A tax auditor is a professional who evaluates financial records to determine whether they comply with the applicable laws. All tax auditors apply the principles of accounting in the course of their duty. They work to check if companies, individuals, agencies and organizations comply with the federal, state and local tax laws.
Tax auditors perform the following duties:
- Conduct internal audits to ensure compliance with tax regulations.
- Evaluate and analyze accounting systems and tax control units to reduce taxes.
- Provide training to staff on tax regulations and procedures.
- Maintain all required tax documents.
- Assist companies file tax and prepare for audits.
- Prepare tax audit reports.
- Offer recommendations on proper tax filing and reporting.
Types of Tax Auditors
Tax auditors can either be internal, external or government auditors. Internal auditors are employed to conduct audits and perform other accounting functions within a company. They can help identify fraud, tax errors and mismanagement of funds. External auditors are impartial third-parties. They help their clients file tax forms and educate employees on tax advantages. Government auditors are employed by the Internal Revenue Service (IRS). They conduct random audits for companies, especially those suspected of tax evasion or fraud.
How to Become a Tax Auditor
Those who want to become tax auditors should undertake a bachelor’s degree course in accounting. An accounting degree enables students to learn a variety of topics related to accounting, including tax laws, fraud detection and auditing. Those who graduate with associate degrees can also qualify for some entry-level jobs under the supervision of an experienced and licensed auditor.
In addition to a degree, the federal government requires tax auditors to have a CPA certification. The CPA certification exam is administered by the state boards of accountancy. Applicants need at least a degree to qualify for the test. However, some states allow work experience as a substitute for academic requirements. CPA holders must pursue continuing education in order to maintain their CPA credential.
To get started as an auditor, you will need a considerable amount of work experience, preferably two to three years. You can apply for entry-level positions in government agencies like IRS and private consulting firms. You can also get employed in a company as an internal auditor.
Apart from experience, you will need to acquire certain skills to enable you to work effectively and improve your career prospects. You will need to be a critical thinker and be able to apply logic when analyzing financial reports. You must also be good at math, have integrity and communicate well with the employees and other stakeholders.
Aspiring auditors should expect good employment prospects in the future. The Bureau of Labor and Statistics (BLS) projects the rate of employment of auditors to increase by 10 percent from 2016 to 2026. The bureau expects the employment growth to be closely tied to the favorable economic environment in the country. Many companies will need auditors to check tax compliance and prepare tax reports.
The average annual wage for tax auditors and accountants is $77,250, according to the Bureau of Labor Statistics.
Tax auditing is a highly engaging career that requires individuals who can analyze information critically and identify any tax issues that might be present. As a tax auditor, you can get employment in private companies, governmental agencies or consultancy firms.