7 Habitual Mistakes Companies Make – Chapter 7 (5)

TaxConnections Blog Post
Communication to Eliminate Tax Risk

HUMAN JUDGMENT, ESPECIALLY when subjected to pressure, is imperfect. Unless checks and balances are introduced, and encouragement exists to communicate pressurized decisions that may have a negative tax implication, improper human judgment will lead to additional tax risk. For instance, it often happens in a merger acquisition scenario that parties to the transaction are placed under great pressure. Deadlines are created, and parties from all sides do their absolute best to ensure that the deadline is met, for fear of reprisals that may stem from causing the merger or acquisition to flounder.

Level-headed thinking by management, albeit at the eleventh hour, caused the professional members of the tax team to be introduced to giving last-minute guidance on the transaction about to take place in the media company business sale case study mentioned in chapter 5.

In order to discourage human judgment error, encourage open channels of communication so that personnel under pressure can seek guidance and assistance on demand.

In accordance with Circular 230 Disclosure

International Tax Attorney, EA, US Tax Court Practitioner in the USA, Counsel of the High Court in South Africa, adjunct Professor of International Tax at Thomas Jefferson School of Law.

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