Everson Seeks To Reassure Taxpayers Over Outsourcing Of Tax Returns

by Mike Godfrey, Tax-News.com, Washington

19 April 2004

IRS Commissioner Mark W. Everson said in a letter released last Thursday that the agency will look into the practice of using foreign workers to prepare US tax returns.

Everson was responding to concerns raised by Rep. Edward Markey (D-Mass), co-chairman of the Congressional Privacy Caucus, that the growing practice of outsourcing US tax returns could have negative implications for the protection of taxpayer data and privacy.

“Code provisions and related Treasury regulations that protect the confidentiality of taxpayer information do not distinguish between US and foreign tax preparers. In other words, the law does not prohibit foreign individuals from receiving taxpayer information or assisting return preparers located in the US,” observed Everson in his response.

“Nevertheless, I recognize that taxpayers may have legitimate concerns about their ability to hold foreign individuals accountable for violations of privacy and confidentiality protections provided by US law,” he added.

According to Markey, the number of tax returns that have been sent to places like India to be processed has risen to 150,000 from 20,000 in 2003.

However, the IRS chief maintained that the agency has received no evidence that tax returns prepared by foreign individuals are less accurate than those prepared by US-based commercial returns preparers.

He added that the IRS and Congress "must clearly understand these practices before we respond to them and we are working diligently to gain that understanding."

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