Key Takeaways
- Start with the work, not the headcount, when evaluating tax resource needs.
- Match internal tax resources to functions where institutional knowledge, strategic judgment, and governance create the greatest value.
- Consider the full cost of maintaining tax functions internally, including recruiting, training, technology, process management, quality control, and continuity.
- External support can expand capacity and specialized expertise without requiring tax leaders to surrender strategic ownership or oversight.
Budget planning often puts tax leaders in a familiar position: balancing the resources available in the tax department against the work the organization needs to accomplish. But resource planning shouldn’t be limited to additional headcount. Instead, tax leaders should shift their focus to asking, “Where do internal tax resources provide the greatest value, and where might a different resource model make sense?”
Tax departments have more options for structuring resources than simply hiring internally or outsourcing an entire function. A well-designed tax resource model aligns internal ownership, specialized expertise, managed services, and outsourcing.
For tax leaders planning for 2027, evaluating these options can help build a resource model that aligns the right capabilities with the work.
Start With the Work Versus the Headcount
When additional capacity is needed, another hire may be exactly the right answer. Headcount is only one way to address a resource need. It’s important to understand the work. Look at what the tax department is responsible for, what is changing, and what capabilities will be required in the year ahead. Then evaluate individual responsibilities against a few practical questions:
How much business knowledge does the work require?
Responsibilities that depend heavily on the organization’s strategy, operations, relationships, history, or risk tolerance generally make a stronger case for internal ownership.
How much judgment is involved?
Consider how frequently the work requires interpretation, strategic decisions, risk assessment, or coordination with business leadership. The greater the level of judgment, the more important internal ownership and oversight may become—even if external resources support execution.
How repeatable is the work?
Highly repeatable, recurring processes are fundamentally different from responsibilities that require frequent business-specific decisions. Consistency and predictability can make work better suited for automation, external management, or outsourcing.
How specialized is the expertise?
Some capabilities are essential but difficult to recruit, expensive to maintain, or needed only periodically. Maintaining that expertise internally may not always be the most practical approach.
How variable is the demand?
An implementation, acquisition, audit, peak filing season, system change, or major transformation initiative can temporarily change the resources a tax department needs. The ability to scale resources up or down can be just as important as the number of resources available.
Taken together, these factors provide a useful starting point for determining the appropriate resource model:
| IF THE WORK IS… | RESOURCE MODEL |
|---|---|
| High judgment + high institutional knowledge | KEEP |
| Specialized + temporary or variable | SUPPLEMENT |
| Specialized + ongoing or recurring | MANAGE |
| Repeatable + process-driven + scalable | OUTSOURCE |
These aren’t rigid categories. The same responsibility may fall into different categories depending on the organization’s internal capabilities, technology environment, risk profile, scale, and business priorities. The objective isn’t to maximize outsourcing, it’s to determine the right resource model for the work.
What Should Your Tax Team Own?
A tax department does not need one resource strategy across the entire function. In fact, an effective operating model may incorporate all four. Across the models, the balance between internal ownership and external support changes.
- KEEP: places both ownership and execution primarily within the tax department
- SUPPLEMENT: maintains internal ownership while adding specialized expertise or capacity for a specific need
- MANAGE: keeps strategy, governance, and oversight with internal tax leadership while shifting ongoing operational responsibilities to an external team
- OUTSOURCE: extends that model further, with an external provider taking responsibility for executing a defined function or broader area while the organization maintains appropriate governance and accountability
The right model may be different for every tax department—and for different responsibilities within the same department.
Keep: Where Internal Expertise Creates the Most Value
Some responsibilities derive much of their value from being close to the business. Tax strategy, governance, stakeholder relationships, risk management, and decisions requiring significant institutional knowledge are often strong candidates for internal ownership. Internal tax professionals understand the organization’s operations, systems, history, priorities, and risk tolerance. They also have relationships across finance, legal, IT, procurement, and the business that can be difficult to replicate externally.
Keeping these responsibilities internal does not mean the team must execute every activity associated with them. An internal tax leader might own tax strategy, establish policies, make technology decisions, and oversee risk while relying on other resources for implementation, administration, analysis, or recurring execution. The goal is to keep internal resources focused where their knowledge and judgment provide the greatest value—not necessarily where the greatest volume of work exists.
Supplement: Add the Capability You Need, When You Need It
Not every resource need justifies another full-time position, and specialized tax expertise may not always be readily available in the labor market. ERP migrations, tax software implementations, acquisitions, audits, process improvement initiatives, data projects, and other major events can create demands that exceed the capacity or specialized expertise of the existing team. These needs may be significant without being permanent, making supplemental resources a practical alternative to adding permanent headcount.
