tax accounting assignment help

tax accounting assignment help

Tax Accounting: Maximizing Efficiency and Compliance

1. Introduction to Tax Accounting

It’s important to remember that while tax accounting doesn’t always have to equal tax compliance, we can also say that when tax accounting does equal tax compliance, you have the best of both worlds. From a theory standpoint, we really should think that minimizing the cost of compliance (that is, minimizing wasted effort) is closely linked with equality of tax accounting and tax compliance. This chapter will be approximately equal parts theory and practice. The primary focus of the chapter is on tax accounting for businesses; however, there are a few “personal tax accounting” rules that we throw in as we go along. Assuming that our main goal is getting it right (maximizing efficiency of compliance and therefore compliance with the rules), we can look at the following tax accounting problem in the following way.

What is “tax accounting,” and why is it important? Tax accounting can be loosely defined as the transmission mechanism or channel by which a tax can be evaluated and measured. Tax is what is left after accounting for various exemptions, deductions, and preferences; tax accounting helps us determine what is taxed. It is important to distinguish tax accounting from “tax compliance” – tax compliance is the idea that taxpayers must figure out what they owe and then pay it (or get overpayments back), and document what they figured out. In other words, tax compliance is tax accounting, with a second step of “document everything to prove that you got it right.”

2. Importance of Accurate Tax Reporting

U.S. consumers pay taxes to local, state, and federal governments. These taxes support numerous services, as follows: Statutory and commonly identified taxes include sales taxes, property taxes, fuel taxes (which directly fund transportation systems), and income taxes. Various other consumer-paid taxes related to insurance premiums and hotel lodging exist. A portion of all U.S. excise taxes is used to fund transportation. In addition to the previously mentioned consumer-paid taxes, U.S. individuals pay other taxes regardless of whether products are purchased.

U.S. states and the federal government make considerable investments in infrastructure that, in and of itself, requires significant funding. Excluding state and federal fuel taxes (which accrue directly to transportation systems), general U.S. taxes, which eventually fund transportation, comprise approximately 33% of U.S. gross domestic product. Information describing how these taxes are used is available from various websites and publications. Few, however, take the time to understand the value received for taxes paid. The intent of this article is to explain who pays taxes, how those taxes are used to fund infrastructure, the costs associated with government contracting, and the importance of producing accurate tax reports.

3. Strategies for Effective Tax Planning

Includes, in addition to the strategies presented here in the following section, the development of a business plan involving an assessment of activities in coordination with the organizational structure of the company, targets to be achieved together with the organization, performance indicators that allow the organization to monitor progress towards that achievement to evaluate what worked and what did not in the planning phase to ensure the continued effectiveness of tax strategies. Tax planning strategies organize how the arrows and tools of the model are used to establish the link between the different practice areas and thus compare them with the five basic strategies. Each practice area of the model can be connected to at least one type of strategy, but does not necessarily cover all strategies of the model. It is suggested that the most complex strategies encompass the simpler ones. Finally, the way in which the strategies in which the model must be built and planned depends strongly on the type of organization, including its size, the increasingly complex and dynamic nature of the company’s business, necessitates constant adaptation of the most efficient tax planning strategies that consider these aspects. Is up to the model helps to facilitate analysis by management, by having an organized, systematic sequence, guided by strategic goals to enhance the likelihood of adapting the imperatives of the tax model for areas of the company’s management.

Section describes the strategies and processes to be developed in order to improve the tax planning from a strategic point of view. We start by establishing what we understand as a tax planning strategy, and then present a conceptual model for implementing them. We finish the section with a brief discussion about the likely impacts of such planning on the tax function’s organizational structure. Can be analyzed in terms of what the organization as a whole is aiming at when defining its goals, or can be specifically applied to the area of the tax function in the following way: tax planning is a broad concept, which involves optimization of taxes in a broad framework, which goes beyond optimization of tax liabilities and spreads to asset protection, appropriate structuring of transactions and support to decision-making across the company, aimed at enabling management to make decisions that have fewer tax impacts, or that make the most of tax incentives.

4. Understanding Tax Laws and Regulations

The Foundation of Tax Accounting – GAAP – Federal Tax Rules – Other Comprehensive Basis of Accounting – Voluntary Consistency. The Internal Revenue Code (IRC) requires that you must follow GAAP to keep your books and records. However, not all taxable income calculations will be prepared based on GAAP. For example, Wallen & Sprague CPAs, PC, offers clients a summary of accounting and tax treatments after preparing tax returns. The summary includes various reports and one or more of other comprehensive basis of accounting considered tax basis financial statement. Other comprehensive basis of accounting used in preparing tax basis financial statements generally incorporate FASB’s OPIC 825. It must be a sometimes baffling task as auditors generally must report this information under 606-10-50-5 thru 7 Statements.

The United States tax laws and regulations generally differ from accounting standards such as GAAP or other comprehensive basis of accounting. Internal Revenue Code Subsection 446 requires that “taxable income shall be computed under the method of accounting on the basis of the taxpayer’s taxable year.” Sounds like easy reading, right? As a proud subscriber to “staying up-to-date on the latest tax changes,” you should also understand that what may be acceptable for books and records purposes may not be acceptable for tax purposes. Tax accounting can be a significant portion of your overall cost of accounting and related services, as it generally incorporates year-round tax planning.

5. Leveraging Technology in Tax Accounting

Finally, a blend of intentional process modeling of the tax function, accounting-focused technology, and standards-based integration will allow you to reach the apex of functional organizational maturity. Even in times of great dislocation, it remains clear that technology investment is critical. Simply put, many functions within a tax department are being automated, and you need a way to harness that transformation – knowing how to add that value is the most critical piece to supercharging your mature tax function.

Using accounting-focused technology will act as an enabler of process. With a simple, accounting-focused technology stack that reduces the number of clicks, naturally these processes will occur more quickly. When working with a complex technology stack, it will be helpful to combine the power and control of larger vendors while enjoying the effectiveness of specialty vendors. Additionally, be cognizant of industry standards and choose integrations between the vendors to avoid having a disconnected stack.

Further, reconcile your tax general ledger to the tune of creating a tax financial statement so that you can sustain any nasty SEC comments. Just as Claro is accounting-focused, we are also technology-focused. We are able to build a custom technology stack and assist with its implementation to reduce your total compliance expense. We use the best of each category of technology, allowing us to swiftly build and deploy custom solutions that scale.

Timeless accounting basics, such as accurate reconciliation and balance sheet substantiation, require complexity in this current accounting environment. Taking things paperless is not difficult based on the appropriate technology tools applied globally via the web. Using a blend of purpose-built web-based applications is an “application stack.” Ensure that your organization can properly harvest these technologies and focus on the basics of days gone by that auditors really appreciate – reconciliation, accuracy of books and records, and proper tax/gap financial accounting.