This morning, Thomson Reuters released new research that reveals both corporate tax and global trade departments state they are under-resourced for technology and talent. This, naturally, is increasing risk in the form of penalties and audits. The latest research piggybacks a bit on what was revealed in their Future of Professions report released last month.
From the press release:
The 2023 State of Corporate Tax Department report highlights under-resourced tax departments are more likely to face audits and penalties. For trade professionals, feeling understaffed is an acute challenge, shows the 2023 Corporate Global Trade Survey report. Departments are facing the data-intensive demands of today’s import and export trading environment – including new requirements to collect ESG data to comply with local laws – adding complexity, and reputational risk.
“What we’re hearing from tax and trade leaders in these latest reports echoes what we heard in our Future of Professionals research: tax teams are under-resourced and the need for internal efficiency is their top priority. There’s significant optimism about the potential of automation and generative AI to boost efficiency and support future growth,” says Ray Grove, Head of Product, Transactional Compliance at Thomson Reuters. “But tax and trade professionals are facing barriers to unlocking this potential, and, specifically, they’re feeling under-resourced in terms of technology budget for their departments, as well as headcount to be able to achieve their goals. This is not only tempering the success they can have – it’s also bringing risk and increasing the likelihood, and cost, of penalties that they’re facing.”
Marcum can tell you a little bit about the inevitable chaos of taking on more work than staffing levels can handle.
Key points:
- Half of corporate tax departments globally say they are under-resourced for technology, resources and hiring (47%)
- Under-resourced tax departments are more likely to incur tax audits and penalties
- Two-thirds of companies with $100 million-plus revenue are implementing technology to help manage their global trade operations (65%)
More on those first two points:
Respondents from close to one-half of businesses (47%) said they feel their tax department is under-resourced, which has greatly increased the risk of audits and penalties among other negative developments. Indeed, while 61% of surveyed businesses incurred tax audits in the past year, 72% of businesses with under-resourced tax departments did so. And 47% of businesses with under-resourced tax departments incurred tax penalties, compared to 42% of all businesses. In both cases, more than one-third of businesses incurred six or more audits and incurred penalties of more than $50,000. Despite this, respondents say their confidence in their ability to manage tax risk remains high, particularly among more well-resourced businesses.
For at least a decade we’ve been talking about robots taking accountants’ jobs, now that we’ve arrived in the glorious dawning of a new AI future companies must adopt technology to take the place of talent they can’t find. Improving efficiency is top of the list of priorities for tax departments (32%), followed by acquiring additional software (14%) and automation of processes (12%).
You’ll note improving processes outranks finding more talent and maintaining the staff they have by quite a bit. Shout-out to the 11% of respondents who chose “don’t know.” No one does, fam, no one does.
When corporate tax leaders were asked what their teams’ proudest accomplishment of the past year was, almost one-quarter (23%) said their team was most proud of its automation of processes through the implementation of new technology or software. Another 15% said they were most proud of how the tax team increased its speed and efficiency around filings, tax returns, and payments. Only 14% said that hiring additional staff and maintaining their existing staff was their team’s proudest accomplishment. 15% of respondents answered “don’t know” to the question.
This year’s survey was done via a 15-minute online survey with 365 senior tax professionals in June and July 2023. People in the 51-60 age bracket made up 29% of respondents, the under 30 crowd just 5%. Their roles include VP of Tax/Chief Tax Officer, Director/Senior Manager of Tax, Tax Manager, Senior Director of Tax, Senior Tax Technologist, Assistant Tax Manager, Junior Tax Technologist, and the ever-useful “Other.”
Under-resourcing in global tax and trade increases risk for multi-nationals, garners new Thomson Reuters research [Thomson Reuters]
I am a recently retired CPA who worked in corporate tax departments and in public accounting tax departments. I would not encourage anyone to go the corporate tax department route. We encountered disrespect from accounting management and the opportunities for professional growth were limited. I went back to public after the bad experiences in corporate tax departments and was fortunate to finish my career with a great firm.