Outsourcing Tax Preparation

xminionFebruary 27, 2008

Hi,

Article in the paper here today about HR Block and other tax preparers outsourcing your tax info to India. They are not required by law to inform you of whether your file was prepared in India or not.

Asia does it faster and cheaper than we can get it done here, but apparently even small accounting firms have started outsourcing the returns.

Does anybody want people halfway around the globe to

know your most sensitive financial business? Your SS#??

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dreamgarden

I won't use someone who needs to ship my information out of the country. Here is an article that was published last year. Some useful tips to keep your info safe.

Identity Theft: Protecting Your Tax Information
March 1, 2007

What does your tax preparer need to know?

SACRAMENTO, Calif., March 1 /PRNewswire/ -- With identity theft cases on the rise, the California Tax Education Council (CTEC) is warning you to take extra precaution this tax season.

The Privacy Act requires tax preparers to provide you with a copy of their privacy policy and prohibits preparers from sharing your private information unless given permission beforehand. Consumers should always review the preparer's privacy policy before making a commitment.

"Taxing agencies are only interested in taxpayers' income and allowable expenses, so tax preparers should only ask questions specific to those items," says CTEC Board Member Jacqueline Marazzi. "If a tax preparer asks questions that do not relate to income or allowable expenses, consumers should beware."

Top five questions to ask:

-- How will you ensure my private information is protected?
-- How will you save my private information?
-- Will you only have access to my private information?
-- Will you share my private information with telemarketers?
-- Do you outsource your work?

An estimated 10,000 people are illegally preparing tax returns in California. State law defines only four groups of professionals that can legally prepare tax returns for a fee:

-- CTEC Registered Tax Preparer (CRTPs)
-- Certified Public Accountants (CPAs)
-- Enrolled Agents (EAs)
-- Attorneys

CTEC was established in 1997 by the California State Legislature to protect the public by registering tax preparers within the state. Each CTEC Registered Tax Preparer is required to purchase a bond and complete annual tax education courses. Last year CTEC registered more than 40,000 tax preparers.

For more information about CTEC, call 877-850-2832 or visit our website at http://www.ctec.org.

Source: California Tax Education Council

    Bookmark   February 27, 2008 at 1:55PM
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tishtoshnm Zone 6/NM

Just as a warning to check your credit report, many hospitals outsource their medical transcription to large companies who then outsource some of it to primarily India although there are other countries. The internet makes this very easy to do. Companies are required to have encryption of this information and I do not want to suggest that the people getting this information are using it but it is always a possibility. Granted, someone stateside could swipe that info too.

    Bookmark   February 27, 2008 at 2:04PM
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western_pa_luann

I don't see why people would put up with that.
I would take my business elsewhere.

My tax guy is small and local. No worries for me.

    Bookmark   February 27, 2008 at 2:34PM
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Chemocurl zn5b/6a Indiana

I don't see why people would put up with that.
Some folks just plain don't know any better. For yours I was one who went to H&R, not knowing there really was anyone any better at any price. I too now have a small local great tax lady that I can really trust to know what she is doing, as well as all my info being secure.

Sue

    Bookmark   February 27, 2008 at 4:08PM
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hittlets

This discussion makes me think at what level do these companies need to have people in other places (and the country isn't a concern, I wouldn't want any American to look at my private records) prepare your taxes? I use H&R Block online. I have used them for about 5 years or so. I felt that since I was putting my information directly into the website, and I believed (naive of me?) that when I hit submit my information goes directly to the IRS. Do H&R Block and other online/tax preparation software send the information to a third party before sending to the IRS? I really like using the online services, but I appreciate my privacy more.

Thanks.

    Bookmark   March 3, 2008 at 8:28AM
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scryn

Hittlets, if you go to the federal tax site (maybe it is IRS.gov??) I can't remember it exactly right now, they give you a link to an online tax prep service. We use that one as it is recommended by the government. We can submit the online forms right to the irs online and not have to print out and send the paper forms, which is nice.
However they DO save your information from year to year which I don't like, but then it is nice to not have to type in the same stuff year after year. To view last year's info though you need a lot of information from the current year and previous years taxes, so I think that is secure at least. I guess I assume their encryption is up to par, however I should read about that!!

Depending on your income the program is free, otherwise you have to pay. I don't know if it is cheaper than H&R but we refuse to use them as some local workers of that company were stealing information from tax preps and stealing identities.

    Bookmark   March 4, 2008 at 3:26PM
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joyfulguy

I heard a few years ago that the larger accounting and tax preparatioon companies have been sending some of their business, including some aspects of tax preparation, to India and other places for years.

At about that time a number of the smaller companies doing similar work disliked having the big guys enjoying that extra advantage, so a number of them went together to make some links with some Indian agencies, then, if I remember correctly, they sent their raw data to an assembler of the information here, who sent the essential information overseas, without information that would identify individual taxpayers.

Probably a bit similar to our final, "departmental exams" in the last two years of high school, where we wrote our exam, put it into an envelope, there was an identification number on the envelope, and the writer wrote his/her name on a strip of paper that carried the identification number and was detachable from the envelope after its receipt at the department of education, before the marker dealt with it.

Don't be too sure that your small local accountant/tax preparer isn't using such a system ... especially if they get the work done really speedily.

Your info may go to India just prior to the local office closing tonight, it's done overnight there (daytime for them) and can be back in your local office tomorrow morning.

Here's an idea: ... if you buy the annual tax preparation book ($20.00 or so?), spend some time a month or so before tax is due, reading the various portions of the hundreds of pages that apply to you (most of it won't) - or, after some study, you might choose to make use of - if learning of the tax system enables you to save $200.00 or so, that'll pay for the book for a number of years. (And you could rent it out to friends each year after you've finished your reading and planning). When you consider that you save the preparer's fee when you prepare your own ... you get the book free ... and even get some pay for the hours of work that it takes.

If you could save $1,000.00 or so ... I don't see you complaining ... do you? If you can repeat that story next year - so much the better.

Learning how your income and assets work - an interesting hobby ... that pays well!

Learning how the income tax system works - an interesting hobby ... that pays well!

I've asked a number of local tax preparers whether their clients ask them, as their business is wrapped up for the year, whether they have some suggestion(s) that the taxpayer might use by altering his/her system somewhat, that would result in some tax savings.

Almost all of them say that hardly anyone ever asks that - I think that almost everyone said, "Never"!

I find that piece of information incredible!!

If a guy who knows the tax system prepares my tax return, s/he becomes rather familiar with my financial circumstances, and might have some suggestions that might save me a substantial amount of taxes, were I to rejig my system a little.

So ... why don't people ask???!!!

How do you spell "S_T_U_P_I_D"??

I hope that you're enjoying your late-winter week.

ole joyful

    Bookmark   March 4, 2008 at 11:04PM
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