U.S. Accountant Shortage: Is Your Tax Information Being Outsourced?

accounting taxes

Introduction: Is Your Tax Information Being Outsourced Overseas?

Is the accountant shortage in the U.S. real, or is it just an excuse to outsource American jobs to other countries like India or the Philippines?

Amid the ongoing accountant shortage in the USA, more tax firms are turning to outsourcing. In this blog post, I'll talk about the accounting shortage and explore the real reasons behind the increasing trend of outsourcing. Later in this blog post, I'll also tell you what you can do to protect yourself if you don't want your Personal Tax Information outsourced overseas. Keep reading!

Is The Accounting Shortage Real?

You may have seen the headlines about an accountant shortage. It's true. The accounting profession has a talent shortage. But the real question is, "Is it just an excuse to outsource American jobs to India and the Philippines?".

Some in the industry think it is, but it's more nuanced than that.

I get emails every day offering to outsource my accounting and tax work to India for like $10 an hour. Of course, this doesn't interest me in the least bit, which I'll explain later on.

But for larger companies, including CPA firms, especially if they can't find accountants to work for what they want to pay, then the reality is they will and they are outsourcing American jobs to foreign countries.

In this blog post, I'll talk about the accounting shortage and how you can protect yourself if you don't want your personal information going over to a third-world country with God knows who has access to your personal financial information.

Hi, I'm Noel Lorenzana. I'm a CPA. I've spent about four years working in public accounting and another nine years working for myself in my own tax and accounting business. I'm older than I look, so I've been around the industry for a long time.

So, Is The Accounting Shortage Real? It is, and I've previously made a video on it last year which highlighted a headline story about 300,000 accountants leaving the profession and my thoughts on accounting.

Basically, the shortage is real. But since my last video, I've come to realize that maybe a lot of it was by design.

What do I mean by this?

I mean that businesses or business owners view accountants as an expense and as such, try to pay them as little as possible.

In my opinion, accountants aren't paid competitively for what they actually do and what they offer a company and the value they bring.

Now, of course, I'm generalizing. Not all accountants are really good at what they do, but the good ones, I mean, they're worth every penny.

Businesses Do Not Want to Pay Accountants

The fact is, businesses do not want to pay accountants what they're worth. Think about it. With an accounting degree or a CPA license, no one wants to work for $60,000 to $70,000 per year.

That's what employers want to pay.

Now, if you bump that up to around, I don't know, $100,000, 120,000. Now we're talking. You'd attract people back to those accounting jobs where there's a supposed shortage.

What I'm saying is, at the right price, and by today's standards in the United States, that's what's expected at a fair wage, you'd get people back into the accounting industry.

Agree? Disagree?

But I'm afraid that's not going to happen because of globalization.

What is that?

It means that right now. it's super easy to hire workers from India or the Philippines for pennies on the dollar.

And that's exactly what these companies are doing. And with these headline stories about Accountant shortages which these American companies caused, they can now freely hire foreign workers while screwing the American worker.

What Is Our Government Doing to Stop This?

Nothing. I think. If I'm wrong, please correct me. But I don't see anything preventing this from happening.


In the tax world, there is one thing I'm aware of. With the IRS, if you plan to have a foreign company or foreign workers prepare a tax return for a US person, you need to disclose this with your client and have them sign what's called a "7216 Disclosure".

It looks innocent enough, as you'll see here.

Now, I pulled this up from a Google search and it's from some random CPA firm.

Mandatory Internal Revenue Code 7216 Disclosure and Consent. Federal law requires you to obtain client consent to disclose tax information to third parties for purposes of assembling information, calculations, diagnostics, and processing of various IRS forms.

Hmm. Very interesting.

If you agree to this consent, you've essentially given your tax or accounting company permission to send your tax return information to a foreign country to be prepared over there by foreign workers.

I don't know how you'd feel about this, but for me, I'd personally prefer they not do this. I personally don't do this with my business, but some companies do. Some people have a problem with this, some don't.

But if it's a concern to you, just be aware of it and do not consent. Contrary to what the title of the letter states, it is not mandatory.

So what now?

Jobs Are Being Outsourced to Foreign Countries.

Jobs are being outsourced to foreign countries. That's where globalization has led us. It's being done. From a business point of view, it makes perfect sense. Why would you pay an American worker $100,000 when you can pay someone in India or the Philippines maybe $10,000 to do the same work?

Don't get me wrong, I don't think the quality of work would be quite the same. And by the way, I am a Filipino and have nothing against Indian people. I admire them. I have Indian friends and according to a 23andMe, I'm actually part east Indian. True story.

What If You Don't Want Your Tax Work Outsourced Overseas?

So what can you do if you don't want your accounting or tax work outsourced overseas? If you work with an accounting or tax company, you can ask and find out if they're using foreign workers to work on your taxes or bookkeeping.

You might be surprised.

If they do and you're not comfortable with that, Let them know. You might need to rescind your consent. Just be aware and keep a lookout for a 7216 Disclosure that you may accidentally signed, along with everything else firms have you sign.

Personally, I think our government should do more. Capitalism is great and all, but when it goes against the American worker, I guess I start to have a problem with it.

Thanks for reading and see you in my next blog post!

About The Author

Noel Lorenzana is an Illinois-licensed, Registered Certified Public Accountant with over 20 plus years of experience.

Through his online educational content, YouTube videos, easy-to-understand courses and 1-on-1 consulting, he gives you the tools to become tax savvy for yourself. 

Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.