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“FIN 48 is yet another proof point that rigor and transparency in corporate tax are here to stay and traditional methods of tax management simply don’t work in today’s world.”
Charles Rossotti, senior advisor at The Carlyle Group and former commissioner of the Internal Revenue Service
The steady march toward a world of financial reporting transparency may have begun with Sarbanes-Oxley, but by no means did it end there. Since Sarbanes was enacted, several significant regulations and policy changes have been introduced, impacting the way corporate tax departments do their jobs. The latest issue?—FIN 48…all of which is leaving many corporate tax professionals to lament, “Where does it end?”
While each regulatory change could be viewed as tactically focused on its own specific and unrelated area of reform, a broader perspective reveals a common theme that is forcing corporate tax departments to increase quite substantially the rigor and transparency of their procedures across the board for all tax positions. In today’s world, traditional methods of tax management simply don’t work. New methods must be employed to meet new imperatives:
- A new level of information accuracy, transparency, and granularity
- Controlled, auditable processes that work in a manner similar to other internal company control processes
- Detailed, readily accessible data to substantiate positions and meet disclosure requirements
The tax organization that succeeds in this new environment will be the one that takes an all-encompassing look at how it manages its processes and underlying data to mitigate risk, establish reporting consistency, and eliminate unwanted surprises.
In my view, one of the ways that tax executives can meet today’s more demanding requirements is to do what other major business functions have done, which is to take more advantage of the power of technology to increase accuracy and transparency as well as operational efficiency. By doing so, corporate tax executives will be in a much better position to effectively manage the tax impact of current and future regulatory developments and add strategic value to the business.
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