis taxindiaonline.com GlobalVATOnline by PWC “The following are tools you might consider: The PwC VAT product "GlobalVATOnline" is a technical research tool that can provide factual knowledge with VAT news and updates. It is about £100 pa to use and is an online tool. IBFD does an EU VAT guide, we used to buy it but have stopped due to its price and that we did not use it that often (there are 4 VAT experts in our tax team so we start from a higher base than yourself). It is a detailed multi territory guide to VAT in each Member State. Hard copy. IBFD also does various other VAT documents such as analysis of the VAT Directive itself. Tolley's also does some VAT guides on VAT in the UK and UK VAT analysis. Tolley's and competitors do CD Rom or online guides to VAT and VAT legislation which although UK centric are very good.” Senior Director, Taxes | Leisure “I look after indirect and direct taxes for an American MNC in Asia Pacific including Australia, NZ, Singapore and India. We find that specific local reference tools are best. In Australia, NZ & Singapore we subsribe to the CCH online subscription. It is a Wolters Kluwer company and the subscription has the legislation as well as detailed commentary, government rulings, cases, etc. In India we subscribe to taxindiaonline.com.” Vice President Tax | Financial Services Answers from Our Members Click here to access the discussion thread June 2, 2009 VAT/GST Research Tools used for UK and Asia Pacific? n = 6.

8 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 8 Issue – Printer to Employee ratio in Tax Departments. PRINTER TO EMPLOYEE RATIO Question We are interested in develop a metric across Tax Departments for the number of employees to printers. 1.How many printers in the dept are color and how many black & white? 2.What is your employee to printer ratio? 1:1 4:1 10:1 15:1 Something Higher “We have one color printer that is shared between the Tax Department and one of the groups in Accounting, so the ratio is approximately 25:1 for the color printer. We have one black/white printer centrally located for the Tax Department but senior managers each have their own dedicated printer. So, the ratio for the black/white printer is approximately 10:1 excluding the four senior managers that each have their own printer. Additionally, all employees have the ability to direct a print request from their computer to the copier. This helps significantly if there is a large job to be printed.” Director of Tax | Financial Services What is your employee to printer ratio? n = 17. Key Takeaways 37.5% of the respondents have one colored printer for their Tax departments 27% of the respondents have a Employee:Printer ratio of 10:1 Other highlights include: 4/17 companies have personal printers for their senior staff 1/17 companies have individual printers for their Tax department staff. 1/17 companies have 2:1 ratio for their compliance sub- division Answers from Our Members Click here to access the discussion thread May 21, 2009 “Realize the quality of printer makes a big difference. Also data security concerns. Our IT group took a very centralized view on this, and went with fewer but very fast printers. It creates issues, including time spent going to central locations and wasted time waiting for large print jobs to clear. Make sure you are measuring all important costs, not just those important to IT.” Senior Executive | Fortune 500 How many printers in the dept are color and how many black & white? n = 17.

9 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 9 MODELLING OBAMA’S PROPOSED TAX CHANGES Question Has anyone developed an excel model to evaluate the impact of the deferral changes proposed by President Obama on May 4? Any model to evaluate President Obama’s proposed deferral changes ? n = 5. Issue—Developing an excel model to evaluate the impact of the deferral changes proposed by President Obama. Key Takeaways 80% of the respondents have not prepared any model to evaluate the impact of the deferral changes proposed by President Obama One of the respondents indicated that Ernst & Young has a model based on the proposals introduced previously by Congressman Rangel (which were the foundation for the Obama proposals). “I did talk to one of my PWC friends and he mentioned, items like SGA (based on gross income) are the areas they believe are going to be attacked, not interest exp (allocated based on ratio ). There is a lot of confusion at the current moment...” Director of International Tax | Manufacturing “I think there are currently too many unknowns about the expense disallowance and impact of repatriation to develop a reliable model. There would have to be a number of assumptions made and the reliability of the result would be very questionable.” Vice President Tax | Manufacturing Answers from Our Members Click here to access the discussion thread Ernst & Young has a model based on the proposals introduced previously by Congressman Rangel, which seem to be the foundation for the Obama proposals. May 7, 2009

