In the business world where government published rules and regulations to properly set up legal obligations of the business owners. Business owners are facing legal obligations and complexities in trade scenarios; these prompt them to hire people to handle financial jobs.
Tax consultants or tax advisors are professionals and financial experts with advanced training and knowledge about tax laws. They are primary tasks to analyze and extract relevant financial information. They work closely with owners or business administrators to prepare and make sure that tax liabilities are complied with.
Role of Tax Consultants
In this industry, services are classified into two: tax return preparers (compliance) and tax consulting. Tax Compliance is the process of reporting past transactions and filling out tax forms, while tax consulting involves planning for future transactions. During tax season, forms are filled and filed. In this process, practitioners must check and analyze all the clients’ financial transactions. Then take note of the client’s potential consulting needs which will be addressed later on. Tax consultants are like medical doctors who discover the health needs of the patients through physical check-up. They should be scrutinizing the client’s consulting needs when they are financially naked during the tax period.
Tax planning provides opportunities in assisting and managing the business’ financial affairs. They will lay on the table legal options to give a solution to the client’s situation. Formulate strategies with the client on how to reduce tax liabilities and proper computations for tax bases. They also need to educate the client about tax and planning opportunities. They must make sure that the client understands the legal options and explain the tax issues. They are expected to prepare tax returns and help clients in finding the right deductions, credits, and adjustments based on their financial situation. They must know the law and stay updated on the latest federal and state tax requirements. It includes thorough research and consults tax law handbooks for procedures.
Tax consultant must be able to draft a letter to explain concisely tax laws and strategies that are easy to understand.
Treasury Department Circular 230, contains the standards that must be followed by a tax advisor in dealing with the IRS on behalf of clients. Following duties are:
Disciplinary actions and penalties (both criminal and civil) are imposed if the above standards are failed to follow.
When representing a client, a written declaration must be first filed with IRS stating that he or she is qualified and authorized. When a person is authorized but does not follow the rules shall be suspended or disbarred from practice. A person who prepares tax return but not authorized to practice is considered as unenrolled return preparer and it cannot represent the client before the appeals, collection or any other divisions in the IRS.
There are also conditions when the practitioner is not allowed to practice before IRS:
How To Qualify
Generally, consultants hold a bachelor’s degree in accounting, economics, finance, business or tax law. Some business institutions they prefer to hire Certified Public Accountants or Tax Lawyers. Formal education and tax experience ultimately the requirements to be anchored in this career. However, in Internal Revenue Service workforce, formal education is not a must but years of experience allow them to get the place as a tax consultant.
To qualify as tax return preparer, they must have complete and pass Tax Return Preparer Competency Test with the IRS. Tax consultants, who offer financial advising services, must also be a Certified Financial Planner which is required and offered by the Certified Financial Planner Board of Standards. The candidate must be a bachelor degree holder, with three years of experience and must pass the exam. They must have analytical and mathematical skills; excellent verbal communication and writing skills in dealing with the clients. Selling skill is also needed to keep up with the competition in the financial consultancy industry, to help attract prospective clients.
The future is bright for the tax industry and the future demands for tax consultants and it is due to the future tax reforms. Pursuing this career projects opportunities and money making.
