WE ARE WHAT WE ALLOW

"We are what we allow" - if you watch Grey's Anatomy, then you may know I got this quote from last week's show. When Dr. Grey made the comment, I was like 'yes,' we are what we allow. If we allow others to treat us small, then we will be small. If we allow others to define who we are and what we do, then we will become that version of ourselves.

We have a choice. We have a daily decision. Are we going to be what we want to be? Or will we allow others to decide who we will be and how they treat us?

In regards to working in the state tax profession, whether you work in a corporate tax department, the Big 4 or a small regional firm, people in your department or partners will try to define who you are. They will treat you a certain way. You need to decide if you are okay with how they are treating you. Are you who you want to be? Is how they are treating you interfering with who you want to become? Just say no. Stop it today. Decide for yourself.

In regards to state taxation, corporations can get ran over by auditors, by unconstitutional laws, by unreasonable compliance deadlines and notices. Will you sit by and let it go on? Or will you stand up? Will you fight? Will you take action? Will your company defend itself? Will your company lobby for better policy? Will you take your audit issues to appeals? 

We are what we allow.

Peace.

THE GREATEST SALT CONSULTANT: MEASURING EFFORT

The Greatest SALT Consultant (GSC) does not use timesheets to manage staff. The GSC measures staff by results (and intangibles), not effort. 

Timesheets are a “crutch,” or replacement for poor project management and poor people management. There are other, more useful tools to manage projects and people (their called managers). Other tools could be a “SCORECARD” and “Project Management Report.”

Example “SCORECARD:”

• Pull your weight (complexity of work / volume of work / meeting deadlines for assigned work)
• Willingness to help others near deadlines (shifting of work / unassigned work)
• Identify tax process improvement ideas
• Identify tax savings ideas
• Work product requires less review time
• Positive attitude

What do you think?

If you are a client, are you paying for effort or results?

If you are a tax professional, are you measuring and managing effort or results? 

This is Part 3 of a Part 7 series. (Go here to read Part 1 and Part 2.)

THE GREATEST SALT CONSULTANT: WHAT ARE YOU SELLING?

The Greatest SALT Consultant (GSC) sells knowledge and solutions to improve cash flow and profit margin, and reduce the costs of doing business. The GSC does not sell time.

How you might ask? Through the identification of SALT issues and opportunities applicable to a client’s business, the GSC can:

• Mitigate exposure to assessments of back taxes, penalties or interest;
• Reduce audit assessments of taxes, penalties and interests;
• Obtain refunds of overpaid taxes;
• Stop payment of taxes not legally owed;

Example:
Scenario (a): GSC conducts 8 hours of research to answer your question.

Scenario (b): GSC conducts 1 hour of research to answer your question.

Which scenario is worth more to the client?

Answer: several factors determine the value of what GSC is providing in both scenarios, but the value is not based on how long it took GSC.

Would you want to buy a house that was built in six weeks or six months?

Or do you just want a house built to your specifications by a builder that keeps you informed and stays on schedule and on-budget? (note: the schedule and budget was agreed to upfront)

P.S.

I know some arrangements call for an hourly-billing arrangement due to an open-scope project, retainer agreement, etc. The point is, the value of what the GSC provides is not based on time, but based on the knowledge, guidance, solutions the GSC provides.

(this is PART 2 in a 7 part series) - Part 1 was last week. 

THE GREATEST SALT CONSULTANT: "ONE-HIT WONDER"

Question: What makes a remarkable state and local tax consultant or client experience?

Over the next 7 weeks, I will share one of the 7 best practices of being "the Greatest SALT Consultant" or GSC each week. Here is this week's.

Strategic Partner or  “One-Hit Wonder”

My first point, based on years of experience, is that state and local tax consultants should seek to be strategic partners with their clients, not be a “one-hit wonders.” Meaning, the Greatest SALT Consultant (GSC), should be someone that develops strong relationships with their clients. Through those relationships, the GSC will gain a deeper understanding of his or her client’s, or prospective client’s business, and be in a better position to provide practical, customized SALT solutions.

The opposite of the GSC is a “one-hit wonder,” or a SALT consultant that “hits up” clients with the “idea of the day.” This SALT consultant is more focused on meeting his or her personal/firm goals instead of focusing on solving the client’s problem with the most practical solution.

The “one-hit wonder” is here today, gone tomorrow; not only before or after a project, but sometimes even during a project. As a client, you can be “in the dark” as to the status of the project, what the consultant is finding, and what the potential solutions are (this should not happen).

The GSC provides updates throughout the project to the client, and advises them as to changes or alternative solutions that arise.

Have you experienced a "one-hit wonder"?

State Tax Burden v. Compliance Costs: 2009 v. 2016

PricewaterhouseCoopers (PwC) conducted a survey of U.S. taxes paid by Business Roundtable member companies entitled, the "Total Tax Contribution Report." It was released back in 2009, and I found a few items very interesting:

1) Large companies are major contributors to U.S. tax revenues:

The 40 companies participating in the survey remitted $94 billion of taxes, of which $71 billion were attributable to federal taxes.

2) On average, survey participants needed a full-time team of 44 staff to comply with federal, state and local tax payment obligations.

U.S. tax compliance staffing is more than three times that in any other country surveyed.

3) The decentralized U.S. tax system is more complex than in any other country surveyed:

In addition to 30 federal taxes, companies are potentially liable for over 1,100 taxes imposed by the 50 states and the District of Columbia, as well as local taxes too numerous to count due to the more than 89,000 local governmental entities in the United States.

Although state and local taxes account for only 24.5% of U.S. taxes borne and collected, companies spend 41.7% of their compliance budget on these taxes. Per dollar of tax remitted, compliance costs for state and local taxes are more than double that for federal taxes.

I obviously found this last point very interesting and to be true in my own experience. It has always seemed that state and local tax has been the "ugly step-child" to its federal tax counterparts in corporate tax departments. Yet, it is extremely complex and burdensome to keep a company in compliance with so many different jurisdictions and very little, if any, uniformity among state and local tax laws.

Do you think these same points apply today in 2016?

Tax Foundation "Climate Index" Criticized by CBPP

Erica Williams, Assistant Director of State Fiscal Research at the Center on Budget and Policy Priorities (CBPP), wrote an article last week highlighting a new website,"Grading the States: Business Climate Ranking and the Real Path to Prosperity." According to Erica's article, the website seeks to "debunk the state rankings from several organizations purporting to measure each state's 'business climate' and prospects for economic growth." In other words, the website does not believe the rankings represent a state's true business climate.

One of the several business tax climate indexes the website criticizes is the Tax Foundation's well-known index. I respect the Tax Foundation and have always viewed their research as thorough and well done. I have also always viewed such indexes and reports as helpful insights into a state's business and tax environment. However, regardless of the index or the organization releasing such a report, I always take the report with a 'grain of salt.' Any report can display facts and statistics, but just like statistics in general, I believe any report can be slanted to tell a specific story. I also believe any report or statistics cannot tell the whole story. For example, a state's tax environment and incentives will always play a role in a corporation's location decision. However, a state's tax environment is never the only factor. Also, a corporation's location or relocation decision is a 'customized' option. Meaning, every corporation does not receive the same treatment because states make custom incentive packages for different corporations. Thus, just because a state's climate index says one thing, each corporation may feel a different tax impact based on the incentives they receive or don't receive.

In summary, I do not criticize or endorse the website or the Tax Foundation's index. I believe the conversation is healthy and puts a spotlight on the importance of a state's business and tax climate for everyone. 

Just like with most things, we can all usually agree on the problems we face, we just can't seem to agree on the solutions.