By Ken Berry
Do you think you're the only one in your office who can complete tax returns "the right way?" If so, outsourcing some of your tax work to India or some other foreign location isn't for you. You won't be happy giving up control, even though you'll be overseeing the process and signing off on the finished product. For other practitioners, however, this growing trend is worth considering.
According to David Wyle, president and CEO of SurePrep, a provider of tax-based outsourcing solutions, one of the main benefits is that it helps CPA firms with staffing issues. SurePrep was founded in 2002, and to Wyle's knowledge, it was the first of its kind in the industry.
"Many people recognize that tax preparation work is extremely seasonal", says Wyle. "Most of the work is done at a couple of times of year. The busy time is the first few months through April and then again during tax extension season." Wyle points to tax return preparers working crazy hours, sometimes even to 2:00 a.m., to meet the needs of clients. His firm aims to "take the edge off" the busy tax return season.
Wyle notes that some professionals have even left the accounting profession due to the compressed workload. Outsourcing allows you to have "a normal life." At the same time, he claims that a CPA firm is able to attract new talent, retain valuable workers, and realize savings by using SurePrep's services. Wyle estimates that offshore outsourcing can save 40 percent off a firm's costs.
Outsourcing for your firm doesn't have to be limited to tax preparation services. SurePrep also assists with compliance work and offers an innovative Form 1040 scanning product to everyone - even those who don't outsource. SurePrep's personnel are trained to handle both the Internal Revenue Code and software development and troubleshooting.
Typically, a CPA firm will send a client's data to SurePrep, which scans the documents into a pdf and uploads the file to its website. It organizes the information, does the grunt work and completes the return, accompanied by electronic work papers. All of the work is presented in the comprehensive SurePrep binder. Wyle says the binder makes it easy for a CPA to view the results and fill in any holes, such as a missing tax ID number or the basis figure for an investment.
CPA firms are able to contact the staff members of its SurePrep team in case of questions or open items. Then the firm can rely on SurePrep to accommodate any changes or make the entries on the return itself. Wyle has observed that some CPA firms have a particular way in which they want returns to be structured, so they might have an initial consultation to set the parameters.
Naturally, security is a major concern for many CPA firms. SurePrep makes sure that transmissions are encrypted and that its servers are physically secure. It also relies on C-Level Security, an independent firm that has also done work for Intuit, auditing its system on an annual basis. C-Level tries to hack into the system and provides solutions based on the results.
Finally, SurePrep locks down its service center where the tax preparation work is done, prohibiting cameras or cell phones within the facility. No one can text or electronically relay a taxpayer's vital information. The environment is completely paperless, and workers use "thin clients" so all the data remains in the United States. SurePrep also performs criminal background checks on its staffers.
The objective is for CPA firms to feel completely comfortable with outsourcing tax returns. "We do everything that's feasible", says Wyle. "We're ISO 9001-certified. In ten years, we've never had an issue." He also recognizes the importance of protecting his company's reputation. If security problems were to occur, Wyle surmises he would probably be out of business.
Wyle acknowledges that outsourcing only makes sense for CPAs who have a "leverage" mentality. As mentioned above, if you have the mind-set that you're the only one in your office who can do returns properly, you won't be happy with this service. Also, keep in mind that you'll be reviewing the work before you sign the return. As with tax returns delegated to junior staff members, Wyle says it's unrealistic to expect perfection.
What will your clients think about you outsourcing their returns? Many clients already understand that a senior CPA can't prepare every tax return and that shipping work overseas can speed up the process. Wyle asserts that Internal Revenue Code §7216 had a chilling effect, albeit temporarily, when it was issued back in 2007. This regulation requires a CPA firm to obtain written consent from clients for using offshore outsourcing. In response, SurePrep began offering another outsourcing service from onshore locations, but at double the usual price. Now that outsourcing is becoming more mainstream, Wyle sees renewed interest in the offshore approach. "It's preferable to having tax returns sit on the shelves for weeks", he says.
SurePrep's long-time clients seem to agree. Greg Diamond, a partner with Grossman, Cohen, & Diamond, LLC, in Deerfield, Illinois, has been using the service since its inception. "We don't need to hire seasonal staff, and all returns come back in a consistent manner in a shorter time frame." says Diamond. He adds",It's hard to find quality for workers for just six weeks."
Diamond also commends the ability of SurePrep to include an extensive set of Quick Notes with returns. "The customization makes it work exactly the way we want it to work." Diamond says that using the outsourcing firm has been a "nonissue" for his clients. "We probably wouldn't be here without it", he concludes.
Peri Aptaker, director of Wealth Management Services for Kahn, Litwin, Renza & Co., Ltd., in Providence, Rhode Island, echoes some of the same sentiments. "Every single return is organized and prepared in the exact same manner, so it's easy for our managers to review", comments Aptaker. She says that outsourcing works better than using audit staff to do tax returns and it's much faster. "We've never had a turnaround time go beyond two or three days", she claims. The firm outsourced 1,600 returns last year, or approximately 20 to 25 percent of its workload. Are clients accepting of the practice? Once they have "a conversation" explaining the benefits, Aptaker says clients have readily jumped on board.