A tax specialist, also known as a tax accountant or tax consultant, is a financial expert who specializes in tax laws, regulations, and compliance. Their primary duties include preparing tax returns, conducting tax research, advising clients on tax planning strategies, representing clients in audits or disputes with tax authorities, and staying up-to-date on the latest tax codes and regulations.
Tax Return Preparation
The main responsibility of a tax specialist is to prepare and file tax returns for individuals and businesses. This involves gathering relevant financial documents, analyzing details related to income, investments, deductions, credits, etc., determining the right forms to use, completing the forms accurately, and submitting them by the required deadlines. The different tax returns prepared by specialists include:
- Individual income tax returns (Form 1040)
- Partnership returns (Form 1065)
- Corporate income tax returns (Form 1120)
- Estate and trust income tax returns (Form 1041)
- Nonprofit organization returns (Form 990)
- Payroll and excise tax returns
For individual taxpayers, the tax preparation process involves:
- Collecting forms like W-2s, 1099s, 1098s, receipts for deductions, etc.
- Asking clarifying questions to determine filing status, dependent exemptions, income to report, assets, deductions or credits eligible for, etc.
- Importing relevant data into tax preparation software to compute tax liability
- Explaining the outcome of the tax return to the client
- Providing advice on steps to minimize future tax obligations
- Electronically submitting the completed returns to the IRS before the tax filing deadline
Tax Research
Tax laws and regulations are complex, vague, frequently changing, and subject to interpretation. When unique or unclear tax situations arise, tax specialists must conduct thorough research to gain insight and determine the best tax treatment. Their tax research duties include:
- Consulting sources like IRS publications, Tax Code, court rulings, legal databases to find relevant references
- Synthesizing information from different sources to gain a comprehensive understanding
- Interpreting and applying new tax laws, regulations, IRS announcements, and court decisions
- Identifying precedents set by previous court cases related to the specific tax issue
- Documenting research findings and rationale for the conclusion reached
- Updating tax knowledge by regularly reading professional journals, publications, and newsletters
Thorough research allows tax specialists to take well-supported tax positions and provide appropriate recommendations to taxpayers.
Tax Planning and Consulting
Tax specialists use their expertise to counsel clients on ways to optimize their tax liability within the bounds of the law. Tax planning duties include:
- Advising when income or deductions should be recognized based on current and future tax rates
- Recommend strategies like maximizing retirement plan contributions to lower taxable income
- Suggesting the best business structure or accounting methods based on the client’s circumstances
- Advising clients on the tax impact of investments, charitable donations, estate planning
- Informing eligible clients of tax credits or deductions they can claim
- Providing guidance on setting up payroll tax withholding
- Helping businesses comply with sales tax rules in different states
Proactive planning enables clients to gain tax savings, avoid interest and penalties, and optimize their financial position.
Audit Representation
If a tax return is selected for examination or audit by the IRS or state tax authority, tax specialists represent and assist their client throughout the process. Audit support duties encompass:
- Acting as an authorized representative with the power to communicate on the taxpayer’s behalf
- Collecting and presenting documentation to substantiate return information
- Explaining audit notices and taxpayer rights/options to clients
- Negotiating with auditors to resolve discrepancies and present counterarguments
- Securing reduced penalties or waivers based on reasonable cause
- Pursuing IRS Appeals or legal options if needed
Their expertise in dealing with tax authorities and skills in negotiating often lead to more favorable audit outcomes for taxpayers.
Dispute Resolution
When taxpayers disagree with IRS decisions about tax, penalty, or interest owed, tax specialists assist with dispute resolution options like:
- Requests for abatement of penalties – Demonstrating reasonable cause to remove certain penalties
- Amended returns – Filing corrected returns if mistakes were made
- IRS appeals – Appealing audit results for reconsideration
- Tax court – Filing petitions and representing clients in tax court
- Innocent spouse relief – Advising eligible clients on separation of tax liability options
- Installment agreements – Arranging for tax payments over time if clients cannot pay in full
They act as advocates and intermediaries to resolve issues and achieve reasonable settlements.
