Are you in the valley of SALY? SALY is doing the “same as last year.”

Do you worry about how you’re going to get all your projects completed and also comply with your filing obligations on time?

Ever wonder, what else you could accomplish if you could reduce the time spent on the preparation and filing of tax returns?

Many tax professionals are stuck in the SALY valley. They convince themselves that it’s easier or faster to just follow the same process as last year. But by doing so, corporate tax professionals can be missing out on opportunities to improve their capacity to file earlier and get more things like special projects and planning accomplished. While corporate tax practitioners dream about filing earlier, how can they make this a reality?

This article explores ideas on how to leave SALY behind by sharing time-saving efforts that many tax professionals have already put in place and investigating potential ways to make beneficial changes to your compliance processes. The goal is to help you save time, money and effort to accomplish your ultimate goal of dedicating more time to higher value projects and personal time by filing earlier.

Data and Information Management and Analysis

A majority of corporate tax departments spend a significant amount of time on data and information management and analysis during the compliance season. Instead of focusing on the time spent to gather and organize data, we will focus on the time spent in manipulating and analyzing financial data once it’s inside your tax department to comply with the income tax regulations and conform to the required format for compliance forms.

No matter how you obtain general ledger trial balance data and gather information from tax packages or tax workpapers and integrate it into your tax compliance systems, tax departments dedicate a large volume of resources and time to reviewing the data to explore in detail the major tax/book differences reported on Schedules M-3 and M-1 of business tax returns and why such differences exist.

This data analysis process of tax sensitizing information, determining tax adjustments, documenting calculations and posting adjusting entries can be a cumbersome process. The main issues to investigate are time spent, risk, cost savings and the factors that have a significant influence on the analysis of transforming data from GAAP book to tax. After understanding the volume and time this process entails, we can weigh up the costs and potential benefits. Areas to consider are:

1. General Ledger — Following general ledger data through a tax return is much easier when using the primary source account structure. The less time required to track back to confirm accuracy of balances and adjustment values, the better.
2. Provision — Building on the logic for general ledger data, employing the same accounts and adjustments, for tax return preparation as used for the provision calculation, improves not only the efficiency of data migration, but also the integrity of the data. Some companies have reported an 85 percent completion of their tax returns by reusing the provision data.
3. Evaluate thresholds — To reduce time spent on preparing and auditing accounts for tax/book differences investigate the level at which different thresholds should be set. Size or amount is not a sufficient measure on it’s own for capturing the costs and benefits of setting appropriate thresholds, but is a consideration that could provide a significant impact on reducing your compliance season. There are other qualitative factors that have a significant impact on the decision on whether or not analysis thresholds should be increased such as reliability of data, internal controls and risk tolerance.

To read more about areas in which you could make a positive impact on your compliance process for earlier filing, read the full article at: Leave SALY Behind and File Your Tax Return Sooner (PDF).