Outsourcing Tax Return Preparation: Domestic vs. Offshore, IRC Section 7216, Client Consent, Privacy Concerns

"Tax Season Is Coming, and These Firms Can't Find Enough Accountants in the U.S. The accountant shortage is so acute, small and midsize firms are ditching audits and hiring overseas"---WSJ Jan. 18, 2023.

The severe shortage of accounting and tax professionals has given rise to outsourcing tax return preparation. Most firms are considering creative ways to supplement staff, and outsourcing has become an effective remedy for many practitioners. The benefits and caveats of this approach are many and assorted.

Firms that outsource tax return preparation must comply with numerous rules and regulations mandated by various agencies. IRC Section 7216 dictates requirements for disclosure of personal tax return information outside the U.S. Failure to comply could result in criminal consequences. Practitioners outsourcing returns are subject to the Gramm-Leach-Bliley Act under FTC rules requiring oversight and safeguards for offsite preparation.

In addition to compliance concerns, a primary consideration is whether to outsource preparation within or outside the U.S. Some tax professionals retain the services of specific personnel overseas who function similarly to domestic employees, returning annually or as needed for return preparation. The cost savings can be remarkable. Selecting a trusted and reliable outsourcing provider is critical whether a foreign or domestic service is retained.

Listen as our panel of outsourcing experts details the essential considerations for firms outsourcing or considering outsourcing accounting and tax return projects.

1. Outsourcing returns: introduction
2. Domestic outsourcing
3. International outsourcing
4. Section 7216: disclosure of return information by preparers
5. Client consent
6. Addressing privacy and security concerns
7. Risk management

The panel will cover these and other critical issues:

• IRC Section 7216 requirements for practitioners outsourcing tax returns
• Various methods and levels of outsourcing tax return preparation and the pros and cons of each
• Steps tax firms can take to ensure the security of clients' personal information
• Differences between domestic and offshore outsourcing

Learning Objectives

After completing this course, you will be able to:

• Identify steps to take to secure clients' personal data
• Determine IRS Section 7216 requirements for outsourced tax returns
• Decide when client consent must be obtained for outsourced returns
• Ascertain key differences between domestic and international outsourcing

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).