Chapter 9 Flashcards
(24 cards)
5 Common types of taxes (READ)
Income Tax
Payroll Tax
Property Tax
Consumption Tax
VAT/Ad Valorem Tax
Income Tax
Tax based on the money you earn from various sources
Payroll Tax
Taxes deducted from your paycheck to fund Social Security and Medicare
Also known as FICA
Property Tax
Tax assessed on real estate properties
Consumption Tax
Tax levied on the money people spend (Ex: sales tax)
VAT (Value Added Tax) or Ad Valorem Tax aspects
Tax on the added value of a product,
Calculated as the difference between sales price and cost of production
Mostly used outside of US
Descriptive Analytics for Tax Accounting (READ)
Summary Statistics
Ratio Analysis
Tax KPIs
Diagnostic Analytics for Tax Accounting (READ)
Performance comparisons
Drill Down Analytics
Predictive Analytics for Tax Accounting (READ)
Sales, earnings, and cash flow forecasting
Prescriptive Analytics for Tax Accounting (READ)
What If Analysis
Sensitivity Analysis
3 main sources of data for the IRS
SEC filings and historic tax returns
Social media feeds
Personal financial data (ex: credit scores) to profile individual taxpayers
Have companies kept up with tax authorities in the use of data analytics for tax compliance?
No
Why do firms engage in data analytics for taxes?
To ensure compliance and avoid a tax audit
Tax Cost
Actual taxes paid
Tax Risk
Risk of misreporting tax provision adjustments
Tax Efficiency and Effectiveness
The technology, processes, and people carrying out the tax function
Tax Sustainability
The ability to sustain similar tax performance over time
Permanent Differences KPIs
KPIs focusing on tax reconciliation by looking at the differences between book and tax revenue and expenses
What does Tax Planning involve?
Identifying and minimizing potential tax liability
Section 179
An immediate expense deduction that business owners can take for purchase of depreciable business equipment instead of capitalizing and depreciating the asset over time.
Is digitization and more access by tax authorities becoming more common around the world?
Yes
Data Mart
Subset of a data warehouse focused on a specific function or department to assist and support its needed data requirements
What do Tax Data Marts do?
They help firms track unrealized capital gains and tax saving opportunities for clients
IRS Discriminant Function Algorithm
Analyzes past tax filings to predict the likelihood of underreported income
