Beware: offshore tax preparation outsourcing

[Michael Plaks]

This discussion started today in a Facebook group for tax professionals. According to the thread, this risky practice is getting more and more common among some tax firms looking to cut costs.

I realize that people have different opinions on the issue. For instance, I won't touch it with a 10ft pole. Others have no problem with it. But maybe it's one of the questions worth asking when you hire your next accountant.

[Michael Plaks]

Because I'm old school and do not delegate critical tasks to people I have not personally vetted and trained and over whom I have no control. Quality and security are both major concerns, and there's plenty of negative experiences shared by my colleagues who tried this route.

Anything that does not require physical contact can be outsourced, including offshore. Ironically, our government, including the IRS (!), has been outsourcing many mission-critical and security sensitive tasks. So do large accounting firms and technology providers. 

You can roll with the notion of "we live in a global economy" and trust that your work is done correctly and securely. Or you can take the cynical stance that there's no true security in this world anymore, which happens to be my view. Hey, the entire IRS worked from their highly secured homes (yes, sarcasm) since the Covid started. It's probably an equally dangerous if not a bigger security risk than offshore outsourcing. 

As to quality - quality is getting devalued more and more every year. Look at construction, electronics and healthcare if you need any proof.

In the end, it's a personal choice. Mine is to stay true to my old school roots. I'm not suggesting to avoid tax firms that outsource. I'm suggesting to be aware of the choices they make (typically without your consent) and make sure you're comfortable with theirs.