9 CHAPTER 3: THE PROCEDURES OF FILING FEDERAL TAX RETURNS FOR CUSTOMER BUSINESS ABC ..... Therefore, the writer determines to work on the topic “XOA Tax's Procedures And Calculation Met
Research rationales
In most countries, businesses generating income are required to file tax returns, which are often viewed as a burden that reduces personal income However, taxation is crucial for a country's development and societal progress Both citizens and corporations have a responsibility to declare taxes, contributing to social and economic advancement Each year, governments may introduce or remove certain taxes to foster a thriving market economy.
Business income tax is a crucial concern for many Americans, particularly those running their own enterprises, as all businesses with income must file tax forms with the Internal Revenue Service (IRS) The U.S business tax system is complex and impacts companies of various sizes and types Additionally, all levels of government—federal, state, and local—possess the power to tax, legislate, and regulate businesses.
Businesses are subject to federal and state taxes on their net income, with varying rates and deductions based on the type of business entity Understanding the laws and regulations for filing tax returns is essential, as the process can be complex and time-consuming Non-compliance or tax evasion can lead to significant penalties from the IRS, depending on the severity of the violation Therefore, it is crucial for business owners to familiarize themselves with applicable tax regulations to minimize their tax liabilities effectively.
Understanding the significance of tax work and researching business tax returns is crucial for practitioners to enhance their knowledge of the tax preparation process This article focuses on "XOA Tax's Procedures and Calculation Method for Filing Federal Business Tax Returns in the United States," aiming to provide a comprehensive overview of the business tax return filing process.
Research objectives
This report provides a comprehensive analysis of the US tax return process for corporations, aiming to clarify the necessary steps and calculation methods for completing a successful federal tax return It highlights essential regulations that must be adhered to while also introducing key tax forms and relevant software options for efficient tax filing.
Research scope and limitations
This research will explore the procedures for filing federal business income tax returns, focusing on the methods employed by XOA Tax It will detail the necessary steps for a successful return, outline the regulations that must be adhered to, and introduce the relevant forms and software utilized by the company.
This study focuses exclusively on the procedures and methods for filing federal income tax returns for companies, excluding considerations of state taxes or international and regional taxation systems Additionally, it does not address potential challenges encountered during the tax filing process or strategies for avoiding such issues.
Research structure
The remainder of this report is structured as followed:
Chapter 1: Introduction to XOA Tax
Chapter 2: Introduction to customer business ABC
Chapter 3: The procedures of filing federal tax returns for customer business ABC
INTRODUCTION TO XOA TAX
General information
- Name: XOA Tax Limited Liability Partnership
- Subsidiary: XOA Consulting Company Limited
- Address: 10015 Garden Grove Boulevard, Garden Grove, CA 92844
- Services offered: bookkeeping, tax filing, financial planning, individual taxpayer identification number (ITIN) application, virtual consultation
- Customers: businesses and individuals in the United States
History of formation and development
Founded in 2020, XOA Tax Limited Liability Partnership is a CPA firm that has quickly established itself in the industry over the past three years The firm is backed by a team of skilled tax accountants and Certified Public Accountants (CPAs), ensuring clients receive expert financial guidance and support.
XOA Tax, based in California, USA, serves individuals and businesses across the United States In 2022, the company expanded by establishing XOA Consulting in Ho Chi Minh City, Vietnam Emphasizing a motto of "fast and concise," XOA Tax is dedicated to delivering professional and reliable services, prioritizing client needs to help them achieve their goals.
XOA Tax is a dynamic and rapidly growing company that specializes in outsourced bookkeeping and tax services for US clients Despite being a young firm, it offers a wide range of high-quality financial and accounting services tailored for business owners, individuals, and independent contractors Committed to efficiency and reliability, XOA Tax fosters strong client relationships through active engagement and regular communication, while emphasizing technical expertise and innovative solutions as key elements of its service approach.
1.2.2 About a subsidiary company – XOA Consulting
XOA Consulting Company Limited, established in July 2022 and based in Ho Chi Minh City, partners with XOA Tax to provide comprehensive accounting and tax-related services to US customers The company is registered under tax code 0317389762, ensuring compliance and reliability in its operations.