10 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 10 TAXES FOR DSO CALCULATION Question I am hoping to understand how other organizations handle taxes (i.e. sales tax in the US, PST/GST in Canada, and VAT for Europe) for the purposes of calculating their DSO (day’s sales outstanding). More specifically, do you exclude these taxes from your accounts receivable balance for the purpose of DSO calculation? Including Sales Tax/VAT/PST/GST in Accounts Receivable for DSO calculation? n = 7. Issue—Including Sales Tax/VAT/PST/GST in Accounts Receivable for calculating DSO. Key Takeaways 42% of the respondents include Sales Tax/VAT/PST/GST in Accounts Receivable for DSO calculation, while 33% of the respondents have varying country-specific accounting practices That said; other trends in DSO calculation include: 1/7 responding companies include Sales Tax/VAT/PST/GST in Accounts Receivable for DSO calculation in Europe and exclude it in the US 1/7 responding companies exclude Sales Tax/VAT/PST/GST in Accounts Receivable for DSO calculation in Europe and include it elsewhere “We include taxes in the accounts receivable and also for the DSO calculation. This motivates our account managers and collections team to collect all accounts receivable, including taxes. In the event a tax exempt or similar certificate is to be received from a customer which will eliminate the tax from the transaction, we leave the tax amount in the A/R until the valid certificate is received. Again, a motivator for account managers/collections to help resolve tax issues outstanding. We have had great success with this policy for many years.” Tax Senior Manager | Computer Software & Services “No we do not exclude such receivables. We include all accounts receivable including sales tax receivables and various other non-trade receivables. We do this because it's simpler and someone can easily re-calculate using our filed financial statements.” VP Finance and Controller and CAO | Diversified Services Answers from Our Members Click here to access the discussion thread April 23, 2009

11 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 11 CERTIFICATION OF BUSINESS UNIT DATA Question To what extent, if any, does your tax department require that information provided to them by subsidiaries, finance, or other groups be certified as accurate and complete? If applicable, can you share how the certification is worded? Who/what level signs the certification? How frequently is a certification provided? n = 5. Issue—Certifying accuracy of tax information provided by subsidiaries, finance, or other groups. “We have experienced issues with information provided to us in the tax accounting processes from our decentralized international finance and accounting personnel. Currently, when the preparer submits the information to corporate they are required to attest to the completeness and accuracy via their signoff in iTaxStream, which we use to collect this information. The preparer is typically not someone with much authority in the overall finance and accounting function. They don't seem to take this very seriously though. It's like they say about torture, after being harassed to comply with the deadlines, they will sign almost anything to make the pain stop. We are exploring ways to create better accountability around the tax accounting information, most likely through some sort of sub-certification process involving higher level people. In some extreme cases related to our 5471 reporting, we have resorted to charging the separate business unit via intercompany charge memos to reflect the added cost and inconvenience they cause.” Tax Accounting Controller | Transportation Key Takeaways 80% of the respondents do not require certification of accuracy for Tax information provided by subsidiaries, Finance, or other groups Answers from Our Members Does your Tax department require certification of accuracy for tax information provided by subsidiaries, Finance, or other groups? Click here to access the discussion thread April 20, 2009

