A Passage to India Expert Discusses Outsourcing at Society Conference

By Simon Eskow

Technological advances since 1998 have altered the workplace enough to pave the way for outsourcing tax filing services, a speaker said at a New York State Society of CPAs conference in November.

“Five years ago a lot of us didn’t have a PC on our desks,” Neil Tipograph said at the Society’s annual Tax/Plenary Conference. “There was no Napster…no Palm Pilots, no Bluetooth (wireless devices).”

These days, with computers and high-speed access in every office, and mandates for taxpayers to file certain returns electronically, the environment is already pointing CPAs toward more professional innovation.

The typical “firm of the future” will outsource its tax preparation services, which Tipograph, a partner with Imowitz Koenig & Co., LLP, deemed “faster, better and cheaper” than performing services in-house.

Society members at committee meetings and seminars have been weighing the risks and benefits of outsourcing tax services in recent months. Tipograph said that while outsourcing expedites tax preparation and lowers costs by $50 to $150 a return, pitfalls remain. He pointed to concerns ranging from protecting a client’s confidentiality, to the gray prospect of exporting jobs, particularly to India, where educated, English-speaking workers supply a competitive labor force.

To the audience at the Nov. 13 conference, Tipograph offered one piece of overarching advice to CPAs in an outsourcing dilemma.

“Outsource your clients’ tax returns only if you are willing to outsource your own return,” Tipograph said.

Best-Practices/Worst-Case Scenarios

Tipograph said that in speaking with a number of firms outsourcing their tax preparation work, he compiled a summary of “best practices.” The summary catches a glimpse of what might be common procedure in the near future: After a CPA quickly reviews data from a client, administrative assistants scan relevant documents and transmit them to the “outsourcer,” who completes the return before sending it back to the firm. Staffers resolve any queries before passing the return back to the lead CPA for final review. This system saves money, frees staff-time and creates a quick turnaround for returns as outsourcers complete projects in “two weeks, as opposed to two months,” Tipograph said.

For better or worse, the system also changes the firm’s workflow, impels firms to purchase new equipment (such as extra computer screens necessary to conduct online tax return reviews), reduces professional staff and dismantles a widely employed training method (tax preparation) for new CPAs on staff.

While Tipograph noted that there are security risks in keeping confidential data in-house, he emphasized the CPA’s regulatory and legislative obligations to protect client information, especially when they are transmitted to outsourcers.

“We have no control of data once it leaves our hands,” he said.

The CPA risks breach of conduct if information about a client is revealed, he said; that risk appears higher with offshore outsourcers, though extra precautions are taken. For instance, outsourcers in India do not allow employees to bring to the office briefcases, notebooks, cellphones or anything else that can be used to copy client data.