Since its inception, the company has developed a robust organizational structure with key departments such as accounting, tax, marketing, and information technology The dedicated staff in Vietnam oversees the company's operations, handling customer documents from XOA Tax, as well as performing bookkeeping, preparing financial statements, and filing tax returns.
Firm goals
The graph below shows the four core values of XOA Tax in identifying objectives and meeting their customers' needs
Table 1 Firm goals at XOA Tax
Maintain the utmost standards of honesty and integrity to win the trust of the clients, public and colleagues
Work as a team, foster collaboration and sharing in order to provide clients with the exceptional service that is aligned with their needs is the key to success
Dedicate ourselves to excellence, continuously learn and upgrade knowledge in order to become smarter and collectively thrive
Commit to an inclusive work environment that embraces and respects individuals regardless of their race, gender, religions, age, sexual orientation, or disability.
Organizational structure
The organizational structure of XOA Tax includes:
Diagram 1 Organizational structure at XOA Tax
Partners hold the top positions within a company, possessing complete authority to determine operational strategies while being accountable for all aspects of the business's functioning They are tasked with upholding professional standards and ensuring compliance with all applicable laws and regulations.
The director at XOA Consulting in Vietnam is responsible for establishing the overall business strategy and overseeing departmental operations to ensure efficiency and effectiveness They collaborate with partners to make strategic decisions that enhance the company's overall performance.
Under the director are the management teams which is responsible for the day-to- day operations of the business There are five departments:
The accounting department plays a crucial role in preparing financial statements, payroll, and sales reports for business clients Staffed by experienced accountants, this team possesses the knowledge and expertise necessary to manage all facets of accounting, including bookkeeping, budgeting, forecasting, and financial analysis.
The tax department is the largest within the company, reflecting the significant number of individuals and businesses that seek assistance with their tax returns annually This department not only handles the high volume of filings but also develops effective tax planning strategies to ensure clients optimize their financial outcomes.
Department compliance with all federal and state tax regulations, this department is in charge of filing taxes on behalf of both individuals and businesses
The marketing department, based in the Vietnamese office, is responsible for crafting marketing strategies that align with the company's overall business objectives This team oversees the development of the company's website, creates compelling marketing content, and generates leads to support the sales team.
The sales department, located in the US office, works closely with the marketing team to transform leads into customers Their responsibilities include engaging with potential clients, understanding their needs and desires, and building strong relationships Additionally, they play a crucial role in collecting valuable information from customers to enhance service and support.
The IT department plays a crucial role in managing a company's technological infrastructure, encompassing networks and software applications It is responsible for ensuring that employees can perform their tasks seamlessly, without disruptions caused by technical issues.
Provided services
XOA Tax operates under the structure of two main divisions: tax and accounting
Diagram 2 Line of services at XOA Tax
XOA Tax specializes in essential tax services, focusing on corporate and personal income tax Their offerings include comprehensive tax planning, consulting, and preparation to ensure compliance with federal and state regulations The expert team, comprising knowledgeable staff and certified public accountants (CPAs), stays updated on the latest tax laws, providing valuable guidance to help clients avoid IRS audits.
The tax team provides valuable assistance to customers in establishing businesses and determining the most suitable business entities, as the choice significantly influences both business and individual tax obligations for owners Consequently, understanding tax implications is crucial for all firms, as the selected business entity can greatly affect the tax responsibilities of employers.
The accounting department offers comprehensive bookkeeping and payroll services, ensuring accurate financial record-keeping, sales tax compliance, bank reconciliations, inventory management, and payroll processing With expertise in all facets of accounting, the team effectively handles daily transactions and complex financial reporting Additionally, they provide valuable support in forecasting, financial analysis, and budgeting, empowering clients to make informed business decisions while adhering to all accounting regulations.
Tax department organization
Diagram 3 Tax department organization at XOA Tax
The tax department is managed by a qualified Certified Public Accountant who oversees all operations, including the signing of engagement letters and assisting clients with both e-filing and paper-filing of their tax returns.
Tax preparer Manager contact to the IRS to deal with complex documents or audited tax returns, and ensures that all necessary paperwork is collected and submitted in a timely manner
The manager is supported by a team of experienced senior tax accountants who provide guidance to tax preparers These professionals possess a thorough knowledge of tax laws and regulations, ensuring clients receive accurate and timely tax services They also assist clients in business formation and offer advice on the most suitable types of company entities Additionally, they prepare sales tax for businesses and contribute to effective tax planning strategies.
