Solutions · Fractional Tax Director

Fractional Tax Director: one person accountable for your U.S. subsidiary's tax

Name: Fractional Tax Director: one person accountable for your U.S. subsidiary's tax
Author: Jenny Gao

The tax preparer appears at year-end, the bookkeeper does not do tax, and the tax team at headquarters does not know U.S. rules. Once a subsidiary operates in several states, transacts with its parent and is asked by the group auditor for a U.S. tax provision, what is missing is a tax leader who looks at the company as a whole. We fill that seat on a fixed monthly basis.

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The short answer

Every tax item has someone doing it; that is not the same as someone managing it

What is a fractional tax director?

A fractional tax director is a senior tax professional who serves as a company's head of tax on a part-time, month-to-month basis. The role is not "another preparer": it decides which tax matters need attention, who handles them, when they are due, what data is needed and what management must decide, and it is accountable for the result. For the U.S. subsidiary of a Chinese company, the role also explains U.S. tax to headquarters in Mandarin and fits the U.S. numbers into the group's tax framework.

Written and reviewed by Jenny Gao, CPA, EA Founder, B&G · Florida-Licensed CPA · IRS Enrolled Agent

Last reviewed: 2026-09-26

A normally operating Chinese-owned U.S. subsidiary deals with, in a single year: Form 1120 and state income or franchise taxes; one Form 5472 per related party; Forms 1042 and 1042-S and withholding on payments to the parent; sales and use tax in every state with nexus; Forms 941 and 940 and state payroll taxes; property tax and annual reports in some states; and customs duties and valuation on top. These usually sit with a bookkeeper, a payroll provider, a sales-tax vendor and a year-end preparer. Each item has someone doing it, and nobody is looking at the company as a whole. The failures happen at the seams: related-party transactions in the books that do not match Form 5472; a sales-tax registration with no returns behind it; headquarters changing an intercompany price without telling the U.S.; quarterly estimates nobody calculated; notices forwarded from vendor to vendor and never closed.

The second demand comes from headquarters. Listed and pre-IPO groups need their U.S. subsidiary to deliver a quarterly tax provision — current and deferred tax, effective-tax-rate reconciliation, uncertain tax positions — for consolidation and the group audit. The U.S. bookkeeper and preparer typically do not do this work, and the group tax team is not fluent in ASC 740 or the Internal Revenue Code, so every quarter becomes a fire drill. It is one of the most common reasons companies contact us.

As fractional tax director, Jenny Gao, CPA, EA personally serves as the subsidiary's head of tax — she led tax and compliance for more than 15 entities across 12 countries inside a multinational, with hands-on responsibility for tax provision, transfer pricing and tax audits — while B&G's team executes the filings and records. A tax memo every month, a headquarters tax package every quarter, a planning cycle every year, and answers to headquarters in Mandarin whenever they are needed.

The boundaries are equally clear: we do not replace day-to-day bookkeeping, we do not guarantee outcomes with tax authorities, and we do not give legal or immigration advice. Where the IRS is involved, the leader represents the company as an IRS Enrolled Agent within the scope you authorize.

When you need one

Six signs it is time for a tax leader

The business has crossed state lines

Remote employees, a warehouse, Amazon FBA inventory, new customers — sales tax, state income tax and payroll tax change at once, and nobody is assessing what new obligations were created.

Related-party transactions with the parent are growing

Purchases, service fees, licence fees, loan interest — pricing support, contracts, Form 5472, Form 1042-S and transfer-pricing documentation must all tell the same story, and they pass through different hands.

The group auditor is asking for "the U.S. tax provision"

Current and deferred tax, ETR reconciliation and uncertain tax positions under ASC 740 or IAS 12 — nobody on the U.S. side prepares it and headquarters does not know U.S. tax law.

Notices and late filings are piling up

IRS and state letters circulate among vendors; nobody confirms what was paid, answered or closed while penalties and interest accrue.

Financing, M&A, a plant or state incentives are on the horizon

Diligence will ask for three years of tax compliance evidence and related-party documents; a plant raises depreciation, state incentives and sales-tax exemptions that must be settled before construction starts.

