Challenging college students with real-life tax problems.

Since 1992, Arthur Andersen LLP has sponsored Tax Challenge[R], an innovative and competitive program that provides graduate and undergraduate students exposure to real-world tax consulting in a team-oriented approach to problem solving. The teams vie for scholarship money to be awarded to their schools by the Andersen Foundation. The Andersen Foundation was created to promote educational and civic well-being in the communities and countries in which member firms of the Andersen Worldwide organization operate. Arthur Andersen's goal for this competition is to increase campus awareness of careers in taxation, while giving students a chance to apply their knowledge to a real-life situation.

The Competition

During the competition, four-member teams evaluate a hypothetical client's tax profile based on past, current and future tax data. Tax Challenge is a one-day case study that begins early in the morning and ends late in the afternoon. The case involves Federal tax issues confronting an individual or family with its own business, including compensation matters, investments, itemized deductions and related issues that affect the taxpayer's filing status and tax profile. Each team must prepare a written report, evaluating the client's tax situation and making tax planning recommendations. Teams are given a list of areas that must be addressed and are evaluated based on their written reports. The only reference materials available to the students during the competition are the Internal Revenue Code and Treasury regulations.

The Tax Challenge competition is open to both graduate and undergraduate students; however, the graduate and undergraduate divisions are judged separately. Teams first compete in regional competitions held at selected university sites throughout the country in late October. In 1995, 110 teams from more than 90 different institutions participated. Each team consists of no more than four students chosen by faculty representatives from the accounting and/or tax programs of their schools. Twenty teams, 10 from the graduate division and 10 from the undergraduate division, are then selected to compete at the national competition held in mid-November at the Center for Professional Education, Arthur Andersen's 140-acre training complex in St. Charles, Ill. At the national competition, the 20 teams complete a second case study, with the winners crowned Tax Challenge champions. In 1995, each division champion earned $20,000 for its school. In addition, second-place finishers in each division received $10,000, third-place teams received $5,000, and each of the other finalists received $2,000 for their schools.

During the four years of the Tax Challenge competition, over 1,500 of the country's most talented students have participated, and the competition has had a lasting impact on campuses throughout the country. Some universities now offer tax courses earlier in their curricula to help prepare students for the competition and give them a more comprehensive look at career opportunities. In addition, some schools have added more or advanced tax courses to their curricula to meet the demands of students gaining exposure to tax courses earlier in their college careers. These expanded tax programs provide students with stronger technical backgrounds with which to begin careers in tax or increase students' interest in pursuing advanced degrees in taxation. (In fact, at least one graduate tax program uses participation in the Tax Challenge to help identify prospective candidates for enrollment into the graduate program.) In addition, the increased visibility of tax career options gives tax faculty opportunities to approach their administrators for additional funding for initiatives within their tax programs.

Educational Value

Equally important is the impact that the team case study approach used in Tax Challenge has had on teaching techniques. Through its collaboration with West Publishing Co., Arthur Andersen makes prior-year Tax Challenge cases and solutions available to students and faculty as a supplement to West's Federal Taxation, the most widely used tax textbook in the country. Tax faculty can use these case studies to introduce real-life client situations into their courses. Students respond as if they were tax consultants being asked to solve client problems. The realistic client situations require students to identify and resolve multiple issues before presenting recommended solutions. In addition to increasing their tax knowledge, students develop business judgment and the ability to think independently. Preparing a report describing their analysis of a client's circumstances and their tax planning recommendations provides an opportunity to practice written communication skills. Finally, this case study approach also provides students with realistic experiences in which problems must be resolved within a limited time frame, even when available information is incomplete.

Using the published Tax Challenge cases, faculty members can challenge students to share information and solve problems through collaborative action. Success in the Tax Challenge competition absolutely depends on shared responsibility and cooperation. The team-oriented approach requires a high level of coordination among team members, including the division of work tasks and a synthesis of efforts to present a detailed set of recommendations. The academic setting does not always provide rewards for this type of group activity. However, the ability to establish team goals and priorities, to develop action plans to reach those goals, and to form the relationships necessary to implement their plans will serve students well in their professional careers. Incorporating Tax Challenge cases in tax courses offers collaborative opportunities to a greater number of students than simply those competing in the annual competition. Furthermore, adding case study and team-building experiences into the tax curriculum can help to increase the students' success rate early in their careers.

Tax Challenge represents a coordination of the efforts of tax students, educators and practitioners in an innovative educational opportunity. Students' success in the competition and in their careers requires combining technical knowledge, analytical and communication skills and teamwork. The team-oriented case study approach provides educators with another method for evaluating students' knowledge and level of development. Educators also gain insight into issues facing practitioners today, helping to make them more effective in preparing the practitioners of tomorrow. Finally, Tax Challenge allows practitioners to make a more immediate impact in the academic community. By gaining exposure to students earlier in their college careers, practitioners can cultivate interest in taxation and influence the academic and career decisions of a greater number of students. More importantly, practitioners can become partners with educators to help develop tax professionals for the future. This unique blending of opportunities has made Tax Challenge a successful educational competition.

For additional information, tax educators should contact Daniel Ceko, at [phone].

Letter From the Editor

As the Tax Education Committee begins a quarterly column in The Tax Adviser, we felt it would be helpful to explain its objectives and activities. The committee's official objective is to "continually review graduate and undergraduate tax education and tax-oriented continuing professional education with a view to recommending to the educational community and, if applicable, the AICPA's CPE Division, changes in course content, curricula or accreditation rules for graduate tax programs or other changes, which are responsive to the needs of the practitioners."

The best way to translate these objectives is to look at some of the activities the committee has recently been involved with:

* Reviewing tax questions on the CPA exam, and commenting on proposed changes to the exam.

* Planning (along with the CPE Division) the National Conference on Federal Taxes held annually in Washington, D.C.

* Planning the Biennial Tax Education Symposium. The 1996 conference, "Preparing the Tax Professional for the 21st Century," will be held June 7-8, 1996, in Seattle, Washington.

* Development of the "Model Tax Curriculum" by a committee task force. The task force's charge was to reevaluate the curricula and course content for both graduate and undergraduate tax education.

The committee's members come from a variety of backgrounds, representing the needs of both educators and practitioners. Presently, six members are from academia, four from large firms and four from local firms.

The goal of this column will be to raise the awareness of readers to issues relating to education in general and tax education in particular. We will also look at innovative methods of training tax students, such as VITA programs and this month's focus--the "Arthur Andersen Tax Challenge[R]".

Editor's note: Mr. Porter chairs the AICPA Tax Division Tax Education Committee. Ms. Miller is a committee member.