US tax returns to India causing stir

THE TIMES OF INDIA ^ | APRIL 16, 2003 | CHIDANAND RAJGHATTA

[John Lenin]

WASHINGTON: Millions of Americans sweated it out on Tuesday, struggling to meet the deadline - April 15 - for filing their annual tax returns as accountants and post offices stayed open late to accommodate the laggards. Many will be hoping the Indians have lived up to their reputation for sound number-crunching.

 

In keeping with the great outsourcing trend that has swept across American businesses, thousands of US tax returns are now being processed in India, a development that has led to quite a stir in the accounting community. Numbers are hard to pin down, but according to Kishore Mirchandani, president of Outsource Partners International, the firm that claims to have triggered the development, more than 10,000 returns went to India for scrutiny this year.

 

The accounting firm Ernst and Young alone is believed to have forwarded 7500 American tax returns to its subsidiary in India after transferring a tax partner familiar with US tax laws there. Scores of other smaller accounting firms have also sent returns numbering hundreds to India after a pilot study last year showed encouraging results.

 

"The business is still in its infancy, but we are looking at over 100,000 returns going to India this coming year," says Mirchandani, whose firm has a 300-person operation in Bangalore and is looking to expand because of the growing demand. Several traditional American firms are also lining up to send returns to India, after pilot projects showed significant reductions in costs and turn-around times.

 

"More and more firms are jumping on the bandwagon after seeing the results. They seem very satisfied with the quality, not to speak of the speed and cost factors," says Bill Carlino, Editor-in-Chief of the journal Accounting Today, which has tracked the trend over the past year.

 

Expectedly, not everyone is thrilled with the outsourcing of what some regard as sensitive financial information. In the latest issue, the magazine Practical Accountant ran a column by a New York accounting professor questioning the trend on grounds of security and job loss to Americans.

 

"If you were to stop by any downtown skyscraper where Ernst & Young has an office, I guarantee that you could not just walk to the elevators and go up to the company's offices. You would be stopped by at least one security officer before you got anywhere near the elevator bank," wrote Prof Lloyd Caroll, head of the accounting department at Manhattan Borough Community College. "Yet the company does not appear to be troubled by the notion of putting taxpayer security in peril by sending returns out of the United States."

 

"The very notion of transmitting confidential tax data - from Social Security and employer identification numbers to financial information - to any foreign country, even Canada, borders on the reprehensible at best, and is treasonous at worst," Caroll fumed.

 

But accounting firms say security is a non-issue. What they are moving to India are only images and the original data remains with the US firm. The software used by the firms is also web-enabled and is accessed by the Indian subsidiary through a server in US.

 

Firms also reported a 50 to 60 per cent cost reduction, besides improved scrutiny because they are able to hire better qualified people. In the US, simple returns are often viewed by junior staff who are not CPAs.

 

Although the pilot studies of last year involved sending simple low end returns, some firms such as Toronto's Horwath Ornstein are now said to be sending high-end returns. In turn, firms are also posting Indian-American CPAs qualified in US tax laws to India

to oversee the work.

 

"The accounting profession in India itself has improved a great deal and quality should not be a problem," says Ram Ganesan, a Maryland-based CPA, who practices in the United States but sees outsourcing as an encouraging trend.

[John Lenin]

I don't think this is a good idea at all.

[Black Agnes]

Identity theft writ large! Wheeeeeeeeeeee.

[Black Agnes]

ping!

[Beck_isright]

"The very notion of transmitting confidential tax data - from Social Security and employer identification numbers to financial information - to any foreign country, even Canada, borders on the reprehensible at best, and is treasonous at worst," Caroll fumed."

Of course after having your bank account hacked, the IRS will tell you that's no excuse for your check that you wrote to them bouncing. Time to implement the flat tax now. What's the point in getting an accounting degree if this is the way we will operate as a nation.

[Black Agnes]

What is the point in getting '*' degree if every job will be outsourced to a 3rd world country?

[Billy_bob_bob]

Bingo! This issue is going to end up boiling over, I can see this one coming. Either something is going to be done by the government, or there is going to be some serious civil unrest before this is all over.

[Centurion2000]

Identity theft writ large! Wheeeeeeeeeeee.

BINGO

[Black Agnes]

ping! I guess the culprit is that *evil* accounting union...yeah, that's the ticket!

[Beck_isright]

Amen brother. What is the point. We are now outsourcing accounting, I.T. jobs by the boatload, and cutsomer service positions by the tens of thousands. I'm really concerned that we will be a victim of our own success because without a solid manufacturing base and with the service industry being exported one job at a time, just what the hell will we do for economic growth?????

[Black Agnes]

Good question. Course, the standard line is 'SHut up you lazy American, it's lazy people like you and UNIONS that caused the downfall of this country!'

No mention of the greedy corporations and CEO's having equal hand in said destruction.

[blam]

"What is the point in getting '*' degree if every job will be outsourced to a 3rd world country?"

If you made a lot of money you'd just end up throwing it away on useless things anyway.<> Who is John Galt?

[Arkinsaw]

Amen brother. What is the point. We are now outsourcing accounting, I.T. jobs by the boatload, and cutsomer service positions by the tens of thousands. I'm really concerned that we will be a victim of our own success because without a solid manufacturing base and with the service industry being exported one job at a time, just what the hell will we do for economic growth?????

Just wait until a few of these third-world countries nationalize all that stuff and our corporations are left holding a big old empty bag.

[monkeywrench]

"...just what the hell will we do for economic growth?????"

Haven't you heard? Why we'll do "what we do best". Whatever that is.

[ptomsiaresool]

I am now unemployed and this just bunrs my ass... I live in california Bay Area and all i see is Indians with pregnant wifes.... Now they have it both ways.... Civil unrest will only be a matter of time......

[Billy_bob_bob]

They'll just go running to the government for a bailout. They'll get it too.

[Billy_bob_bob]

You have my sympathy. I too used to live in the third world, er, the Bay Area. My advice is to get out of there as soon as you can.

[The_Media_never_lie]

I don't think this is a good idea at all.

Where's the value added here?

Wouldn't it make more sense to streamline the accounting laws to uncomplicate the process rather than export the inefficiency to foreign accountants?

Nothing against the Indians, they are smart people and good workers, but this is crummy!

[ptomsiaresool]

If my mom wasnt blind I would have been out of here two years ago.. Up to Boise where my highschool buddy makes a damn good living....I work in insurance and could find something....

[Beck_isright]

"No mention of the greedy corporations and CEO's having equal hand in said destruction."

I think that should read greedy and traitorous. I still think back to all the secrets Bubba let all those companies sell to China and it burns my butt.

[the gillman@blacklagoon.com]

I know I don't bother to make much anymore. It all goes to utterly useless things.

Like taxes to help India or China's economy and support damnocrat causes.

Screw em. I'll stay home again this year.