What keeps CTOs up at night: retroactivity issues and the Apple case may trigger some angst, but what often cause concern for CTOs on the firing line are business developments they don't know about.

• Author: Levin-Epstein, Michael
• Position: Chief tax officers - Discussion

For chief tax officers (CTOs), there are everyday worries, and then there are worries that keep them up at night--BEPS, changing compliance requirements, and increasing demands on their time, to name just a few. Tax Executive convened a roundtable to discuss in more detail the changing role of CTOs and what does, in fact, keep them up at night. Eric Johnson, vice president of tax at Ross Stores Inc.; Jim Kennedy, senior vice president and chief tax officer of OppenheimerFunds; and Judy Zelisko, vice president of tax and chief tax officer at Brunswick Corporation, participated in the discussion moderated by Senior Editor Michael Levin-Epstein.

Michael Levin-Epstein: So, what does keep you up at night?

Eric Johnson: Probably the thing that keeps me most awake at night is "what do I not know?" What's happening in the business that I have not yet become aware of? What's happening in the tax climate or the tax world that I might not have heard about? What's potentially happening in my organization that I might not know about? So, I really think that obviously there are a lot of answers for what keeps a CTO up at night, but for me, it comes down to, what are the things that are happening that I might not know about? Then, the reaction is, OK, how do I ensure, either through myself or my staff, that we are properly and completely or accurately plugged in wherever we need to be? Are we as close to the business as we can get? Are we as close to the legislation in the federal, state, and non-U.S. jurisdictions that we care about? I think the follow-on to that is the second piece: if I'm doing my job, what's keeping me up at night is whatever is keeping my CFO up at night and, ultimately, my CEO. So, being sure that I know where their heads are, what their concerns are, so that I can be worried about those things, too.

Jim Kennedy: I would certainly concur with the points that Eric made. I think his comments are spot-on. As far as my own situation, at this point in time there's nothing that's really causing me a loss of sleep, if you will. We're just trying to figure out the best ways to handle things. I think I'm more concerned with what's developing. As Eric had mentioned, there are things that are internal and external to the company. Internally, we're always looking to see if we can have the process improvements and increase efficiencies and increase productivity from a P&L perspective. Obviously, people issues, trying to make sure that we have the cultural movements understood and the generational issues addressed as well as having the technical expertise in the workforce for the way business is evolving. Those are important. But I'd say the real concerns that I have are external. When you think about externalities, our industry has faced a number of pressures, being in financial services. There have been a number of information reporting requirements that have been placed on our industry that are quite onerous. The ability to resource these things adequately and wonder about what's coming down next can cause a little bit of concern.

But more so than anything else, I think I'm concerned about what's going on out in the governments that are looking at and implementing a variety of changes which could add to the risk environment to all of us. By the risk environment, I'm talking about retroactivity and the risk of double taxation. I think it's manifesting itself in the international and the state realms. I think you see it in a variety of places. We've seen the headlines recently with the Apple state aid case by the EU. I think the OECD BEPS initiative from the last couple of years is certainly going to increase the risk of double taxation. The potential for retroactivity is something that we are concerned about in all of those areas. The same thing goes domestically on the state tax front. There's a number of MTC [Multistate Tax Commission] cases that we've been involved with on the TEI SALT committee. Some of the committee folks, Jamie Fenwick, Margie CondonBrown, and Vic Ledesma of Kimberly-Clark, as well as Pilar Mata of TEI, have done a tremendous job with the briefs on those cases. It's very important because this whole, unbridled discretion...