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Tax

IRS Cracks Down on Tax Preparer Miami

IRS Cracks Down on Tax Preparer Miami

The IRS is sending letters to 21,000 members of the Tax Preparer Miami community to make them aware of their preparer responsibilities and to provide them with information to ensure the accuracy and quality of their clients’ returns in the 2012 filing season. The IRS plans to visit at least 2,100 of the income Tax Preparer Miami during the filing season at their business locations.

Tax Preparer Miami and IRS has provided information regarding the letters to and visits with income tax preparer Miami in a question-and-answer format. The purpose of the letters and visits is to heighten awareness of preparer responsibility, with a focus on income tax preparer Miami who prepare a large number of returns with Schedules A, C and E.

Certain Income Tax Preparer Miami firms have been selected due to the high percentage of attributes that indicate errors in filing Schedules A, C or E during the 2011 filing season. Included with the letters are enclosures addressing areas of concern regarding those schedules. The letters and visits are an integral part of the effort by the IRS to provide oversight of income tax preparer Miami firms, as well as to inform practitioners of their responsibilities.

The Schedule A enclosure is being sent to income tax preparer Miami who have prepared returns that have a high number of attributes typically found to have significant errors on Schedule A, Itemized Deductions. The notice lists the most common issues as unreimbursed employee business expenses and business mileage claimed on Form 2106, travel, meals and entertainment expenses, and charitable contributions. Tax Preparer Miami CPA Viera advises staff to make reasonable inquiries if the information furnished by a taxpayer appears to be incorrect, inconsistent with an important fact, or incomplete.

The Schedule C, Profit or Loss from Business (Sole Proprietorship), enclosure is used to inform income tax preparer Miami who have prepared returns with attributes that indicate a high number of errors on Schedule C. The most common Schedule C issues are: reporting less than all the gross receipts, reporting expenses that are not ordinary and necessary for the business, and reporting the allowable amount of the expenses paid or incurred during the tax year. Income Tax Preparation Miami CPA Viera advises staff to ask clients sufficient questions to ensure that the expenses being claimed are correct. Taxpayers may not fully understand the law and they may believe they are entitled to claim Schedule C deductions for nonqualifying expenses.

The Schedule E, Supplemental Income and Loss, is the third enclosure used by the IRS to indicate that a income tax preparer in Miami has prepared returns that have a high incidence of attributes found to result in error on Schedule E. The most common issues are that rental income and expenses have not been correctly reported, rental depreciation has not been correctly calculated and passive activities, basis and at-risk rules have not been properly considered or calculated. Income Tax Preparation Miami CPA Viera makes the appropriate inquiries to determine the existence of facts and circumstances required as a condition for claiming a deduction or credit.

When it comes to income tax preparation in Miami residents often feel a lot of anxiety. This is for good reason as you need to carefully go line by line and make sure that you are executing your tax preparation the right way. Why not hire a pro?

Tax Preparer Miami Finding a Pro

Really, there is no reason to stress out when tax time rolls around. All you need to do is find a professional Tax Preparer Miami. You can start your search online by typing income tax preparer in Miami into the search engine of your choice and seeing what comes up. Likewise, you can look in the phone book under income tax preparation Miami and see what is available.

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Tax

A Little Pre-Tax Season Tax Planning Can Go a Long Way

A Little Pre-Tax Season Tax Planning Can Go a Long Way

Some may tell you that it’s too late to do some Tax Planning; that you’ve done all you can do. That it’s time to just hunker down and wait for tax season to start, hoping it will be over before you know it. In truth, it may be too late to drastically change the course of your tax season. However, some relatively easy workflow strategies can help you realize timesaving efficiencies and help you better weather the storm.

By polling firms formally and informally, Tax Preparation Miami uncovered five tried-and-true strategies for a smoother busy season, Tax Planning. Not surprisingly, most agree that a little pre-season Tax Planning and preparation can go a long way.