12 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 12 Issue—Time taken to complete Quarterly Tax Entry. QUARTERLY TAX PROVISION Question How many business days does it take your company to complete the quarterly tax entry (P&L provision and balance sheet) after the pre-tax books have been closed? “Our experience has been that it takes approximately 5 days on an interim quarter basis to complete the consolidated and separate company Tax Provisions, once we get the "final" pre-tax T/B. In our case, as an EBITDA-valued yet highly leveraged company with very low pre-tax Book income year-to-year, our materiality threshold for Big 4 audit/review is extremely low (e.g., at or near zero), thus requiring a near- perfect Provision calc to avoid material or significant errors or deficiencies in the Tax process. We currently use numerous Excel worksheets (close to 400 xls schedules at year-end; approximately 100 per quarter) to prepare our Provisions. We are migrating to TaxStream; however, we do not anticipate that TaxStream will eliminate even as much as half our xls schedules, due to the near-zero materiality threshold under which we are forced to operate. Another key issue is the fact that each and every quarter & year-end close results in multiple "final" pre-tax T/B's due to late Book entries, which causes us to stop and re-start the Provision process over & over (e.g., 8-9 times) and interferes with our 109/48/SOX process flow. This in turn heightens the risk of error or deficiency, especially as the 'window' of time closes in completing the financial statements for submission to the Audit Committee of the Board for approval and ultimate release.” Sr VP Taxation | Consumer Products How many business days does it take your company to complete the quarterly tax entry ? n = 15. Key Takeaways Majority of the respondents (62%) take anywhere between one to seven business days to complete their quarterly tax entries 19% of the respondents complete their quarterly tax entries within one business day Remaining 19% of the respondents take more that seven business days to complete their quarterly tax entries Answers from Our Members Click here to access the discussion thread April 16, 2009

13 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 13 QUARTERLY TAX PROVISION (CONTINUED) “We are now calculating our ETR for the year in advance and prepare entries for all discrete items prior to the quarterly closing process. Then accounting utilizes the rate we have provided and the entries for discrete items in the closing process. Then we prove out the tax expense as soon as books close and add any other known discrete items. As long as the information is known and not pending the process takes a day. HOWEVER, we are not adjusting our tax balance sheet accounts on a quarterly basis. The expense gets booked to the payable and FIN 48 gets booked to a FIN 48 account. No deferred items are adjusted until year- end. Last year we got our auditors comfortable with not booking interim changes in deferred tax accounts. That has been a big help.” Vice President Tax | Manufacturing “Our quarterly tax provision process occurs in two steps. Step One is the global calculation of the year to date deferred taxes under FAS109. We capture approximately 90% of our global deferred taxes each quarter through the use of standardized excel templates. In addition, the FIN48 analysis is completed and appropriate journal entries are recorded. Step One is typically completed within 3 days of the pre-tax books closing. Step Two is the calculation of the worldwide effective tax rate. Once we receive the updated full year pre-tax forecast, we generally have completed journal entries by COB of the following day (we tend to required 1.5 days to complete). We then follow up these two steps with the preparation and review of the MD&A and tax footnote.” Senior Executive | Fortune 500 Answers from Our Members (Continued) April 16, 2009

14 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 14 INTERNAL TAX ACCOUNTING FUNCTION Question We are in the process of building out an Internal Tax department that will take over certain significant corporate tax activities currently provided by a major audit firm. As such we'd like to know the following: 1) Have you restructured your Tax department by creating an Internal Tax accounting function to take on activities previously provided by a major audit firm? - Yes - No 2) If so, would you be willing to share your insight into development of policies, procedures, workflows, and processes around income tax accounting, including documentation and related software? - Yes - No Have you restructured your Internal Accounting function to take on Audit activities? n = 7. Issue—Restructuring Tax Accounting function to take on additional audit activities. Key Takeaways 71% if the respondents have restructured their Internal Accounting function to take on some additional Audit activities Click here to access the discussion thread April 14, 2009

