I don't think it was happenstance that I came in contact with the outsourcing of the preparation of 1040s to India twice recently.

The first instance is the Braintree, Mass. accounting firm of Kirkland Albrecht and Fredrickson, a winner of the Practical Accountant's Practice Innovation Awards, that was profiled in the September issue of Practical Accountant. The firm won the award for its outsourcing 1040 program during the past tax season. It successfully outsourced the preparation of approximately 200 returns to India at an average cost of $75 dollar per.

The second instance occurred the day after the issue came out when I met with Dave Wyle, the president and CEO of Sureprep, a company that offers the outsourcing of tax returns to experienced chartered accountants in India. In addition to the 1040s, a number of states' returns can also be prepared.

Wyle, who was the founder of Epace, says that clients' tax information is scanned and transmitted electronically to India, with the returns prepared on the same software used by the U.S. practitioner. The turnaround time is estimated at no more than two days. Wyle readily admits that, when returned, the 1040s will only be about 80 to 90 percent completed and they will still need a close review. He feels, however that the quality will be about the same as a tax return done by a staff accountant in the U.S.

Doesn't it sound somewhat like a resurrection of the service bureaus of years ago? I expect that because of staffing shortages and increased competition over pricing of tax prep work, outsourcing of tax returns will be getting much more attention this coming tax season. Obviously, quality control, reliability, and security will be the prime issues.

Clearly, firms have to be more nimble and reduce fixed costs. When I see accounting firms and companies providing services to other accounting firms arriving at the same solution for a problem, I don't believe it is a mere coincidence. More likely, it is an indication that outsourcing of tax returns will be a market force that will have a direct impart on a large number of accounting firms.

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