Tax Return Preparation easier with Tax Planning

1. Communication

This is critical. It won’t eliminate unexpected kinks in your busy season plan, but it will help to minimize them. Your Tax Preparation Miami firm should have a clear communication strategy for clients, staff and any third-party resources you plan to utilize during busy season. Don’t assume that everyone is already on the same page.

Depending on the size of your Income Tax practice and your relationship with individual clients, communication may be in person or in an engagement letter. Key elements should include the following:

Clearly state when, how and where to submit tax information.

  • Give the deadline for tax data, making it clear that failure to meet that deadline results in an automatic extension
  • Provide disclosure and consent forms.
  • Use this as an opportunity to manage expectations, emphasizing constraints on your time.
  • If you have people going into the field, arm them with the list of information needed for tax season so they can address it in person with the client. Make it part of your year-end planning to tell your client when their work is scheduled and get their buy-in. This gives them an opportunity to alert you to scheduling conflicts such as vacations, board meetings, etc.

It’s important to clearly articulate your expectations for your staff – hours, weekend work, opportunity to work remotely, contingency plans in the event of an unexpected absence due to illness, weather, or personal matters (if this varies from your normal HR policy).

Additionally, if you’re using temporary or seasonal workers, or outsourcing, now is the time to inform that resource of what to expect in terms of a time commitment in order to avoid misunderstandings or over-commitments later.

Finally, set a staff schedule for when you will meet during busy season. Allow some flexibility, but lock in key dates for things like determining when to extend clients to avoid wasting time trying to schedule management discussions on the fly. If you’re planning to meet once a week to review workloads and schedules, do it the same day and time every week and set a standing, manageable agenda that will allow participants to get what they need quickly to balance work and address potential resource issues.

2. Capacity Tax Planning

Two important themes to Tax Planning pre-season preparation: Use what you learned last year as a guide, and do as much as possible before the season really gets going. For example, you might want to run last year’s extension report and prepare these same extensions in early January.

Look at how you handled the larger, more complex client returns last year to see exactly when the return was prepared and reviewed, and build it into your scheduling for this year. Research major tax law changes in advance, and add that intelligence into the appropriate client tasks within your workflow software. For example, you might do a data scan to identify all the clients that will be impacted by the new tax legislation this year, then flag them and add instructions to those tasks universally so the preparer and reviewer have the information at their fingertips.

Tax Planning should coordinate scheduling and client responsibility early. This tip goes back to communicating expectations and creating a plan of accountability. Utilize software tools like workflow and scheduling to enforce your plan. Mail your completed organizers in early January, and utilize available technology resources for your client data (i.e., Goldman Sachs provides online access to clients’ 1099s, etc.).

3. Prepare for Problems

Let’s face it – there will be glitches, so it’s best to expect them and prepare for how you will handle them when they arise. Create a schedule that carves out time to plan for and address potential workload and bottleneck issues. Use real-time scheduling and workload management tools to get an up-to-the-minute view of all work in progress by person and status to see who’s buried in preparation or review, who’s overbooked and who’s under-booked so you can make those on-the-fly capacity planning decisions.

For example, one firm has a weekly meeting between the scheduler, the audit team leader and the tax team leader during which they review issues, identify chunks of time and conflicts, discuss new unexpected business, and locate additional resources. This allows them to gain a seven-week outlook and move work dynamically within the workflow system. Part of the purpose of this meeting is pre-emptive problem solving. It’s possible that you can schedule tax season well in advance, but there will always be issues that come up.

Tax Planning relies on its workflow software to see clients with 3/15 and 4/15 filing deadlines to quickly view and proactively address any missing information or other issues holding up the client return. Armed with that view, this firm can proactively work with clients and staff to address the bottlenecks.

Of course, having a real-time view of the work also empowers accounts receivable to stay on top of billing for all the returns that went out that week.

4. Digital Work Environment

The specific software application’s your firm employs varies according to the size of your firm, the Tax Planning services you offer and perhaps even your culture. I think we can all agree that, in addition to some software basics (MS Office, Adobe), the following tools enable you to work digitally: dual monitors, scanners, workflow system, electronic file storage (DMS or shared network filing tree) and a portal.

