Organizing and staffing of the tax function
Barry P. Arlinghaus
Organization and Staffing of the Tax Function
Managing the tax function in today’s complex and changing environment requires more than filing returns and dealing with tax audits. It requires tax management to be an integral part of the company’s business team. In order to learn more about tax management’s role in today’s corporate environment, a survey was conducted that focused on senior management’s perception of the tax function, the tax department’s involvement in decision-making, information flow, and organization structure.
Two questionnaires were used to conduct the study. One questionnaire was developed for completion by the company’s chief executive officer (CEO). The other questionnaire was developed for completion by the person who had primary direct responsibility for the overall tax function. Results of the CEO questionnaire were discussed in an article in the Spring 1989 issue of The Tax Executive (Vol. 41, No. 3, pp. 223-56). This article summarizes the findings for the senior tax person questionnaire regarding staffing and organization of the tax function and the place of the chief tax officer (CTO) in the corporate hierarchy. A third article appearing in the September-October 1989 issue will address tax department communication, information gathering, the use of computers, and the use of outside advisers.
The author wishes to express his appreciation to those who have helped make this study possible. First, Tax Executives Institute (TEI) assisted by making its membership list available and provided partial funding, and members of the Institute’s Corporate Tax Management Committee and other TEI members provided valuable insights. Miami University – in particular the Department of Accountancy and the School of Business – provided a significant amount of financial support. Numerous students, in particular Steve Cunningham and Mike Warmouth, assisted in the compilation of the data. Lisa Ehrichs provided invaluable assistance with computer input and the writing of programs that resulted in output for analysis.
Information for this study was obtained by means of two questionnaires mailed to the senior tax person at 2,463 TEI member companies. The cover letter requested that the senior tax person forward the CEO questionnaire to the CEO for his or her independent completion and separate return.
In order to gain the insight necessary to develop meaningful questionnaires, interviews were conducted of tax executives at 15 midwestern companies during the Summer of 1987. Drafts of the questionnaires were sent to tax executives at the 15 companies where interviews had been conducted and to members of TEI’s Corporate Tax Management Committee. Comments were received from 22 tax executives. The questions dealing with staffing, organization, and the chief tax officer from the senior tax person questionnaire are reprinted in Appendix I to this article.
Questionnaires were numbered in order to facilitate the mailing of second requests and to enable the author to correlate CEO responses with those of the senior tax person for the same company. Confidentiality of responses was strictly observed as promised. The questionnaires were mailed in October 1987. Second requests were mailed in late November and early December. Approximately 30 percent of the responses received from each group were generated by the second requests.
Responses were received from 588 companies. Surprisingly, there were 30 companies for which the CEO responded but not the senior tax person. There were 298 companies for which both the CEO and the senior tax person responded.
Overall, there were 558 returned and completed senior tax person questionnaires for a response rate of 22.7 percent. There were 328 returned and completed CEO questionnaires for a response rate of 13.3 percent. Not all of the respondents answered each question but most responded to nearly all of the questions.
Most of the senior tax persons responding were from smaller companies. Approximately 55 percent of the 558 questionnaires returned by senior tax persons were from companies with assets under $1 billion. Almost 86 percent of the responses were from companies with assets under $5 billion. On the whole, however, responses were received from companies representing a wide range of industries.
Number of Tax Staff
Firms were asked the number of tax staff employed to do tax work at corporate headquarters. For this purpose, “tax staff” was defined as managers, supervisors, and technical specialists. Tax staff did not include clerical employees such as secretaries and data processing personnel. Five hundred and fifty-one firms provided the number of employees by type of tax work and by type of tax.
Table 1 indicates that the 551 firms employed 4,148 persons. The majority were employed in either full-time compliance activities or the combination of compliance, research, and planning activities. Only 18.3 percent of the tax staff worked in research and planning on a full-time basis. Relatively more of the tax staff involved in international taxation (32.6 percent) were employed in full-time research and planning activities. Of the tax staff involved in state, provincial, and local income (franchise) taxation, relatively few (11.2 percent) were employed in full-time research and planning.
