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General Best Practices
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By itemizing the most current tax policies on-line, anyone in the accounting
department can readily research problems and expect to find answers within a
few minutes of a tax-related question being posed. If the answer is not there, then
the site can also include an e-mail linkage to the tax or legal department, so that
the problem can then be properly researched and posted on-line for the next per-
son who has the same problem. Also, because the posting is on-line, there is no
need to issue a cumbersome mailing to a list of approved recipients every time a
change is made to the policies; instead, the change can be readily made to the on-
line posting, which makes it available to anyone at once. There will be complex
transactional situations that are so unique that only the advice of a trained tax
person will yield the correct answer to a query. Nonetheless, the majority of tax
problems can be resolved for the accounting staff by this simple means.

Cost: Installation time:

13–18 OUTSOURCE TAX FORM PREPARATION
For smaller firms, the accurate and timely preparation of tax forms is a monumental
pain that frequently results in missed filing dates, incorrect payments, and penalties.
The reason is that a smaller organization cannot afford the services of a full-time tax
accountant, which means that incoming tax forms are routed to whomever has time
to complete them. No one likes to do tax forms and so they end up at the bottom of
someone’s work pile, which results in a last-minute rush to complete them, without
much regard to accuracy or filing dates. Larger organizations do not have this prob-
lem, since they have specialists on staff who can organize a steady stream of tax
work, resulting in accurate tax filings mailed out precisely on time and that are sup-
ported by fully documented work papers that can be easily audited. Thus, the con-
troller of a small company needs to find a better way to prepare tax forms.
The solution is to outsource the bulk of the tax filings to one or more suppli-
ers, usually with a few tax returns remaining in-house. A common situation is for
a company’s audit firm to take over all federal and state income tax returns. These
are among the most complex returns to file, and these are precisely the forms that
most audit firms specialize in filing. In addition, many companies outsource their
payroll so the payroll-processing suppliers will handle all of the tax return infor-
mation related to payroll. This leaves local returns, which are best kept in-
house—the reason is that these documents are usually so specialized that suppliers
do not have any experience in filing them and so are no more efficient (and much
more expensive) than the accounting employees who can do the same work.
Thus, there are opportunities to divest an accounting department of the majority
of its tax form preparation work.
There are two factors to consider when outsourcing tax work. One is that some
suppliers will charge an inordinate amount to prepare a tax return. To avoid this
problem, it is wise to first inquire about the hourly rates of the supplier’s staff who