CHAPTERS 1, 2, and 3 have brought the tax risk management process to a point where a Tax Risk Management strategy is in existence, with a participating tax team and a positive attitude toward proactive tax risk management.
This entire process for small businesses is taken care of through the tax-Radar program and the completion of the Tax Risk Matrix with the small businesses accounting firm.
This chapter deals with Tax Risk Management Step 4.
Insular tax compliance from an ivory tower or by third parties handling your tax affairs can only mean that tax compliance is probably at its lowest, despite attempts to ensure the opposite by businesses. All key stakeholders must be involved from the CEO, the BO/CFO, the business owner, the board, and the audit committee to the outside legal team and tax advisors. In the case of small businesses this will be the business owner, the accountant, and the tax-Radar program. Tax managers are often left on their own and expected to remain on top of tax compliance, law, and regulatory changes and the management of a complex series of relationships throughout the organization so as to get to the “tax truth” in many transactions, financial accounting, and operation areas. Their ability to be totally transparent, so as to limit ongoing exposure to IRS, revised assessments, is stifled by their lack of authority to access all key areas of the business and outside advice, in areas that go beyond technical tax issues. Allowing transparency and connectivity into the mix turns the insular tax compliance problem around.