Some of these you can still put in place before the upcoming busy season. You don’t have to make a career out of picking a scanner; just get started. Use the resources available to help you make a good selection quickly: consultants, technology-focused publications, networks and associations, peers, AICPA and state society resources, and websites like TotallyPaperless.com.

Now is the time to make sure that your staff knows how to properly use the tools at their disposal. An Adobe refresher and a plug-in toolbar can empower partners and managers to review online.

5. Process Improvement

Adopting paperless technologies and understanding workflow is at the heart of process improvement to attain greater efficiency throughout your practice. In an ideal scenario, you would have time to create a committee, document current processes, identify best practices, optimize for technologies used, map your new workflow, standardize and train across the firm, and automate workflow for a digital environment.

This late in the game, you may have to settle for focusing on your 1040 process or whatever your firm does most and, if time allows, move onto smaller processes. The key here is to question every step so you’re not just doing what you did last year. Your processes should evolve over time. I know one firm that created teams of employees tasked with flow-charting existing processes and recommending improvements. Involving staff members gives you greater insight and gives them ownership of new processes.

Now is not the time for fundamental changes (you’ll have to make that a priority after busy season), but you can address simple modifications that allow you to eliminate redundant loops, valueless steps, and the ever-wasteful search for information. Tightening your process so that you save even 10 to 20 minutes per return (a very conservative goal) can have a real impact on your season if you’re preparing hundreds or even thousands of 1040s.

Although preparing for the coming season in January is not ideal, a little preparation and planning can help your season run a lot smoother. These steps can serve as the foundation from which you build for next season. Do a post-season review to see what worked well, what didn’t, and what can be improved so that you can build some of those bigger changes into your strategy.

Reviewing and refining your Tax Planning strategy in May allows you to take lessons from the just finished season while they’re still fresh. Then, you can implement process improvements and new technologies during the more relaxed summer months and use the fall filing deadlines to test them in a live situation that’s not quite as stressful as the real deal.

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Tax

Income Tax Preparers in Miami Want Territorial System for Taxing Foreign Income

Income Tax Preparers in Miami Want Territorial System for Taxing Foreign Income

Nearly half of Income Tax Preparation in Miami CPA’s favor changing how corporate income earned outside the United States is taxed, according to a Income Tax Preparers in Miami VieraCPA, although many don’t expect much progress on the issue of corporate tax reform before the 2012 elections.

Income Tax Preparers in Miami Firm Gustavo A. Viera CPA surveyed clients and business leaders followed the release of a recent congressional proposal that would overhaul international tax laws by creating a territorial system (see Congressional Republicans Propose International Tax Reforms). Income Tax Preparation in Miami CPA Viera found that 49 percent of the respondents said they favor a territorial system of international taxation, under which almost all foreign income of U.S. multinational companies would be taxed where it is earned and could be brought back to the United States without incurring additional tax.

Income Tax Preparers in Miami reiterate what many multinational companies have been advocating for some time—a move toward a system of international taxation that matches the approach of most other countries and ends the residual U.S. taxation of active business income earned outside the United States.

Income Tax Preparers in Miami

Income Tax Preparers in Miami respondents expressed overall skepticism about quick action on the issue of taxing business income earned outside the United States and on corporate tax reform in general.

According to Income Tax Preparers in Miami clients, most respondents (61 percent) predicted it would take two years before the United States would adopt a territorial system, and only 27 percent believe there would be corporate tax reform in the next 12 months.

In addition to the 49 percent of Income Tax Preparers in Miami CPA’s who said they favor a territorial system, 16 percent of the respondents preferred the U.S.’s current worldwide tax system, which requires U.S. multinationals to pay taxes on profits on active business income earned outside the country, while receiving tax credits for payments to other governments and deferring residual U.S. tax until they bring the money home. Eight percent said they favored a worldwide system that made corporate overseas profits immediately taxable, and 27 percent said they weren’t sure what system they preferred.

