It’s never too early for corporate tax departments to begin taking steps to increase their efficiency and streamline their processes in 2006, observes KPMG.
For example, think e-filing. Companies that have assets of $50 million or more and that file at least 250 returns annually must begin filing electronically with the Internal Revenue Service beginning this year. Companies have three choices to meet this mandate, according to KPMG: licensing tax software that can create the e-file and transmit it to the IRS, develop their own e-filing software in accordance with IRS specifications, or hire an outside tax preparer to manage the process.
According to a recent KPMG survey, just 15 percent of companies have a plan in place to satisfy the e-filing requirement. Not surprisingly, perhaps, 73 percent of respondents were planning to license tax software to process and e-file their return.
The firm also recommends that companies consider tax co-sourcing; it notes that 62 percent of tax executives recently surveyed by KPMG expect to co-source some of this work in 2006.
KPMG also reminds companies to embrace IT. The firm points out that 45 percent of survey respondents expect to undertake tax technology improvements over the next 12 months. The most likely projects: software implementations and process efficiency/automation upgrades.
Software and Web-based applications, notes the firm, may help tax departments meet compressed deadlines for financial reporting and reduce manual processes, thereby decreasing the risk of error. “In addition, web-based applications can help manage data conversion as it moves upstream from a corporation’s business units to the legal entity, enhancing overall data integrity,” it adds.
And as always, “be alert to legislative and regulatory changes that can affect your tax position,” the firm stresses.