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Get Ready for Tax Season by Leveraging Strategic Tax Outsourcing

2/4/21 12:00 PM

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This post contains highlights from a January 19, 2021 webinar discussing how accounting firms can utilize international tax outsourcing to increase firm productivity, reduce tax season compression, and improve capacity to focus on high-value services.

To watch the webinar on-demand, click here.


According to the Accounting Firm Operations and Technology 2020 survey, recruiting and retention is the #1 challenge for accounting firms. Factors contributing to this challenge include:

  • Increased influence of technology. A combination of outsourcing and automation—in the form of RPA and bots—is starting to transform the lower tier of the typical accounting firm’s workforce. Firms are starting to require more development of a highly-skilled, digitally proficient middle layer of staff.
  • Changing demographics. Millennials are already the largest segment of the workforce (35% in 2018, pew research). With generational changes come priority changes. For millennials, life-work balance is increasingly important, which means a workforce segment isn’t interested in long hours of manual-task-intensive tax return work.
  • COVID-19. The pandemic forced businesses to adopt remote work models. Companies with the appropriate firm-wide tech stack adapted quickly. Even when stay-at-home restrictions were lifted, most firms reported maintaining a hybrid home-office work model.
  • Remote office environment. With the rise in remote work, firms are learning new ways to recruit and train new hires and interns. Other ripple effects of widespread remote work include ensuring that staff assignments are fair and balanced, scheduling staff to the appropriate tasks, and collecting source documents.

As hiring and retention struggles continue to plague the industry, the number of firms utilizing outsourcing to supplement their internal staff has increased significantly from 2018 to 2020. This trend is expected to continue, especially for larger firms. According to Xpitax Tax Outsourcing’s annual post-season customer survey, benefits to utilizing International Tax Outsourcing include:

  • Greater capacity
  • Reduced time on tasks and costs
  • Additional growth and training opportunities
  • Opportunities to focus on value-added services
  • Better work-life balances
  • Increased client service
  • Decreased remote work challenges

On average, firms who utilize Xpitax Tax Outsourcing gain 7% to 8% more capacity than firms who choose not to outsource, and 95% to 99% of returns are completed within 24 hours during off-peak times. During the last two weeks of busy season—the last week of March and the first week of April—Xpitax maintains a 24-hour turnaround time for 87% to 89% of returns.

Client testimonials tell us that their remote staff are considered part of the team, provide additional capacity to support new clients, and help reduce bottlenecks to keep the pipeline moving. Firm staff can take a step back from transactional work and provide additional research, planning, and tax consulting services.

By putting Xpitax Tax Outsourcing’s dedicated tax team to work and connecting to the team with process and technology, accounting firms can gain additional capacity to:

  • Reduce busy season compression and balance the workload
  • Maintain visibility into the status of returns
  • Add support for tax and planning services to clients early in the tax season
  • Scale-up and grow their practice by leveraging experienced staff

As your firm builds a busy season strategy, it’s important to evaluate the opportunity that outsourcing presents. The firm should determine

  • The type of tax returns to outsource
  • Which clients are best for outsourcing
  • Who the outsourcing coordinator will be
  • How consent forms will be tracked

And possibly most importantly, the firm needs to figure out what will change as it capitalizes on the benefits of outsourcing tax preparation discussed above.

Xpitax Tax Outsourcing uses all of the major types of tax software, including software from Wolters Kluwer, ThomsonReuters, Intuit, and Drake Tax, among others. The process is fairly simple:

Xpitax Workflow

Implementation and training is a four-step process: Deciding who from the firm will participate in the training; determining how client consent letters will be distributed; communicating the implementation to the firm or its offices; and training on the XCMworkflow application, tax workflow, sending and receiving documents, and work papers.

Don’t Forget About the 7216!

The AICPA interpretation of U.S. Treasury regulations (Section 301.7216), also known as IRS 7216 consent, is that tax preparers need to obtain permission from the taxpayer in electronic or written form before disclosing tax return information, including 1040 type forms. There is a similar requirement for federal business entity forms.

As a leader in tax preparation services, Xpitax provides tools to support firms during the 7216 process. These tools include sample 7216 consent forms and cover letters explaining the consent forms that accounting firms can use with their clients, if they wish, as per disclosure best practices.


This post contains highlights from the December 01, 2020 webinar. Ray Barlow, Senior VP, and Dave Harris, Director of Outsourcing Operations, go into much greater detail and cover additional topics during the webinar.

Watch the on-demand webinar to learn more about how to leverage international tax outsourcing for greater busy season success.


Written by Staff