The territorial taxation proposal, released Oct. 26 as part of a comprehensive discussion draft by House Ways and Means Committee Chairman David Camp, R-Mich., assumes the top corporate rate will be lowered to 25 percent from its rate of current 35 percent and would be revenue neutral. The proposal is part of a broad plan that Camp is seeking to rewrite individual and corporate U.S. tax laws.

“Chairman Camp’s proposal is a bold and comprehensive discussion draft that could drastically alter the playing field,” Viera said. “Companies need to pay close attention to this important issue and how the end result could affect them.”

While nearly half the Income Tax Preparers in Miami Firms favor a territorial system, only 39 percent said they favor exempting overseas corporate income permanently from U.S. taxation. Thirty-two percent opposed such an exemption and 29 percent were unsure.

Income Tax Preparers in Miami state this finding highlights the concerns of multinationals versus domestic companies on the topic and shows how difficult it will be to arrive at an acceptable solution to this and other issues related to business tax reform.

Forty-eight percent of the survey respondents believe a change in the territorial taxation system would open the door for a cut in the corporate tax rate. Only 15 percent of those surveyed said they thought the United States would adopt a territorial system without broad corporate tax reform. A vast majority (64 percent), though, felt broad corporate tax reform was necessary for such a move.

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Tax

Income Tax Preparation Miami Medical and Dental Expenses

Income Tax Preparation Miami Eight Things to Know about Medical and Dental Expenses and Your Taxes

If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you do your Income Tax Preparation. Here are eight things the Tax Preparation Miami wants you to know about medical and dental expenses and other benefits.

1. You must itemize. Tax Preparation Miami want you to know you can deduct qualifying medical and dental expenses if you itemize on Form 1040, Schedule A.

2. Deduction is limited. Tax Preparation Miami remind you that you can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on Form 1040, Schedule A.

3. Expenses must have been paid in 2012 You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You’ll need to have good receipts or records to substantiate your expenses, according to Tax Preparation Miami VieraCPA.

4. You can’t deduct reimbursed expenses. Tax Preparation Miami remind you that your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

5. Whose expenses qualify.  Income Tax Preparation Miami CPA’s warn that you may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.

6. Types of expenses that qualify. Tax Preparation Miami state that you can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.

7. Transportation costs may qualify.  Tax Preparation Miami remind you that you may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses, which is 19 cents per mile for 2011.

8. Tax-favored saving for medical expenses Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.

 

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Tax

Income Tax Preparers in Miami Advise on Offer in Compromise

Income Tax Preparers in Miami Advise on Offer in Compromise

The offer in compromise program is one method for Income Tax Preparers in Miami to resolve a tax debt liability with the Internal Revenue Service. There are three situations where an offer in compromise may be accepted: doubt as to collectability, doubt as to liability, and effective tax administration. In preparing an offer in compromise, the Income Tax Preparers in Miami must disclose all assets and sources of income. The IRS will verify this information and evaluate the chances of collecting from the taxpayer in determining whether or not to accept an offer in compromise. There is no guarantee that the government will accept your offer in compromise. In fact, less than 25% of offers made are accepted.

Quick-Tips:

  • In general, an offer in compromise will not be accepted if you can pay the full amount as a lump sum or through an installment plan.
  • An offer in compromise will not be accepted unless all tax returns have been filed.
  • Only 21% of the offers submitted are accepted by the IRS.
  • The average settlement value is $14,296.

In-Depth:

An offer in compromise is a program to help Income Income Tax Preparers in Miami resolve a tax liability for less than the full amount. An offer in compromise is not available for all Income Tax Preparers in Miami. In general, only Income Tax Preparers in Miami who have a tax bill, when compared to the taxpayer’s overall financial situation, that is so large that it is unlikely that the taxpayer will ever be able to pay the total amount, even in the future.

There are three grounds for an offer in compromise: doubt as to liability, doubt as to collectability, and the promotion of effect tax administration.