Table : TABLE 1
Number of Tax Staff by Type of Tax Work
and by Type of Tax
N = 551
Type of Tax Work
Full-Time Research Research
Type of Tax Compliance and Planning and Planning Total
Federal Income 819 433 712 1964
State, Provincial 385 87 303 775
International 75 120 173 368
Payroll 91 13 53 368
Property 161 41 125 327
Sales/Use/Excise 210 40 129 379
Other 81 24 73 178
Totals 1822 758 1568 4148
As expected, the largest percentage of tax staff (47.3 percent) was employed in the federal income tax area. The state, provincial, and local income (franchise) tax area employed 18.7 percent of the tax staff. A significant portion of the tax staff was employed in the property (7.9 percent) and the sales, use, and excise tax (9.1 percent) areas. International taxation employed 8.9 percent of the tax staff.
The mean number of tax staff per respondent by type of tax work and by type of tax is provided in Table 2. Tables A and B in Appendix II provide the mean number of tax staff per firm by industry group. Nine industry groups had tax staffs that were well above the 7.53 mean number of tax staff for all respondents. They are aerospace with 10.6, chemicals with 11.5, computers and office equipment with 14.8, mining and crude oil production with 16.6, motor vehicles and equipment with 11.5, pharmaceuticals with 10.9, equipment leasing and rentals with 10.3, insurance with 10, and investment banking with 12. The mean number of tax staff employed by conglomerates was 9.6.
As anticipated, the mean number of tax staff increased as sales and size of assets increased. Companies with assets under $1 billion averaged only 3.35 persons on their tax staff, whereas those with over $20 billion of assets had a mean number of 29.91 persons. When categorized by sales, the range of mean number of tax staff was from 2.70 for companies with sales under $500 million to 56.50 for companies with sales over $20 billion. Tables C and D in Appendix II summarize the responses by size of assets and sales.
Respondents were asked several questions regarding the use of clerical or support personnel, para-professionals, and part-time or seasonal professional staff (personnel not included in the number of tax staff working at corporate headquarters). There were 445 firms that reported having at least one full-time clerical or support person assigned to the tax area; 98 firms, however, reported having no full-time clerical or support personnel assigned to the tax function. The mean number of full-time clerical or support personnel working regularly in the tax function for these firms with at least one was 2.58. The mean number for these firms by staff size, assets, and industry groupings are provided by Tables E, F, and G in Appendix II.
There were 80 firms employing at least one full-time para-professional in the tax area; 436 firms reported using no para-professionals. The mean number of full-time para-professionals utilized by these 80 firms was 1.92. The mean number for these firms by staff size, assets, and industry groupings are provided in Tables H, I, and J in Appendix II. Respondents indicated that para-professionals were generally used to perform data entry and processing tasks, legal and actuarial research, and return preparation for employment, payroll, property, sales, and use taxes.
One hundred and ten firms indicated that they employed part-time or seasonal professional tax staff (not outside advisers). For these firms the mean number employed was 1.74.
Table : TABLE 2
Mean Number of Tax Staff by Type of Tax Work
and by Type of Tax
N = 551
Type of Tax Work
Full-Time Research Research
Type of Tax Compliance and Planning and Planning Total
Federal Income 1.48 .80 1.28 3.56
State, Provincial .70 .16 .55 1.41
International .14 .22 .31 .67
Payroll .16 .02 .10 .28
Property .29 .07 .23 .59
Sales/Use/Excise .38 .07 .24 .69
Other .15 .04 .14 .33
Totals 3.30 1.38 2.85 7.53
Change in Number of Tax Staff
Respondents were asked the approximate percentage change in the number of total professional tax staff since 1982. There were 309 firms that reported an increase, 74 firms that reported a decrease, and 158 firms that reported no change in the number of tax staff. Proportionately more of the larger firms (in terms of assets, sales, and staff size) increased their tax staffs since 1982. The mean percentage increase for firms that increased their tax staffs far exceeded the mean percentage decrease for firms that decreased the size of their tax staffs since 1982. These results are summarized in Tables K, L, and M in Appendix II.