15 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 15 INTERNAL TAX ACCOUNTING FUNCTION (CONTINUED) “1) We now base our tax compliance on our tax accounting. As a result, all of our staff are "tax accountants" that review our tax accounting/book tax differences on a quarterly basis and, for the most part, our tax return numbers are substantially complete within a few months of year end. This process tends to flatten out the spikes with return preparation that we used to have. In addition, we have one and a half people fully dedicated to dealing with our auditors and the teams outside the U.S. to coordinate all WW tax accounting matters. (Note we have around $10B in sales (1/2 in U.S.) and 15 people in the U.S. dedicated to income tax.) 2) Willing to share, but for us the "correct" answer was a result of our individual situation. We have a strong accounting process that we tagged onto. If the situation were different, we would have come to a completely different result.” VP, Tax | Chemicals “Though I did not have to take over a previously outsourced tax function, I did have to create the tax department for our Fortune 200 company virtually from scratch. Our headquarters had moved twice so we experienced 100% turnover in staff. In addition, the structure of the functions/workpapers were not adequate when I came to the company.” Vice President of Corporate Tax | Health Products & Services Answers from Our Members (Continued) “We recently restructured our tax group which included an almost complete turnover of personnel due to retirements and transfers into other departments within the company. We have a small tax group with only 8 total FTE's and we do all compliance work in house including sales & use, Ad Valorem, and income tax. Although we previously performed these same tasks in-house we completely re-designed all processes to resolve some internal control issues.” Senior Tax Manager | Utilities April 14, 2009

16 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 16 APIC POOL CHANGE DISCLOSURE Question a) Have you exhausted your APIC (Additional Paid- In-Capital) pool, either previously or recently because of a decline in stock prices? Yes / No b) If yes, did you or do you plan to call out this item to provide for comparability between year-over-year periods? (e.g., either in your earnings release or in other external communications immediately succeeding the period in which the pool was exhausted and deficiencies were included in the tax provision) c) If yes, how did you call it out? ___ Pro forma the income tax impact of the deficiencies out of the current period earnings in the press release (in a non-GAAP measure) for comparability ___ Identify in verbal or written communications (either in the press release or in the script) ___ Other:__________ Our Situation: Because of the recent decline in stock prices, our APIC (Additional Paid-In-Capital) pool for the tax effects of equity based compensation expense has been exhausted since our restricted shares are vesting at a much lower stock price than the price at which they were granted. Accordingly, we will be taking future equity based compensation expense vs. tax deduction deficiencies to our income tax provision, and our effective tax rate will vary significantly from a historical normalized rate. Have you exhausted your APIC (Additional Paid-In- Capital) pool? n = 15. Issue—Charges for referencing publicly available credit ratings in credit facility’s pricing grid. Key Takeaways Seven out of 17 responding companies were charged for referencing their credit ratings All companies (except one) that have been charged indicated that they contested the fee levied by rating agencies Levied charges vary depending on existing relationships with rating agencies The company didn't call out the drop in APIC pool because they considered the amount to be immaterial and had little effect on their effective tax rate. Click here to access the discussion thread April 14, 2009

17 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 17 APIC POOL CHANGE DISCLOSURE (CONTINUED) “We have not exhausted our APIC windfall pool. Our situation is not exactly on point, but we did consider a year end disclosure due to deferred tax assets currently on our books that may not be realized due to decline in the stock price. Note, our understanding is that the tax accounting rules do not allow for a valuation allowance or a current write down of a deferred due to market fluctuations in price. Rather, adjustment must occur when the exercise or vest transaction occurs. In some cases, a disclosure regarding the potential future impact on the deferred is appropriate. Ultimately, we determined that a disclosure was not necessary due to materiality.” AVP – Tax | Retail a) No. Our APIC pool is large and nowhere near exhausted. b) n/a c) If it was material to our effective tax rate we would likely talk to the ETR both with and without, and EPS both with and without in the press release. We would comply with Reg G 9 (i.e. explain why meaningful measure and do the reconciliation for the non-gaap measures) in the 8K filing for the press release.” Director Financial Reporting | Consumer Products Answers from Our Members (Continued) a)Yes, our APIC pool periodically dropped below zero. b)No, we didn't call it out because it was an immaterial amount and had little effect on our effective tax rate. c)N/A I feel your pain. The same situation kept us from building an APIC pool. Hopefully you won't have a significant amount of underwater options expire unexercised. US GAAP Consultant | Computer Software & Services April 14, 2009

