Alvarez and Marsal

A&M Tax Advisor Weekly

From Chaos to Order: A Provision Process Strategy to Position Tax Functions for Success

Joshua Din, Senior Director

jdin@alvarezandmarsal.com

December 4, 2020 / North America

With the continuous increase in complexities related to tax laws and regulations and the shortage of tax resources available, tax departments are expected to do more with less, which requires proper planning for each stage in the overall tax cycle. A critical component to effectively and efficiently operate in this ever-changing environment of tax laws and regulations is a well-organized step plan which appropriately integrates the automation tools available to a tax department. One of the most pressing issues for a tax department this month is the year-end tax provision.

Year-End Tax Provision – What are your plans to run a smooth provision process?

The year-end tax provision is one of the most critical components of the tax life cycle. Most companies struggle to adequately plan for the computation of the year-end tax provision, and as a result, do not spend enough time and resources on pre-closing activities. Therefore, companies are often catching up, with the activities that could have, and should have, been performed earlier needing to be done at the last minute, which results in unnecessary time being spent on non-value adding activities. This results in companies having minimal, if any, time to appropriately analyze and plan for the overall tax position (including their effective tax rate, utilization of their operating losses and releasing their valuation allowances).

In order to avoid this result, companies should design and adopt a well-organized step plan that implements a holistic approach to the year-end tax provision.  This approach recognizes that the computation of the year-end tax provision should be broken out into four separate phases, including two that should be performed before the year-end. The phases are…

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North America



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