Companies with operations in multiple tax jurisdictions understand the value of partnering with an outsourced tax compliance service. Considering the high levels of risk and cost associated with tackling compliance in-house, it is no surprise that companies choose to outsource this critical but cumbersome work.
But not all compliance partners are able to deliver the value expected for the investment. The costs of sub-par compliance work can include reduced cash flow, internal scrutiny of the tax department, and a mess of disorganized tax data —leaving businesses with years of cleanup to deal with.
As a leader in corporate tax services for over fifty years, DMA has heard the biggest frustrations that our clients faced with their previous compliance partners. If you’re looking to outsource tax compliance, you’ll want to avoid the following costly mistakes:
PITFALL #1: CHOOSING A ONE-SIZE-FITS-ALL SERVICE
Whether you are looking to outsource only certain tax areas or jurisdictions, or you are looking for help with a range of complex tax obligations, you need a custom-designed solution to meet your unique needs.
Using cookie-cutter solutions with options that don’t apply to your operation only adds clutter and usually sacrifices opportunities for optimization. Instead, find a partner with its own tax technology experts who can collaborate to create custom solutions and unique reports designed to enhance and improve the way you do business.
If you’re looking to fill holes in your existing tax operation, find a partner who offers a la carte services for managing compliance in real or personal property tax, various forms of indirect tax, state income and franchise tax, etc. You should be able to choose specific services—from filing returns and validation to tax bill tracking and bill payment.
PITFALL #2: SACRIFICING A TEAM ENVIRONMENT
Outsourcing can feel like handing over a critical part of your business to a group of ever-rotating strangers who are difficult to trust. Firms sometimes provide an account manager who farms the work out to anonymous staff or even an offshore third party. Some firms don’t put a premium on employee retention, and turnover can be especially high in compliance-focused engagements.
Ask potential vendors where their compliance professionals are located and what kind of turnover they have. Only partner with a firm that is committed and able to provide a stable, dedicated team of professionals to every client—including a senior tax manager who is heavily involved in the day-to-day work you’re outsourcing.
You should also ensure that you will have access to your compliance team as an ongoing resource—with the ability to ask questions, request reports, and address concerns at any time. Your compliance partner should truly act as an extension of your tax department and be aware of your organization’s ever-evolving best interests.
PITFALL #3: SETTLING FOR ‘GOOD ENOUGH’
In some situations, unexpected operational changes require you to coordinate compliance resources quickly. Don’t create more work for yourself down the line by hiring a vendor who can’t provide highly-trained professionals to step in, accept data in your standard output format, and deliver high-quality work.
Confirm whether your compliance partner undergoes frequent training to stay on top of legislation, regulations, certifications, and tax technology. Ask to see professional biographies or resumes for each member of the team assigned to your account. Doing so will help ensure that you get the best team for your particular business, with the jurisdiction, industry, technology, and tax expertise you need most.
PITFALL #4: NOT DOING YOUR RESEARCH
Choose a reputable partner with many years of proven success in the jurisdictions and tax types you need help with. Tax firms that have been around longer have more accumulated knowledge and experience across jurisdictions and industries. Take advantage of the inherent wisdom found in firms with decades of success and high client satisfaction.
But don’t just take a company’s word for it—ask for case studies and referrals from their current clients. Existing customers are the best resource to leverage in understanding what to expect when working with a particular tax compliance partner. If you operate in multiple jurisdictions, look for a provider with a variety of Fortune 1000 and Top Private clients (who typically have more complex tax obligations).
Of course, this is not an exhaustive list of challenges you may face in choosing a tax compliance partner. Perhaps the best indication that you’ll gain value from a partnership is by looking at whom they’ve worked with in the past and for how long they’ve had success.
DMA has over fifty years of providing the highest quality tax compliance services to the world’s largest corporations, with a high customer satisfaction rate. That’s because we provide custom-tailored solutions designed by our in-house staff of tax and tax technology professionals who act as an extension of our clients’ tax departments.