IRS Correspondence
Tax specialists help clients appropriately address any IRS letters or notices and avoid further compliance issues. Common correspondence they handle includes:
- Requests for additional information
- Notices of deficiencies indicating additional tax owed
- Notices of audit
- Penalties for nonpayment, late filing, underpayment, etc.
- Lien/levy notices for overdue balances
By responding promptly and accurately, tax specialists can often resolve discrepancies and prevent an expansion of the dispute.
New Tax Law Analysis
Tax laws, regulations, rates, and IRS procedures change frequently across federal and state levels. Tax specialists must continually analyze new developments and update their knowledge. Their duties related to legal research include:
- Closely follow proposals for tax reforms and new regulations
- Read detailed summaries of changes and effective dates
- Identify how new rules will impact different taxpayers and entities
- Compare current law vs. updated law side-by-side to note differences
- Update forms, resources, and recommendations based on new laws
- Advise clients on how to comply with new requirements
Keeping abreast of legal changes allows tax specialists to integrate the new rules into their client services and submissions accurately.
Tax Compliance and Control
Tax specialists help businesses establish internal processes to comply with tax obligations and minimize risk. Compliance responsibilities can involve:
- Setting up procedures to accurately track taxes owed
- Implementing controls for collection, reporting, and payment
- Ensuring tax-related records are properly organized and retained
- Helping develop tax technology solutions and e-filing processes
- Training personnel on tax practices and requirements
- Conducting reviews to identify compliance gaps and suggest improvements
These measures foster sustainable tax compliance and reduce the likelihood of penalties for non-compliance.
Specialization
Given the breadth and complexity of tax codes, many tax specialists develop expertise in certain areas based on their background, interests, and additional certifications. Common specializations include:
- International tax – Issues related to taxpayers working abroad or foreign business activities
- State and local taxes – Understanding rules/forms for specific states and cities
- Trusts and estates – Estate planning strategies and tax compliance for trusts
- Expatriate taxes – U.S. tax obligations for citizens living and working overseas
- Transfer pricing – Setting appropriate pricing for transactions between parts of a company
- Tax-exempt organizations – Tax compliance for nonprofits and charities
Industry specialization is also common, such as focusing on the tax needs of specific sectors like healthcare, real estate, financial services, or technology companies.
Continuing Education
Given frequent tax code changes, specialists must regularly enhance their expertise through continuing education. This helps ensure they provide accurate guidance based on current laws. Typical continuing education activities include:
- Attending tax update seminars and conferences
- Joining associations and professional networks to exchange ideas
- Reading newsletters, blogs, and email alerts on tax topics
- Completing annual minimum hourly requirements for continuing education
- Pursuing advanced tax certifications and accreditations
- Researching guidance from the IRS and other authoritative sources
Ongoing learning allows tax specialists to deliver high-quality, compliant tax services informed by the latest rules and best practices.
Taxpayer Advocacy
While upholding the tax law, specialists also act as advocates for taxpayers. Advocacy efforts can include:
- Providing pro bono services to low-income taxpayers
- Supporting tax policies that simplify filing and reduce taxpayer burden
- Submitting comments on proposed regulations that will disadvantage taxpayers
- Educating taxpayers on available deductions/credits, filing resources, and rights
- Protecting taxpayer information security and confidentiality
Tax specialists aim to help clients navigate the tax system, receive eligible benefits, and avoid unnecessary costs or headaches.
Conclusion
Tax specialists play a multidimensional role encompassing tax compliance, research, analysis, planning, dispute resolution, and ongoing education. Their core function is helping taxpayers understand and meet their federal, state, and local tax obligations in a legally compliant yet cost-efficient manner. With intricate and constantly changing tax codes, specialists provide value through their technical proficiency, interpretation skills, attention to detail, and advocacy mindset. Their expertise helps both individual and business taxpayers file timely and accurate returns, claim available deductions/credits, implement tax-efficient strategies, and avoid penalties. The wide-ranging and evolving duties of tax specialists present continual opportunities to deliver vital assistance to taxpayers.