(This Is Part Of A 7 Series Special Report)

This special report is based on over 120 lectures presented by International Tax Attorney and Professor Daniel Erasmus on multinational corporations (MNEs) and smaller businesses (SMEs) looking to minimize one of the largest financial risks facing them: tax.

The case studies in this special report are very real and based on years of experience. The names, places, and specific details are not, so as to preserve the secrecy of the taxpayers.

One thing this special report will do for you is teach and guide you, step by step, that in matters of tax it is extremely dangerous not to be proactive. No matter what anyone says, tax is always and will always remain a large expense for any successful business. States will always look to their most successful taxpayers to collect 80% of the tax from the 20% most successful taxpayers. It makes commercial sense. The balance of tax officials’ time will most probably be spent chasing after tax criminals, those who are blatant tax evaders and offenders. For you, who are reading this special report, I doubt you fall into this latter category; otherwise you would only have grabbed this special report if its title read How to Evade Tax, Legally!

IRSs around the world want to know that their actual cash flows from taxpayers are stable. A good guess is that about 20% of all taxpayers are those whom they rely on the most. If these 20% of taxpayers have devised a TRM™ process to ensure ongoing transparency and compliance through a self-audit process, the costs of collection and the costs of compliance are equally reduced, with an accurate result.

Disputes that may emerge will be limited to differences of opinion and interpretation where taxpayers have embarked on proactive tax planning, as opposed to arguing about shoddy unknown tax pitfalls.

Now it is for you to read on and open the door to proactive tax risk management (TRM™) and manage effectively one of the biggest financial risks in your business.

The Seven Steps Tax Risk Management

1. Taxpayers tend to be reactive to tax problems and tax risks. This will translate into additional tax exposure through the imposition of tax penalties and interest and lead to poor relationships with the Internal Revenue Service (IRS). Proactive tax risk management will eliminate the additional tax exposure, improve IRS relationships, and place control of the tax risk management process back in the hands of the business, and not the IRS. This then translates into a golden opportunity to develop an ongoing tax planning process, to keep tax exposures under control, and in a proactive manner. Refer to chapter 1.

2. Tax compliance departments in businesses try to cover their tax risk without outside professional assistance, except on a reactive basis. This contributes to step 1; tax risk management becomes reactive. By creating a tax team that participates proactively in the TRM™ process, the business is able to expand its tax risk cover from 40% to 100%. Refer to chapter 2.

3. Most businesses do not have a road map of how and where they are going with their tax risk management TRM™, other than blindly ensuring that they are “fully tax compliant.” Without a properly formulated TRM™ strategy in place, the goals and objectives, and the manner of executing a TRM™ process so as to minimize tax risk, cannot be achieved properly. An extensive and fully maintained TRM™ strategy is what is required, with all potential tax risks summarized to be dealt with through defense files in the Tax Risk Matrix. Refer to chapter 3.

4. Insular tax compliance from an ivory tower (not getting into the trenches and your hands dirty to see where the real tax risks are) 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, BO/CFO, the board and the audit committee, the accountant to the legal team and tax advisors. 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 in order 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 the IRS deficiency 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. Refer to chapter 4.

5. Lack of facts, facts, and more facts often leads to bad tax compliance and unnecessary mistakes that could have been avoided. Getting to the bottom of the facts takes time and effort and is the most important starting point in any TRM™ strategy implementation. Thereafter the technical expertise can be applied properly. Various business transactions illustrate this point time and time again, as businesses continuously fail to check the facts, check the advice, and then check the facts again. Refer to chapter 5.

6. Financial accounting supplies the numbers on which tax compliance is based. Simply relying on these numbers, as is usually the case with most managers and accountants, is not enough. Internal checking or audit procedures must be expanded to self-audit and checking the higher tax risk areas in a business, in order to self-expose any mistakes and noncompliance before the IRS does. This plays back into proactive tax risk management and the avoidance of unexpected and additional tax charges that may be crippling, if driven by the IRS. Refer to chapter 6.

7. Lack of communication between the accountant, or the manager responsible for tax, and the rest of the business, and merely processing numbers to compile tax returns, is the reason why tax compliance in most businesses only covers 40% of the total tax risk in those businesses. The other 60% tax risk is hidden and can only be exposed through a systematic process of people-to-people communication, and not just through processing numbers. The one must verify the other. This calls for new communication systems to be implemented in the business to circumvent and put an end to the bad habit of limited people communication. Refer to chapter 7.

In accordance with Circular 230 Disclosure