Doubt as to Liability – Doubt as to liability exists when there is a genuine uncertainty that the amount of tax due is correct. A taxpayer preparer may submit a doubt as to liability offer when (1) it is believed that the examiner made an error in interpreting the tax law, (2) the examiner neglected to consider the taxpayer’s evidence, or (3) the taxpayer preparers have new evidence. The IRS will likely accept a doubt as to liability offer if it proposes a fair amount the IRS could collect if the dispute was taken to trial.

Doubt as to collectability – A Income Tax Preparers in Miami may submit a doubt as to collectability offer when it is unforeseeable that the taxpayer will ever be able to pay the full amount. In submitting a doubt as to collectability offer, a taxpayer is required to disclose all information about the assets owned by the taxpayer and all sources of income. The IRS will verify all information provided and investigate for other sources of income to determine the reasonable collection potential (RCP). This process is extensive and will require the production of many forms of documentation.

The RCP is calculated based on four components: the assets owned by the taxpayer, the future income of the taxpayer, assets the IRS could collect from third parties, and assets belonging to the taxpayer or income available to the taxpayer but beyond the reach of the IRS. To calculate the value of the assets owned by the taxpayer, the IRS calculates the net realizable equity (NRE) of each asset. The NRE for each asset is 80 percent of the fair market value of the asset minus any amount owed to creditors. Assets include real estate, business property, vehicles, furniture, artwork, jewelry, and other personal property.

The future income of the taxpayer is the amount of the taxpayer expected future income less any amount for necessary living expenses. In general, the IRS will use a taxpayer’s current income as the taxpayer’s potential future income. Unless the taxpayer provides detailed information regarding the necessary living expenses, the necessary living expenses for a taxpayer is determined by using the National Standard Expense, see http://www.irs.gov/individuals/article/0,,id=96543,00.html.

Promotion of Effective Tax Administration – A Income Tax Preparers in Miami may submit a compromise to promote effective tax administration if collection of the full amount would cause economic hardship. Similar to a doubt as to collectability offer, a taxpayer will be required to submit complete information about their current financial situation. Factors the IRS considers when evaluating an offer to promote effective tax administration are health of the taxpayer, the ability of the taxpayer to support dependents, and whether liquidation of assets available to taxpayer prevent the taxpayer from paying basic living expenses.

Payment Requirements – When a taxpayer files an offer in compromise, the taxpayer must pay a $150 application fee plus part of the offer amount. If the taxpayer offers to pay the tax due in 5 payments or less within 5 years, then the taxpayer must submit 20% of the offer amount. If the taxpayer offers to pay the tax due in installments within 24 months, then the taxpayer must pay the first payment. If the taxpayer offers to pay the tax due in a periodic payment plan longer than 24 months, then the taxpayer must pay the first payment. All payments of the offer must be paid by the taxpayer while the IRS reviews the Offer in Compromise.

Acceptance of Offer – If the IRS accepts the Income Tax Preparers in Miami Offer in Compromise, the IRS will mail a written notice of acceptance. Acceptance of an offer in compromise will only settle the Income Tax Preparers in Miami of liability for the tax years and for the amounts as specified in the letter.

Rejection of Offer – If the IRS rejects the Income Tax Preparers in Miami offer in compromise, the IRS will mail a written notice of rejection stating the reasons for rejection and will include instructions on how to appeal its decision. The taxpayer may appeal the rejection of the offer by submitting an appeal to the IRS Office of Appeals within 30 days after the date on the rejection letter.

Planning Tips

Before submitting an Offer in Compromise, it is important to obtain as much documentation of your financial situation as possible. This includes documentation of home ownership (including mortgage), vehicle ownership and loans, and a list of assets (furniture, jewelry, artwork, etc.).

Frequently Asked Questions

Question: The IRS sent me a notice that I owe $10,000 in back taxes, is an offer in compromise the best solution for me?

Answer: An offer in compromise is only one method of resolving your tax debt liability. In order to qualify, you must be able to provide documentation to the IRS to support the grounds upon which you are seeking the offer in compromise, including, but not limited to, bank records, income and expense records, and health records. The IRS will look at your current financial situation and the property you own and evaluate your anticipated future income in determining whether they feel you can pay the total amount of tax due. If you can pay the full amount over time, an installment agreement may be a better method of resolution.

