Tax Return Preparation Outsourcing Q&A
Q: Why are you outsourcing returns?
A: 1- Staffing shortage; There has been a very significant decline in the number of accounting graduates entering the industry over the last 5 years. And with 75% of AICPA members retiring over the next 8 years, it is not wonder most firms are turning to outsourcing to help service their accounts.
2 – We are moving the data input and organization of workpapers to our third party provider to free up time for our professional staff to concentrate on the complex issues affecting your return.
3 – Being able to service your account in a timely fashion. IRS has compacted the busy season by allowing the people issuing tax information (i.e. form 1099) a month later than normal. We want to be able to get your returns out on time as opposed to extending them.
4 –We are concerned about the work/life balance within our staff, I order to get their work done, they are working 12 – 14 hour days; outsourcing lessens the burn out factor. Would you rather have someone who is burnt out doing your tax return or someone who is fresh and can identify opportunities?
Q: Is outsourcing something new?
A: No, it is currently an accepted industry practice. Outsourcing tax returns began in 2001 (Xpitax was the pioneer firm in the industry) and today industry estimates have over 500,000 tax returns are being outsourced, including the Big 4 firms with thousands of employees oversees.
Q: But I am patriotic.
A: It is not a question of patriotism; it is a question of customer service. The main driver for outsourcing is the current supply demand imbalance not replacing US accounting jobs for cheaper labor. Accounting firms first have to get the work done. Second they have to get it done in a reasonable amount of time. Third they have to get the work done at a reasonable internal cost.
In the accounting outsourcing world, jobs are not lost to overseas companies; overseas workers fill a gap that cannot be filled with domestic professionals. Outsourcing solves a very serious problem of not being able to find people to serve our clients.
Q: Are you still responsible for my return and how do I know it is correct?
A: We are responsible for the accuracy of your return. While we are outsourcing the initial data input and workpaper preparation, your return still goes through an extensive review by our firm’s tax staff to insure that we have taken advantage of all the tax laws to minimize your tax liability and to insure accuracy. And as part of the preparation process, we are responsible for signing the return.
Q: If I agree to the Consent, will I see a reduction in my tax prep fee
A: No, there is no reduction in our costs regarding the preparation of your return as a result of outsourcing. What savings we are seeing from outsourcing your return is absorbed by the increased review time spent trying to minimize your tax situation. We are outsourcing not to cut our costs, but to better service our accounts.
Q: Why is the IRS so concerned about disclosure?
A: The IRS believes that the taxpayer should control their own tax return information held by prepares and should be the ones to direct the preparer who they can disclose their information to. This disclosure pertains to tax return information that is shared with any third party provider, whether they are domestically or international located.
Q: Why is the consent form language so onerous in its language?
A: This is language that is promulgated by the IRS and cannot be altered by the accounting firm.
Q: Who is your Outsource Provider and why did you pick them?
A: We performed extensive due diligence and choose Xpitax as our outsource provider based on the following factors:
1)They are a US based company owned by a CPA firm located in Boston
2)They use a Boston based hosting site, with your information never leaving the US.
3)There security process and procedures were extensive.
4)They have an extensive tax training program for their staff, even better than what is available in the US
5)They have been in existence for over 7years, being the pioneer in the industry
6)Outsourced over 25,000 tax returns last year
7)Never had a security issue, whether here or in their oversees office.
Q: What security does Xpitax have to make sure my information is safe?
A: In most ways, we diminish risk, not increase risk, by using our outsource provider. In the US most firms are still operating in a paper based environment. In the outsource world, the entire tax outsource process is digital which allows our outsource provider to wrap security measures around their workflow process that would be difficult to put in place in those firms operating in the paper world. The following should also be brought up with the client
1)The taxpayer information never leaves the US. It resided in a hosted environment in Boston. Our overseas professionals come into the hosting site through a secure private network connection (much like people to do online banking access their information at the bank hosting site). So, do not have to worry about your information sitting on servers overseas.
2)All information transmitted from the CPA firm to the hosting site is encrypted
3)Xpitax owns it operations overseas, so that insures that the facility and their employees only work for accounting firms located in the US and Canada.
4)The overseas office cannot download any information locally
5)The overseas office is a virtual office, with no access to paper, pencils/pens, pocket books or briefcases. There is a guard at the only entrance 24/7 who monitors what comes into and goes out of the office.
6)Other than a direct link to the Boston hosting site, they do not have access to the internet and the hosting site can only be accessed from the office.
7)Xpitax uses a world class service provider, Savvvis, to host your information. They continually have security audits to insure the integrity of the site.