Accounting Best Practices, Fifth Edition

13–17. Designate a Tax Liaison for Each Government Jurisdiction

A company with multiple locations will undoubtedly have taxation issues with a variety of government entities, each of which collects taxes under a separate set of rules, forms, and timetables. The usual approach to dealing with these jurisdictions is to research problems only when contacted by one of them. This results in a crisis level of review work at the last minute, which can result in incorrect decisions regarding how to address each tax issue.

A better approach is to assign tax liaison responsibility to several members of the accounting staff (or tax staff, if this is a separate group). Each person is responsible for obtaining contact information for his or her counterpart within the assigned government. This can include establishing contact and building relations, but only if the amount of ongoing contact over tax issues warrants the level of work involved. Each liaison should know what problems the company has had in the past with the assigned jurisdiction, and be aware of any current issues over which the jurisdiction has recently contacted the company. The liaison should become the lead person for all contacts, as well as for making recommendations to management for how to deal with current tax issues (as supported by knowledgeable legal counsel, of course).

By using tax liaisons, a company can deal with tax problems in a proactive manner, and be considered a good tax “citizen” by the various government ...