Tax accounting is relatively simple to explain, though nuanced in execution. In short, every region has specific tax accounting rules and regulations. Adhering to these rules and regulations is critical to avoiding penalties and ensuring ethical behavior in the country (and/or state) of operation. Tax accounting is therefore a combination of legal and financial knowledge.
The Financial Side
Tax accountants act as the bridge between an organization's accounting team and the reporting bodies in the region. As a result, the primary role of a tax accountant is to understand the business' current operating status, distill profitability before tax, and report earnings.
On the strategic side of this, tax accountants can consider any tax implications as it pertains to certain strategic decisions or tactics. Identifying and understanding opportunities in a region's tax code is a win win. For example, some manufacturers can receive tax breaks for environmentally friendly operations, often high enough tax breaks to offset the cost of implementing them. Tax accountants should be aware of these opportunities in the legal environment.
The Legal Side
More tangibly, tax accounts will focus on the preparation, analysis, and presentation of tax payments and tax returns at all times. There are specialized accounting principles and obligations for each area of operation which must be met. Keeping up to date on what is expected, and ensuring alignment on across the organization, is their primary responsibility.
Some exceptions exist, of course, such as non-profit organizations. Non-profits have unique tax preparation requirements due to their no-tax status. This comes along with its fair share of obligations, paperwork, and approvals from the governing bodies.
Various Accounting Perspectives
This image demonstrates the various responsibilities and perspectives of different forms of accounting (those being tax accounting, managerial accounting and financial accounting).