On the other hand, they also work with customers to find ways to minimize their tax obligations or maximize their tax refunds
Tax preparers play a crucial role in preparing and filing tax returns for clients, ensuring accuracy and compliance with all applicable laws They collaborate closely with seniors, who provide essential client documentation, to utilize tax software effectively Their expertise encompasses both individual and business tax returns, and they meticulously list open items to capture all relevant information In cases where discrepancies arise, such as incorrect numbers or information, tax preparers are responsible for promptly reporting these issues to managers or seniors and notifying clients before proceeding with the return processing.
The tax department is dedicated to providing clients with efficient and effective tax services, led by a highly qualified manager and supported by experienced senior tax accountants and skilled tax preparers This team ensures that clients receive accurate and timely tax solutions tailored to their specific needs.
INTRODUCTION TO CUSTOMER BUSINESS ABC
Introduction to ABC Incorporation
ABC Incorporation, established in 2008 with EIN XXXXX6979, specializes in the production and distribution of affordable sexy wear and adult costumes Initially launched as an online platform, the company has rapidly grown to become a leading global provider in its niche market, offering customers easy access to fun and sexy apparel.
ABC Incorporation, established as an S corporation in California, is wholly owned by a single shareholder who possesses 100,000 shares The company filed its initial statement of information with the California Secretary of State in July 2008, under entity number XXX066 With a robust online presence and a continuously expanding customer base, ABC Incorporation is committed to delivering outstanding products and services to its clients.
For three years, Business ABC has relied on XOA Tax for essential accounting and tax services, which encompass financial statement preparation, sales reporting, and tax filing.
Accounting policy
Business ABC employs the accrual method to effectively record and report its financial transactions, ensuring that expenses and revenues are recognized when earned This approach simplifies the management of inventory and cost of goods sold, allowing for a clearer tracking of financial performance By using the accrual method, Business ABC achieves a more precise depiction of its financial position over time, including the management of fixed assets and depreciation.
Fixed assets include the building and automobile which is reported as cost less accumulated depreciation Using the straight-line method, fixed assets are depreciated over their anticipated useful lifetimes.
THE PROCEDURES OF FILING FEDERAL TAX RETURNS FOR
Theoretical basis
- IRS Instructions for Form 1120-S provide guidance on how to calculate the S corporation's taxable income, how to allocate income and deductions among shareholders, how to prepare and file Schedule K-1
- IRS Instructions for Form 2553 "Election by a Small Business Corporation" provide guidance to file Form 2553 to elect S corporation status
- IRS Publication 542 "Corporations" provides general guidance on tax issues relevant to all types of corporations, including S corporations
- IRS Instructions for Form 7203 “S Corporation Shareholder Stock and Debt Basis Limitations” provide guidance about shareholder basis including stock basis and debt basis and how to file basis statement
- IRS Publication 550 "Investment Income and Expenses" provides guidance on tax issues related to investments, including how to report income and losses from S corporations on Schedule K-1
- IRS Revenue Ruling 59-221 provides guidance on the qualification of corporations as
S corporations, and discusses the requirements for electing S corporation status
- IRS Publication 334 "Tax Guide for Small Business" provides general guidance on tax issues relevant to small businesses, including those that are organized as S corporations
A business entity is an organization created by an individual or a group to conduct business activities, with three primary types: sole proprietorships, partnerships, and corporations The chosen entity type significantly influences tax obligations and the extent of financial liability Each business entity offers distinct advantages and disadvantages, making the selection dependent on the specific goals and requirements of the business owners.
A sole proprietorship is a business structure owned and operated by a single individual, creating no legal separation between the owner and the business itself This means that the owner holds personal liability for all debts, liabilities, and legal obligations incurred by the business.
Business owners report their income and expenses on Schedule C of Form 1040, which is part of their individual tax return If the business is profitable, proprietors are required to pay both self-employment tax and income tax to the federal government.
Partnerships involve two or more individuals who collectively invest money and property, sharing equally in the profits and losses of the business Each partner holds unlimited legal responsibilities and liabilities related to the company.
