Compensation Climbs for Corporate Tax Professionals

Sarbanes-Oxley and other new financial reporting requirements have created a greater demand for corporate auditors and tax professionals. This has influenced compensation levels especially for senior corporate tax executives.

October 11, 2007
Sponsored by Spherion Professional Services

by Brendan Courtney, senior vice president, Professional Services Group

Over the past few years, changes brought about by Sarbanes-Oxley and other new financial reporting requirements have created a greater demand for corporate auditors and tax professionals. This has, of course, influenced compensation levels for these positions, mainly the senior positions held by corporate tax executives.

A number of different factors are responsible for this strong growth in compensation for in-house tax professionals, including:

  • Smaller talent pool. While the number of people pursuing accounting degrees currently is on the rise, a decline in enrollment in university programs in the recent past is a key factor in the smaller pool of available talent at the middle level. Given the inevitable laws of supply and demand, this often means that employers are forced to up the ante and raise their compensation offers in order to attract the experienced in-house tax professionals they need.
  • Corporate governance demands. The continued influence of the Sarbanes-Oxley Act and related legislation is making the in-house tax professional a more valuable commodity than ever. Organizations seek skilled professionals who can help them support ongoing compliance efforts at their company, especially if it is a large publicly owned entity.
  • Business expansion. As companies become more confident about global business opportunities, they are planning expansion initiatives and need internal tax staff to support these efforts. Organizations are recruiting accountants with several years of experience who can hit the ground running when they join the business and make a significant contribution of expertise right away.
  • Internal promotions. Many employers have learned that one of the best strategies for improving retention — and thereby reducing turnover costs — is to promote from within and illustrate to their employees that there are meaningful career advancement opportunities at the company. As a result, companies need to fill the vacancies left by those who have moved up within their organizations and replenish the talent vacuum in their corporate tax departments.

So when your employees ask you to show them the money, what kind of dollars are we talking about in today’s marketplace? According to Mercer Consulting’s 2006 survey for the Tax Executives Institute, the recent salaries of corporate tax professionals show some interesting trend lines.

The corporate tax executive, for example, is the top position and thus has the highest salary and most responsibility. This executive is responsible for developing corporate tax strategy and administering tax affairs so they are in compliance with federal, state, local, and foreign tax laws; the position often reports to a chief financial officer. The median salary for this position is $164,000, a 13 percent increase over where it was in 2005 — the largest of any corporate tax title. Median total cash compensation comes to $199,400.

The tax compliance manager is responsible for the maintenance of tax records and the preparation of composite tax returns and related reports to ensure compliance. The manager directly supervises a staff of tax accountants. The median salary for this position is $97,000, a 2.9 percent increase over 2005. The median total cash compensation is $109,200.

The tax research manager administers the tax research and tax planning functions to determine tax consequences. The median salary for this job is $102,900, up 7.2 percent, and total comp is $115,600. The tax manager's median salary barely budged; it rose by a mere 0.8 percent, to $90,000, while total comp grew 1.3 percent to $98,300. This position manages and directs all activities related to tax research, planning, and compliance, and ensures reports are filed on time.

The senior tax accountant also had a modest 2.1 percent raise, to reach $67,000. The senior accountant works on the more complex projects and is the most senior position without supervisory responsibility. The intermediate tax accountant works under general supervision on maintaining tax records or preparing tax returns and related materials. This title earns a median $50,900 salary and $52,600 in total compensation.

Finally, the associate tax accountant works under direct supervision on tax records, returns, and reports. The salary for this position actually declined by three percent, to $41,600, and total compensation shrank 4.5 percent to $42,400.

All things considered, demand for corporate tax professionals remains strong and the growth in their compensation confirms this marketplace trend. Employers who take note of these developments and adjust their hiring and compensation practices accordingly will be in a stronger position to secure the best in-house talent in the coming years.

For more information visit Spherion Professional Services.

Brendan A.J. Courtney, senior vice president & group executive, Professional Services Group, Spherion Corporation. Brendan Courtney serves as senior vice president and group executive of professional services for Spherion Corporation (NYSE:SFN).