As we draw ever nearer to the 2019 Tax Season, you likely are already considering what you'll need to do for your tax returns. Many taxpayers decide to "outsource" their returns to a local tax firm, under the pretense that they are more qualified and better equipped to navigate the nuances of the U.S. tax system. What happens, however, when the firm you have outsourced your taxes to then outsources their labor overseas?
Outsourcing is not a new concept. Most manufacturers and even some service-based companies have been doing it for years. This, however, is a newer practice for the tax industry, but it's gaining favor rapidly. It's not hard to see why; if a company can reliably delegate a task to somebody else for cheaper, then they will. As the consumers of this service, though, there are quite a few considerations that might make it a bitter pill to swallow. The main motivation behind handing off your taxes to a professional firm is peace of mind: You don't have to do it yourself (because who wants to do taxes?) and you are okay with entrusting your sensitive information with them because you are handing it to a trained professional who you have likely vetted beforehand or worked with before.
Not so with the firms that your taxes are further being pushed out to. Located in many of the usual outsourcing locations such as India, the Phillippines, and Bangladesh, workers in those countries are being paid as little as one-third the cost of a base-level accountant in the United States to do the same work. There are no concrete controls on the way they store, handle, and transmit your data. And, in the case of a screw-up, there is a gap of thousands of miles between your firm and theirs that makes pursuing restitution near-impossible. Perhaps the most frustrating part of this, however, is that US tax preparers likely will not make mention of this outsourcing and will pocket the savings, despite the risk to you.
This isn't to say that it's a bad move for tax preparers to outsource, there should simply be clear communication that this is the process that they use, and perhaps there should be some kickback on the savings as an added cherry on top. Until there is solid proof that the outsourced firms are going to protect your data as they should, you should double and triple check the agreements you sign with the tax firm and identify if they make use of an outsourcing service. Discuss it with them, and if you feel comfortable with it, go for it!
If you have any concerns about the way your data is being handled or if you want to make sure that your security is where it needs to be, call FrameWork IT! We're here to help you.
To read the full article from Forbes, click HERE.