Tax season is upon us and proactive organizations are now taking the necessary steps to prepare their tax information reporting processes. Here are the top five steps organizations can take in preparation for a successful tax season:
– Compliance research: In the world of tax information reporting, regulatory changes and updates are frequent and impact many parts of the reporting process, such as deadlines and payment thresholds. Prior to tax season, it is essential that tax teams research regulatory changes across multiple jurisdictions, including state, federal and global, in order to avoid penalties.
– Update databases: Prior to tax season, systems and tools used in the tax information reporting process must be adapted according to the most recent compliance updates and form changes, including new forms for new reporting regulations, such as the Affordable Care Act (ACA).
– Collect necessary data: Organizations must also compile the necessary data in preparation for tax season. Collecting, consolidating and cleansing reporting data into a central database is a critical step. During this process, organizations are able to locate existing data gaps and errors (such as missing or inaccurate TINs, EINs, etc.). If these errors are rectified early on, potential fines and penalties can be avoided.
– Test run: Testing the files prior to tax season is also important. The IRS allows organizations to do this to in order to side-step any unforeseen errors and inaccuracy.
– Reinforce your team: Verifying that the necessary resources and teams are available to execute the reporting process plan is also an important step in preparing for tax season. Early training for employees is essential to ensure a successful tax reporting season as well as create awareness of compliance issues across other functional parts of the organization.
Some of the key regulatory changes for tax year 2014 that will impact an organization’s tax information reporting processes:
- Changes in “B” Notice processing
- Multiple federal form changes
- Several states may leave the CFS program. If they do leave, these states will require direct filing and this change is likely to be accompanied with last minute changes to reporting requirements.
With new regulations such as the Foreign Account Tax Compliance Act (FATCA) and ACA, the tax information reporting landscape is expanding and growing in complexity. Many organizations are seeking out expertise of a third-party reporting technology like Convey’s that provides the knowledge, tools, resources and flexibility to handle the complex process.