Tables N and O in Appendix II provide the number of firms and the mean percentage change by industry groups for those firms that increased or decreased the size of their tax staffs since 1982. Industries with substantial increases in terms of number of firms and mean percentage increase, included apparel, banking, building materials, chemicals, computers and office equipment, financial institutions, glass, concrete, abrasives and gypsum, insurance, and retailing. Those with substantial decreases included metal products, mining, petroleum and natural gas, and real estate.
Respondents were asked to indicate whether the use of outside advisers increased or decreased since 1982. Table 3 correlates the number of firms and the mean percentage change in tax staff for firms that increased or decreased their tax staffs with whether the firm had experienced an increase, decrease or had no change in the use of outside advisers. There were 149 firms that both increased the size of their tax staffs and increased their use of outside advisers since 1982. These firms increased the size of their tax staff an average of 96.1 percent. Thirty-six firms decreased the size of their tax staffs but increased their use of outside advisers. Ninety-one firms decreased their use of outside advisers but increased the size of their tax staffs. These firms increased the size of their tax staffs an average of 106.4 percent. Twenty-eight firms increased the size of their tax staffs but experienced no change in the use of outside advisers.
Table : TABLE 3
Change in Number of Tax Staff Since 1982
by Change in Use of Outside Advisers
Increase Decrease No Change
Change in Use
of Outside Advisers Number Mean % Number Mean % Number
Increase 149 96.1 36 30.0 71
Decrease 91 106.4 16 44.4 20
No Change 28 67.4 10 35.9 18
The correlation between how the tax function was organized and the change in staff size is illustrated in Table 4. Approximately 56 percent of the responding firms organized by type of tax (federal, state, provincial, etc.) had increased their tax staffs since 1982. Approximately 60 percent of responding firms with tax functions organized either along functional lines (compliance, planning, etc.), a combination of functional and type of tax, or along lines similar to the corporate organization (industry, division, etc.) had increased their tax staffs. The mean percentage increase for these firms was the smallest for the combined form of organization (86.2 percent) and the greatest (147.5 percent) for those organized along organizational lines. Approximately 19 percent of the firms organized by type of tax decreased their tax staffs whereas only approximately 5 percent of those organized along organizational lines decreased the size of their tax staffs.
Table : TABLE 4
Change in Number of Tax Staff Since 1982
by Type of Organization
Increase Decrease No Change
Organization Number Mean % Number Mean % Number
Functional 42 103.9 13 30.7 14
Type of Tax 52 104.9 18 40.8 23
Combination 135 86.2 26 34.9 64
Organizational 24 147.5 2 25.0 13
Table 5 provides the number of firms and the mean percentage change by management orientation (cash flow, earnings per share (EPS), cash flow/EPS, EPS/cash flow, and earnings before interest and taxes (EBIT) for those firms that increased or decreased the size of their tax staffs. Relatively more firms that were EPS-oriented increased their tax staffs since 1982. In addition, the mean percentage increase was relatively higher and the mean percentage decrease relatively lower as compared with the mean percentage changes for the companies with other management orientations.
Respondents were asked to describe their perception of senior management’s attitude toward the tax department. Table 6 correlates the number of firms and the mean percentage change in tax staff for firms that increased or decreased their tax staffs with whether the tax department’s primary function was viewed as (i) compliance, (ii) compliance and planning equally, (iii) planning, or (iv) an integral part of the company’s business team. The results indicate that where the senior tax person believed senior management perceived the tax department’s primary function was planning or viewed the tax department as an integral part of the business team, the senior tax person enjoyed relatively greater success in increasing tax staff as measured by both the proportion of firms with increases and the mean percentage increase.