18 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 18 REQUEST FOR INTERNAL AUDIT REPORTS Question Have you been asked by the IRS for a list of internal audits completed during the exam period? If so, were you also asked to hand over the corresponding Internal Audit reports? If so, were you able to refuse the request successfully? Has IRS requested for your companies’ Internal Audit Reports? Issue—IRS request for Internal Audit Reports and companies’ compliance to the request. Key Takeaways 67% of the respondents received requests for Internal Audit Reports from IRS 50% of the respondents were able to refuse the request successfully Have you been able to refuse the request successfully? n = 5. “We were asked to provide a listing of the completed Internal Audit Reports for the period under audit. The IRS then selected the ones that they wanted to review. When I informed the Team Manager that I was getting some push back in furnishing a few of the reports as being proprietary, he said that a summons would be issued if the reports were not provided. We discussed this issue with outside Tax Counsel and did not come up with any tax authority or arguments to challenge the IRS request. We provided the requested Internal Audit reports.” Vice President, Corporate Tax | Utilities Answers from Our Members “We have had this request before. Our response was that the report had nothing to do with supporting the tax return. We subsequently provided accounting information required to support the item on the books that was also on the tax return.” Tax Director | Technology Click here to access the discussion thread April 09, 2009

19 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 19 TAXSTREAM PROVISION SOFTWARE IMPLEMENTATION Question We are interested in you experiences around implementing TaxStream provision package internally, with little help from a third party consulting firm. Specifically; is it preferable to use a consultant for implementation? Any feedback/suggestions around the subject would be highly appreciated. How did you implement TaxStream provision package? Issue—Experiences around implementing TaxStream provision package. Key Takeaways Majority of the respondents (50%) depend upon a third- party consultant for implementing TaxStream Provision Software 33% complement external consultants with internal staff for the implementation of the software Remaining 17% implement the software using internal staff only We implemented our current software (the RIA InSource product) 100% ourselves a number of years ago. If it is possible to do a lot of the work internally I believe there is great value in it. There is really only one way to fully understand the software and learn how and why it is arriving at the computations. If the consultants come in and do all the work and show you how to "input" what you need then there is a greater likelihood the output may not be fully understood. In addition each year as new accounts are added and tax laws change new schedule M items will be needed. If you don't know how to map the accounts or create new tax adjustments you will need to have the consultants come in to update the software. Having said that I would recommend the software company or a consultant with experience with the product help you implement the software in the best most effective manner. We learned the hard way when we implemented ours and should have had a little more guidance thru the process. Senior Tax Manager | Utilities n = 6. Answers from Our Members Click here to access the discussion thread April 08, 2009

20 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 20 TAXSTREAM PROVISION SOFTWARE IMPLEMENTATION (CONTINUED) “We implemented TaxStream in 2008 and are generally pleased with everything at this point. I consider myself a very hands-on user and I was directly involved in the day-to-day implementation efforts. We were very focused on minimizing our implementation costs. We spent a full day with two TaxStream implementation managers and an individual from KPMG who has been involved with many implementations developing and reviewing a comprehensive implementation plan. We made it very clear on the front end that we intended to do everything we could on our own. We went through each phase and implementation step assigning the total number of hours required and talked through what we were capable of doing on our own, based on the tasks and resource availabilities. In our case, it came out about 50/50. I think you would find it very difficult to do it on your own entirely and I would suggest this may not be the best answer in the end. There are so many threshold questions and setup alternatives that have to be considered and decided - many of which are not intuitive. I learned through the process and through many discussions with others since then, that there is no one correct way to implement TaxStream. Every company is using TaxStream a little bit differently, and every company presents different challenges. These people have experience in all different situations and can help you figure out what will/won't work for your company. Even with some implementation assistance, we mistepped a few times along the way. Tax Accounting Controller | Transportation “We implemented our current software (the RIA InSource product) 100% ourselves a number of years ago. If it is possible to do a lot of the work internally I believe there is great value in it. There is really only one way to fully understand the software and learn how and why it is arriving at the computations. If the consultants come in and do all the work and show you how to "input" what you need then there is a greater likelihood the output may not be fully understood. In addition each year as new accounts are added and tax laws change new schedule M items will be needed. If you don't know how to map the accounts or create new tax adjustments you will need to have the consultants come in to update the software. Having said that I would recommend the software company or a consultant with experience with the product help you implement the software in the best most effective manner. We learned the hard way when we implemented ours and should have had a little more guidance thru the process.” Senior Tax Manager | Utilities Answers from Our Members (Continued) April 08, 2009

