Due diligence is a crucial element of tax return preparation. It’s more than a best practice, but an ethical imperative that shields both you and your clients from the cost of penalties and liabilities. Tax due diligence is a complex, and requires a great amount of diligence. This includes reviewing the client’s information to ensure accuracy.
A thorough review of tax records is essential to a successful M&A transaction. It can aid a company negotiate a fair price, and also reduce the cost of post-deal integration. Additionally, it can help identify compliance issues that https://allywifismart.com/paperless-board-meeting-guide-make-your-transition-into-a-digital-board-room/ could affect the deal structure and valuation.
For instance, a recent IRS ruling stressed the importance of reviewing documents in support of entertainment expense claims. Rev. Rul. Rul.
It’s also important to examine the status of unclaimed property compliance as well as other reporting requirements for both domestic and foreign organizations. These are areas that are under increasing scrutiny by the IRS and other tax authorities. It is crucial to look at a company’s position within the market and be aware of changes that could impact financial performance metrics and valuation. For instance a petroleum retailer who was selling at inflated margins could have its performance metrics decrease once the market returns to normal pricing. Tax due diligence can help prevent these unexpected surprises and give the buyer confidence that the deal is likely to succeed.
