The head of tax is a senior leadership role within an organization’s tax department. They are responsible for overseeing and managing all aspects of tax strategy, compliance, reporting, and operations. This critical position requires an experienced tax professional with strong leadership capabilities.
Some quick answers to common questions about the head of tax role:
- They report directly to the CFO or other senior financial executive.
- Key duties include developing the overall tax strategy, managing a team of tax professionals, liaising with tax authorities, ensuring compliance, and advising senior management on tax issues.
- Requirements include 10+ years tax experience, CPA/attorney credentials preferred, leadership and communication skills.
- Industry knowledge is key as regulations differ between sectors like financial services, manufacturing, tech, etc.
- Performance metrics include minimizing tax liability, avoiding penalties/audits, timely filing, and cost management.
Now let’s explore the head of tax job description and responsibilities in more detail.
Developing the Tax Strategy
One of the main responsibilities of the head of tax is to develop and execute the overall tax strategy for the organization. This requires a deep understanding of the business, the competitive landscape, and complex tax regulations.
The head of tax will analyze the company’s operations, structure, industry trends, and goals to determine tax planning opportunities. Their aim is to proactively minimize the tax liability and maximize after-tax returns for the company within the bounds of tax laws and regulations.
Some examples of strategic initiatives the head of tax may spearhead include:
- Evaluating the optimal global entity structure to minimize multinational tax exposure
- Assessing the costs/benefits of tax incentives or credits in jurisdictions where the company operates
- Modeling the tax impact of potential mergers, acquisitions, or divestitures
- Developing IP strategies to effectively manage licensing costs and royalties
- Identifying ways to properly classify employees vs independent contractors to optimize payroll tax costs
- Providing tax-efficient compensation planning guidance to HR on executive compensation programs and employee benefits
The head of tax will present their recommended tax strategies to senior executives and the board for alignment and approval. They must be able to articulate complex tax information in a simple, strategic manner. Once tax plans are approved, the head of tax oversees the execution across the global organization.
Managing the Tax Department
A core part of the head of tax role is providing effective leadership for the tax department. This includes hiring, developing, and managing a team of tax professionals with complementary expertise across multiple tax areas:
Tax Department Roles | Responsibilities |
---|---|
Income tax accountants | Prepare income tax returns and provisions, manage audits |
Tax research analysts | Conduct research on tax codes and new regulations |
Payroll tax leads | Oversee payroll tax compliance and filings |
Sales & use tax managers | Manage sales/VAT compliance across jurisdictions |
Transfer pricing analysts | Document intercompany transactions and minimize exposure |
Tax technology specialists | Manage tax software/applications and data security |
The head of tax will assess resource needs and hire top talent. They must provide mentoring, career development opportunities, and continuing education.
The head of tax will also set departmental goals, evaluate team members’ performance, and determine appropriate compensation. They need to foster collaboration across the tax team and encourage innovation in processes and technology use.
Communication and influencing skills are vital to motivate the tax team, coordinate with other internal departments, and liaise with external tax authorities. The head of tax serves as the ultimate decision maker on major tax positions and filings.
Tax Compliance Management
Ensuring compliance with all applicable tax laws and regulations is a crucial responsibility of the head of tax. This includes both domestic tax rules as well as complex regulations governing international/cross-border business activities.
The head of tax will ensure all tax returns, payments, and reporting disclosures are completed accurately and timely across every entity and jurisdiction globally. This requires extensive knowledge of tax codes as well as strong project management skills to track many overlapping deadlines.
Coordinating input from various departments is essential to compile the information needed to support tax filings. The head of tax will work cross-functionally to obtain:
- Accounting records and financial statements
- Payroll data including employee census information
- Information on taxable fixed assets
- Sales/VAT data by legal entity and location
- Details of foreign subsidiaries’ activities and tax filings
- Related party transactions required for transfer pricing documentation
- Data to complete industry-specific tax schedules
The head of tax will also implement standardized controls, processes, and procedures to maintain compliance. This includes updating compliance checklists, calendars, and templates to reflect changes in tax codes. Obtaining legal opinions on uncertain tax positions may also be advisable.
If errors or lapses occur, the head of tax is responsible for assessing penalties, overseeing audit responses, and developing corrective action plans for the future.
Tax Audit Management
Managing audits by tax authorities is a high-risk aspect of the head of tax role. Audits can be triggered by random selection, discrepancies in filings, or intentional focus on a company by tax agencies.
Upon audit notice, the head of tax will assemble an internal response team including legal counsel. They will oversee gathering information requested by the auditors. The head of tax serves as the key point of contact and liaises with the audit team.
Based on audit issues raised, the head of tax must determine the company’s defensibility related to tax positions taken. They will assess whether tax reserves should be increased to potentially account for deficiencies or penalties.
For controversial findings, the head of tax must decide whether to appeal, push for settlement, or acquiesce to audit adjustments. They must weigh litigation risks and costs.
Post-audit, the head of tax will report findings to the CFO, implement new controls to prevent recurrence, and incorporate lessons learned to improve tax processes.
Ongoing relationships with tax agencies are vital. The head of tax aims to minimize adversarial disputes through transparent communication and cooperation with auditors. However, they must zealously defend the company’s interests during contentious audits.
Tax Technology Management
The head of tax role has grown increasingly technology-focused. Tax departments now rely on various specialized software, data analytics, and integrations to streamline compliance, reporting, audits, and planning.
The head of tax is responsible for identifying innovative tax technology solutions and getting budget approval for purchases and subscriptions. Implementation oversight, testing, training, and change management are critical when rolling out new tax systems.