A tax department preparing for a tax engine or ERP implementation, for example, may retain ownership of tax policies, business requirements, and key decisions while bringing in experienced tax technology resources for design, configuration, testing, and deployment. The same model can support tax process optimization, audit management and defense, data initiatives, or emerging areas such as AI enablement. Supplemental resources can also address temporary capacity constraints caused by vacancies, leave, organizational change, or competing priorities. The defining characteristic is ownership: the organization continues to own the function while adding the expertise or capacity needed to accomplish the work.
Manage: Retain Strategic Ownership Without Owning Every Task
Some responsibilities are not temporary projects, but they may not require dedicated internal resources. Managed services can fill that middle ground by allowing the tax department to retain strategic ownership, governance, and oversight while an external team supports ongoing operational responsibilities.
Tax technology is a common example. Implementing a tax engine is only the beginning. Systems require ongoing attention as tax rules, business operations, ERP environments, integrations, and organizational requirements change. Maintaining sufficient technical expertise internally can be challenging, particularly when those same resources are expected to support new initiatives and day-to-day tax operations. Managed services can provide ongoing support for system administration, maintenance, enhancements, testing, issue resolution, and other operational needs without requiring the organization to maintain every technical capability internally.
A managed model can also apply to recurring transaction tax processes. Exemption Certificate Management, for example, can require ongoing collection, validation, renewal, remediation, and monitoring. Internal tax leaders can retain ownership of policies, risk decisions, and customer relationships while external resources support the operational workload.
Outsource: When Scale Changes the Resource Equation
Some tax responsibilities are recurring, high-volume, and process-driven. For these functions, outsourcing may provide a more scalable operating model than maintaining all the necessary people, processes, technology, and infrastructure internally.
Compliance is one of the clearest examples. The operational requirements can be significant. Managing compliance at scale is not simply about having enough people to prepare and file returns. It requires repeatable processes, technology, controls, jurisdictional knowledge, quality assurance, and sufficient capacity to execute consistently across filing cycles.
For some organizations, maintaining that infrastructure internally makes sense. For others, outsourcing compliance can provide access to an established operating environment while allowing internal tax professionals to shift their focus elsewhere. The analysis should therefore go beyond comparing the salary of an employee with the cost of an outsourcing provider and consider the complete requirements of maintaining the function internally:
- Recruiting and retention
- Training and knowledge continuity
- Technology
- Process management
- Quality control
- Peak workload capacity
- Regulatory changes
- Management oversight
- Business continuity
The determining question: “Is maintaining this capability internally the best use of our resources?”
When the Need Goes Beyond One Function
Sometimes the resource challenge is broader than a particular project, technology, or recurring process. Rapid growth, turnover, acquisitions, organizational restructuring, or difficulty recruiting tax professionals can leave an organization needing support across several areas at once. In those situations, an Outsourced Tax Department Solution can provide access to broader tax capabilities without requiring the organization to build every specialty internally.
That does not necessarily mean replacing an existing tax department. External professionals can work alongside internal tax leadership, provide continuity while positions are being filled, take responsibility for defined areas, or provide access to multiple specialties that would be difficult to maintain internally. For example, an organization may need expertise in sales and use tax compliance, tax technology, exemption certificate management, audit support, and process improvement—but not enough ongoing demand in each area to justify maintaining each capability internally.
Tax leaders should consider the capabilities the organization needs and the availability, scalability, continuity, and depth of the resources required to provide them.
Outsourcing Execution Doesn’t Mean Outsourcing Control
One of the most important distinctions in any resource discussion is the difference between execution and control. Using an external resource does not mean handing over responsibility for the organization’s tax decisions. Depending on the model, internal tax leadership can continue to own tax policy, governance, risk tolerance, strategic decisions, approval authority, provider oversight, and performance expectations while an external team executes processes, administers technology, provides specialized expertise, or manages defined functions.
That separation allows organizations to reconsider who performs the work without giving up the oversight that belongs with tax leadership. It also creates room for hybrid models in which internal and external resources have clearly defined responsibilities rather than treating outsourcing as an all-or-nothing decision.
Before You Add Headcount, Ask This Question
Budget planning naturally creates conversations about people, providers, technology, and cost. But the most useful starting point is simpler: What work does our tax team actually need to own? From there, evaluate where internal knowledge and judgment create the most value, where specialized or temporary resources can extend the team, which responsibilities need ongoing operational support, and which defined functions could operate effectively outside the organization.
Keep. Supplement. Manage. Outsource. There isn’t one right combination. The goal is to build a tax operating model that gives the organization access to the capabilities it needs while keeping internal tax resources focused where they can provide the greatest value.
Build the Right Tax Resource Model
Every tax department has different resource needs.
DMA supports tax departments through flexible resource models spanning transaction tax and tax technology—offering specialized project support and managed services to compliance outsourcing or co-sourcing and comprehensive outsourced tax department solutions.
Connect with one of our experts about the right resource model for your tax department.
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