I read a disturbing article this week and immediately knew it was something I should address with my blog readers. The article, entitled Do You Know Who is Preparing Your Tax Return?, talks about how bigger tax preparation firms are outsourcing the preparation of their clients’ tax returns to India, the Philippines, Bangladesh and other countries. The tax firms utilizing outsourcing apparently believe it increases efficiency for the firm and saves costs. The hourly cost for tax preparation in the other countries is often half the cost of that in the U.S.
Of course, the tax firm cannot legally send your information overseas or to anyone without your permission. According to the article, for tax firms using this service, the consent is imbedded within the engagement letter. Unless the client reads the letter carefully and asks questions of the tax firm before they sign the letter, they may not realize their information is being sent to another country.
The article continued discussing the advantages and disadvantages of outsourcing tax returns and made some very valid points. For me, the biggest concern with outsources is security and privacy. It’s difficult enough with all of the cyber-security issues in this day and age to protect personal information. How do we ensure that firms in other countries are taking the same precautions required of U.S. tax preparers? Whose responsibility is it if the outsourced firm has a security breach? What if the outsourced firm is responsible but they don’t have the liability insurance to cover the loss? And what about the reputational loss to the U.S. firm? Are efficiency and cost-savings worth those risks? I don’t think they are.
Please be assured that when you utilize the services of Crystal Financial Solutions, we prepare your tax return right here in our office. We take the time to go over your tax return with you, line by line, so you understand what your tax return is reporting. We also discuss with you any actions you can take to reduce your tax burden. There is no way an outsourced company in other country will take this time, care, and attention when it comes to preparing your return. When you choose a firm to prepare your taxes, read all the fine print and know who you are working with! And, as always, if you have any questions please let me know!
Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.