The head of tax will collaborate with IT staff to:
- Integrate tax software with core accounting systems like ERPs
- Develop interfaces between tax applications and source data systems
- Enhance tax data security and access controls
- Automate tax processes using robotics or AI where applicable
- Create centralized digital repositories for tax filings, returns, and documentation
They will measure the ROI of technology investments and stay abreast of emerging tax tech trends. Ensuring tax technology enhances efficiency, controls, and timeliness is paramount.
Tax Risk Management
Identifying and mitigating tax risks is central to the head of tax role. Potential tax risks include:
- Incorrect tax positions resulting in litigation
- Tax authority challenges of related party transactions
- Erroneous tax accounting treatment
- Failure to comply with documentation or disclosure rules
- Unqualified foreign tax credits lowering tax reserves
- Unexpected tax law changes
The head of tax will perform rigorous assessments of tax risks by jurisdiction, legal entity, and type of tax. A detailed tax risk register will be maintained.
Risk mitigation strategies will be developed such as:
- More robust tax return reviews before filing
- Adjusting transfer pricing methodologies
- Enhanced tax technical training for staff
- Increased tax reserves
- Purchase of tax liability insurance
There should be open communication with the audit committee and CFO about tax risks, their potential impacts, and progress reducing exposures.
Reporting to the CFO and Audit Committee
The head of tax will prepare reports for the CFO and audit committee on a recurring basis. Examples of key reporting may include:
- Current year tax provision review and forecast
- Tax exposures and audit status updates
- Impact analyses of proposed tax law changes
- Briefings on tax authority trends and new compliance rules
- Technology roadmaps and investments
- Tax department staffing and budget review
In addition to scheduled briefings, the head of tax will communicate with the CFO and audit committee on an ad hoc basis for significant tax events, risk updates, and planning decisions that require stakeholder input.
The head of tax will provide the transparency these governance stakeholders need to fulfill their oversight responsibilities. Clear, succinct communication tailored to the audience’s perspective is important.
Advising the Business
A key aspect of the head of tax’s role is serving as a strategic advisor to the CEO, CFO, controllers, and business unit leaders on tax matters impacting the company.
Examples of advising the business include:
- Providing guidance on the tax implications of new business initiatives, expansion plans, and restructuring
- Offering tax-efficient alternatives to propose transactions or legal entity structures
- Highlights tax risks related to significant deals before execution
- Collaborating on intellectual property planning
- Reviewing executive compensation programs for tax deductibility
- Advising the treasury function on tax impacts of financing decisions
The head of tax will interpret complex regulations and communicate the essence to executives without tax backgrounds. A proactive approach allows tax to be considered early in business decision-making.
This advisory role also entails keeping the CEO and CFO updated on external factors like tax reform proposals, new regulations on the horizon, or tax authority scrutiny directed at the company’s industry.
The head of tax serves as the in-house expert executives can turn to for objective counsel on tax optimization and risk management issues. Their guidance enables leaders to make informed decisions aligned with overall business strategy and objectives.
Liaising with Tax Authorities
The head of tax usually serves as the primary liaison between the company and tax authorities. They often personally handle discussions with senior agency officials on audits, disputes, tax litigation, or settlement negotiations.
Cultivating positive working relationships with key contacts at tax agencies is imperative. The head of tax aims to position the company as transparent and cooperative through:
- Timely, comprehensive responses to information requests
- Extending professional courtesies to examiners and officials
- Working collaboratively to resolve legitimate disputes
- negotiating settlements where warranted
While advocating forcefully for the company’s interest, the head of tax must maintain credibility through fact-based arguments versus emotional appeals. However, some cases do ultimately end up in tax court when settlement seems unlikely.
On broader policy issues, the head of tax may engage with tax authorities during initial stages as they formulate new rules. By submitting commentary during public consultation periods, the head of tax can put forth the company’s perspective on potential regulations.
Industry Knowledge
Given tax codes vary significantly across industries like airlines, real estate, retail, financial services, and so on, the head of tax role demands specialized industry knowledge and experience.
The ideal head of tax candidate understands the macro environment and nuances of tax rules affecting the company’s specific sector:
- For multinational manufacturing, experience with cost segregation, inventory valuations, and cross-border supply chains is key
- In the tech sector, IP transfer pricing and cloud taxation issues are critical
- For companies with extensive fixed assets, knowledge of capital vs repair regulations and depreciation conventions is vital
- In highly regulated sectors like financial services, background on specialized taxes like insurance premium tax is needed
- In real estate, understanding property taxes, REIT requirements, and development tax incentives is important
This vertical expertise allows the head of tax to spot issues, recognize opportunities, and provide strategic counsel tailored to the business. They can benchmark tax practices against industry leaders and apply lessons learned.
Credentials
The head of tax role generally requires:
- Bachelor’s degree in accounting, tax, finance, or related business field
- Advanced tax education credentials like CPA, MBA, or Master of Taxation are preferred
- Attorney with LLM in Taxation or JD may also qualify
- 10+ years of diverse tax experience at a senior manager or director level
- Prior experience managing a tax team is highly valued
- Big 4 public accounting firm background is common
- Industry-specific experience is a plus
Technical tax skills and leadership capabilities are equally important for the head of tax. They must excel at technical issues as well as motivating teams, developing talent, and communication.
Conclusion
The head of tax holds a strategically vital role, overseeing all tax planning, compliance, reporting, audit, and controversy matters globally. They interface extensively with business leaders to provide guidance on tax implications.
While tax technical skills are crucial, the ability to manage teams, influence stakeholders, and translate complex issues also distinguish success in this role. Industry expertise tailored to the company’s sector is a plus.
As regulations and scrutiny of corporate taxation continue increasing worldwide, the head of tax is central to mitigating risks and structuring operations in a tax-efficient manner without overstepping boundaries. Their leadership enables smart tax strategies aligned with business goals.