Outsourcing tax services — a valuable option in the age of disruption
Samantha Wimmer, CPA, MBT | May 2020 Footnote
Editor's note: Updated April 30, 2020
So much has changed in my 20 years of public accounting, not only within our small world of tax, but the world in general. Twenty years ago, e-commerce was gaining traction, the gig economy was a foreign concept and behemoths such as Amazon were still relatively small. We were entering an age of increasing connectivity and, furthermore, an age of increased disruption.
There is no question we all do our work differently in today’s world. We now work together across virtual offices, accessing and sharing expertise, and forever changing our traditional work-team paradigms. The business world is more connected than ever before, and no industry has escaped the impacts of disruption.
How do organizations handle disruption when technology, processes, personnel and customer preferences are changing at lightning speed? By leveraging outsourcing. Organizations need to change their mindset to “from the outside in.” Yes, outsourcing is very worthwhile during an age of disruption. Outsourcing offers the power of a strategic partnership, whereby disruption is seen less as a threat, and more as an opportunity for collaboration.
As your business continues to decipher the disruptions of tax reform, I encourage you to consider outsourcing your tax function to trusted tax advisers who can add value and help you navigate the powerful storm generated by new tax law.
Outsourcing tax matters
For many of us, the first “why” for outsourcing an organization’s tax function is cost savings. Outsourcing is generally less expensive than internal personnel costs (considering training, salary, benefits such as health insurance and vacation time, payroll taxes, technology, etc.), and tax outsourcing generally leads to minimized compliance costs; however, should cost savings be the most important reason to outsource tax matters?
How about the value of the relationship? Tax outsourcing at its finest is finding a trusted tax adviser who delivers focused tax technical expertise, peace of mind and a return on your investment (tax savings). All of this comes through higher quality tax reporting, more in-depth coverage of technical issues, access to subject matter experts to help with your business needs, and confidence in proven-systems and practices.
Focused expertise
Benjamin Franklin once said, “In this world, nothing is certain but death and taxes.” Perhaps that phrase should be expanded to “… nothing is certain but death and taxes and changing tax laws.”
Recent years have been inundated with tax law changes! The Tax Cuts and Jobs Act (TCJA) was enacted more than two years ago and we continue to see guidance on a plethora of TCJA provisions. The TCJA regulations from the Treasury are thousands of pages long! The landmark Supreme Court decision in
South Dakota v. Wayfair, Inc. established an economic nexus standard for sales tax, which will forever change how states view activities within their borders. With the 2020 presidential election nearing, there has been discussion of even more tax law changes, including threats to repeal or significantly overhaul the TCJA.
Is your organization brave enough to tackle the challenges of these changing tax laws on its own? What about your clients’ organizations? Many of these new tax provisions are fraught with complexity and, therefore, now is an opportune time to seek outside counsel. Outsourcing to an experienced team of professionals allows you to assess the impacts, to mitigate risk and to proactively handle the administrative and regulatory compliance burden of these changes. This is especially true for midsize businesses, who are less likely to have in-house personnel with the necessary skillsets or adequate systems to properly administer this web of tax law changes.
Expertise also brings tangible benefit to your organization in the form of tax savings. The best tax advisers will ask questions, understand your business and determine ways to use the complex tax law to create permanent tax savings for your organization. While you focus on the challenges of growing your business, an outsourced tax adviser will focus on the challenges of minimizing taxes.
Peace of mind
Tax compliance is a regulatory burden that demands attention and can easily draw time away from organizational growth. In addition to the burden of time, there are also the burdens of responsibility, risk and accountability. The good news: Tax outsourcing can help alleviate them all.
- Burden of time. Tapping into an outsourced tax provider leverages focused resources. The appropriate systems, personnel and processes are already in place, thus ensuring your tax compliance obligations are addressed in a timely, efficient manner.
- Burden of responsibility. Outsourcing allows you to manage expectations with the tax service provider versus directly managing internal personnel and processes. The burden of responsibility is thus shifted outside your organization, providing you with an opportunity to focus on higher value areas of your business.
- Burden of risk. Outsourcing may allow for the identification and resolution of potential issues of which the organization may not otherwise have been aware. The outsourced tax provider will have more in-depth knowledge of the nuances and exceptions buried within the complex tax law that can be a trap for the unwary. The burden of risk will be minimized as these issues are properly identified and resolved.
- Burden of accountability. Finding and keeping quality talent is a challenge. Losing a key accounting employee can negatively affect an organization, particularly in the short run. Outsourcing offers a team approach with a large group of individuals; therefore, there is less distraction when a change in outsourcing personnel occurs.
Evolve with the ever-changing tax environment
A properly aligned tax outsourcing relationship not only brings expertise, but also peace of mind, helping alleviate the burdens of time, responsibility, risk and accountability. Whether engaging tax outsourcing services, or being engaged, outsourcing provides valuable options in an ever-changing tax environment.
Outsourcing is not merely a cost commodity, but more so a relationship-builder, and a great example of how disruptions can be faced with collaborative partnerships. For some of you, the only barrier to outsourcing your tax function may simply be embracing a different way of getting work done. If so, change your mindset! An outsourcing relationship may be the catalyst for change that your organization needs. It will help you to transform “from the outside in” to drive a greater impact to your organization.
Samantha Wimmer, CPA, MBT is a tax partner at Wipfli LLP, with 20 years of experience primarily focused on privately held companies. She is part of the firm’s national tax office with an emphasis on partnership taxation. You may reach her at swimmer@wipfli.com or 651-766-2857.
