For the last couple years, the industry trends have felt a lot like everything is on fire and we are just never getting ahead. The tax law changes, coupled with poorly executed COVID relief funds wreaking havoc on taxpayer return processing, coupled with staffing shortages have literally made everything hard.
But is the tax industry really just trending from hard to harder?
As you may have guessed, the biggest trends in the industry right now are digitally focused as well as specific job skill sets. Data security and technology are the top trends in the tax industry. More firms than ever are offering online and remote services, as well as having online and remote staff.
With information speeding across the digital highway, security is the top priority. Tax firms are essentially subject to the same digital security laws as a hospital would be when it comes to protecting HIPPA information. Because tax firms house sensitive financial data such as names, addresses, and social security numbers, they are sensitive to data attacks and required to meet cyber security protection measures.
Firms cannot rely on cybersecurity insurance alone to protect them. Measures have to be taken internally to ensure that information is secure and staff understands the seriousness of data breaches.
Specific skill sets in the tax industry are also in high demand. As technology and software continue to evolve, we will see more and more data entry-level positions being replaced by tech tools. Tax preparation outsourcing services have become more available and better skilled at producing quality returns, but the skills that cannot be outsourced are management-level consultations.
The tax code is not getting any easier and clients are looking for experienced tax managers who can help them to plan and strategy, a skill not easily addressed by technology alone. In addition to the higher-level strategy skill set, industry-specific skills are also in high demand.
E-commerce clients have exploded amongst pandemic, work from home, online business booming. Not just from an income tax perspective, but as e-commerce continues to grow rapidly, more and more businesses are struggling to find skilled sales and use tax help.
Tax preparation outsourcing services have become more available and better skilled at producing quality returns, but the skills that cannot be outsourced are management-level consultations.
Similar to the technology with income taxes, software for sales and use taxes address the more basic, data entry functions, but has yet to provide a higher level consultative replacement for an experienced tax manager.
Cannabis businesses also still are struggling to find experts well versed in the nuances of their industry. More CPAs have started to dabble in their cannabis tax service offerings, but few have an intimate knowledge of the industry to provide clients with meaningful strategic advice.
Firms can stay on top of these trends first by addressing technology. Investing in data security measures should be a top priority, followed by technology that will aid efficiency.
By allowing technology to help provide more efficient support for data entry and prep level support, more funds can be allocated to recruit top management talent to address strategy and consultative needs.