Tariffs have become a major cost

Import cost, IEEPA duties, customs valuation and its consistency with transfer pricing, refund opportunities — tax and customs have to be looked at together, and usually two different groups handle them.

Scope

What the tax director is responsible for

Compliance management

The full tax calendar: federal, state and local income tax, Form 5472, Form 1042, sales and use tax, payroll tax, property tax, annual reports
Division of work, timetable and quality review for preparers and outside advisers
Quarterly estimate calculations and cash-tax forecast
Notice register, responses and follow-through to closure (Enrolled Agent representation)
State tax registrations, de-registrations and account maintenance

Headquarters and group

Quarterly tax provision (ASC 740 / IAS 12): current and deferred tax, ETR reconciliation
Identification and assessment of uncertain tax positions
PBC lists and responses for the group auditor
Chinese-language tax package with a page-by-page walkthrough of the U.S. returns
Implementation of group tax policy in the U.S., with exceptions explained

Related parties and cross-border

Transfer-pricing policy and contemporaneous documentation, coordinated with the group TP team or outside advisers
Register of intercompany agreements, pricing support and payments, consistent with Form 5472
Characterization and withholding on payments to the parent: Forms 1042/1042-S, the U.S.–China treaty, Form W-8BEN-E, Form 8833
Equity or loan: interest, withholding and capital-structure design
Wage sourcing, day counts and social-security treatment for seconded executives

Planning and projects

Multistate nexus monitoring; obligation assessment and registration strategy before entering a new state
Entity form and elections: Form 8832, C corporation vs. branch, state-level choices
Plants and capital investment: depreciation (§168(k)), state incentives, sales-tax exemptions
R&D costs (§174) and credits; inventory and §263A
Tariffs / IEEPA and customs valuation, aligned with transfer pricing; refund assessment
Tax due diligence and structuring for financing, M&A and reorganizations

What you receive each month

Six living deliverables

Tax calendar and status report

Owner, status and evidence for every filing, payment and registration deadline, updated monthly and visible to headquarters at any time.

Monthly tax memo (one page, in Chinese)

Tax consequences of this month's business changes, items completed, decisions required from management and our recommendation.

Quarterly provision package

Current and deferred income tax, ETR reconciliation, uncertain-tax-position assessment and supporting workpapers for the group auditor.

Related-party register

Contract, pricing support, payments and withholding for every intercompany arrangement, mapped line by line to Forms 5472 and 1042-S.

Nexus monitor

Each state's economic and physical thresholds against actual sales, inventory and headcount; obligation assessment before entering a new state.

Annual tax planning memo

Structure, elections, incentives and cash-tax forecast for the coming year; a document list that can be handed straight to auditors or diligence teams.

The first 90 days

From takeover to steady state

Days 1–30 · Diagnostic

Full inventory of entities, states, tax types, filings, registrations, notices and related-party transactions; historical exposure and remediation order; definitions, templates and meeting cadence agreed with headquarters.

Days 31–60 · Build

Tax calendar and responsibilities, related-party register, nexus monitor, provision template and the headquarters interface all in place; the most urgent remediation done first.

Days 61–90 · Run

First monthly memo and quarterly package delivered; preparers and advisers working to the agreed division; first meeting with headquarters completed.

Responsibilities

Who decides, who is accountable, who executes

Matter	Your China HQ	U.S. management	B&G leader	B&G execution team / your staff
Tax policy and major decisions	Decides	Participates	Analysis, options and recommendation	—
Filings and payments	Informed	Authorizes payment	Reviews and signs off before release	Prepares and submits
Quarterly tax provision	Receives and consolidates	Informed	Prepares, explains, liaises with auditors	Workpapers and data
Related parties and transfer pricing	Pricing and contracts	Executes	U.S.-side compliance and documentation coordination	Register and records
Notices and tax-authority contact	Informed	Authorizes	Represents (Enrolled Agent)	Document preparation

Boundaries

What this role does not do

Does not replace day-to-day bookkeeping — but does manage the bookkeeping team on tax-relevant account definitions
Does not necessarily prepare every return personally — but is accountable for the filed result
Does not give legal, immigration or customs-law opinions; works alongside your counsel where they are needed
Does not serve as a corporate officer and holds no bank signing or payment authority
Does not guarantee the outcome of an examination — what we commit to is a complete, documented process