Partnerships differ from sole proprietorships in that they must file a separate annual tax return using Form 1065 Instead of being taxed at the corporate level, partnerships are subject to individual taxation, meaning each partner must report their share of the business's income or loss on their personal tax return This information is detailed on Schedule K-1 for each partner.
Corporations are separate legal entities from their owners, primarily established to limit personal liability for owners This structure ensures that the corporation assumes all obligations and liabilities, protecting owners from being held accountable beyond their initial investment There are two main types of corporations: C corporations (C-Corps) and S corporations (S-Corps).
S corporations are pass-through entities that do not pay federal income tax at the corporate level, as profits and losses are allocated to shareholders based on their ownership percentages To comply with tax regulations, S-Corps must file Form 1120S annually, and each shareholder receives a Schedule K-1, which outlines their share of the company's income, losses, nondeductible expenses, and distributions Shareholders must report this information on their individual tax returns.
C corporations face double taxation, as they are taxed on their earnings at the corporate level, and shareholders are taxed on dividends received Unlike other business structures, C-Corps have no limit on the number of shareholders, which can include individuals, other corporations, or foreign entities To fulfill tax obligations, C-Corps must file an annual tax return using Form 1120, which calculates the corporation's tax liability, with the company responsible for paying any owed taxes.
Table 2 Comparison of business entities
One owner Must have at least two partners
Levels of federal income tax
Subject to personal tax only
Subject to personal tax only
Subject to personal tax only
Subject to personal and corporate taxes
Tax form Schedule C Form 1065 Form 1120S Form 1120
An S Corporation, or S-Corp, is a business structure that functions as a pass-through entity, meaning it is not taxed at the corporate level Instead, the profits and losses are passed on to shareholders, who report them on their personal income tax returns This unique structure helps avoid double taxation, allowing shareholders to offset business losses against their personal income, thereby reducing their overall tax burden As a result, S-Corps provide significant tax advantages for shareholders by ensuring they are only taxed on the income they actually receive.
S corporations offer attractive benefits, but they come with specific limitations, including restrictions on the number and types of shareholders, allowable stock classes, and a ban on corporate or foreign ownership Notably, S corporations can have a maximum of 100 shareholders, which can impact their growth potential.
An S-Corporation is limited to 100 shareholders, all of whom must be U.S citizens, and typically cannot include corporations or non-resident aliens Additionally, an S-Corp is restricted to a single class of stock, ensuring that all shares possess identical rights and privileges This limitation can make it difficult for S-Corps to raise capital or offer stock options as incentives for key employees.
To elect S-Corp status, a business must submit IRS Form 2553, titled "Election by a Small Business Corporation," within two months and fifteen days after the start of the tax year for which the election is intended Once the IRS accepts the election, the S-Corp is obligated to file Form 1120S annually, which reports the corporation's income, deductions, and other tax-related information.
The tax base for S-Corporations is established by their taxable income, derived from gross income minus allowable deductions Utilizing a pass-through tax method, S-Corps are not liable for federal income tax on profits; instead, the income and losses are passed on to shareholders, who report them on their personal tax returns.
Form 1120S allows corporations to report their income, deductions, and credits through Schedule K-1, which is distributed to shareholders As the S-Corp's profits or losses are passed through to shareholders, each individual must report their allocated share of the corporation's income, deductions, and credits on their personal income tax returns.
To determine the taxable income for each shareholder, the S-Corp must first calculate its business income or loss using Form 1120S This ordinary business income or loss is calculated based on a specific formula.
• Ordinary business income or loss (net income)
Introduction to the tax software
Intuit ProSeries is a robust tax preparation software designed specifically for tax professionals and accounting firms, developed by the reputable financial software provider Intuit This software simplifies the tax filing process by offering a virtual office that efficiently manages everything from data gathering to return filing With its user-friendly interface and advanced features, ProSeries enables tax professionals to accurately calculate returns and minimize errors To ensure compliance with ever-changing tax laws and regulations, ProSeries is updated annually, releasing a new edition each year to incorporate the latest tax return requirements.
