Communication and Critical Thinking Skills Needed by Tax Professionals

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Taxation professionals engaging in a group discussion

Working as a taxation professional, accountant, or auditor requires a strong set of skills including quantitative reasoning and problem-solving. Most correctly assume that tax professionals need to be good with numbers and detail-oriented. However, even the most talented mathematical minds won’t get far as a tax professional without soft skills that include effective communication and creativity.

Soft skills such as these are in high demand across a range of occupations. Tax professionals, however, could be seeing their industry’s needs changing faster than average. According to a report from accounting firm Ernst and Young, institutions everywhere are refining their searches for tax professionals to focus on finding people who are as good with words as they are with numbers. Ernst and Young concluded that the tax profession is undergoing rapid change, and jobseekers must change along with it.

What exactly are firms looking for in the new age of accountancy? Ernst and Young researchers found that recruiters specializing in hiring for tax practice positions were looking for individuals with a broad set of skills:

● Strong technical expertise, including fundamentals of tax law and tax practice, as well as the ability to understand the latest digital tools for organizing, preparing, and analyzing tax information.
● Familiarity with data science, with a special focus on finding creative, novel solutions to complicated problems.
● Effective communication skills, both in writing and in person.

Trends driving shifts in tax practice needs

According to experts who spoke to Ernst and Young for deeper insight into the evolving role of the modern tax professional, many executives and recruiters cited a shifting scope of responsibilities for those in tax practice.

One major catalyst for this change, according to Ernst and Young, was the 2008 financial crisis and the sweeping reforms that followed. Since then, governments have put more pressure on the private sector to increase oversight and compliance. This is especially true for tax professionals in the wake of several laws that sought to crack down on tax avoidance and dishonest reporting.

● In 2014, the Organization for Economic Cooperation and Development announced a plan to combat tax avoidance committed by multinational corporations. Known as base erosion and profit shifting, or BEPS, it encompasses a number of strategies that have been or could be used to reduce or eliminate tax liability on the part of businesses, thus increasing profits.
● In 2010, the U.S. government passed the Foreign Account Tax Compliance Act, or FATCA. The law seeks to create a standardized, global framework for income tax reporting in an effort to root out tax fraud. FATCA is particularly focused on wealthy individuals who use a number of legal tactics to move finances overseas, primarily to avoid taxation.
● The OECD began rolling out the Common Reporting Standard to facilitate tax reporting across international borders. This standard has implications for both businesses and individuals all over the world.

These new laws are just a few of the reasons why modern tax professionals must be adept at more than simple number crunching. If these and other new standards are to be effectively implemented, it will require teamwork and ingenuity on a large scale. The responsibility for seeing these changes through falls on the tax professional.

Strategic tax practice

As explained in the Ernst and Young study, the tax professional as a key member of a successful, multinational business is relatively new.

“In the past, the most in-demand tax professionals tended to be those that were highly specialized and technical,” the study’s authors wrote. “Compare that with the Pure Search survey in 2015 that found the three most important skills for tax leaders today were judgment, leadership, and communication. Strong technical expertise, viewed as a given, ranked at the bottom of the list.”

While the specific skills required of modern tax pros may be relatively recent developments, the need to develop them isn’t all that groundbreaking. As explained in an article from Accounting Web, accountants have long been encouraged to expand their knowledge beyond the most technical skills and into more generally applicable abilities, especially as they advance their careers. Progressing from typical bookkeeping into upper management has long required advanced communication and analytical skills. As accountants or other tax pros move from working as part of a team to actually leading a team, they will need to adapt to fit these roles.

A few of the less technical, more abstract skills required of aspiring managers or executives include:

Business acumen: Accountants or tax experts often concern themselves with the “how” questions of a business—how to report earnings or how to collect and organize data. Managers and executives need to know the “why”—why is revenue increasing or declining? Why do customers choose our products over a competitor? Shifting from a detail-oriented approach to a big-picture perspective can be one of the most challenging transformations for employees moving up the corporate ladder.
Leadership: Even an accountant with divine intuition would be mostly ineffective if he or she were not also a good leader. It takes one set of skills to analyze and interpret the meaning behind information, but an entirely different set to develop an effective action plan and delegate tasks to team members. Entry-level tax professionals could gain experience leading a team by simply demonstrating their ability to supervisors, perhaps by volunteering to take on a new project or fill in when a manager is on vacation.
Training and relationships: Not everyone is able to develop these and other skills overnight. That’s why accountants should always take advantage of training offered by their firm. These sessions are often great for learning new skills, as well as creating new connections with co-workers. Building these skills and new relationships will prove critical to any tax professional looking to advance through the ranks.

Essentials for tax prep

Working as a tax expert in a corporate setting often requires a slightly different set of soft skills than would be expected from someone who works mostly with individual clients. Those who prepare forms or advise people on tax matters will need to be effective communicators and team players, but in ways that emphasize a more personal approach.

In almost all cases, anyone who provides tax advice or services for a fee must be registered in some capacity with the IRS, as well as some state organizations. Since tax preparers and advisors will be working with sensitive personal information, the IRS provided a number of tips to help clients and preparers understand what is expected in these situations.

● The IRS urges taxpayers to conduct a fair amount of research before working with anyone to file their taxes or receive tax-related financial advice. Tax preparation workers should have an IRS Preparer Tax Identification Number at minimum. Many also are certified by a number of professional organizations, particularly if they specialize in one form of tax expertise.
● Tax preparers need to be organized and methodical, and should be willing to answer any questions or provide any documentation their clients ask for, within reason. This means tax preparers must have a keen eye for organization, be able to adhere to schedules and deadlines, as well as keep important documents filed away and securely stored.
● Above all, tax preparers or advisors need to be inquisitive and thoughtful. A good tax professional should understand the legal implications of any client’s situation, and ask the right questions to reach that level of understanding. At the same time, they must also earn their client’s trust by remaining impartial and confidential.

One great way for accountants in training to hone these skills is by participating in programs offered through the IRS as well as educational institutions. One popular program is the Volunteer Income Tax Assistance Program (VITA). Along with an initiative called Tax Counseling for the Elderly, VITA is established by the IRS to develop the skills of students working to become professional accountants with low-income taxpayers who need assistance with their annual returns.

VITA participants get assigned to work with a sponsoring organization in their area before undergoing training for their role as volunteer preparers. Then they attend regular open house-style sessions where taxpayers can receive help with their returns. VITA is not just a great way to give back to the community; it’s also an excellent option for business and finance students to gain experience they can apply to their future careers.

Developing soft skills as a tax professional is a work in progress, and one that often lasts a lifetime. By understanding how the profession is changing, and how to adapt to those changes, anyone studying tax practice through the Master of Science in Taxation online program at Northeastern University’s D’Amore-McKim School of Business will have a head start wherever their career takes them next.

 

Recommended Readings

The Importance of Ethics in Taxation

Understanding Changes in Flow-through Entities Due to Recent Tax Reforms

Learn More About International Taxation with a Graduate Degree

Northeastern University Online MST Program