Reporting Blunders Cost Cos. $7B in IRS Fines

IRS charged that amount for errors including end-user mistakes, tax and accounting rule errors, and organizational boo-boos.
Katie Kuehner-HebertFebruary 5, 2015

U.S. businesses amassed almost $7 billion in Internal Revenue Service civil penalties stemming from inaccurate reporting in 2013, according to Bloomberg BNA Software.

NYC_IRS_office_by_Matthew_Bisanz“Despite U.S. organizations’ increasing reliance on internal tools and technology, the potential for human error remains,” the business-news outlet posted on its website. “In tax and accounting departments, any number of manual mistakes can lead to costly, damaging consequences.”

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Some of the top tax and accounting mistakes gleaned from a recent Bloomberg BNA Software survey of 200 U.S. in-house tax and accounting professionals were highlighted:

Top Five End-user Tech Errors

1. Manually inputting incorrect data into an enterprise system.
2. Saving a file with corporate financial or tax data to a personal device.
3. Accidentally deleting a customer Excel formula used to calculate corporate tax data.
4. Overriding data in an enterprise system with figures calculated outside of the program.
5. Working on a non-secure public WiFi network.

Five Tax and Accounting Rule Mishaps

1. Closing the books before all required, accurate data has been collected.
2.  Modifying asset information from past years.
3.  Incorrectly applying unitary state tax rules.
4.  Failure to keep track of or adhere to city-specific tax regulations.
5. Failing to maximize depreciation by using the most advantageous depreciation tables.

Top Five Organizational Issues

1. Inability to recruit or train qualified tax personnel.
2. Unfavorable adjustments in audit.
3. Lack of C-level awareness of the impact of the tax function.
4. Insufficient investment in tax systems.
5. Failing to take advantage of tax breaks due to the lack of available data.