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.

[Chris Seveney]

Quote from @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

Why will you not consider it? Quality of work, security/data breach? Curious as to why (For education not trying to criticize in anyway).

Second question, is there any type of work one may want to consider outsourcing such as AP or AR?

Thanks

[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.

[Basit Siddiqi]

I used to work at the Big four for 5 years of which it was normal practice to send work offshore to countries where English was considered strong.

India, Philippines and Argentina were frequent countries used.
Often the staff within the US would complain about the quality of work recieved.

From my understanding, a form needed to be signed by the client to authorize us to use offshore per section 7216.
https://www.irs.gov/tax-profes...

My firm personally doesn't use offshore help.

I think one of the issues that will come up is that a lot of tax professionals may see it as a way to increase workload and revenue while skipping out on the review process.

[Ned Carey]

Giving sensitive financial information to people you have never met and have no control over seem very high risk to me. It seems to go against the concept of having good "financial controls' in your business.