Only 31 percent of the respondents indicated that they had reasonable success in increasing staff size in order to deal with the Tax Reform Act of 1986. Tables P, Q, and R in Appendix II summarize the responses by assets, sales, and size of tax staff. Generally, the larger firms were relatively more successful in securing the additional staff needed to deal with the added complexity of the 1986 Act. Table S in Appendix II summarizes the responses by CEO background Interestingly, the firms where the CEO had an operations or production background were more successful than the firms where the CEO had an accounting or finance background.
Profile of Tax Staff
A substantial portion of tax staff held either law degrees, CPA/CA certificates, or other professional certification. Table 7 provides information about the credentials held by respondents’ tax staffs. When compared with the overall mean number of tax staff of 7.53, the 3.19 mean number holding the CPA/CA certificate is significant. Although fewer firms responded that they had tax staff holding law degrees, a significant portion did hold either a law degree or a CPA/CA certificate and a law degree.
Table : TABLE 7
Credential of Tax Staff
Mean Number of
Credential N Staff Holding
CPA/CA 473 3.19
Law Degree 193 1.92
CPA/CA and 176 1.35
Other Certification 171 1.73
Number of Tax 551 7.53
Tables T, U, V, and W in Appendix II provide the mean number of tax staff holding the above credentials by size of company as measured by assets. As expected, the mean number holding either CPA/CA certificates or law degrees increased as the size of the firm increased. Although the pattern is mixed, the relative proportion of a firm’s tax staff holding CPA/CA certificates decreased as the size of the firm increased. The relative proportion of a firm’s staff holding law degrees remained approximately the same as the size of the company increased. Significantly fewer companies at each level of assets, however, responded with the number of tax staff (if any) holding law degrees.
Respondents were asked whether their company’s tax staff spent part of their careers working outside of the tax department. Most firms had at least one or more staff members who spent part of their careers in public accouting. The mean number doing so for the 490 firms with at least one was 3.01. There were 312 firms that reported having at least one member who worked in the finance/accounting function within the company before entering the tax department. Significantly fewer firms had tax staff who had either practiced law or spent part of their careers in other operations within the company. The mean number with work experience outside of the company’s tax department is presented in Table 8.
Table : TABLE 8
Experience of Tax Staff
Outside the Corporate Tax Department
Mean Number of Staff
Work Experience N with Other Experience
Finance/Accounting 312 2.25
Law Practice 154 1.12
Public Accounting 490 3.01
Other Operations 139 1.21
Number of Tax 551 7.53
The relative proportion of a tax staff’s members with experience in the company’s finance and accounting function or in public accounting decreased as the size of the firm increased but the percentage of firms with at least one increased. The mean number of tax staff with work experience outside the tax department by size of company is provided in Tables X, Y, Z, and AA in Appendix II.
Movement of tax staff into other areas within the company has been relatively low. There were 164 companies reporting that they had at least one member of their tax staff move from tax into the company’s finance and accounting function during the last five years. The mean number of staff making such a move was 1.76. Transfers into other operating areas of the company were even fewer. Only 49 companies indicated that tax staff had moved into other areas with the company during the past five years. The mean number making such a move was 1.46. These results are summarized by assets in Table BB in Appendix II.
Rather than make a move into other areas within the company, a significant number of tax staff went to work for other companies. There were 316 companies that reported that they had lost at least one member to another company during the last five years; 181 companies indicated that they did not have anyone go to another company. The mean number of tax staff going to work for another company by size of company is provided in Table CC in Appendix II.
In order to determine why there has been relatively little mobility from tax into other areas within the company, respondents were asked to rank three possible explanations. There were 423 companies that ranked at least one of the reasons provided. The rankings, presented in Table 9, show that the most significant reason was that tax staff personnel view themselves as “tax professionals” and had little desire to be other than a tax professional. Ranked almost as significant was that management views the tax person as a technician. Relatively few respondents believed that mobility was limited by compensation considerations. The rank order of reasons, as provided in Table DD in Appendix II, was about the same as the overall rankings regardless of the size of the company assets.
