Unraveling the mystery of tax compliance
August 16, 2007
 By Web Hill, senior vice president of Ceridian Tax Services |
| I may not be Sherlock Holmes, but I do enjoy a good mystery every now and then. And most have several elements in common: a crime, complex clues and then of course a good detective to help guide us through the maze of information until we finally reach the big "ah ha" moment.
While I would never equate tax policy to crime, failure to comply with tax requirements can lead to potentially serious financial and legal consequences. That is why when it comes to solving the mystery of payroll tax compliance, you need a good detective on the case. Tax law is too complex and too dynamic. And the cost of non-compliance is too expensive to risk anything less. As the great detective Agatha Christie once said, "Never do anything yourself that others can do for you." How can you ensure tax compliance within your organization? One thing is certain: your organization must pay taxes. And it's not something that will go away anytime in the near future. Another certainty is that tax compliance continues to become more and more complex with changing regulations at the federal, state and local levels. One tax misfiling on the part of your company can result in substantial penalties that negatively impact your bottom line. As one of the largest providers of stand-alone tax services -- we typically process over 500,000 returns and $102 billion in tax funds each year -- Ceridian Tax Services' 450-person organization focuses on delivering repeatable, reliable services to help our clients mitigate their risks associated with tax filings so they can focus on the strategic aspects of their business. Payroll tax compliance means filing correct data on time and in an approved format. In today's increasingly electronic world, tax agencies validate and process most reports and deposits electronically. Approved electronic formats require specific data elements in specific fields and locations. These format specifications are subject to change on a quarterly basis, and failure to comply with these requirements may result in causing the tax agency to reject all or part of your quarterly tax file. We understand that our customers are very good at what they do. However, tax filing requirements and payroll tax interface specifications are increasing as areas with zero tolerance for error. Ceridian works very closely with tax agencies to identify and communicate these changes to ensure that you reduce the risk of failure to file notices and penalty assessments. We also recognize that it's not enough to wait for requirements to be communicated, and then react. That is why we have taken a leadership role in the Federation of Tax Administrators workgroup responsible for developing the latest XML format schemas and we have helped influence the development of new standards that we hope state agencies will adopt, allowing for efficient and easy to maintain tax-filing formats. Ceridian was the first payroll tax service provider to partner with the Social Security Administration (SSA) to file W-2's electronically and we have more recently partnered with the Internal Revenue Service (IRS) to test and implement the very latest in IRS eServices. To influence the very latest changes in tax filing technology, Ceridian is a leader in the National Payroll Consortium, where we help review, recommend and challenge new eFile and legislative and regulatory requirements. It is through our active participation in both public and private associations and workgroups that we influence requirements before they happen to minimize the financial burden on customers like you. How does Ceridian monitor regulations? As involved as we are in the technology requirements of tax filing, we also very closely monitor legislative and regulatory activity and actively network to maintain strong relations at all levels with employees and leaders of government agencies to ensure that your interests are always considered and there is a free-flow of information. I believe in developing strong partnerships. That is why we place such an emphasis on compliance information sharing, education and assistance to our customers to help reduce non-compliance conditions before it becomes a serious problem. That is where you come in. The most important thing you can do to be compliant is be sure you have accurate rates, deposit and reporting frequencies, and obtain valid Employer Identification Numbers as quickly as possible. These are the most common causes of agency notices and penalty assessments. But you don't have to do it alone. We help validate the tax rate and ID information through regular data exchanges with tax agencies before we file. This helps us identify possible problems and provides the opportunity to resolve them before you are penalized. On an annual basis, Ceridian has more than 1,000 compliance changes that require what I'd like to call the three "I's": Identification Ceridian uses state of the art software to monitor and track pending legislation and we routinely monitor government and industry publications and communications to provide an 'early warning' of new requirements. Compliance information is time sensitive. We need the details as quickly as possible to allow for sufficient time to make the programmatic changes that might be needed on time. Our Tax Compliance group participates in government meetings such as the annual Pennsylvania locals conference, the Kentucky locals conference, the Federation of Tax Administrators conference, the IRS National Forums, quarterly IRS Reporting Agent Forums, the annual SSA software developers conference and many other conferences and meetings to stay on top of the very latest tax compliance requirements. Interpretation At the end of the day, most compliance requirements have to be translated into system changes -- how data is gathered, calculated and reported. Ceridian Tax Compliance analyzes new requirements and interprets those into development changes and works closely with Product Development to make the necessary changes, test and implement them in a timely manner. Implementation To ensure maximum quality, all development changes are carefully tested for quality assurance, and when possible, production is validated and tested with the tax agency before implementation. These three areas must be examined to determine how we impound the taxes to ensure that our clients do file in compliance. It's really back to simplifying your processes to help you avoid paying large penalties for misfiling. We do that through dedicated knowledgeable service team members who are consistently trained and educated on the nuances of the intricate maze of tax compliance regulations. Quite simply, we help our customers by removing the financial risks and ensure reporting compliance, as well as reducing their administrative burden. As Sherlock Holmes once said, "I am glad of all details, whether they seem to you to be relevant or not." I love a good mystery. That is why I am so passionate about this business, and being part of Ceridian Tax Services to help you focus on solving the technology, legislative and regulatory puzzles that make up the mysterious world of payroll tax compliance. Web Hill is senior vice president of Ceridian Tax Services. Since his transition from Ceridian's RPS business in 2006, he has focused on a goal of evolving the tax business to being second to none in the industry. Hill had more than 20 years experience as a banker and broker before joining Ceridian. |
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