Tag Archive for TRM

7 Habitual Mistakes Companies Make – An Introductory Tax Risk Management Case Study

TaxConnections Blog PostBBA Ltd decides to go for Tax Risk Management

TAKE BBA LTD, part of the international Rialtry Group, (a fictitious name but the facts are real) as an example. They faced a major tax audit on all fronts.  The trigger had been an article in the Exposé magazine, citing them as having sneaked assets offshore under the radar screen without detection by the IRS, and now they were leaking huge sums of money to a tax friendly jurisdiction, escaping significant tax charges in their country of effective management.

Four years later, they concluded their Tax Risk Management (TRM) process.  The process was heralded a great success by the board of directors of BBA Ltd, the Rialty Group, and the IRS.  Why?

There were no less than 30 key tax areas that required investigation and audit by the IRS.  IRS audit teams were typically given 100 man hours per key tax area to audit, and then would be expected to deliver a result through revised assessments.  Three thousand man hours would have been spent completing all the audits to arrive at a result for the IRS. This would have meant an equal, if not greater amount of time and resource to be spent by BBA Ltd. With a very small tax department, they would have had to hire an extensive number of outside consultants at great expense. Read More

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7 Habitual Mistakes Companies Make – Chapter 1 Don’t Be Reactive: Be Proactive

TaxConnections Blog PostWikipedia, the free online encyclopedia, defines the word “proactive” as originally coined by the psychiatrist Victor Frankl …and… popularized in the business press in Stephen Covey’s 7 Habits of Highly Effective People …and… the word has come to mean “to act before a situation becomes a source of confrontation or crisis” vs. after the fact.”

Executive Summary

BEING PROACTIVE WITH tax risk management requires decisive steps to be taken by the BO / CFO, with the tax manager.  The steps include: forming a tax team under the leadership of the legal team to ensure legal privilege, plotting a tax risk management strategy, and then determining what the on and off-the-radar screen issues are.  The aim of the process is to eliminate the tax risks before they become disputes, obtaining resolution through the IRS representative sign-off, moving towards a soft outcomes solution to any tax risk management issues.  With the completion of the process, the taxpayer’s ability to tax plan into the future increases proportionately.

Introduction

THIS CHAPTER DEALS with Tax Risk Management Step 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 IRS. Proactive tax risk management will Read More

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Preface to Tax Risk Management – An International Special Report

TaxConnections Blogger Jerry Donnini posts internet sales tax principlesThis TRM™ tax-Radar™ 7 Steps Special Report is based on over 150 lectures presented to many multi-national corporations (MNE’s) and smaller businesses (SME’s) looking to minimize one of the largest financial risks facing them:  tax.

It looks at where they have failed to properly recognize the potential tax exposure they face.  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 evaders. Read More

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7 TRM Steps?

TaxConnections Blogger Jerry Donnini posts internet sales tax principles□ Step 1. Taxpayers tend to be reactive to tax risks and tax problems. 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.

□ Step 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%.

□ Step 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 Read More

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