Revolutionizing tax functions with state-of-the-art technologies. Mutual fund tax services

Transcription

1 Revolutionizing tax functions with state-of-the-art technologies Mutual fund tax services

2 Connectivity and rapid delivery through tax technology 1 With regulated investment companies (RICs) facing multiple disruptions from technological and regulatory fronts, and mutual fund tax processes becoming more dynamic and challenging, advanced technology-based transformative tax services are gaining market attention and are transforming the way traditional tax functions are carried out. Innovation, artificial intelligence and process automation are helping companies achieve business excellence while augmenting processes and increasing ROI. At Ernst & Young LLP (EY US), we are at the crux of digital innovation and we have evolved our tax technology practice to build innovative platforms and solutions to deliver leading-edge mutual fund tax services from data capture through tax reporting thus creating an automated end-to-end technology enablement solution for modern tax requirements. Tax-specific technological advances have made it possible today for companies to evolve at a faster pace and lead the way for total enterprise transformation. EY service excellence Our technology solutions, combined with the bench strength of our mutual fund tax professionals, translates to industry-leading mutual fund tax services. From the preparation of taxable income through tax reporting, our services are customized to fit the business needs of our clients. In addition to providing core tax services, our technology platform allows for customized reporting and analytics that enable clients to manage funds in a more efficient way. Because we have dedicated asset management tax professionals specializing in mutual fund tax, our professionals understand the challenges that mutual fund asset managers face today. Our dedicated and seasoned professionals work to help clients reduce tax-related costs and improve quality, business scale and overall service. Resources Highly experienced and accessible team of professionals across a global network Deep tax-technical knowledge with significant experience providing tax services to RICs Coordination Transparent, collaborative and robust relationships built on frequent communication and timely sharing of information Technology Proprietary technology to enhance synergies and efficiencies to help improve processes and enterprise infrastructure Enhance the tax process through automation, tools and/or enablers Rapid assessment plan to identify and prioritize potential enhancements and automation efficiencies Customizable reporting and analytics Industry-leading solutions related to foreign taxes, corporate actions and PFIC identification 1 Please note that our involvement in year-end work may be limited if the fund is an Ernst & Young LLP audit client. ey.com/mutualfundtax 1

3 Our commitment to innovation is exemplified by our tax technology initiatives. In order to address the ever-changing tax and business landscape, we understand our clients need for realtime tax data and analytics. To this end, we have dedicated significant resources to the development of RIC-specific tax technology tools that provide: Automation of source data collection Security analysis and scenario planning Taxable income calculations including taxable income estimates and year-end distribution calculations Financial statement tax disclosures Preparation of federal and state income tax returns Analytics and reporting Our integrated global tax technology enablement solutions include: EYTaxSpace our platform for delivering leading-edge tax compliance Real-time tracking and online review via embedded workflow management and analytics in a client-accessible dashboard Reports, returns and analytics can be reviewed in real time 24/7 Gathering data, validating data and tracking work flow is done via the EYTaxSpace dashboard Automatic data management network (ADMN) A strategic engine that automates the delivery of end-toend data for clients. Robust analytics are generated from a streamlined data aggregation process from multiple sources, including third parties and administrators. Securities Analysis Module (SAM) Industry-leading technology solution that automates the tax analysis of portfolio trading activity and provides an auditready integrated tax report. In addition, SAM allows for customized data analytics and reporting to assist clients with operational and business issues. The RIC module Offering the best of EY people, process and technology, our clients gain access to a network of professionals and tools that provide both flexibility and customization for tax service needs, including comprehensive work papers for audit purposes. Mutual fund tax services 2 Ernst & Young LLP is the No. 1 tax service provider to RICs (non-audit clients).

4 EYTaxSpace end-to-end solution Automatic Data Management Network (ADMN) Data collection forms are dynamic depending on data and responses required. This lets EY US and clients collect the data they need via a streamlined process, reduced risk of error, and faster delivery. ADMN Reporting and analytics EYTaxSpace SAM RIC Module Securities Analysis Module (SAM) This calculation engine of EYTaxSpace analyzes securities trading patterns to calculate tax basis, tax holding period and tax character through an integrated and customizable solution. EYTaxSpace is at the core of our solution with all modules integrated and synthesized within our system EY tax and technology people dedicated Custom-built system (v3.0) Tens of millions spent to date Technology that can easily be configured through modules RIC Module A taxable income calculation engine that produces supporting documentation for all tax adjustments that are linked to underlying data points. ey.com/mutualfundtax 3

5 Robotic process automation With robotic automation, our virtual software BOT performs routine activities that were originally carried out by human resources. This allows you to refocus your time and effort on higher-value activities like true tax planning and analysis. Global Withholding Tax Reporter (GWTR) One-stop information source for withholding tax rates and rules around the globe with content, customized functionality and support designed exclusively for financial services firms. Market-leading web-based application providing technical information on withholding tax rates, fund-level taxes, treaties, procedures, forms and instructions for the following: Portfolio dividends Portfolio interest Capital gains Mutual fund distributions Real estate investment trust distributions Alternative investment strategies and other financial instruments Value-added tax (VAT) and goods and services tax (GST) Additional tools designed for mutual fund companies include: Rapid Security Analyzer (RSA) Passive Foreign Investment Company Analyzer (PFIC Analyzer) Automated PFIC Mark-to-Market Service Corporate Actions Tax Analyzer (CATA) Per Se Analyzer Rapid Reclaim Analyzer Mutual fund tax services 4

