According to Benjamin Franklin, “In this world nothing can be said to be certain, except death and taxes.” But with the complexities in tax laws and increasing illegal acts, we could make that death, taxes, and penalties.
Recently a large financial organization agreed to pay penalties of over $1 billion to avoid further prosecution as a result of not reporting transactions correctly to the countries in which they actually occurred. Several countries have doubled their penalties regarding off-shore and nonreported transactions as a response to the escalations of the tax authorities to garner more revenue.
For an effective tax management function, organizations need to:
- Recognize the tax events and their consequences.
- Understand the basics of tax penalties, that is, why penalties are applied and how they can be avoided.
- Identify common problem areas to reduce risks and minimize costs.
- Explore solutions to manage and mitigate penalties once they have been assessed.
In addition to taxes owed, the application of penalties is particularly painful, as these funds come directly out of the organization’s funds and cannot be passed along. There is also the stigma of being singled out for having done something wrong, even if that is not the case. This affects public relations and perceptions in the financial markets.
Are you comfortable with your organization’s tax compliance process? Are you aware of the consequences of defaulting any income, expense, or tax? The Accenture Academy course Identifying Tax Penalties and Prosecutions can help you understand how tax penalties are applied and how to mitigate them. This course also identifies common tax penalty issues and how the finance, accounting, and financial reporting departments can address them. This information can help you keep your organization in compliance and avoid potential tax issues while saving time and money.