Tax Department Heroes: Cash Saving Opportunities

It’s official; the U.S. economy, if not the world economy, is in a recession.

As usually happens during economic downturns, companies turn to the Tax Department for cash. No, it’s not because we are hoarding cash in barrels out back. Often, it’s because the newly enacted stimulus law involves taxes. Plus, savvy companies know Tax Departments can be a source of strategic opportunities to recover and save cash. In this article, we provide a list of places to explore as you’re turning over stones to help save cash for your company.

We have indicated the stones to look under by name or high-level description only. They might not apply to all companies and situations. Additional research or consultation with your advisors should be performed to confirm your company qualifies.

Recent stimulus:

  • EIDL (Economic Injury Disaster Loan Program) grants and loans (CARES Act)
  • PPPL (Paycheck Protection Program loans) (CARES Act)
  • Other business loan programs under the CARES Act
  • Deferral of payments on pre-existing SBA loans (CARES Act)
  • Delayed tax filings and payments (IRS)
  • Delayed payroll tax payments (CARES Act)
  • COVID-19 related sick leave (FFCRA)
  • NOL carrybacks (CARES Act)
  • AMT credit (CARES Act)
  • Increase in the cap on IRC Sec. 163(j) interest deductions (CARES Act)
  • Qualified improvement property (e.g. subject to 15 years depreciation) (CARES Act)
  • Payroll tax credits on retained employees (exclusion applies with the PPPL) (CARES Act)
  • Increase in the cap on charitable contribution deductions (CARES Act)

Preexisting laws:

  • Accounting methods
  • Capitalization policies
  • Treatment of customized or internally developed software
  • Enhanced charitable deductions for food donations
  • Research and development – have conversations with heads of different teams to learn about new activities
  • Tips credit for restaurants and other industries with tipped staff
  • Tax incentives such as work opportunity credits
  • Legal entity structure
  • Revenue recognition – take another look at large contracts and accounting’s policies
  • Analyze entries in select GL accounts
  • Evaluate fixed assets for:
    • Items that can be re-categorized or split into shorter-lived assets
    • Items that can be written off or down
    • Items that can be expensed
    • Items that can begin depreciating
  • Acquisitions:
    • Payroll taxes
    • Workers compensation rates
    • Goodwill – basis and release
    • Basis in liabilities (some liabilities do not follow GAAP, such as deferred revenue, which is based on anticipated cost of generating revenue)
  • Federal and state items subject to carryforward limitations to ensure proper treatment – if the rules are unclear, do not make assumptions, there may be resources to help you determine proper treatment such as Congressional intent, jurisdiction manuals, and instructions for returns from the year the law went into effect
    • NOLs
    • AMT credits
    • R&D credits
    • Excess charitable contribution deductions
    • Nonrefundable incentives
  • Foreign taxes, direct and indirect
  • Evaluate sales tax for:
    • Machinery and equipment used in manufacturing
    • Rate adjustments if you use a blended sales tax rate based on “to go” sales
    • Exempt or zero-rated items
  • Property tax:
    • Assessed values
    • Special rules and rates for specific assets, such as machinery and equipment
    • Property no longer in the company’s possession
    • Payment deferrals
  • Excise taxes – state and federal
  • Unclaimed property
  • Timing of tax prepayments – penalties and interest may be outweighed by the company’s need for or return on/cost of cash

G&A driven:

  • Renegotiate rates with external service providers
  • Opportunities for automation
  • Reevaluate the in house to outsourced work mix
  • Seek experts working on contingency to find opportunities to recover cash or capture future savings, such as through credits
  • Reevaluate capital spending plans
  • Reevaluate tools and the department’s use of them
  • Reassess priorities
  • Implement KPIs for performance optimization and ROIs to control costs and focus efforts
  • Implement project management processes and tools
  • Implement policies, procedures, and protocols to standardize processes and increase efficiency

Let us know how it goes. You can share your recommendations with us by sending an email to Info@TaxForward.org.

Happy hunting!


Ashby Walters is Executive Director and cofounder of TaxForward and Future Tax Leaders. She has served as head of tax for Peet’s Coffee, Inc. and its subsidiaries, Quizno’s, and other companies. Over her 20-plus year career, Ashby has helped organizations from Fortune 200 companies to start-ups save more than $200 million in cash taxes, millions in G&A, and thousands of production hours collectively.