Building a Better Tax Department

WHITE PLAINS, N.Y., May 11, 2011 /PRNewswire/ -- Yair Holtzman, tax director at WTP Advisors, shows how key business process improvements can be effectively applied to a corporate tax department just as they are to other functions of an enterprise, in a new article appearing in the current issue of the Journal of Management Development.

"Bridging these two areas can have a significant impact on the competitive success of any type of enterprise – not just in the short term, but on an enduring basis," says Holtzman.

Holtzman was driven to write this article based on discussions with CFOs and senior individuals in the tax departments of Fortune 500 companies over the past several years, which revealed a significant interest and focus on improving processes within the tax function. This interest is prompted, Holtzman believes, by fewer qualified tax resources, significant weaknesses showing up in tax processes, and the increasing demands placed upon the tax department within a company. Added to this, at many companies, tax's unique demands and specialized knowledge requirements have isolated the tax function from the rest of the finance function and the business at large.

Holtzman's research led him to create the Optimized Tax Operations division within WTP Advisors in September 2010. He explained the need that this practice area fulfills: "One of the greatest opportunities for process improvement is in the tax arena. Tax departments that do a better job aligning and integrating their processes and technology can spend less time on data processing and more time on tax analyses that can actually drive revenue."

Historically, the corporate tax department has often been segregated within the finance function at many U.S. companies. The tax function adheres to different calendars and timetables, mandated by the IRS and other taxing authorities, and uses its own processes and systems, accounting methods, and reporting standards that are different from those used for financial and managerial reporting. And in general, the usual focus for process improvement in the corporate tax department revolves around tax reporting and compliance.

"But the highest value-adding activities are not always addressed," says Mike Minihan, partner and co-founder of WTP Advisors; "and what companies don't realize, is that with the right tweaks, their tax departments can actually become profit centers, rather than cost centers."

Holtzman believes there are four mechanisms in particular that can increase effectiveness and efficiency within a corporate tax department:

1. Thoroughly understanding tax processes and optimizing these from an operations viewpoint,
2. Investing in technology for tax,
3. Empowering the leadership of tax, and
4. Honing the processes of the tax function as it relates and interacts with operations, finance and technology within the enterprise.

"Tax departments everywhere need to strengthen both their leadership and technical capabilities within their organizations. Changes in tax law, corporate structure, and regulators oversight of results will continue to drive the tax department to perform more effectively and efficiently," says Holtzman.

WTP Advisors is a leader in tax and business advisory services for a global marketplace. Our highly skilled professionals equipped with years of industry experience, coupled with our cutting-edge technologies, make substantive and long-term differences to an organization's profitability. WTP Advisors is headquartered in White Plains, New York, with offices across North America, Asia and Europe.

SOURCE WTP Advisors