It offers a variety of tools and resources to help tax professionals stay organized and efficiently manage their clients' tax information
Figure 2 Intuit ProSeries tax software background
The process of providing business tax services by XOA Tax
The process of XOA Tax’s business tax services is divided into three stages:
Diagram 4 The process of providing business tax services by XOA Tax
Steps Procedures Person in-charge
Step 1 Contact the client for business information Intake person Step 2 Send an email with a secure link for the client to upload any necessary tax-related documents
Step 3 Review documents and provide an estimated quote CPA Step 4 Send an engagement letter for the client’s signature Intake person
Contact client Send secure link
List open items Prepare tax return Peer review CPA review
Send tax return to client
E-file tax return to IRS
When clients reach out for tax filing assistance, our sales team’s intake specialist actively engages them to provide expert tax consultation and relevant information If the client chooses to proceed with our services, the intake specialist promptly sends an email containing a secure link for the client to upload any necessary tax documents.
After receiving all necessary documents, the CPA evaluates them and gives the client an estimated quote for tax preparation services Once the client accepts the quote, an engagement letter detailing the terms and conditions of XOA Tax's services is sent for their signature.
The sales team may initially request the client upload the following essential documents:
- The previous year's tax return
- All income and expenses tax forms for the current year
- Any other tax-related documents
The intake person works in the XOA Tax office in the US because it is easy for them to approach and assist clients
Table 4 Tax return preparation process
Steps Procedures Person in-charge
Step 1 Tax preparer review documents and list open items if necessary
Step 2 Prepare tax return Tax preparer
Step 3 Peer review Tax preparer
Before starting tax preparation services, the intake person transfers client documents to the preparers' folder The preparer reviews these documents alongside the previous year's tax return to identify any missing or unclear information and any IRS notices They then compile a list of open items in an Excel file and send it to the client for confirmation or to request additional supporting documents if needed Once all required documents are received, the preparer uses ProSeries tax software to complete the client's tax return, maintaining communication with the client to keep them updated on the progress.
After completing the tax return, the preparer sends it to a peer reviewer to catch potential errors like typos, incorrect dates, or missing information before it undergoes CPA review CPAs, with their specialized expertise, can identify technical errors in the return If the client's tax liability is significant, the CPA will reach out to discuss available credits that may reduce the amount owed Should any issues arise during the review, the CPA will return the tax return to the preparer for necessary corrections.
Table 5 Completion and submission process
Steps Procedures Person in-charge
Step 1 Have the CPA sign the return CPA
Step 2 Send the tax return for client to review and the authorization form for their signature
Intake person Step 3 Electronically file the tax return to the IRS CPA
After the CPA finalizes and approves the tax return, it will be sent to the client for their review Once the client has reviewed it, the CPA will electronically file the return with the IRS, ensuring that clients can rest easy knowing their tax returns are submitted accurately and punctually.
Illustration of the business tax filing process for business ABC
Since Business ABC started utilizing XOA Tax's bookkeeping services in 2020 and tax filing services in 2021, XOA Tax has developed a comprehensive understanding of ABC's operations and financial records This familiarity has streamlined the process, removing the need for initial client information gathering and secure document upload links.
In 2021, XOA Tax responded to ABC's request for corporate tax filing services by reviewing the company's tax documents and financial records before offering a quote Once ABC agreed to the fees and opted to proceed with the services, XOA Tax provided an engagement letter outlining the scope of services and associated costs for the client's signature.
To prepare for the tax filing stage, the tax preparer will conduct a document review of ABC company to identify any missing or unclear information, including:
- Reviewing the previous year's tax return to identify any changes in ownership, business structure, or accounting methods
- Examining current year financial records such as financial statements and depreciation schedules to ensure accurate recording and classification of data
- Conducting a capital rollover to ensure the previous year's data is accurately carried over to the current year
Since XOA Tax took over the preparation of ABC's financial records, the company has gained a comprehensive understanding of its operations, ensuring the accuracy of reported figures during bookkeeping This efficiency eliminates the need for the tax preparer to address open items in the financial records However, while reviewing the 2021 tax return, it was noted that ABC's previous CPA failed to prepare a critical basis statement for reporting the shareholder's basis, which is essential due to the IRS's stricter regulations on this matter Consequently, XOA Tax has requested ABC to provide tax returns dating back to 2008 for further assessment.
