Outsourcing to India

Software. Marketing. Training. Running your business.
#1
Posts:
3694
Joined:
21-Apr-2014 11:24am
Location:
North Carolina
So, apparently, today we are getting ready to outsource bookkeeping work to India. They will, presumably have access to payroll reports. How much redaction should there be on those? Is last four digits of SSN fine? What about EIN. 7216 mentions "Returns of the tax imposed by chapter 1." That would cover income taxes for, say, an S Corp, but not employment taxes (not that we should use that as an excuse).

I have been a bit blindsided by this so any thoughts (calming or otherwise) would, as always, be much appreciated.
 

#2
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
Most of the tax scams originate from India! I would not tell those Indians what day or time it is here :twisted:

Check out news stories of how call center employees sell data or out steal identity.
 

#3
Posts:
3
Joined:
18-Jul-2018 3:54pm
Location:
Indiana
I know most of my fraud phishing attempts have been from India, at least thats whats the accent sounded like when they said they were from the IRS and I needed to send gift cards. Good luck. Im sure it will be back on your shore soon enough
 

#4
FLAcct  
Posts:
446
Joined:
21-Apr-2014 2:47pm
Location:
Florida
I can't imagine that any of my clients would agree to have their bookkeeping outsourced to anywhere. Are your clients agreeing to this???
 

#5
Posts:
728
Joined:
28-May-2014 12:04pm
Location:
Arkansas
FLAcct wrote:I can't imagine that any of my clients would agree to have their bookkeeping outsourced to anywhere. Are your clients agreeing to this???


And more importantly, will they be notified? I had a previous boss that wasn’t going to tell his clients. He ran a few test clients and the service was slow, inaccurate, and expensive so we didn’t proceed.

But I think these days it’s a required disclosure. My clients would run and run fast.
 

#6
Posts:
52
Joined:
29-Sep-2014 10:35am
Location:
Rockville Centre, NY 11570
You should be aware of the applicable law pertaining to outsourcing tax returns!

CONSENT TO DISCLOSE INFORMATION OUTSIDE THE UNITED STATES
Regs. Sec. 301.7216-2(c)(2) requires a preparer to obtain taxpayer consent before disclosing any of the taxpayer’s tax return information to another preparer located outside the United States, regardless of whether the preparers are related parties. In all cases, the consent must be knowing and voluntary, obtained prior to any disclosure, and signed and dated by the taxpayer. The term “tax return information” is defined in Regs. Sec. 301.7216- 1(b)(3) and has been expanded to include items such as statistical compilations, IRS communications, and amounts generated (e.g., credits or deductions) based on information provided by the taxpayer. The consent requirements applicable to all tax return filers are described in Regs. Sec. 301.7216-3. Additional consent requirements that apply to taxpayers filing individual returns are specified in Rev. Proc. 2008-35.
 

#7
novacpa  
Posts:
1228
Joined:
28-Apr-2014 1:16pm
Location:
McLean, Virginia 22101
SumwunLost wrote:So, apparently, today we are getting ready to outsource bookkeeping work to India. They will, presumably have access to payroll reports. How much redaction should there be on those? Is last four digits of SSN fine? What about EIN. 7216 mentions "Returns of the tax imposed by chapter 1." That would cover income taxes for, say, an S Corp, but not employment taxes (not that we should use that as an excuse).

I have been a bit blindsided by this so any thoughts (calming or otherwise) would, as always, be much appreciated.


What's your Source for this, please?
I haven't seen any News on this topic.
 

#8
Posts:
3694
Joined:
21-Apr-2014 11:24am
Location:
North Carolina
Novacpa, I do not understand your question. We are, apparently, making information available to a team in India (engaged by an American business that does outsourcing, here and abroad for tax and bookkeeping) from tomorrow morning. My question is how far 7216 reaches. At the moment, we are only outsourcing bookkeeping. Depending on how this goes, we may outsource business and/or personal tax preparation.

When I look at 7216, it refers to "returns of the tax imposed by Chapter 1." So that tells me that it is income tax, but not employment taxes. So we have to think about disclosure of the SSNs and the client's EIN on payroll reports. I am pretty sure that we have a responsibility to mask the SSN, but I am not so sure about the EIN. As far as I am aware, we have not obtained any 7216 consents. Common sense tells me that we should truncate SSNs. The question is how hard I fight this internally.
 

