This is a newsletter from
J.D. Choi of
Tax Technologies, Inc. to tax
professionals whose interests are improving the tax management processes.
Table of Contents
- Tax Software Evaluation
- Tax Planning Models
There's got to be a better way...
How was your compliance season?
Would you like to do it again the same way?
So you are done with the tax returns. What are you going to do with the data collected for the returns?
How are you going to retain the calculation and the data for the audit?
Tough questions? These are the questions that are raised after every compliance season.
Well, there are better ways to collect the tax return data; better ways to prepare the tax returns and; better
ways to transform your compliance data into planning information.
If you have visited our website recently, you may have noticed a new item listed on our home page. It is
a hyperlink to our new website (or worksite) www.WorkPaper.net. We are building a free bookkeeping website
for small businesses. This is also our model web application to show our clients that there are better ways
to collect data, manage the tax processes and share the data, across wide geographic area. Although it is
still under construction, you may get a sneak preview of how the web financial application really works.
More importantly, you will see the implications of web database applications on the tax processes.
This site had been shown to a few focus groups and we have received very favorable responses. In fact,
most of them immediately recognized the enormous potential applications in their tax processes, in
particular, international tax compliance and tax provision. Coupled with our legal entity web application,
financial comparison model, this financial reporting application could potentially redefine the way tax
data is collected and processed.
If you decide to visit and take a look around, login as "johnprint" with the password "johnprint", then
you will be invited into a fictional printing shop named "John's Printing Shop". Take a look at the application
and let your imagination run wild. We are sure that you will see the enormous implications of this small
application.
As indicated, this site is meant to be a small model web application for everyone to see. However, we
have also been developing web applications that are specifically targeted to international tax data
collection, compliance, planning and audit support. If you would like to see the applications, please
contact us via e-mail (Choi@TaxTechnologies.com) or call us at (866) 239-4884.
1. Tax Software Evaluation - Busy season is almost over... and you wonder...
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Many companies re-evaluate their choice of tax software during this time of the year for many reasons. Many
of the software selections are based on the presentations of the vendors and reference from the current users.
This approach may not be the best approach for two reasons. The vendor presentation would inherently show
the software in the best light possible. The user reference is based on the satisfied users of the candidate
software. Unless your company's data structure and processes are similar to the reference company, it may
not be a valid reference.
Unfortunately, in most cases, the mis-fitted selection of software is not apparent until the company is
well into the implementation. By that time, it is too late and companies must make the best use of the new
system (although it cannot function as it was initially promised to be) or revert back to their old system.
The tax software selection and related implementation is a very significant task. It requires very detailed
knowledge of the candidate systems being evaluated. The best way to evaluate them is to run the simple
return through the candidate systems. It may require some up-front investment, but it will save you a lot
of time and agony in the end.
2. Tax Planning Models
» Return top
Now the tax return is out of the way, most of you will be focusing on the provision to return reconciliation
and year-end planning to manage the effective tax rate. For many multinational companies, management of
foreign tax credits is the key to a successful management of the effective tax rate. Successful management of
the foreign tax credits largely depends on two elements: effective re-use of tax data for historical tax
attributes and the modeling of the current year projected effects on the historical tax attributes.
There are various ways to get this work done; some better than the others. Most of the tax planning models
are very facts-specific and particular to the situation. But, with a touch of creativity, you may (and
should) create models that take advantage of existing data in the compliance system and be flexible so that
it can accommodate the planning for the similar situations with different target companies.
Most of the databases for tax compliance system are ODBC Compliant. As such, it is relatively easy to
reuse the tax data residing in the compliance system. Thus, it is prudent to incorporate in the model to
access the data in the compliance system so you can reuse the data in a dynamic model.
Without getting into too much detail, another important step in the modeling is categorizing whether the
model will accommodate the intercompany payment transactions or reorganization transactions. Although it can
be done, it is rather difficult (and costly) to build a model that can accommodate both in one model. However,
categorizing your planning and knowing your finish line will save you a lot of time.
Check out our bulletin
Check out our bulletin to see if you would like to list a job or would like to find a job. Since most of
our visitors are from big five accounting firms and international tax people from corporate tax departments,
it would be a good forum to recruit employees for international tax jobs. So, if you have an opening, send
us an e-mail. We currently have one international tax manager job listed for a Fortune 200 company and we
also have been informally working with few clients to help them find international tax people.
The content of this e-mail is reproduced in the "Newsletter" section of our website
www.TaxTechnologies.com one week after its release to our subscribers.
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Regards,
J.D. Choi
CEO, Tax Technologies, Inc.
201-387-9451
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