Levels of involvement

Three ways to engage

Advisory

You have a reliable filing team and need a tax leader to review and answer questions

Quarterly tax provision and HQ tax package
Monthly tax memo
Questions answered in writing within 48 business hours
Annual tax planning session

Most common choice

Accountable

You need someone to actually run the tax function

Everything in Advisory
Owns the tax calendar, preparers and outside advisers
Related-party register and nexus monitor
Notice representation and follow-through; bi-weekly working sessions

Embedded

A plant, financing, acquisition, audit or transfer-pricing project is under way

Everything in Accountable
Intensive project involvement; attends HQ and board meetings
Tax due diligence, structuring, transfer-pricing documentation coordination
Step back down to Accountable when the project ends

Every tier is a fixed monthly fee with the scope written into the engagement letter; we do not bill by the hour, and we re-confirm the tier when the business changes. When combined with B&G bookkeeping, payroll, sales-tax and annual-return services, the "leader" and the "execution team" are the same firm, so nothing falls between two vendors. Fees are quoted after a free initial conversation.

FAQ

Questions headquarters and U.S. teams ask most

We already have a tax preparer. Why would we need a tax director?

The preparer's job is to get the return right at year-end. The tax director's job is to make sure someone looks at tax for the whole company all year: which states created new obligations, whether related-party definitions are consistent, how much to pay in estimates each quarter, whether notices are closed, and who prepares the provision headquarters is asking for. The two roles do not conflict — we can work with your existing preparer or take on the filings as well.

Can you deliver an ASC 740 / IAS 12 tax provision to our group auditor?

Yes. We prepare current and deferred income tax, the effective-tax-rate reconciliation and the uncertain-tax-position assessment with supporting workpapers, and we respond to the group auditor's questions directly in English. The leader was responsible for tax provision and tax audits inside a multinational for years.

Do you prepare transfer-pricing documentation?

We own U.S.-side transfer-pricing compliance and coordination: confirming the pricing policy and contracts for each related-party arrangement, maintaining the register, keeping Form 5472 consistent with the transfer-pricing position, and preparing or coordinating contemporaneous documentation before the return is filed. Where a group-level economic analysis is needed we work with the group's TP team or outside advisers, so the U.S. and China do not tell different stories.

If we receive an IRS or state notice, can you represent us directly?

At the federal level, yes — the leader is an IRS Enrolled Agent and, once you sign the authorization, deals with the IRS directly through to closure; at the state level we follow each state's authorization procedure. Just as important, we keep a notice register so every letter has an owner and a closing date.

We operate in one state and have no related-party transactions. Do we need this?

Probably not yet. A company in one state with no employees, no cross-border transactions and low volume is usually well served by quarterly or annual tax consulting. The fractional model fits the stage where complexity has risen but a full-time role is not yet justified — and we will tell you plainly in the first conversation.

How does the tax director relate to B&G's bookkeeping and tax-return services?

The tax director is the leadership layer; bookkeeping and filings are the execution layer. When B&G provides both, the books, Form 5472, Form 1042-S and transfer pricing are maintained by one team and nothing falls between two vendors. If your bookkeeping and returns sit elsewhere, we provide the leadership layer only and review their work.

Can you explain U.S. returns and figures to headquarters in Chinese?

Yes — it is one of the things we do most. The quarterly tax package is delivered in Chinese with a page-by-page guide to the returns and a bridge between U.S. tax and the group's framework; headquarters meetings are held in Mandarin. With U.S. tax authorities and auditors we work in English.

How does an engagement start, and how soon do we see results?

The first conversation is free. Within 30 days of signing we complete the diagnostic and deliver the gap list; by day 60 the calendar, registers and templates are in place; by day 90 the function runs monthly. The engagement letter runs annually, billed monthly, terminable on 30 days' notice; all registers and workpapers are yours.

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If your company is entering or already operating in the United States, connect with us on WeChat to discuss your accounting, payroll, sales tax and ongoing compliance needs.

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