21 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 21 GLOBAL COMPLIANCE CALENDAR Question Do you use a calendar to keep track of compliance obligations and deadlines globally? If so, did you buy a product or create something internally? Regardless, how do you keep it updated or is it a highly manual process? Any insights/suggestions around the subject would be highly appreciated. Type of Global Compliance Calendar used? Issue—Calendar to keep track of compliance obligations and deadlines globally. Key Takeaways 62% of the respondents use Internal or Excel-based Compliance Calendar 25% of the respondents use external providers that build and market compliance calendars; such as Deloitte and Vertax n = 8. “We use Vertex Tax Calendar to track our domestic state compliance obligations. The initial process transfers each "Filer" profile from the Vertex Income Tax program. Once in Vertex Tax Calendar, you must manually assign each state filing obligation to each "Filer". There is also an option to prepare an import file but this method did not work for us. Some advantages of Vertex Tax Calendar include: 1) Performing query reports to help meet deadlines, 2) Automated certified mail tracking and label printing (ideal with high volume of filings), 3) Option to create custom obligations/events, 4) Has an automatic rollover function to rollover obligations to the next year 5) Fairly user friendly. However, besides the Filer profiles, the Tax Calendar is not currently linked to the Income Tax Program. For example, when we input payment amounts or ES/Extension filing dates, it does not transfer to Tax Calendar or vice versa. Thus it results in double manual entry. Vertex stated they are currently working on this capability in the future but it is not yet available.” Senior Manager Income Tax Accounting | Drugs Answers from Our Members Click here to access the discussion thread March 26, 2009

22 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 22 GLOBAL COMPLIANCE CALENDAR (CONTINUED) “In out view, the answer to this question varies greatly by companies. For many large complex multinational, companies have "created" a tax compliance calendar which is often linked to their tax data warehouse, and built into the compliance packages. One example of a company that implemented this "push" technology is Halliburton, which links the global compliance calendar with Outlook and providing visibility into filing deadlines, status, and team owners across different jurisdictions. They developed this technology in house, and it is linked to their overall ETR forecasts and legal entity information. Click below for a link to find out more about this comprehensive solution: https://www.tax.executiveboard.com/Me mbers/ResearchAndTools/Abstract.aspx?cid= &fs=1&q=halliburton&program=&ds=1https://www.tax.executiveboard.com/Me mbers/ResearchAndTools/Abstract.aspx?cid= &fs=1&q=halliburton&program=&ds=1 In other instances, companies will create their own excel based template (which is manual and labor intensive, to be sure.) Here are a few templates from the Tax Director Roundtable that are used by client companies. https://www.tax.executiveboard.com/Members/Res earchAndTools/TaxCompliance.aspx” https://www.tax.executiveboard.com/Members/Res earchAndTools/TaxCompliance.aspx Practice Manager | Diversified Services “We are using a software tool from Deloitte, for income tax, consumption tax and trade compliance reports. I'm afraid maintenance is quite manual. We're rolling it out globally, and it's not universal yet. It's taken some work getting the reports into a usable format, but we've made progress and things look promising.” Senior Executive | Fortune 500 Company Answers from Our Members March 26, 2009