Table : TABLE 9
Reasons for Limited Mobility
from Tax Into Other Areas Within the Company
1 = Most Significant Reason
Reason N Rank Ranking First
Management Views Tax 322 1.63 166
Person as Technician
Tax Staff View Themselves 360 1.44 227
as “Tax Professionals”
Transfer Results in 265 2.45 30
Organization of the Tax Function
Respondents were asked several questions regarding the organization of the tax function. Approximately 87 percent of the 551 respondents reported that their company had a separate (stand-alone entity) tax department. More than half of the firms with a stand-alone tax function had organizational structures that were a combination along functional lines (compliance, planning, etc.) and by type of tax (federal, state, provincial, etc.). Another 22 percent and 16 percent of the firms were organized by type of tax and along functional lines, respectively. Relatively few firms were organized along lines similar to overall corporate organization (industry, division, subsidiary, etc.). The responses are summarized in Table 10.
Table : TABLE 10
Organization of the Tax Function
Type of Organization N Percentage
Functional 70 15.9
Type of Tax 96 21.8
Combination 234 53.2
Organizational 40 9.1
Totals 440 100.0
Table EE in Appendix II shows that it is difficult to generalize about the relationship between the size of a firm and the type of organization. It appears that relatively more firms were organized along functional lines as the size of the firm’s assets increased. Relatively fewer firms were organized by type of tax as the size of the firm’s assets increased. Type of organization by size of tax staff is presented in Table FF in Appendix II.
The senior tax person’s perception of senior management’s attitude toward the tax department appears related to how the tax function is organized. For those firms at which the senior tax person believed senior management viewed the tax function as primarily compliance, considerably more of those firms were organized by type of tax rather than along functional lines. In contrast, for those firms at which the senior tax person believed senior management viewed the tax function as primarily planning, relatively more of those firms were organized along functional lines. For those firms at which the senior tax person believed senior management viewed the tax department as an integral part of the business team, relatively more of those firms’ tax functions were organized along organizational lines. These responses are presented in Table 11.
Approximately 40 percent of 548 firms responded that the organization of their company’s tax function had changed within the last five years. Almost 20 percent of 527 respondents reported that the organization and operation of their company’s tax function had been reviewed by an outside consultant within the last five years.
Most firms – 456 out of 549 responding – had in-house legal counsel. In-house counsel, however, was relatively uninvolved with the tax function. Only 77 firms indicated that their in-house legal counsel had any staff with a tax background.
In order to determine the relative mix of tax workload, respondents were asked to indicate the approximate percentage of time spent doing various types of tax work. As shown in Table 12, more than 60 percent of tax staff time was spent doing compliance work. Another 15 percent of tax staff time was utilized to do planning at the request of someone external to the tax department. Approximately nine percent of tax staff time was used to monitor legislation and provide testimony. Only 15 percent of the time was spent on proactive planning.
Firms with their tax function organized along functional lines spent relatively less time on compliance work than tax functions organized along other lines. Table 12 confirms that those organized by type of tax spent more time on compliance and less time on planning and legislative review.
Tax staffs at smaller firms spent more time, but not much more time, doing compliance work than tax staffs at larger firms. A little more time was spent on legislative review by tax staffs of larger companies. The mean percentage of time spent on various types of tax work by size of assets is presented in Table GG in Appendix II.
There appears to be no relationship between size of tax staff and mean percentage of time spent on various types of tax work. Responses by size of tax staff are summarized in Table HH in Appendix II.
