A pharmaceutical company was being invoiced by its tax firm at $4,000 per assignee. While this is in line with industry norms and best practice, our audit revealed that at year-end, the company accumulated additional invoices that brought its actual annual spend closer to $12,000-$19,000 per assignee—roughly $2,500,000 annually based on the company’s assignee population.
The problem was that the company was not accounting for out-of-scope charges from its tax firm for things like reconciling and balancing W2s and T4s, cost projections and balance sheets. Most of these charges were incurred at the end of the year, around tax deadline, when the company engaged in its annual scramble to collect data. In the rush, mistakes were often made, key data went missing, and the tax firm was called upon to assist.
The expertise of Big Four tax firms comes at a premium, and while such out-of-scope fees are normal and customary, they don’t typically hit some companies’ radar until they start adding up. But because Weichert charges a flat fee for the services Big Four firms charge out-of-scope fees for, and because we are already tracking most of the assignment-related data that the tax firms are not, we were able to demonstrate significant cost savings to this company—specifically, annual savings of $1.3M over the current program costs.
We also identified a process to track, monitor and collect outstanding tax equalization (TEQ) payments that resulted in an additional estimated $1M savings each year.