23 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 23 SCANNED VS. HARD COPY OF RESIDENCY CERTIFICATES Question Do overseas licensees rely on scanned copies rather than hard copy originals of Residency Certificates to pay away at reduced rates of withholding? Background: Overseas (non UK) licensees require Residency Certification to allow them to pay royalties subject to Treaty rates of withholding. This is administratively demanding. Scanned vs. Hard copy of Residency Certificates to pay away at reduced rates of withholding? Issue—Residency Certification to allow paying royalties subject to Treaty rates of withholding. Key Takeaways All the respondents believe Hard copy of Residency Certificates are needed to allow paying royalties subject to treaty rates of withholding n = 7. “We had migrated records for all W-8 type series certificates to electronic versions stored as links in the G/L system. However, we recently learned that there is a regulation that requires original signature documents and the IRS on audit sometimes enforces the original signature requirement (vs. copies, scans or pdf versions). Additionally, the IRS recently made withholding a tier initiative. We have a project underway to confirm that we have original signatures on file and a process to update these documents periodically.” Senior Executive | Fortune 500 Company Answers from Our Members “Our experience is that requirements have varied from country to country. Spain and Japan have insisted on hard copy originals. Uncertain regarding other countries' representatives. Our tax department sends original residency certificates to local project managers; we do not know what is finally delivered to the tax authorities. Note: US residency certificates have imbedded "void" logo that shows if you try to photocopy or scan; our interpretation is that the recipients expecting an original hard copy. Senior Executive | Fortune 500 Company Click here to access the discussion thread March 10, 2009

24 Tax Director Roundtable, Finance Practice © 2009 The Corporate Executive Board Company. All Rights Reserved. 24 FIN 48 TABULAR ROLLFORWARD Question While categorizing additions in the tabular rollforward, where did you include FIN 48 additions associated with 2007 tax return positions (that are included in returns filed in 2008): _in additions for current period _in additions for prior periods Where to include FIN 48 additions associated with 2007 tax return positions? Issue—Categorizing additions in the Tabular Rollforward. Key Takeaways 62% of the respondents include FIN 48 additions associated with 2007 tax return positions in additions for prior periods 38% of the respondents include FIN 48 additions associated with 2007 tax return positions in additions for current periods n = 8. “For positions taken or expected to be taken in the 2008 tax return, we considered these additions for current period. If we had rolling positions (positions occurring in prior years, i.e., 2007 and prior but rolling into 2008) we would include anything prior to 2008 in the "additions for prior period" and include the 2008 accrual in "additions for current period". Therefore it is possible to have one issue spread over two different categories depending on the years which the reserves fall into.” NY Corporate Tax Manager | Insurance Answers from Our Members “Any additions associated with the 2008 tax return are included in "additions for current period." That includes additions related to positions taken in previous years. So for example, if we added a FIN 48 issue in 2007 for bad debts but we plan to file our 2008 return with the same methodology, we would add another year of FIN 48 to the 2008 year under "current period additions.“” Tax Director | Insurance Click here to access the discussion thread February 20, 2009

25 CORPORATE EXECUTIVE BOARD ™ The Tax Director Roundtable has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the Tax Director Roundtable cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the Tax Director Roundtable is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the Tax Director Roundtable or its sources, or b) reliance upon any recommendation made by the Tax Director Roundtable. LEGAL CAVEAT As always, members are welcome to an unlimited number of copies of the materials contained within this handout. Furthermore, members may copy any graphic herein for their own internal purpose. The Corporate Executive Board requests only that members retain the copyright mark on all pages produced. Please contact your Member Support Center at for any help we may provide. The pages herein are the property of the Corporate Executive Board. Beyond the membership, no copyrighted materials of the Corporate Executive Board may be reproduced without prior approval. COPIES AND COPYRIGHT


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