Preparing year-end tax reporting for your company’s international assignees is a difficult process by itself. Having to do it twice due to errors can be downright painful, not to mention expensive when you factor in possible penalties.
With your 2011 year-end reporting already completed (or close to it, hopefully) now’s the time to start planning for a pain-free 2012. The following tips can help you improve the overall process to boost tax compliance and reduce or eliminate late filings and W-2C amendments that will inevitably cost you more time, money and sanity.
- While it’s still fresh in your mind, make a list of the things that worked well in preparing the 2011 year-end and what needs to be addressed for next year. Even if you only had to do one W-2C, why chance that the one mistake could be for a senior level executive? Bottom line: There’s always room for improvement.
- Ask your assignment administration provider and your expatriate tax firm to create a similar list, with their perspectives on what worked and what didn’t.
- Same for the individuals in your overseas offices who are responsible for providing data for the year-end process.
- Meet with your assignment administration provider and your expatriate tax firm to begin planning for 2012. Review successes and challenges and the reason for any W-2Cs from the previous year. Assess any anticipated changes to your process or technology. Develop a project plan and a responsibility list to assign accountability for critical tasks. This will encourage collaboration and efficient teamwork.
- Consider collecting data quarterly (which would make year-end “just another quarter”) or even monthly, if possible. Document your timeline and cut-off dates and distribute it to key constituents.
- Consider uploading collected and reviewed data quarterly. Many governments require reporting on a more timely basis than annually.
- Review security protocols for the way data is passed between overseas offices, vendors and payroll.
- Consider consolidating payment sources, which would make data collection that much easier.
- Review data as it is collected throughout the year. This will help you catch things like exceptions to policy that might be paid in the host location.
- Start now! Ideally, planning for next year should begin as soon as the prior year is finalized.