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Author: yodaorange Big red star, 1000 posts Feste Award Nominee! Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 454741  
Subject: Was your tax return done in India? Date: 4/15/2013 8:34 PM
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Many American’s use one of the popular tax programs like TurboTax or TaxCut to prepare their Federal Income tax. Other folks do not want to take the time or trouble to do their own tax return. This is particularly true if it is a complex tax return.

So you take a stack of paperwork to your local CPA and enlist their services. It might be a small, single person operation up to and including the large Big Four accounting firms like KPMG or Ernst & Young.

Your CPA will dutifully and accurately fill in your tax return and give it back to you to sign. He will also sign the return as a paid preparer.

What you might not be aware of is that many CPA’s are outsourcing your tax returns to India. The US administrative personnel scan all of your documents in and then Internet them to India. Indian accountants fill out the return and send it back to the CPA for review. The majority of the “low value” work is thus transferred from your CPA to lower compensated tax preparers in India.

Three points:

1) Your accountant does NOT have to ask your permission to send your information to India. If you ask, he will tell you that it is being sent, but he might not volunteer to tell you if you do not ask.

2) If you EXPLICITLY tell your CPA to not outsource your return, he will honor the request. He might quote a longer time to get your return completed.

3) Your accountant is still 100% responsible for the accuracy of your return. While the Indian firm does the legwork, he will still review the return and hopefully catch any errors. If he misses something, he will be on the hook.

I have not seen an accurate number for how many returns are outsourced like this. It varies widely from firm to firm. What is surprising it how easy it is for small CPA firms to do this. Many of them are using outsourcing services. It lets them take on additional clients and increase revenues.

The Big Four firms have their own “outsourcing” operations spread throughout the world. Smaller CPA firms likely use one of the Indian companies that specialize in this. Here are two of them:

Sureprep
http://corp.sureprep.com/

Xpitax
http://www.xpitax.com/

I have not heard of any cases where outsourced tax returns fell into the wrong hands due to a security problem. Theoretically it is possible your tax info could show up in the wrong hands. Personally I do not use any of the outsourcing firms, so I am not concerned. Even if you are not concerned about the security risks, you might want to ask your CPA if he uses an outsource service.

Thanks,

Yodaorange
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