Corporate tax departments and high-ranking executives are doing a better job of communicating, according to a new survey BY Ernst & Young.

The survey of more than 400 tax and finance leaders found that 66 percent of tax departments said they communicate frequently with the CEO, COO, audit committee or board of directors, up from 49 percent last year. Another 31 percent expect communication to become more frequent over the next two years.

On the other hand, 11 percent of the survey respondents said they rarely communicate with anyone at that executive level, and 21 percent of the respondents said their companies do not consider tax issues to be an area of focus for that level.

“Our survey shows that there is a heightened focus on tax at the board and audit committee level,” said Ernst & Young LLP Americas vice chair of tax Kate Barton in a statement. “The rise in communication is a direct result from increased reporting, enforcement and controversy.”

More than half of those surveyed identified legislation such as tax reform (54 percent), and regulations such as uncertain tax positions (51 percent), as areas that require the focus and attention of top company executives. Nearly half of the companies surveyed (42 percent) said their organizations are engaging in the tax reform discussion.

Sixty-six percent of the respondents said their tax department evenly divides its time between doing compliance work, addressing risk, and conducting additional activities that support the rest of the organization. Another 26 percent said their department spends more time on compliance and addressing risk than on value-added activities.

“Tax leaders are rightfully focused on day-to-day tax planning and preparing for changes in information reporting and withholding,” said Barton. “But it’s important to also keep your eye on the tax reform debate.”  

Corporate operations and logistics also demand attention, as 36 percent of respondents said they expect their organizations to revise their supply chains within the next 12 months. Another 26 percent of respondents anticipate changes in the next 12 to 18 months. Almost a quarter (22 percent) of respondents say their companies are considering changes in business operations in a particular state in response to enacted or expected state tax changes.

For the second year in a row, survey respondents identified the biggest challenge in the coming fiscal year as the need to accomplish everything with the given staffing model. To help meet that challenge, 29 percent of the respondents said they expect their internal budgets to increase by at least 5 percent. Almost as many (28 percent) expect to increase budgets for external service providers including law firms, accounting firms and tax advisory services. Both of the expected increases are slightly higher than last year.

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