6 Leading with innovation, while carrying forward the legacy While we are forerunning innovative tax technology solutions, we still provide customized tax services tailored to address the specific needs of fund complexes of all sizes. We offer a complete range of tax services, including, but not limited to, calculation of year-end taxable income and related financial statement tax footnotes, excise tax distributions, tax return preparation, interim tax qualification testing review, assistance with the year-end shareholder tax reporting, analytics and reporting and assistance with ASC 740 documentation. Recurring services: Preparation/review of excise tax distributions In addition to assisting with these computations in November and December, we can help you prepare estimates earlier in the year to enhance communications with shareholders. Preparation/review of 1099 designations and related shareholder mailings We can assist with 1099-related components of distributions made during the year, such as qualified dividend income, interest-related dividends, capital gain distributions, return of capital distributions, foreign tax credits and foreign source income. We can also assist with year-end shareholder supplemental information. Our wide range of other non-recurring services includes: Assistance with fund mergers and liquidations, including computations of final distributions and limitations on the use of capital loss carryforwards Assistance with investments in real estate investment trusts, including tax character of these distributions Drafting of letter ruling requests to the Internal Revenue Service (IRS), including relief requests Representation before the IRS in case of an audit Preparation of detailed policy and procedures manual for investments in derivatives, emerging market debt Customized training courses covering tax, accounting and regulatory aspects of mutual funds Analysis of corporate actions Analysis of complex securities that may have a direct impact on distributions and other compliance areas Analysis of new products Please note that our involvement in year-end work may be limited if the fund is an Ernst & Young LLP audit client. ey.com/mutualfundtax 5

7 Tax-related work associated with year-end financial statements This includes, but is not limited to, the following: Preparation/review of Internal Revenue Code Section 855 (spillover dividend) computations Preparation/review of tax-related footnote and other disclosures (such as capital loss carryforwards and 60-day notices) Preparation of SOP 93-2 (ROC-SOP) disclosures Assistance with ASC 740, including identification of tax positions and related assessment and documentation Assistance with other tax-related issues associated with the year-end work Year-round assistance with the tax compliance function This includes, but is not limited to, the following: Periodic tax reviews of asset diversification (including special diversification requirements for segregated asset accounts); 90% gross income test (performed monthly, quarterly or as desired) Periodic reviews of distribution amounts and determination of their character (e.g., ordinary, longterm capital, return of capital) Periodic review of the portfolio to identify complex corporate actions utilizing the EY Corporate Actions Tax Analyzer (CATA) Periodic review of the portfolio to identify passive foreign investment companies using our proprietary Passive Foreign Investment Company (PFIC) Analyzer Periodic review of portfolio to identify foreign tax issues, complex financial instruments, corporate actions, withholding tax reclaims, products and positions (e.g., straddles, emerging market debt) to determine whether these are being correctly recorded for tax purposes Preparation of tax returns and related extensions Computation of special items for state and local tax purposes, such as issuer s allocation percentages Assistance with non-shareholder information reporting We can prepare 1099-MISCs for directors, 1042/1042s for non-us directors, and 1099s for vendors and service providers. Tax-equivalent yield computation We can perform federal, state and local taxequivalent-yield computations involving municipal bond funds as well as funds investing in US government obligations. EY member firms provide services to all of the top 10 mutual fund complexes and to 88% of the top 50. Mutual fund tax services 6

8 Mutual Fund Tax practice contacts Ernst & Young LLP East Coast Robert Meiner (New York) Deirdre Mirabile (New York) Danielle Polvere (New York) Michael Russo (New York) Paul Keith Jr. (Boston) Yianni Lestaris (Philadelphia) Midwest Margie Arnst (Chicago) David Mangefrida Jr. (Chicago) Executive Director, Financial Services Washington, DC National Tax Matthew Stevens (Washington) Partner, International Tax Services West Coast Paul Kangail (San Francisco) Scott Odahl (Los Angeles) Thomas Bagley (Boston) Stephen Fisher (Boston) Principal, Financial Services Tax Ryan Ross (Chicago) EY is the only public accounting organization with a dedicated business unit for financial services. EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US. EY is a leader in serving the global financial services marketplace Nearly 51,000 EY financial services professionals around the world provide integrated assurance, tax, transaction and advisory services to our asset management, banking, capital markets and insurance clients. In the Americas, EY is the only public accounting organization with a separate business unit dedicated to the financial services marketplace. Created in 2000, the Americas Financial Services Organization today includes more than 11,000 professionals at member firms in over 90 locations throughout the US, the Caribbean and Latin America. EY professionals in our financial services practices worldwide align with key global industry groups, including EY s Global Wealth & Asset Management Center, Global Banking & Capital Markets Center, Global Insurance Center and Global Private Equity Center, which act as hubs for sharing industry-focused knowledge on current and emerging trends and regulations in order to help our clients address key issues. Our practitioners span many disciplines and provide a well-rounded understanding of business issues and challenges, as well as integrated services to our clients. With a global presence and industry-focused advice, EY s financial services professionals provide high-quality assurance, tax, transaction and advisory services, including operations, process improvement, risk and technology, to financial services companies worldwide Ernst & Young LLP. All Rights Reserved. US SCORE no US BDFSO ED None ey.com