Having the opportunity to work with thousands of corporate tax executives over three decades has provided insightful information many people are unaware of in running a corporate tax function. There are three topics that will be discussed in this article that are important to know. A corporate tax executive may not have the opportunity to communicate this information to top management teams. However, it is important to know this information and what we are privately hearing from corporate tax executives.
Lead tax executives are under more pressure in running a corporate tax function than ever before in history. With multiple tax revenue authorities increasing their activity investigating corporations today to generate revenue, corporate tax organizations are experiencing an increase in audit activity from Federal, State, and Foreign tax revenue authorities. As a result, corporate tax executives have a heavier workload as they manage increased risk for corporate organizations. While many corporate executive teams are searching for ways to cut costs, the tax department needs an increase in its budget to support their growing workload. Note To CFOs and Human Resource EXecutives: Ask your Tax Executives what they need to be more successful for your organization? Then give them the financial support they need.
Over the previous two years, we have experienced the highest amount of turnover in corporate tax departments we have seen in decades. Allow me to share a truth with you most corporate executive teams are unaware of. The impetus of the great exodus and early retirements in the tax profession has a lot to do with the complexity of the tax executive workload. Tax work is a high risk job, demands substantial technical knowledge, has greater complexity nationally and internationally, and many tax organizations are working with understaffed tax teams with an increase in workload. Tax Executives will not tell you they do not know the answer to all your technical questions. However, they know how to find the answers from selected industry experts. Therefor, give them the budgets they need to access industry specialty experts. It is technically very complicated in the world of tax! A tax executives technical knowledge is as sophisticated as a pilot driving a jumbo jet! We are talking about a highly trained and educated group of tax professionals.
Another factor affecting corporate tax organizations today is the difficulty finding staff for their tax departments. In the year 2020, public accounting firms were not hiring staff level tax professionals. The staff who were fortunate enough to be hired were working from home with little mentorship available to them while working alone from home. The pandemic had a devastating effect on training in your children’s schools; it also had an impact on training tax staff. I have personally spoken with corporate tax executives who have looked for over a year for qualified tax staff. Many tax departments are hurting for tax staff support. My recommendation is for corporations to hire and train tax staff themselves as interns and rotate the staff among their tax team so tax staff receive more exposure to how a corporate tax department operates over multiple tax jurisdictions.
The Big Four are burning out their tax staff as many leave due to the stress of extraordinary overtime demands on them in these firms. Unfortunately, the experience has motivated many tax staff to leave the tax profession altogether at the three to five year level. This contributes to the lack of available trained tax staff talent for hire today. In the old days, you knew if a tax staff was trained by Arthur Andersen (who ceased operations August 31, 2002 from the Enron debacle), the tax staff went through a rigorous training program. Nowadays, you put tax staff on zoom call in front of a computer and hope they understand the highly technical concepts.
Another issue privately discussed with tax executives that corporate management teams are likely unaware is the increasing demand of technical expertise required by tax executives today. Tax legislation is changing rapidly across multiple tax jurisdictions. The changes are evolving at a pace impossible for any human to keep up with and take time to identify, assess, and select the best solution for the company. I would certainly not leave the solutions to A.I. as it would likely be favorable to tax revenue authorities. There are often several ways tax planning can be utilized so it is best to have the experience of a tax expert who also understands the issues and corporate business objectives. Give your competent tax executive the support and the budget they need to get the job done properly.
Companies need to understand that many organizations make mistakes which cause them to lose great tax talent. Tax Executives are very valuable to corporations today as they save companies enormous amounts of tax revenue that would otherwise be lost forever. One situation I often see is human resources making the mistake of thinking tax salaries and accounting, and finance salaries are in the same pay range. This is not the case as companies often find out when making offers to new tax executive hires. It is a very sensitive subject and best handled in the hands of a professional who has deep knowledge of the subject matter about tax compensation. Having placed more than one thousand tax executives over three decades and negotiated some of the largest tax executive compensation packages in the tax profession, I know how to help companies get the talent they need that will save companies millions (and sometimes billions in tax revenue over a ten-year period just on the way they structure their IP). Technically talented tax executives are one of the most valuable assets a company has these days. Treat your tax executives with the respect they deserve by supporting them with what they need.
Do you have a need for a tax executive currently or anticipate a need in the future? As an internationally proven expert in completing multiple tax executive searches for corporate clients, please be comfortable contacting me with your questions or needs: https://www.taxconnections.com/tax-executive-search-services
Contact firstname.lastname@example.org or call 858.999.0053 or text 858.232.4415. Available to speak with you 7 days a week. Call me if you have questions on tax compensation.
Contact me if you would like to participate in our year end 2023 private corporate tax compensation study.
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