As companies strengthen their continuity and planning activities in response to the COVID-19 crisis, it’s important for tax to monitor what type of support two of their key internal stakeholders—the CFO and the CIO—need.
Addressing Tax-Related Issues
Regarding tax management, we know finance chiefs within many of our customer companies are turning to their tax executives to help address specific challenges and to answer a range of questions, such as: Is our tax technology provider on top of tax-related policy and legislative changes that are percolating around the world? In Vertex’s case, the answer to that question is an unqualified “yes.” We’re actively monitoring potential tax rules adjustments on a global basis, and we stand by ready to make changes the moment they’re needed.
From a U.S. transaction tax perspective, some states have established processes for “working with companies” through this crisis on a case-by-case basis. While those pronouncements do not qualify as definitive policy changes, CFOs who work out deals with state Department of Revenue (DOR) also will want to know that their company’s tax technology can be swiftly reconfigured to handle what they negotiated with the DOR (yes). When states enact major sales tax changes to generate much-needed revenue as the recession progresses (a high likelihood starting later this year), finance executives will want to know that the tax technology can quickly handle those comprehensive changes as well (yes).
Strengthening Liquidity and Managing Risks
Over the next several months, CFOs also will place high priority on strengthening liquidity and managing risks, which figure as two of the six “Managing through COVID-19” imperatives CFOs are likely to pursue, according to Deloitte.
When it comes to securing and controlling liquidity, CFOs likely will call on their tax leaders for tax planning insights: “Tax planning can be vital to reducing cash outlays and preserving cash,” the Deloitte bulletin notes. “Taking action in several areas can help CFOs conserve cash in the nearer term.” When it comes to transaction taxes, that might involve assessing the pros and cons of taking advantage of recent filing extensions states have enacted along with options for delaying payments without interest or penalties over a set period of time.
By keeping tabs on what CFOs need during the immediate crisis, tax leaders will help them, and their organizations, carefully navigate a difficult recession and the recovery that follows.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc..