Tax Accountant and Tax Accounting

A tax accountant is simply an individual who assists a taxpayer in preparing a tax return (Hussey, 1999). For businesses, the accounting system must also provide data for use in the completion of the company's tax returns. This function is the concern of the tax accountant. In some countries, financial accounting must obey rules laid down for tax accounting by national tax laws and regulations, but no such requirement is imposed in the United States, and tabulations prepared for tax purposes frequently differ from those submitted to shareholders and others. In this regard, “taxable income” should be viewed as a legal concept rather than an accounting concept.

Tax laws almost always include incentives to encourage companies to do certain things and discourage them from doing others. Accordingly, what is considered “income” or “capital” to a tax agency may be far different from the accountant's measures of these same concepts (Shillinglaw, 2004).