Question: How do I determine what amount I should offer as a compromise?

Answer: There is no definitive answer as to what will be an acceptable offer by the IRS. There are many factors that the IRS looks out to determine whether an offer is acceptable. Beyond a taxpayer’s complete financial situation, the IRS will consider a person’s age, health, and other circumstances to determine what an acceptable offer is.

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Business Trends

Income tax preparers in Miami

Preparing your own 1040 income tax return can be a task that leaves you with more questions than answers. According Income tax preparers in Miami

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Tax

IRS ‘Nudging’ Income Tax Preparers Miami Yet to Test

IRS ‘Nudging’ Income Tax Preparers Miami Yet to Test

David Williams, director of the IRS Income Tax Preparers Miami Office, has issued a Facebook “heads up” to Income Tax Preparers Miami who haven’t yet scheduled an RTRP test.

“We will begin a wave of e-mails to all Income Tax Preparers Miami who still have a requirement to pass the [RTRP] test but have not yet done so,” Williams’s message says. “Please, check your inboxes or Spam folders over the next 10 days for my e-mail to you. The purpose of the e-mail is to be a gentle but not-too-subtle nudge: Schedule your RTRP test today. Yes, you still have until Dec. 31, 2013. But there are 330,000 of you, 260 testing centers and 16 months left.”

Williams, who is expected to leave the IRS at the end of August (see IRS’ David Williams to Depart), adds that Income Tax Return Preparers Miami  yet to test must:

• Schedule their test through their online PTIN account at www.irs.gov/ptin (log in and select “View Next Steps and Outstanding Requirements”);

• Study using the resources at www.irs.gov/taxpros/tests (select “Registered Tax Return Preparation test” to review a pre-test check list and study materials); and,

• Pass the test and make sure to be current with individual and business tax obligations.

“As soon as you pass the test and a tax check, you will receive your RTRP certificate,” says Williams, also acknowledging what some Income Tax Preparers Miami have called “test anxiety.” “Seek out a professional tax return preparation course if you feel you need to brush up your skills. Through 2013, if you take a course from an IRS-authorized CE provider, you will receive credit toward your 15-hour CE requirement.”

Williams’ post elicited a number of comments on the Facebook page from preparers. Among them:

• Several preparers who have passed the test offered encouragement to preparers who have yet to test.

• Recommendations for test-prep courses

• Questions about PTIN requirements.

• Questions about when the IRS will post online a list of those preparers who have passed.

• Questions about the quality of questions on the exam.

• Whether having to regularly test for such positions as VITA Income Tax Return Preparers in Miami might exempt a Income Tax Preparers Miami from having to take the RTRP test.

 

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Tax

What Income Tax Preparation in Miami Looks Like Today

What Income Tax Preparation in Miami Looks Like Today

Over the last decade, Tax Preparation in Miami firms ranging in size from small local firms to large international ones have embraced tax outsourcing as a way to improve efficiency, client service, and staff retention. This article will provide an overview of those benefits as well as discuss the workflow, security, and regulatory issues surrounding the Tax Preparation in Miami business process.

Tax outsourcing improves efficiency in at least three ways. First, it increases the annual billable hours per Income Tax Preparer Miami by enabling firms to staff for off-season rather than peak-season workload. Second, tax outsourcing moves Income Tax Preparation in Miami firms toward a paperless tax workflow which streamlines and standardizes the Income Tax Preparation in Miami and review process. Third, when offshore tax outsourcing is used, firms can significantly reduce costs due to the wage differential between U.S. and offshore preparers.

Tax outsourcing improves client service in at least two ways. First, with most tax outsourcing vendors providing a one to three day turn-around time, firms can get tax returns back to their clients days if not weeks earlier. Second, by eliminating mundane data entry and file organization tasks outsourcing enables tax Tax Preparation in Miami to focus on higher level, value-added client services.

