The current tax environment is one of constantly increasing regulations, a strong economy, significant merger and acquisition activities, globalization, and a focus on internal controls and financial reporting accuracy, J. Richard Stamm, National Partner-In-Charge of Tax, PricewaterhouseCoopers LLP told students during his April Lyceum presentation.
According to Stamm, the top two concerns of corporate tax professionals are that they either want a reduced tax rate or a reduced risk.
“Our corporate clients are very focused on the risk they take on,” he said. “It is the number one area of concern for corporate tax directors.” Other areas of concern are the increasing focus and expectations on financial reporting disclosures and transparency in areas related to disclosures to the SEC, IRS and others.
“Our clients are incredibly understaffed to deal with these issues,” said Stamm. “Our profession has under-hired for the past ten years and the net effect is not enough people with 8-10 years of experience.”
The current PwC tax practice is approximately $2 billion. With 7,000 employees in the U.S., the number of entry-level employees has doubled in the past four years. “The only reason we’re hiring 1,000 new grads this year is that we can’t get 1,200,” Stamm said.
We are seeing more demand for domestic tax preparation from corporations, he said. Because of globalization, a company may have actually used five different accounting firms in five different companies. Stamm prefers to run the tax practice as one organization, relying on talent in geographic locations as needed to provide superior client service.
“As leader of our practice, that’s a speech I give a lot… you have to consider client needs rather than our own comfortable matrix. What clients want from us is a selfless approach, bringing in a person from New York to Chicago, for example, if they’re the best person for the job.”
Stamm said given globalization and increasing interaction with U.S. and international regulation, he sees the need for a global tax professional code of conduct.
“If we had a global code of ethics and laws I think it would keep some people out of trouble. It would encourage work with the assumption of disclosure, meaning if you’re not willing to disclose it to the IRS, then don’t do it,” he said.
In his more than 25 years of dealing with tax laws, Stamm says he has faced making many decisions using what he calls “the asbestos test.”
“In the 1960s the Apollo space program showed the wonders of asbestos in its television coverage,” he said. “They showed that the substance could help the spacecraft withstand extreme heat and cold. But what happened is that a number of companies went bankrupt because of a wonder material, and when you look back a few years, what looked good then now looks terrible – hence the ‘asbestos test.’”
He advised students entering the tax profession to earn broad-based experience early in their careers, then to move into areas of greater complexity.
“You won’t be a really good tax professional until you’ve built strong building blocks to correlate all the issues, see the connections and avenues. And that’s what you’re doing right now.”
The skill most lacking in the profession is solid communication skills, both written and oral, Stamm said.
“Hang in there,” he advised. “All those papers and team projects will pay off.”