Taxes aren’t going away anytime soon, and by most measures, it won’t get much easier to plan for them, either. The Online Master of Science in Taxation degree from Northeastern University’s D’Amore-McKim School of Business can prepare students for a career in one of many roles as a tax professional. Among the most common of these is a tax auditor.
What Does a Tax Auditor Do?
A tax auditor is a financial professional specifically concerned with taxation issues as they relate to businesses. While accountants and auditors share many of the same skills and responsibilities in the corporate world, the terms are not interchangeable. Although accountants are typically the people who prepare and manage financial records for a business, it’s an auditor’s job to review those documents for accuracy and compliance with laws and regulations. Therefore, a tax auditor would be concerned only with analyzing a company’s tax records and practices.
Essential Skills for Tax Auditors
The skills and qualifications required of most tax auditors mirror those of most other accounting professions, with a few key differences.
As a specialty related to accounting, prospective tax auditors should have received a bachelor’s degree in accounting or a related field, at minimum. Many of the best employers seeking tax auditors also require a master’s degree in taxation, business administration, or accounting. In any case, students hoping to become tax auditors should be able to demonstrate a strong level of proficiency with tax practice and laws surrounding taxation, whether gained through college coursework or professional experience.
Licenses and Certifications
In addition to an appropriate degree, tax auditors are often registered as Certified Public Accountants. Most of the largest auditing and consulting firms require applicants to be a CPA or be eligible as such in the near future. Any accountant filing a report with the U.S. Securities and Exchange Commission on behalf of a business must also be a CPA.
CPA exams and licenses are managed by the Board of Accountancy in each state. CPAs in every state must pass a uniform exam and meet their state’s postsecondary education requirements (usually 150 credit hours in certain courses) before obtaining their official title. However, there are several other professional licenses and certificates that employers may look for in certain accounting specialties, including tax auditing positions. These include:
- Certified Internal Auditor
- Certified Government Auditing Professional
- Certified Fraud Examiner
Important Skills and Knowledge
Accountants and auditors of all kinds are typically very analytical, detail-oriented people. They often feel comfortable working with numbers and data, and are also proficient in basic concepts underpinning finance and economics.
Tax auditors, in particular, should be well-versed in tax law, mostly as it relates to businesses. They should also be familiar with core concepts behind the financial auditing process, and apply those best practices to the tax code as it relates to businesses in general. Tax auditors may benefit from knowledge of tax laws and practices that are especially relevant to specific industries or different types of corporations.
According to the U.S. Bureau of Labor Statistics, the outlook for accountants and auditors in general is good. Between 2016 and 2026, the BLS projects a 10 percent increase in employment for these professionals, which is faster than the average across all occupations.
Tax auditors should continue to see a promising job market over the next decade as financial laws and regulations become increasingly complex. In fact, businesses themselves are growing larger and more complicated as they expand to new nations and implement more sophisticated technology. Each of these factors should increase the demand for tax auditors who can demonstrate a grasp of essential concepts as well as adapt to new situations.
The median salary for an accountant or auditor in the U.S. as of 2016 was more than $68,000 annually, according to the BLS—much higher than the median salary of around $37,000 for all occupations. Accountants and auditors in the top 10 percent earned $120,910 in 2016. As in many professions, specialized skills tend to attract higher-than-average wages, but may also be much more selective.
Accountants and auditors share many traits in their background, skills, and typical work environment. However, there are a few differences between the two that might help someone decide which path is best for them, or which they might excel at.
Tax audits, or any kind of financial audit, require an investigative approach. Auditors are tasked with more than finding mistakes and discrepancies in a company’s bookkeeping—independent auditors need to think creatively to find problems that might not be readily apparent. Large companies will bring on an auditor to double- or triple-check the work of the finance and accounting department before a major event like the compliance deadline for a new law or completing a big acquisition deal. Tax auditors will pay close attention to how the company has been calculating, paying, and recording its tax liabilities in these situations. If anything is amiss in the firm’s financial records, it could present a problem. The best auditors will need to think abstractly and exhaust all possible scenarios to find these problems before they turn into costly mistakes.
Along with a mind for critical thinking and a strong grasp of mathematics, tax auditors need to demonstrate aptitude in a number of other ways:
- Communication is key as an auditor or accountant. These positions often require the explanation of complex, highly technical concepts to people who may only be generally familiar with the subject. The best tax auditors should know how to distill their findings into concrete advice for clients.
- Tax auditors should be willing to continue learning throughout their career. Tax law is constantly changing, as is the technology used to perform tax audits. Those with a tendency to constantly investigate and understand new concepts will excel in this field.
The road to becoming a tax auditor may sound daunting, but it becomes much clearer with a solid foundation from the beginning. Speak to an enrollment advisor for the online Master of Science in Taxation degree program from Northeastern University’s D’Amore-McKim School of Business to learn more about this and other careers in tax.