Monday, April 6, 2009

Companies See Prospect of Tax Audits as Governments Seek Revenue, According to Poll by Tax Governance Institute

/PRNewswire/ -- As governments seek additional revenue in the current tight economy, senior business professionals say the increased possibility of an audit by taxing authorities is the most significant tax risk facing their organizations today, according to a survey conducted by the Tax Governance Institute (TGI).

Some 30 percent of more than 500 respondents polled during a recent TGI webcast identified the possibility of a tax audit as their number one risk. Also, high on the list of anticipated tax risks were increased regulatory requirements (27 percent) and accuracy of tax provisions (26 percent).

"As countries and states seek additional revenue, corporate tax executives are bracing for a round of heightened regulatory scrutiny," said Hank Gutman, principal at KPMG LLP, the audit, tax and advisory firm, and executive director of the TGI. "Companies know they will need to have documentation in place and accessible to demonstrate compliance with the many domestic and international tax requirements they regularly address in today's global economy."

Companies are also seeking to improve cash-flow in the current economic climate, the survey found. In fact, identifying and increasing the potential use of tax refunds, credits and incentives has been the top tax area of focus by companies in the past six months, according to 37 percent of respondents.

"By being alert to both overpayment of estimated taxes and opportunities to claim credits or utilize incentives, companies can reclaim some much-needed cash, a valuable commodity in today's difficult marketplace," said Scott Vance, principal at KPMG and moderator of the webcast.

The survey also revealed that compliance and reporting has been the tax function most focused on by companies during the past six months, according to 44 percent of respondents, followed by enhancing tax savings (21 percent).

"In difficult economic times, tax professionals can play a critical, strategic role for their enterprises," said Gutman, "by both limiting compliance risks and effectively managing their refund and incentives opportunities."

Among other key findings:
-- During the past six months, most companies (47 percent) kept tax
department resources about constant, with 28 percent reporting a
decrease in their in-house tax resources.
-- A majority of companies (69 percent) view tax risk management as an
integral part of their organization's enterprise risk management
-- Most companies (51 percent) said that reporting by the company's tax
function to the board and audit committee has remained about the same,
while 18 percent said that such reporting has seen an increase over
the past six months.

The Tax Governance Institute currently comprises more than 14,000 members. Launched in early 2007, it provides a forum for board members, corporate management, stakeholders, and government representatives to share knowledge regarding the identification, oversight, management, and appropriate disclosure of tax risk.

The survey was conducted during the Institute's March 12 webcast, "Identifying and Managing Tax Risks in an Economic Downturn." A replay of the webcast can be accessed at the TGI Web site at

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