Cash tax savings

The current economic landscape and liquidity crisis have made additional cash flow a priority for many companies. Many businesses are looking for ways to increase cash flow in order to invest in strategic activities and fund working capital, payroll, dividend payments, pension plans and other employee benefits, capital improvements, acquisitions, research and development, stock buy backs, etc.

But at the same time that tax departments are being asked to contribute to the corporate drive to preserve and increase cash flow — their limited or reduced resources are struggling to keep up with day-to-day tax operations. This can result in missed opportunities to significantly reduce their tax liability, increase cash flow and potentially impact the effective tax rate by managing their cash tax rate more effectively.

Have you?

1. Had a significant employee reduction or turnover within the workforce?
2. Considered reducing your immediate cash commitment to retirement plans?
3. Made significant acquisitions of businesses in the past 5 years, e.g., stock, asset, merger, etc?
4. Made significant expenditures on research and development activities, or expenditures/disposals of buildings, structures, or other fixed assets?
5. Disposed of any businesses in the past 5 years through sale, spin or liquidation?
6. Outsourced compliance or planning of specific tax functions such as sales/use tax, income/franchise tax, payroll tax or property tax?
7. Created any special purpose entities, such as captive insurance companies, IP companies, finance entities, or sales and manufacturing entities?

How PwC can help

PricewaterhouseCoopers will work with you to gain insight into your business, unique circumstances and cash tax profile and co-develop a program of solutions to increase cash flow by looking at possible funding alternatives, overpayments, refunds or overlooked tax credits.

Permanent deductions

• Potentially identify state corporate income tax refunds and potentially reduce or eliminate exposure to assessments for tax, interest and penalties. A company may also benefit from increased cash flow, potential reduction of its tax burden, better management of open audits, and experience potential tax savings in future periods.

Tax deferrals

• Identify ways to defer taxes through the correct application of methods such as 1031 exchanges and fixed asset depreciation.

Tax refunds

• Increase cash flow through federal and state tax refunds, reduce the effective unemployment tax rate, and realize future employment tax savings enhance pre-tax income and shareholder value.
• Realize savings through improved processes resulting in correct reporting on originally filed tax returns, and limit risk of IRS challenges through improved documentation to support filings.

Tax credits

• Identify, quantify and obtain credits resulting in a decreased tax liability for the current and future years and increased cash flow from refund opportunities.

Identification of overpayments

• Identify and remedy missed multi-state refund opportunities and effective ways to recover "lost" tax dollars, offset audit assessments and reduce future overpayments of sales and use taxes.

Cash flow improvements

• Leverage cash saving alternatives, such as company stock or existing pension assets, to satisfy immediate expenses such as minimum benefit contributions, severance pay, or executive pension payouts.