Software to Help Maintain Compliance with International Tax Notices
When you run a multinational business, taxes become complicated—fast. Even selling across country lines can change the taxes your business is obligated to pay. From international organizations with field offices worldwide to a company opening its first field office one country over, and even an eCommerce seller directly selling to a customer outside their country, your organization now has international tax compliance obligations. These will change based on both the country of origin and the country where taxable actions took place.
What is international tax compliance most likely to require? There are three main options businesses have at this stage:
- Hire an internal tax and finances team that can handle compliance (best reserved for enterprise-level organizations)
- Using international tax compliance software that can help direct and manage compliance, as well as prompt or inform you when you need to take action (every organization needs a bit of this)
- Work with a third-party service that can handle international tax obligations as needed (best for small and medium-sized companies without enough work to profitably maintain a full-time team of tax experts)
Let's look at those two options and how third-party professionals and software can help you maintain compliance with international tax notices.
Maintaining International Tax Notice Compliance
One of the most important aspects of maintaining international tax notice compliance is to stay up to date on regulatory changes, deadlines, and requirements, including:
- Filing deadlines
- Registration requirements of related systems
- Maintaining good records with sufficient information for the required duration of time
- Payment deadlines
Organizations can also better fulfill their tax obligations if they continually update their understanding of regulatory compliance by staying aware of pending and potential changes.
Implementing Risk Management
Another aspect of good international tax notice compliance is risk management – or identifying, prioritizing, and resolving potential risks that can interfere with compliance. That can include poorly organized tax management systems, the risk of fraud and scams, noncompliance due to ignorance, and other potential risks. Compliance risk management can help set your company up for success by eliminating potential infractions before they happen, catching omissions before they result in penalties, and providing insight to improve compliance processes overall.
Tax compliance specialists can help throughout this process. Companies will receive many different types of notices, ranging from informational notices to notices of penalties and pending issues. A specialist can advise you on the best practices for recording and organizing file notices so that the appropriate follow-up occurs. They can also determine which notices require action. Other actions a tax professional can assist with include:
- Filing the appropriate paperwork on your behalf in response to notices
- Noting regulatory changes and norms that affect your business
- Creating a tax management strategy so notices don't go unanswered
How Software Assists International Taxes
Software is a vital part of any strategy for tax compliance, whether you handle taxes in-house or work with a third-party services provider. Tracking documentation, creating response tickets for each notice, and maintaining records about actions taken can keep your company in good standing in the event of an audit. The right software solution will utilize automation tools with specific functions designed to simplify compliance, even for non-tax professionals.
Some of the key features of international tax management software include:
- Personalized settings based on the county of operation, so notices and informational guides are built for your needs
- Automated scanning and sorting functions
- Workflows that automatically trigger to alert the right person about different notices and necessary action items
- Reports and alerts so filing notices don't linger unresolved
- Clear records with time stamps that track actions with clear metadata and time stamps
These features ensure fast notice processing and support, giving you plenty of time to respond to notices. Maintaining thorough records allows helps in the event of an internal or external audit, review, or investigation.
Internal Organization Supports Compliance
There are two underlying causes of most international tax notice violations:
- Missed payment or filing deadlines
Creating processes that minimize the opportunity for these mistakes can preempt many of the challenges and potential penalties involved in international tax compliance. Automated software can alert all relevant decision-makers in advance of a deadline, ensuring it doesn't fall through the cracks. The same international tax compliance software can also track when action was taken so you can strengthen protocols in the future or appeal any penalties you believe are in error.
Work with a Tax Professional to Manage International Tax Compliance
International tax compliance is challenging. Building systems that automatically trigger the proper workflows to address tax notices can go a long way in simplifying compliance, reducing errors, and streamlining the entire process. We recommend taking a dual approach to protect your organization by investing in software built to help companies stay compliant and working with tax professionals who can create custom workflows and management systems for your unique needs.