Tax Profession’s Painful Deductions; Penalties and Interest To Come

Demographic and regulatory changes impacting in the tax profession have been written about extensively over the past few years.  The increasing scarcity of tax professionals has landed CPA firms, tax partners and tax professionals in sticky situations – not only to meet client service obligations – but in some cases, just to stay in business.  The entire firm hierarchy is under siege.  A few facts:

  • Fewer accounting graduates are choosing a career in tax.  The AICPA’s 2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits reports the percentage of accounting graduates hired into tax has dropped from 35% in 2008 to 23% in 2012.  That’s a reduction of just over one-third in four years.
  • Generational trends are creating a leadership vacuum.  Tax Talent’s 2013 United States and European Union Tax Market Assessment cited growing evidence that Millennials prefer finding work/life balance to advancement rewards that may or may not become a reality.  Case in point: their older Generation X colleagues, who are being blocked in their career advancement by Partner Baby Boomers delaying retirement.  Frustrated Generation Xers are leaving to pursue their professional goals outside of public accounting.
  • Preparers are calling it quits due to new exam and continuing education requirements.  As of this writing, just over 325,000 (93%) of tax preparers had yet to take the Registered Tax Return Preparer (RTRP) exam.  The IRS deadline for passing the exam is December 31, 2013; however, an injunction against the exam requirement was granted in January and promptly appealed by the IRS.  Oral arguments will be heard in late September.  Stay tuned.

These facts paint a sobering picture for tax practices and put extreme pressure on middle and senior leaders to serve clients with fewer resources than ever before. Firm recruiting personnel are battling large volumes of open tax requisitions, relying more and more on staffing software and other “non-personal” tactics to recruit candidates.  Forming a relationship is a critical aspect of winning talent.  It takes much more than a LinkedIn subscription to recruit in today’s marketplace.  Simply put, knowing where the fish are doesn’t guarantee that you’ll catch any.

At Simply Driven Executive Search, we have tremendous connectivity in the tax community, having relationships with nearly 26,000 tax professionals who are CPAs.  Over 12,000 of them have between 3 and 10 years of experience.   Twenty-two hundred of those are in the Big Four.  No other search firm has that depth.  Is it time for us to talk?