Even though the first main form creation and delivery deadlines for federal tax information reporting may have passed for Tax Year 2015, there is still plenty your organization should do throughout the year to prepare and handle other obligations such as state reporting, penalty notices, and back-up withholding just to name a few in order to achieve and maintain full compliance. Tax information reporting is complex and demands constant upkeep to reduce penalty and audit exposure as well as avoid reputational damage and poor customer/vendor experiences.
Do You Know How to Proactively Handle Your 10-series Obligations Throughout the Year?
It’s best to constantly check your data during the off season. Why? This can help you prepare to handle all the different reporting requirements you have throughout the year and minimize corrections. For instance, having an aggressive way of aggregating tax data across systems if/when your company grows through mergers and acquisitions can help you capture all the information you need and avoid scrambling to collect and validate it closer to deadlines.
Moreover, if you are proactive about collecting and validating data throughout the year, you can minimize the revisions that have to be done during the usual form revision period of January to March. If you have been validating name and TIN information all year as you onboard new clients and vendors, and make sure information is up to date, there will be less revised statements that need to be generated to payees (recipient) and you will be prepared when these filings are due on March 31.
Additionally, being proactive will cut down on the time you have to spend during the usual form corrections period that lasts from April to June. Utilizing these spring and summer months proactively to review incorrect forms and B-notices for additional data issues.
The IRS may reduce or eliminate penalties for payers who act in good faith and who carefully document their solicitation and revision process. Correcting information and revising the data to update client/vendor information for next year’s forms can help reduce exposure to ever-increasing penalties, which have already been raised TWICE in the last year to $260 a record. Having a full process is place can help mitigate errors from happening in the first place, improve client satisfaction, and minimizes inquiries to customer service to amend records.
Having a proactive approach can also help avoid late state reporting and missing any other deadlines, but what is the best way to set up a system that reaches a goal of full tax information reporting compliance?
The Benefits of a Centralized Solution for Handling Tax Reporting Obligations All Year Long
With a centralized tax information process in place, your organization can implement a yearlong process, taking proactive measures during down times to make busy tax months run more efficiently. Utilizing a real-time tax solution like Sovos 1099, your business will not need to reallocate resources since our technology cuts out the time consuming, manual work.
Moreover, you do not have to waste time and money hiring and training temporary workers incur the risk of trusting them to handle and compile this sensitive personal information as well as execute all these steps correctly. Having a trusted solution with a dedicated staff allows your organization to focus on core business initiatives. Your company can have confidence knowing that these tax forms will be processed correctly so you will avoid penalties, reputational damage, customer service issues, and audit exposure.
Sovos can help you streamline all these steps, import your data easily, and process the forms successfully. We are here to help you achieve compliance and ensure your tax information reporting process run smoothly all year long.