Basics

• A business generally settles its fiscal debts, including regular and additional taxes. The corporate treasurer works in tandem with state fiscal agencies and the Internal Revenue Service to determine how much the company owes, why it must pay an excess amount and whether there are fees and surcharges that come with the incremental taxation. Various operating scenarios may lead to a company owing more taxes than it initially estimated, including nonconformity with fiscal guidelines, inaccurate financial reporting, deferred tax items and the results of an IRS permanent audit or one-time review.
  
  

Significance

• Responsible corporate management understands that inaccurate fiscal reporting and nonpayment of additional taxes are magnets for regulatory scolding, poor marketplace reputation and operational inefficiency. As a result, senior executives open permanent lines of communication with fiscal agency representatives, asking them to work with corporate personnel to gradually bring the organization's books back into the "financial records fiscally acceptable" zone. Cultivating good ties with the IRS and state agencies is a money saver, because it helps companies establish procedures in line with government guidelines and prevent the adverse consequences of audits and sting operations.
  
  

Decision Trees

• To run a tight and fiscally compliant ship, a company's management often sit with department heads to figure out the best way to calculate corporate taxes, pay them promptly, deal effectively with the taxman and avoid government reprimand. To jump-start creativity and fiscal innovation, the top brass may create different groups to analyze different topics, asking them to set a decision tree for all alternatives. This is a decision-support tool that enables senior personnel to list all fiscal decisions with their eventual consequences, including benefits, costs and event outcomes. Tax subjects that employees may discuss range from state tax compliance and sales tax recording to IRS recommendations, international taxation and income reporting.
  
  

Making It Right

• After paying additional income taxes at the end of a given period, a company's management makes sure personnel do everything to prevent a similar event from happening. They attempt to make it right, improve fiscal processes and bring more transparency in the way the business recognizes and reports its operating income. By doing so, senior leaders explicitly show regulatory agencies where they stand on fiscal accountability, transparency and compliance.