In 2020, we will review the contributions, distributions, and profits or losses for ABC, reconciling the tax basis from 2008 to 2021 This reconciliation will be documented in an Excel file to establish the beginning tax basis for the year 2021.
As tax preparation commences, the preparer updates ABC's project status to "in progress" to inform managers of the ongoing work Throughout the preparation, the preparer inputs relevant data into the workpapers, ensuring that the figures align with the software and identifying any discrepancies between book and tax records.
Based on the Profit and Loss statement, ABC has these accounts:
The Profit and Loss statement indicates a net income of $334,297, which, upon reconciling with tax figures, reveals no book-tax differences Consequently, no adjustments will be necessary in the M-1 Adjustments column when inputting data on the income statement worksheet in the workpaper.
Figure 4 Income statement reported on workpaper
The balance sheet will be entered as follow:
Figure 5 Balance sheet reported on workpaper
In order to reconcile the 2021 tax basis for the shareholder of ABC, a reconciliation must be performed from 2008 to 2020 to identify the beginning basis in 2021 For the year
In 2021, ABC Corporation reported a net income of $334,297, a contribution of $2,420, and distributions totaling $291,861, without any nondeductible expenses or distributions This financial data allows for the calculation of the shareholder's tax basis in the corporation for the current year.
Hence, tax basis of ABC will be calculated as follow:
Figure 6 Tax basis reconciliation of business ABC
The ending basis of $816,865 will be rolled over to the next year and reported as beginning basis for the year 2022
Upon finalizing ABC's business tax return, the CPA will thoroughly review and sign the documents to confirm the accuracy of all recorded information Subsequently, the intake staff will send an email to the client, which will include a copy of ABC's business tax return along with an authorization form for the client's signature.
Please find the secured link to your 2021 Business Tax Returns We encourage you to review the document thoroughly and inform us of any necessary adjustments or updates It's essential to double-check your personal and bank information to avoid any delays in the filing process.
The link is password-protected for your security The password is
For us to file the returns on your behalf, you will also receive a link in a separate email to sign the authorization forms in our portal electronically
If you have outstanding tax obligations, please adhere to our instruction letter for paying your current year's tax and any estimated tax for the upcoming year The payment options and due dates will be detailed in the provided vouchers.
Thank you again for choosing our service, and we look forward to assisting you during the next tax seasons
Clients can sign the authorization form to allow XOA Tax to e-file their tax return with the IRS, provided there are no objections or requested changes This process guarantees a seamless and efficient filing experience while upholding the utmost professionalism and accuracy in our tax services for valued clients.
The process of filing tax returns for customer business ABC
Upon launching the ProSeries software, users are greeted with the S Corporation Information Worksheet, where the tax preparer must accurately input essential business details, including the business name, EIN, incorporation date, and address For business ABC, the required information should be entered accordingly.
Figure 7 S corporation information worksheet on ProSeries
From there, ProSeries will automatically populate the various schedules and forms required for the tax return
After entering the business information, the tax preparer will then enter the corporation's income, deductions, and other relevant information into ProSeries, which will automatically calculate the corporation's tax liability
Figure 8 Form 1120S – income and deductions
To calculate software depreciation, it's essential to identify depreciable assets from the general ledger, which shows that ABC has three assets: land, building, and automobile While land does not depreciate, the building and automobile are considered depreciable assets To perform the calculation, access the Federal Asset Entry Worksheet on ProSeries and enter the asset description, service date, cost, and asset type The asset type is based on its useful life, with the building having a useful life of 39 years and the automobile classified accordingly.
Figure 10 Depreciable assets shown on general ledger
Figure 11 Asset entry worksheet of building
Figure 12 Asset entry worksheet of automobile
The full depreciation report after calculating will be shown as follow:
Entering shareholder information on the Schedule K-1 worksheet automatically transfers the data to the Schedule K-1 form, which details the shareholder's business and interest income This income must be reported on the shareholder's individual tax return and is subject to relevant tax laws Accuracy in the information on Schedule K-1 is crucial for shareholders to prevent potential penalties or legal complications.
After completing the Schedule K-1 with all required information, the "S Corporation Shareholder Stock and Debt Basis Limitations Worksheet" will be generated automatically by ProSeries This software will display essential figures, including net income, interest income, and contributions To ensure accuracy, enter the beginning balance from the tax basis reconciliation workpaper into the designated field on the worksheet, and verify that the ending balance calculated by the software matches the ending balance from the tax basis reconciliation worksheet.
