Just 32 percent of companies said they are very ready for the demands of the Tax Cuts and Jobs Act, according to a new survey of CFOs, while 68 percent indicated they are somewhat prepared or not at all ready for the changes.
The survey, by the recruitment firm Robert Half Finance & Accounting, found companies are using a variety of strategies to deal with the new tax law, including hiring tax experts and other staff. Twenty-one percent of the more than 2,000 CFOs polled said their companies are hiring full-time staff to prepare to meet the new requirements, while 33 percent are bringing in subject matter experts. Meanwhile 42 percent of them are doing extra training, and 34 percent are upgrading their financial systems.
“The changes to the tax laws are going to impact just about every organization, both public and private, irrespective of size, industry and location,” said Robert Half Finance & Accounting executive director Steve Saah. “A lot of them are really behind the curve in terms of what they need to do to prepare for it.”
That’s one reason why many companies are adding more tax and accounting employees to their staff, doing extra training for those who already work there, and upgrading their accounting and tax software. “They’re just making sure that they have the right staff in place, that they’re getting everyone on their current staff and organization trained properly to account for the new tax changes,” said Saah. “They’re looking at their financial systems and making determinations as to whether their existing systems are adequate, whether they need to upgrade that system or maybe even implement a new system. A lot of them are looking to potentially bring in subject matter experts. They may not have that talent on their existing staff. There’s a lot of looming changes that are coming, and organizations really have to take all of that into consideration to make sure that they can properly account for them.”
Companies not only need tax experts to handle the usual tax season chores, but they also need experts to help them plan around the best strategies to deal with tax reform.
“Especially on the consulting side of our business, I think we are seeing an increase in the demand for tax professionals, both from the perspective of hiring full-time staff as well as bringing in subject matter experts or consultants who have an expertise in this area in preparation for the consequences of the new laws,” said Saah.
Robert Half found that the top four U.S. markets hiring full-time staff to handle tax reform are in the San Francisco Bay Area, San Diego, St. Louis and Cleveland. Four cities appeared to be the least prepared, according to the CFOs surveyed there: Minneapolis, Des Moines, Cleveland and St. Louis. The top industries planning to hire full-time staff include finance, insurance and real estate (32 percent), and business services (28 percent). Larger companies with 1,000 employees or more appear to be slightly more prepared than smaller companies with between 20 and 249 employees.
“There were cities such as Minneapolis, Des Moines, Cleveland, St. Louis and San Francisco that generally CFOs said that they were somewhat unprepared for the new tax laws,” said Saah. “We definitely saw an increase in hiring in San Francisco, San Diego, St. Louis and Cleveland. Then, from an industry perspective, we also saw some pretty big demands in industries that were planning to hire full-time staff within the finance, real estate, insurance and business services industries.”
While both domestic and multinational companies are affected by the tax code overhaul, some of the most complicated new provisions involved international taxation.
“While the laws are going to impact just about every organization irrespective of whether it’s a publicly traded company or a privately held one, it’s fair to say that it’s probably going to have a little bit more of an impact on larger, publicly traded global organizations,” said Saah.
Tax and accounting aren’t the only sectors that have seen hiring increases as the economy continues to expand after the 2008-2009 recession. Last Friday, the U.S. Bureau of Labor Statistics reported that employers added 164,000 jobs in April, and the unemployment rate dropped two-tenths of a percentage point to 3.9 percent after six months of being at 4.1 percent. The 3.9 percent is the lowest level of unemployment in 18 years. Job gains occurred in professional and business services, along with other sectors.
“At the end of the day, there’s a huge demand for a specialized skill set like tax professionals,” said Saah. “That demand far exceeds the supply that’s out there.”
Companies will need to do more hiring of tax professionals to get ready for the overhauled tax code, but finding the necessary talent is going to be a challenge in itself.
“The organizations that are proactive about this, either looking to hire additional staff, bringing in subject matter experts or consultants, and really just getting ahead of the curve, those are the ones that are probably going to be well prepared for all the changes that are about to hit them,” said Saah. “A little over 90 percent of the CFOs, at least the ones that we surveyed, were facing challenges in finding those skilled professionals. That goes right in line with supply, demand and unemployment rates.”
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