[rpsurf5]

When will it ever end ? Now tax returns are being outsourced. I would not feel too comfortable knowing some guy in India who doesnt know the first thing about the the US is doing my tax return

! Not only that , all your personal information is overseas somewhere ! I better check with my accountant and make sure he is actually doing mine !

click here for article

Looks like this guy is expanding his operation to include tax preparation !

This post edited by rpsurf5 08:50 AM 03/25/2008

 

[jpd]

General Electric has a huge subsidiary there to create their 10-K for the SEC, now they are doing them for other large corporations.

 

[jpd]

Does anyone know how this would play out in Tax Court? The firm that signs off as the paid preparer should represent you there, but they can claim now they outsourced and didn't do your return?

 

[MakoMike]

jpd wrote:
Does anyone know how this would play out in Tax Court? The firm that signs off as the paid preparer should represent you there, but they can claim now they outsourced and didn't do your return?

The firm who prepared you return has no stautory obligation to represent you either before the I.R.S. or in Tax Court. In fact most tax preperation firms cannot represent you in Tax Court because they are non members of the bar. If you want your preparer to be on the hook for representing you either during an audit or during litigation, you'll have to make that deal (hopefully in writing) when you sign up with them.

As far as return prep being outsourced in India, it makes perfect sense. Almost all returns are really prepared by computer programs these days with the accounting poeple just inputting the required data and checking the output. No reason someone in India can't input the data as well as some wet-behind-the-ears college kid who just graduated with a degree in accounting.

 

[jpd]

FIN 48

They're not exactly off the hook....

Return preparers have recently become subject to new, higher standards from two sources: Congress and the Financial Accounting Standards Board (FASB). This item compares the new "more likely than not" standard and explores the pitfalls that CPAs may encounter under FIN 48 and the Code.

Preparer Standards Under the Code

The Small Business and Work Opportunity Tax Act of 2007, P.L. 110-28 (SBWOTA), which was signed into law on May 25, 2007, includes a provision that modifies the existing preparer penalty rules. SBWOTA amended Sec. 6694 by making the following changes:

1. It expanded the preparer penalties to apply not only to income tax returns but also to estate and gift, excise, exempt organization, and employment tax returns.

2. It increased the dollar amount of preparer penalties:

* For an "unreasonable position," the penalty is increased from $250 per return to the greater of $1,000 or 50% of the income derived by the preparer (per return or claim for refund).

* For "willful or reckless conduct," the penalty is increased from $1,000 per return to the greater of $5,000 or 50% of the income derived by the preparer (per return or claim for refund).

3. It modified the standards of conduct that must be met to avoid the imposition of preparer penalties associated with the understatement of a tax liability:

* The "not frivolous" standard for understatements involving a disclosed position is raised to a "reasonable basis" requirement.

* The "realistic possibility of being sustained on its merits" standard for an undisclosed position has been raised to a "more likely than not" requirement.

The Service has issued Notice 2007-54, which provides transitional relief from the new preparer penalty rules. This transitional relief will allow return preparers to follow the previous law under Sec. 6694 for income tax returns, amended returns,...

Goliath

 

[MakoMike]

Fin 48 doesn't apply unless you're a publicy traded organization ( I don't think many Noreasters qualify

) The preparer penalties have nothing to do with who represents you in audit or litigation, they only reltate to what the preparer does in preparing your return. IOW if they take resonable positions on the return they don't have to worry about what happens to you on audit.