Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Is your tax return being prepared in India?

Posted by taxguru on January 23, 2005

Outsourcing Sparks Returns – I’ve discussed this trend of using accountants in India to prepare USA income tax returns on a number of occasions. From this article, as well as a lively discussion thread on the Kleinrock board, the trend is still growing, in spite of my explicitly stated opinions that this is a disservice to clients who are often unaware of the fact they are paying top dollar fees to their USA preparers, while those preparers are farming the actual work out to a third world country where pay rates are a small fraction of what they are here in the USA. The fact that most of the USA tax firms quoted in this article were unwilling to have their names used is a perfect indication that they know they are doing something seriously wrong and are too embarrassed by it.

Maybe it’s just a difference in operating philosophy. In my case, I have always considered each tax return I prepare to be an extremely customized work of art. I have also always charged strictly by the time spent in order to appropriately reward the organized clients and penalize the messy complicated ones.

Even when I had my multiple offices in the Bay Area with a staff of preparers working for me, they were all required to abide by the very strict standards and procedures that I had established. I also reviewed and signed each and every tax return. This was tough enough to do when they were working in my offices. How it would be possible to properly supervise people from a different culture living and working on the other side of the planet escapes me.

Based on the multitude of incompetent tax pros who were born and raised here in the USA, I have a very hard time accepting the claim that these outsourcing companies can adequately train people from such a different culture in how we do things here. I have met and worked with many Indian accountants over my career, and they are very well educated and intelligent. However great they may be in their own environment, it’s impossible for them to be as skilled when out of their element. It would be the same situation if I were to start preparing tax returns for people in other countries. As well versed as I may be here in the USA, I would be a fish out of water.

From the solicitations I have seen for these Indian outsourcing companies, their main market is with the assembly line tax services that charge fixed amounts for their returns. They base their appeal on the fact that the USA firms can still charge their clients the same amounts while cutting their labor costs down dramatically. Quality of the product isn’t generally of as much concern to these kinds of tax prep firms as is quantity; so they will probably continue to expand their use of Indian preparers. Client beware is all I can say for people who use these USA tax firms.

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