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.

[Cultural Jihad]

As you wish. I agree that griping can have a huge effect on an outcome; just that I question the need to extend the energy for it. We are living in a global economy, and information travels at the speed of light.

[numberonepal]

Once again I will post this link. The Fair Tax

1. No divulging of income to the Imperial Federal Government
2. No corporate taxes (as if they exist anyway)
3. A very very significantly reduced IRS
4. No taxes on used goods or necessities
5. No coerced class envy
6. More money in your pocket
7. No violations of your First and Fifth amendment rights (see #1)
8. Lower prices on everything
9. The "poor" will still pay no taxes
10. More government revenue

What's the problem here? Am I so misinformed thinking that this would work. This seems to me to certainly be the way to go. We don't need cuts we need REFORM AND WE NEED IT NOW!

[Greybird]

This is an EXCELLENT idea. For once, we are exporting nonproductive work to other countries. Since tax-law compliance is a net burden on productive businesses, why shouldn't they minimize the cost by getting it done as cheaply as possible?

And the Indian workers know how to set up and use secure Web servers. Let's not condescend to think they're incapable of secrecy. In any event, it's a matter to be decided by the accounting firms and their business clients, not Congress.

Cut the tax rates to keep the productive jobs at home, and we'll have a proper combination. Conservatives who say they espouse free enterprise -- if there are any around here -- should support both moves.

[numberonepal]

I've read that there are upwards of 100000 FReepers. The Fair Tax needs your support. I suppose I am a cheerleader for the Fair Tax, but I am more of a cheerleader for freedom and privacy. I used to ask my Dad how much he made, and he'd tell me, "Nunya. Nunya damn business." Why should some government worker puke know what I make, and some Indian certainly has no business knowing my personal worth or income. Heck I won't even let my accountant walk out of the office with my social security number. Now these guys will have access to thousands of social security numbers. This really scares the crap out of me, and it MUST stop and STOP NOW!

[NoControllingLegalAuthority]

I am a middle-aged, non-union apprentice electrician, living in a right-to-work state. Too bad you have no idea what you are talking about.

I used to be competing with other college-educated people for two few jobs in finance and management. Common sense tells us to pursue work in states and in trades where there is the most demand.

I am enjoying my new occupation very much and I don't have to play office politics in some large corporation.

The greatest demand fields are in health care. Nursing, in particular, is a high demand field. I haven't heard of nursing being outsourced to India.

[numberonepal]

Thaks goodness the Indians are crappy graphic designers or I'd be in serious trouble. Good programmers, crappy designers.

[Black Agnes]

Nursing and medicine is being 'in'sourced from other countries as you type. Look at Southern California. They're importing Mexican doctors already. Wanna be they didn't pay as much for their degrees as you did yours? I know several Indian nurses and healthcare workers. H1B and L1 will have their equivalent in your field soon enough.

[Black Agnes]

Ping (forgot the underline last time)

[NoControllingLegalAuthority]

Well, I am being positive and pro-active with my employment choices. If Americans want to destroy their living standards, they could do nothing better to accomplish it than to allow the tidal wave of illegal aliens to continue. The only way Americans can compete against illegal workers living 20 to a house and sleeping on the floor is to also live 20 to a house and sleep on the floor. Why are we committing economic suicide? I don't want to hear others try to tell me it isn't happening. I spent four months last year, on the street, talking to thousands of people who are living the truth of declining living standards because of "open borders."

If we continue to ship millions of jobs overseas and hand the rest to illegals, we'll self-destruct.

What will stop this nonsense in its tracks is when we begin hiring lower-bidding foreign contractors instead of letting domestic contractors hire illegal aliens.

It takes a lot of the fun out of pure, borderless, free-market economics when your own ass is in the soup line.

Wal-Mart may have the lowest prices but we're heading for a day SOON when Wal-Mart's prices will be beyond the household budgets of huge numbers of working Americans.

Henry Ford wisely understood his own auto workers had to be paid enough to buy the product they built.

[tdscpa]

If your accountant is your tax preparer, you can't prevent him from knowing your social security number. If he is professional, he has a copy of your return, including your SSN.

If he has half a brain, he can remember your SSN if he wants to. Do you erase his memory every time he leaves your premises?

[numberonepal]

I sure wish I could erase his memory onece in a while. He mostly does accounting for my biz, and my personal taxes are just an add on around the Spring Purge. I simply get him to prepare everything without my social security number on it. It's also done on software on MY machines in the office. He has never even seen it. There are some things I can do for myself. He visits me, and it is understood between the two of us that NONE of my personal information or documentation leaves the building. I'm a little paranoid about stuff, so this is how I do it.

He IS quite professional, especially in the way he respects my wishes of privacy. He never questions my wishes for privacy. This is why I keep him. I got him young and he can do some "creative" things. He keeps NO records of any of my personal finances. I gather the necessary material, and he works his magic. It's simple.

[Centurion2000]

Meet your new I.T. Network Engineer .... thanks to H1B's

[Eaker]

Ahem......feeding trolls????

;>)

If it is bad for America, Cultural Jihad is behind it 100%.

[Black Agnes]

Sorry. I couldn't help myself. I'm off to stand in the corner. :-D

[Eaker]

No fair taking your laptop!!!

LOL

[A. Pole]

The only way Americans can compete against illegal workers living 20 to a house and sleeping on the floor is to also live 20 to a house and sleep on the floor.

Free market fundies think it would be excellent.

[Black Agnes]

Drat.

[Beck_isright]

" It is a pity our schools are largely useless."

Which sort of kills the concept of creating "NEW IDEAS". Oh well, I'm semi-retired anyways, it's not my problem yet. Only if I have to call Microsoft's help desk or deal with my insurance companies. Sadly, you can't outsource everything without the national identity suffering. I guess this is the solution to kill nationalism in America.

[Beck_isright]

Yes, but my tax documents leaving the offices of the IRS is not what I have in mind. I guess it's time to start erasing my credit pipeline and becoming even more reclusive. This is sad. The Chicken Little drama you refer to I think is happening in the Silicon Valley; those programmers are watching their once large salaries vaporize in front of their own eyes.

[plusone]

Yeah, but they are only sending copies... sarcasm.