Expectations fading among corporate and tax executives when it comes to recent legislative events and tax reform, according to Ernst & Young LLP
Tax reform, legislative events and compliance are among the top challenges for 2013
New York, 1 May, 2013 – The ongoing discussion surrounding tax reform continues to be a topic of interest and debate according to survey findings released today at Ernst & Young LLP’s Eighth Annual Domestic Tax Conference in New York.
Despite recent proposals and concessions made by both sides of the aisle, 35% of the more than 420 tax executives who participated in the survey said tax reform was still gaining traction but was notably down from a more optimistic view of 41% expressed just last year. The lack of concrete and tangible progress resulted in tax and finance executives refocusing their efforts on more immediate budget demands. Only 18% are currently and actively engaging tax reform, which is again down from the previous year’s result of 25%.
“Overall, we are seeing that tax directors are less confident that major tax legislation will occur either domestically or internationally in the immediate future,” said Kate Barton, Americas Vice Chair of Tax Services for the global EY organization. “It seems like we are forever talking about the possibility of tax reform at these conferences. This time it might actually happen, according to the chairmen of the House and Senate tax writing committees. They are working hand-in-glove to come up with a proposal.”
The lack of consensus and forward movement among the electorate has emerged as a top concern when speaking about the current US corporate tax structure as it affects business. Forty-four percent of those surveyed stated the legislative gridlock and the temporary nature of many tax codes have caused uncertainty throughout the corporate tax function. For the second year in a row, more than half (55%) have identified legislative and regulatory developments as areas of focus for the CEO/COO, audit committee and the board of directors.
One of the biggest challenges over the coming months will be the effort to comply with the Affordable Care Act’s employer mandate by the January 1, 2014 deadline. While 52% of survey participants believe they are taking the necessary steps toward compliance, only 23% felt they were sufficiently prepared. Still, almost 16% indicated they require more information in order to understand the specific requirements for their organizations.
Other noteworthy findings from the survey were whether or not companies are taking steps to manage reputational risk related to tax. Fifty-two percent of respondents asserted that their organizations are concerned about and addressing tax related reputational risk on a proactive basis through the coordination of the tax and communications functions within their organizations. When asked about corporate operations and logistics, the biggest challenge for the fourth year running is to increase activity while maintaining their current staffing model with 24% of those polled seeing a budget increase in 2013 (down from 27% anticipating an budget increase the previous year).
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