Tables II and JJ in Appendix II present the mean percentage of tax staff time spent on various types of tax work by industry. Five industry groups had tax staffs that spent well above the mean percentage time of 60.5 percent on compliance work. They are apparel, furniture, rubber and plastic products, equipment leasing, and vending/fast foods operations. Eight industry groups had tax staffs that spent considerably above the mean percentage time of 15.3 percent on proactive planning. They are aerospace, beverages, metal manufacturing, paper/wood products, soaps, tobacco, agriculture/forestry, and professional services. Six industry groups had tax staffs that spent well above the mean percentage time of 9.0 on legislative review. They are mining/crude oil production, paper/wood products, tobacco, communications, data processing, and insurance.
The senior tax person’s perception of senior management’s attitude toward the tax department appears related to the percentage of tax staff time spent doing various types of tax work. As reported in Table 13, the percentage of time spent on compliance was significantly greater where the senior tax person believed senior management viewed the tax function as primarily compliance. The percentage of time spent on planning and legislative review was significantly less. Time spent on planning was the greatest where the senior tax person believed senior management viewed the tax department as an integral part of the company’s business team.
Almost 40 percent of the 546 respondents reported that some of their company’s tax functions were carried out by personnel outside of the tax department. Most of the work done by other departments was in payroll, property, sales, and use taxes and in the employee benefits area.
Most firms reported that tax reporting for financial accounting purposes was the responsibility of the tax department. The responses were, as follows: 403 tax department, 97 accounting department, 33 combined tax and accounting and 12 other.
Chief Tax Officer
Respondents were asked the title of the person at corporate headquarters who had direct primary responsibility for the overall tax function. “Director of Taxes” (or a very similar title) was by far the most commonly used. One-third of the respondents reported that their company’s senior tax officer had the title of “Director of Taxes.” Table 14 summarizes the responses.
Table : TABLE 14
Title of the Individual at Corporate Headquarters Having Direct Primary Responsibility for Overall Tax Function
Title Number of Responses
Director of Taxes 185
Tax Manager 123
Vice President – Taxes 120
Assistant Treasurer 19
Assistant Controller 13
Assistant VP – Taxes 8
Chief Financial Officer 6
Various Other Titles 46
One hundred and ninety-two firms, or about 35 percent of the respondents, reported that their company’s senior tax person was considered to be a corporate executive officer. The chief tax executive, as presented in Table 15, was no more than two levels from the CEO in the corporate hierarchy at 355 companies.
Table : TABLE 15 Number of Levels Senior Tax Person from CEO
Number of Levels from CEO Number of Responses
The responses, summarized in Table KK in Appendix II, indicate that the senior tax person tended to be farther down the corporate ladder as the company increased in size in terms of assets. As presented in Table LL in Appendix II, the relationship between the senior tax person’s place in the corporate hierarchy and staff size is more mixed. The senior tax person was closer to the CEO when the staff size was either under five or in the 16 to 50 range. Senior tax persons at companies with staffs in the 5 to 15 range and more than 50 were generally farther removed from the CEO.
Table 16 shows the mean number of levels from the CEO by management orientation. The responses indicate that senior tax persons were somewhat closer to the CEO in the corporate hierarchy at companies where top management was cash flow or cash flow/EPS oriented as contrasted with an EPS or EPS/cash flow orientation.
Table : TABLE 16 Number of Levels Senior Tax Person from CEO
by Management Orientation
Management Orientation N of Levels
Cash Flow 83 2.24
Earnings Per Share (EPS) 119 2.41
Cash Flow/EPS 102 2.22
EPS/Cash Flow 128 2.30
Earnings Before Interest 93 2.26
and Taxes (EBIT)
It is difficult to generalize about the correlation between how the tax function is organized and the senior tax person’s place in the corporate hierarchy. Table 17 shows the percentage of senior tax persons at each level in the hierarchy by organization type. The percentages should be compared with overall percentages of firms for each type of organization. For those companies where the senior tax person reported directly to the CEO relatively more had tax functions organized by type of tax (federal, state, provincial, local, etc.) than by function (compliance, planning, research, etc.). Relatively more companies were also organized by type of tax where the senior tax person was three or more levels from the CEO. Where the senior tax person was two levels from the CEO relatively more were organized functionally.