#9
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
The question is how hard I fight this internally.


If the decision to outsource is beyond your control then you have to think about the future implications. Are you a partner in the firm or just an employee?

In one of my prior jobs I did not agree with some decisions my boss made and after thinking about it hard for any future blow back to me I quit!
 

#10
Posts:
3694
Joined:
21-Apr-2014 11:24am
Location:
North Carolina
I am just an employee, but I have my EA credential to protect. My wife is in fragile health at the moment so, although the obvious solution is to move, there are reasons to tough it out, at least for a while.
 

#11
Posts:
52
Joined:
29-Sep-2014 10:35am
Location:
Rockville Centre, NY 11570
To

Novacpa

IRS § 301.7216-2 Permissible disclosures or uses without consent of the taxpayer.
 

#12
Posts:
2887
Joined:
21-May-2018 7:50am
Location:
Northern MI and Coastal SC
I'd start seeking other employment if your firm is not notifying clients of this change. Agree with others, almost every scam attempt I have dealt with has originated from India, though sometimes they ARE on U.S. soil.
 

#13
Posts:
3694
Joined:
21-Apr-2014 11:24am
Location:
North Carolina
Here's the thing, though - are we required to notify? At the moment, only bookkeeping is being outsourced. Tax returns will not be made available. I cannot find anything in 7216 or its regs to say that consent is required for general bookkeeping. However, my concern is whether or not a consent would be required for payroll reports to be sent to India and, if so, who would have to give that consent. If consent is required, logic would dictate that each employee of the client would have to give consent.

I do know that, if tax return preparation is outsourced (and I expect it will be), my employer and the outsourcing company are ready to seek section 7216 consents for that.
 

#14
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
If you think about it logically the payroll processor in India will have knowledge and details of the employees, addresses, wages, benefits, and bank information if there is direct deposit in addition to preparing year end tax forms that will have SS#. :evil:

If the outsourced work will not have any identifiable employee data then I don't think a 7216 is required IMHO!
 

#15
HowardS  
Posts:
2820
Joined:
21-Apr-2014 3:12pm
Location:
Southern Pines, NC
I think it is sad commentary that your employer can't find somebody locally and just pass the difference in cost on to the client. Of course it could be that your employer is just greedy.
Retired, no salvage value.
 

#16
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
Unfortunately no bookkeeper in USA is willing to work for 25 cents per hour!
 

#17
Posts:
2887
Joined:
21-May-2018 7:50am
Location:
Northern MI and Coastal SC
ATSMAN wrote:Unfortunately no bookkeeper in USA is willing to work for 25 cents per hour!


Here's a valid question...do any of us with CPA or EA credentials really want to work with bookkeeping clients that are not willing to pay corresponding rates? I know I do not! If they want to pay $10-15/hr, they can hire their own bookkeeper and then pay me to fix errors, or pay India 25 cents/hr, deal with fraud, and still have to pay me to correct issues. Not one client I have ever worked with that chose a lower cost option lived to not regret the decision at least in some manner.

Then again, my effective rate, including bookkeeping and payroll (two least profitable services), is almost $300/hr as a sole proprietor. That, of course, is on average...some clients, significantly lower. Others, significantly higher.
 

#18
ATSMAN  
Posts:
2094
Joined:
31-May-2014 8:34pm
Location:
MA
Companies that outsource back office processing to India base their decision on the labor cost savings with an assumption that a percentage of the work product will be defective and the cost of corrective action is still lower than if the whole work was done in USA with prevaling wages!

I have had clients who were in the outsourcing business and that was their sales pitch! BTW the cost of labor is going up in India and outsourcing is not as lucrative as 10 years back.
 

#19
novacpa  
Posts:
1228
Joined:
28-Apr-2014 1:16pm
Location:
McLean, Virginia 22101
Are there Tariffs imposed on the returns? Making Tax/Prep Great Again.
 

#20
Posts:
3694
Joined:
21-Apr-2014 11:24am
Location:
North Carolina
Jings, I hope note, novacpa! I will say that the work has, so far, been of quite high quality. We've had a couple of calls with them (part of the service) and they know their onions.
 

Next

Return to Business Operations and Development



Who is online

Users browsing this forum: No registered users and 33 guests