Paying taxes is an essential part of business operations. It’s also a complex process requiring strict adherence to federal, state and local laws. Monitoring tax laws is critical to maintaining an organization’s bottom line. If payments are off, unexpected penalties and interest may occur, potentially triggering an audit, which could generate additional headaches. Complying with evolving laws in addition to operating a business can feel like a monumental task.
This is where a tax manager can play a critical role in their organization’s success and longevity, but a tax manager’s contributions may not be as immediately recognizable as those of controllers or accountants. What does a tax manager do, exactly? The tax manager’s role is primarily to ensure that an organization’s tax strategy complies with local, state and federal tax laws. Tax managers also hold a variety of tax-related responsibilities that work to minimize their organization’s audit risk. Without tax managers, businesses worldwide would struggle to operate.
Tax Manager Job Description
Tax managers work year-round to minimize their organizations’ audit risk. They do this by building and maintaining tax strategies, preparing and filing their organization’s tax returns, and staying up to date on new tax legislation. Including the newest tax laws in their tax strategies helps tax managers minimize their organization’s audit risk and helps their organization not to overpay taxes by identifying every available tax deduction. Tax managers make sure their organization does not underpay its taxes due to a tax law change as well, which could lead to penalties or worse.
Tax managers also help facilitate organizational expansions, including initial public offerings and mergers and acquisitions. They assist by accurately documenting all transactions from a tax perspective and researching and reviewing current tax laws to ensure that the acquisition process is accurate and complete. Not having a tax manager present during the acquisition process could create record discrepancies that may take a significant amount of time to untangle, or could even result in tax fraud, accounting fraud or a future audit.
Those are just a few examples of what a tax manager does. Other responsibilities include overseeing and managing organizational audits by the respective tax authorities, acting as mentors or general supervisors to other accounting employees, ensuring the accuracy of the tax team’s work, and leading internal tax initiatives, such as audits or investigations into organizational issues that might spur tax challenges. As leaders of the tax teams, tax managers also assign tasks and report findings to executives.
How to Become a Tax Manager
Steps on the path to becoming a tax manager include pursuing the right education, becoming certified and gaining experience.
The first step to becoming a tax manager is to earn a bachelor’s degree, which is standard for those in the accounting profession. This undergraduate degree can be in accounting or a related business field such as finance, economics or business administration. A bachelor’s degree helps graduates build foundational knowledge of the generally accepted accounting principles (GAAP), which are the industry standard for financial reporting.
Once individuals have earned a bachelor’s degree, they must typically earn a master’s degree in accounting before being considered for tax manager positions. An advanced degree can deepen students’ knowledge of fundamental concepts such as cost accounting, corporate taxation and accounting for government or nonprofit organizations. A typical master’s program also features a capstone project that allows individuals to further explore a key accounting theory or concept.
Graduates must also earn a certified public accountant (CPA) certificate to begin practicing; the credential is a mandatory prerequisite for the majority of accounting positions, although it is not required for tax preparers.
Aspiring tax managers will most likely enter the field as entry-level accountants before becoming tax managers. Tax managers commonly have three to six years of accounting experience before moving into managerial roles. In some cases, experience can substitute for education.
Tax Manager Skills
Tax managers must have advanced math skills and be detail oriented, as errors can lead to significant penalties.
They must also have well-developed soft skills, including communication, organizational, time management and problem-solving competencies. Collectively, these skills can help tax managers effectively perform their tasks and share vital information in clear, easy-to-understand terms. This is particularly important when explaining complex financial information to C-suite executives.
Other vital skills for tax managers include:
The tax manager’s role is highly analytical. From reviewing tax returns prepared by staff to ensuring that their organization is complying with tax laws, tax managers’ tasks require high-level thinking and complex analysis. Analytical skills also help tax managers minimize their organization’s audit risk: Tax managers check tax returns for errors, ensuring that income, deductions and other items are accurate and properly documented.
Tax managers must have strong technical skills to analyze business transactions and their tax consequences. They must have an in-depth understanding of complex tax laws at the federal, state and local levels, and stay up to date with new and changing tax policies. Additionally, they must have advanced knowledge of preparation software programs like QuickBooks to build tax strategies, identify discrepancies and complete tax-related tasks quickly.
Tax Manager Salary
According to PayScale, the median annual salary of tax managers was about $98,800 as of October 2021. Senior tax managers had a median annual salary of about $130,500. Individuals with higher levels of education or more years of experience often earn higher salaries.
Job location and company size are also key contributors to salary variations. Tax managers in metropolitan cities such as New York, Los Angeles or San Francisco may earn up to 17% more than those in smaller markets.
Learn the Accounting Skills Required for a Tax Manager Role
Accountants and tax managers do far more than just create spreadsheets and calculate sums. The modern business and financial environment is complex, with ever-changing requirements and regulations. A broad skill set is required to succeed in this challenging and important role.
The University of Nevada, Reno’s online Master of Accountancy can help you acquire these skills. With courses like Business Analysis Methods, Data Transformation and SQL, Individual Taxation, Taxation of Corporations and Other Business Entities, and Accounting Theory, the program is designed to help you develop the skills and knowledge that employers seek. Enroll today to learn essential skills for a successful accounting and tax management career.
Online Master of Accountancy Program Overview
What Is Managerial Accounting?
AllBusiness, “6 Common IRS Tax Penalties on Small Business Owners”
American Institute of CPAs, Positions in Public Accounting
Bloomberg Tax & Accounting, Tax Issues in Mergers and Acquisitions
Investopedia, “Generally Accepted Accounting Principles (GAAP)”
Journal of Accountancy, “Hiring for Soft Skills Is More Important Than Ever”
PayScale, Average Senior Tax Manager Salary
PayScale, Average Tax Manager Salary
Tax Policy Center, Key Elements of the U.S. Tax System