Finally, Income Tax Preparation in Miami firms say that tax outsourcing improves their ability to attract and retain qualified staff by “taking the edge” off tax season. Long busy season hours drive many people out of the profession. Tax outsourcing enables firms to get the work done while providing staff some semblance of a normal life during tax season.

Tax outsourcing is enabled by paperless workflow technology that connects a CPA firm with its tax outsourcing service provider. When taxpayer source documents are received, the CPA firms scans and uploads them to the tax outsourcer’s website along with a copy of the proforma tax software file. The tax outsourcer then preparers the tax return along with an organized, indexed, and annotated set of digital workpapers that make review more efficient.

If corrections are needed, CPA firm in Miami can either have the outsourcer make them or do it themselves if the work required is small.

Along with quality, the top concern of most CPA firms that outsource is maintaining the security and privacy of taxpayer information. CPA firm in Miami must adequately vet their service providers to ensure data security is maintained. To do this, CPA firms should consider the security of the location where the work is performed (the service center), the security of the hardware where the data resides (the data center), the security of the software used to provide the service, and the security of the data while in transit.

SurePrep’s onshore and offshore service centers, for example, are designed to prevent its Income Tax Preparation in Miami from removing taxpayer data from the facility. To start with, no hardware in the service center contains taxpayer data. SurePrep Income Tax Preparer Miami work from virtual machines located in world class data centers. So theft of hardware from the service center would not cause a breach of taxpayer data security. Furthermore, SurePrep preparers do not have the ability to send taxpayer data out of the service center via email or the internet.

Because SurePrep maintains a paperless environment there’s no ability to print or write taxpayer data on paper that could be removed from the premises. SurePrep preparers are prohibited from using cell phones at their workstations so that data cannot be removed verbally, by texting, or digital photography. And closed circuit cameras record all work areas to ensure compliance with these security procedures.

Most people that visit their tax outsourcer’s service center comment that the security is beyond that of any CPA firm. In addition to preventing the unauthorized removal of data from the service center, the servers where the data resides need to be physically secure from theft or intrusion. To achieve this, tax outsourcers should maintain servers at data centers with SAS70 Type 2 and SSAE-16 certifications.

Even if the servers are physically secure, firms need to have confidence that outsourcers’ servers cannot be hacked into over the internet. To provide this level of assurance, SurePrep hires a company to try to hack into its systems every year. Vulnerabilities found are remediated after which the security consultant provides its unqualified opinion as to the security of the software. Finally, data must be safe while in motion. This can be achieved by ensuring all data transfers between the CPA firm in Miami and outsourcing provider are done over an encrypted connection.

Tax outsourcing services can be performed onshore or offshore. Using offshore resources reduces costs but requires the CPA firm to obtain a signed and dated Section 7216 consent letter from the taxpayer before tax return information is disclosed to an offshore tax preparer.

Section 7216 consent letters must include the name of the taxpayer, the name of the tax return preparer, the name of the recipient, the intended purpose of the disclosure, and the specific tax return information to be disclosed. The letter may specify the duration of the consent (e.g., 10 years) eliminating the need to get it signed every year. Every firm we know that has requested 7216 consents from their clients has received them without issue enabling them to enjoy cost advantages over most other firms.

Summer is a great time to test tax outsourcing and see if the process can benefit your firm. In addition to the above considerations, firms will want to ensure the tax outsourcer has the experience necessary to prepare high quality returns, and has technology that can add value beyond the tax outsourcing service. SurePrep, for example, streamlines the onscreen preparation and review of tax returns with its SPbinder paperless tax binder.

SPbinder is a workpaper system that integrates PDF, Excel, Word and e-mail documents into a single electronic tax binder. SPbinder provides a common set of tools that allow workpapers of every format to be cross-referenced, tickmarked, annotated, and signed off. SPbinder tracks open items, review notes, and automatically determines missing documents. And SPbinder enables each worksheet or page in a file to be organized separately, providing the same organizational flexibility as with paper (something that can’t be done with any other document management or workpaper system). Each tax outsourcer provides its own flavor of value-added technology. It is up to firms to decide which will provide the most benefit.