Respondents were asked to report the number of years’ experience their company’s chief tax officer had in various types of work. As shown in Table 18, chief tax officers had an average of almost 20 years of professional experience. Almost 12 years was in the practice of tax in the corporate sector; another 3-1/2 years was in the practice of tax in public accounting; and a little more than 2 years was in finance and accounting. The senior tax persons, on the average, had relatively little experience in the practice of tax in either the legal profession or with the government.
Table : TABLE 18
Experience of Senior Tax Officer
Professional Experience N of Years
Practice of Tax in Corporate Sector 547 11.80
Practice of Tax in Public Accounting 548 3.56
Practice of Tax in Legal Profession 551 .18
Practice of Tax in Government 551 .58
Experience in Finance and Accounting 547 2.32
Experience in Other Operation Areas 550 .68
Total Years of Professional Experience 545 19.65
The mean number of years’ experience in finance and accounting was higher for those senior tax persons who were closer to the CEO in the corporate hierarchy. Otherwise, as indicated in Table MM in Appendix II, it is difficult to generalize about the senior tax person’s experience and position on the corporate ladder.
Size of company and how the tax function is organized appear to be unrelated to the professional experience of the senior tax person. Tables NN and OO in Appendix II summarize the responses by size of company assets and organization of the tax function respectively.
Respondents were asked whether their company’s senior tax officer had responsibilities outside of the tax function. Almost 40 percent of the 548 respondents indicated that they did have other responsibilities. Frequently cited outside responsibilities included employee benefits, financial reporting, insurance and risk management, merger and acquisition planning, and treasury functions.
In order to determine the amount of authority held by the senior tax person, respondents were asked to indicate who determined the company’s position upon filing a return and upon settling on audit. At most companies the senior tax person determined the company’s position. At those companies where the senior tax person did not, the decision was generally made either by the CFO or jointly with the CFO. The responses are summarized in Table 19.
Table : TABLE 19
Responsibility for Company’s Position
upon Filing Return and upon Audit
Federal and Local
Party Responsible Filing Audit Filing Audit
Chief Tax Officer 422 369 459 427
CFO 49 74 27 49
CEO 7 13 2 3
CTO/CFO 19 26 12 14
Other (Including 51 56 49 46
This article summarizes the responses of senior tax persons to questions about the staffing and organization of the tax function. The results reveal that for many companies the tax function has undergone change. More than 70 percent of the respondent firms had either increased or decreased the size of their tax staffs during the period 1982 through 1987. Although approximately 57 percent of the firms had increased staff size during the period, only 31 percent of respondents believed they were reasonably successful in increasing staff size to deal with the impact of the Tax Reform Act of 1986.
A significant portion of tax staff had experience in areas outside the corporate tax department. For the most part, the experience was either in public accounting or in their company’s finance and accounting function.
Movement of tax staff into other areas within the company has been rather limited. The movement that did occur was for the most part into the finance and accounting functions of the company. Most respondents believed the limited mobility was either because tax staff viewed themselves as “tax professionals” or because management viewed the tax person as a technician. Few respondents believed that mobility was limited by compensation considerations.
Relatively few firms utilized either para-professionals or part-time professional tax staff. This appears to be an unexplored source of personnel.
Most firms had a stand-alone tax function. The majority were organized as a combination of along functional lines and by type of tax. A significant number of the firms, however, had tax functions organized either by type of tax or by function. Almost 40 percent of the firms had experienced changes in the organization of their tax function within the past five years.
Tax staffs organized by function (compliance, research, planning, etc.) spent more time on planning and legislative review than tax staffs organized by type of tax. Regardless of organization type, most tax staffs spent considerable time on compliance work.
The senior tax person at most companies was fairly high up on the corporate ladder. At more than one-third of the respondent firms, the chief tax officer was considered to be a corporate executive officer.
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