COMMENTS AND RECOMMENDATIONS
Comments on the tax procedures
XOA Tax, in collaboration with its partner businesses, has invested in coordinated professional skills training programs for its staff, ensuring they possess a robust professional foundation to deliver top-quality service to clients By effectively managing streamlined consulting tax processes, the company has built a reputable and trustworthy image among its clientele.
Establishing a well-defined process system is essential to minimize distractions for employees during operations A robust customer information management system is implemented to prevent any overlap between new and existing clients New clients are stored in a separate database within the software, allowing employees to efficiently track and engage with them for any additional information required.
A strong collaboration between tax preparers and CPAs is essential for maximizing clients' tax refunds and minimizing their tax liabilities This partnership also plays a crucial role in helping clients rectify any errors on their tax returns, ensuring accurate and beneficial outcomes.
US residents who are customers of the company face challenges related to filing US taxes, creating difficulties for Vietnamese staff who lack familiarity with US tax laws and regulations To address this, employees and interns invest considerable time in studying tax laws and comprehending the necessary tax forms.
Tax team members face significant challenges during engagements, as some preparers may take on high-risk tasks beyond their expertise They are also tasked with preparing tax returns for numerous clients within tight deadlines, where both accuracy and speed are crucial for meeting the expectations of individual and business customers.
Tax preparers frequently encounter challenges in obtaining complete information from clients due to reliance on intake personnel, which often leads to repeated requests for clarification This intermediary process can result in missing details and delays in tax preparation, ultimately wasting valuable time for both tax preparers and CPAs.
The ProSeries software, while popular among users, has notable limitations, including reported inaccuracies in the rollover of numbers from the previous year, which can result in errors on tax returns Additionally, tax preparers often face unexplained errors during the preparation process, leading to frustration and increased time spent on tasks.
Recommendations
To enhance the efficiency of client information intake and streamline the tax filing process, XOA Tax should implement strategic measures Delegating the intake process to designated personnel and facilitating direct communication with clients via phone or email for document collection can significantly reduce delays Furthermore, establishing earlier deadlines for document submission will allow ample time for service provision, ensuring timely and effective service delivery Regular notifications, reminders, and clear explanations will help avoid misunderstandings and save time for both the clients and the tax preparers.
Given the potential limitations of ProSeries software, the company should explore alternative tax software solutions like Lacerte Lacerte offers an intuitive user interface and advanced features that enhance data accuracy and reduce unexpected errors By transitioning to software that aligns more closely with the needs of the firm and its tax preparers, the risks of errors and technical issues may be significantly minimized.
Income tax is a complex subject in many countries, making it essential for tax preparers to have a deep understanding of tax laws and regulations to effectively consult clients and prepare accurate tax returns Mastery of ProSeries software is crucial, as tax preparers must identify taxable and non-taxable incomes and deductions to optimize their clients' tax obligations and ensure high-quality service.
My internship provided valuable exposure to US tax principles and regulations, enhancing my understanding of tax preparation Despite the brief duration, I gained practical knowledge that enabled me to grasp the procedures for delivering tax services and applying tax rules effectively This experience, combined with the theoretical frameworks acquired during my university studies, deepened my insights into the field of taxation.
I attempted to complete the internship report and offer some suggestions in an effort to develop the report
I am deeply thankful to the managers and CPA at the company for their unwavering support throughout my internship, guiding me in correcting mistakes on tax returns and sharing invaluable insights into US tax law However, the brief duration of my internship and my limited experience have prevented me from exploring various facets of the profession, such as corporate income tax Consequently, my article reflects certain shortcomings and limitations in professional knowledge and experience.
I would like to express my gratitude to Ms Nguyen Hoang Dieu Hien, a lecturer at the Faculty of Accounting and Auditing at the University of Economics and Law, for her invaluable assistance with my internship report Her insightful comments, constructive feedback, and enthusiastic guidance greatly contributed to making my internship experience exceptional.
1 Internal Revenue Service, Instructions for Form 1120-S
2 Internal Revenue Service, Instructions for Form 2553
3 Internal Revenue Service, Instructions for Form 7203