Welcome

Parking Lot Drops, 10Qs on Etch-A-Sketch: Covid-19’s Real Work

Oct. 14, 2020, 8:45 AM

Everyone knew what to do: Parking lot. Broad daylight. Bring the files. Wear gloves.

Whisper.

Warrenetta Baker donned a mask and tried not to breathe too deeply. Her team knew the drill. It did these sorts of exchanges all the time, without anxieties. But that was before the global pandemic.

Which is why Baker, Capital One Financial Corp.‘s chief tax counsel, and her team created this carefully coordinated meet-up to notarize tax papers. It was an example of how the pandemic has turned the most mundane tasks of daily business into potential matters of life and death, if someone got sick.

Tax and legal teams have had to keep tabs on where thousands of employees were working, deploy internet services to remote areas, figure out how to safely meet to do things that have to be done in person, even decide who should be sent sensitive mail and how to open it safely. What started as temporary patches has more and more become the new normal: An informal mid-summer poll by the Association of Corporate Counsel found that almost half expected their remote work policies to continue even after the pandemic.

“There’s always the concern that you need to do it right and you need to be in compliance,” said Toby Reese, managing director of tax services at Duff & Phelps. “When you have a situation like the pandemic, that brings certain stressors into the equation.”

Those stressors translate into real risks, Reese said, which could create a domino effect of missed deadlines and civil penalties. Liability is always on the mind, especially with a proposed federal liability shield for businesses mired in negotiations between Congress and President Donald Trump’s administration over another economic stimulus bill.

“I know it’s been requested, but I haven’t seen any legislation that would protect organizations if any of their employees got Covid and they could trace it back to the employer’s operations,” said Susanna McDonald the ACC’s chief legal officer.

‘Work in progress’

For many companies, important documents like the quarterly 10-Q report to the Securities and Exchange Commission were written remotely for the first time.

Aflac Inc. completed the filing with the team all at home for the first time in the multinational life insurance company’s 65-year history.

“I felt like my 10-Q—and I know I’m not alone in this—was made on an Etch-A-Sketch,” said June Howard, Aflac’s chief accounting officer.

Because of the pandemic and a slew of new SEC rules, Howard said they had to drum up new language, supplying new information and write new sections. The most regular of all filings felt like a moving target.

“Trying to figure out what the Covid-19 disclosures were and get those ready was a real challenge because it was literally a work in progress,” Howard said.

In the “beforetimes,” Julia Lagun would set up a series of meetings and informal chats to change and review Cleveland-based KeyBank’s tax return.

That all changed once the pandemic sent everyone home. Now, the senior vice president for tax had to schedule team members to review and make changes to ensure the important document was completed correctly, and on time.

“Once the return is put together, you can’t have multiple people making changes at the same time,” Lagun said. “From that perspective, it definitely took a lot more close coordination and teamwork.”

Working together when so many people will be apart for far longer than expected is a concern for NetApp Inc. general counsel Matthew Fawcett, one of roughly 10,500 employees at the data management giant who will be remote until July 2021.

Fawcett said companies with highly distributed work forces like NetApp must find new ways to recruit, on-board, and mentor employees in order to build high-performing teams.

“It’s hard to do because we don’t know what works and what doesn’t,” Fawcett said.

Where is everyone

One critical detail for Howard was making sure there were hot spots available for about 10 employees in her group who live in remote areas, away from the company’s Columbus, Ga., headquarters, that don’t have internet access.

“Do you have a cell phone?” Aflac’s Howard asked a subordinate as she handed her a mobile internet device when the company went all-remote. “A hot spot is only going to be as good as your cell service.”

With all the added remote technology, though, comes increased cybersecurity risks. If companies can’t track where all their employees are working from, that could lead to data breaches and unauthorized access to internal networks, said Steven Miller, former acting commissioner of the IRS.

“If I was a general counsel or a CFO, I need to arm my people to succeed, and that might mean getting them the equipment they need,” Miller, who now works as national director of tax at consulting firm alliantgroup, said.

“But mostly I’m worried about cybersecurity and the increased possibility of breach by the way we have to operate now,” he added.

Companies also have to know employees’ physical working locations to ensure payroll information is up to date. With local tax collections falling as a result of business closures and rampant unemployment, authorities in many areas are looking to count newly remote employees in their jurisdictions as new revenue sources.

Global credit rating agency Moody’s Corp. created an internal working group to track and approve all employee’s new working locations to provide employees everything they need to work from home—and to stay informed on what regulators are considering, said Scott Kapusta, vice president of global tax.

“You’ve got to review all these situations,” Kapusta said. “It can create corporate tax risks, filing obligations, and exposure.”

Jared Sine, chief legal officer at Dallas-based Match Group Inc. said the online dating giant’s human resources and in-house employment lawyers are working with outside counsel to advise on potential tax liabilities for its 1,800 employees in new locales.

“In certain instances we’ve had to tell people: ‘Hey, if you’re going to work for the next six months from Amsterdam, where we don’t have a tax footprint, that’s going to create some problems,’” Sine said.

Those problems could come in the form of surprise tax bills for employees, a risk especially high for multinational companies.

With thousands of employees worldwide, firms have to track local, domestic, and international tax trends, Louise Weingrod, vice president of global taxation at Johnson & Johnson, said.

“We’re in the process of continuing to develop what the right policy is and what the right approach is to ensure that our employees have no surprises,” she said.

Until everyone is back in the office, legal, tax, and HR managers will make do to support their teams and comply with sometimes out-of-date regulations—all while staving off burnout and trying to stay emotionally connected like the rest of us.

For Capital One’s Baker, once a week, a box is sent to an employee full of sensitive tax documents from headquarters. That lucky person handles the most routine of all office tasks: sorting mail.

Before the pandemic, it was normal to open notices or refunds here and there. Now, she opens sometimes a tub of mail with gloves and a mask.

“I look forward to when we can do everything electronically with all of our filing jurisdictions. But some still require paper,” Baker said.

To contact the reporters on this story: David Hood at dhood@bloomberglaw.com; Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Bernie Kohn at bkohn@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.