Taxed here, prepared in India

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It's almost April 15. Do you know who prepared your tax return this year? Even if you think you do, are you sure it was prepared in the United States?

More U.S. accountants are turning to their counterparts in India to help prepare tax returns for their clients in this country.

Indian chartered accountants -- the subcontinent's version of certified public accountants -- will prepare between 150,000 and 200,000 returns this year, up from 20,000 in 2003 and 1,000 in 2002, according to the Associated Press.

Outsourcing helps U.S. accountants save money. A 1040 form prepared in India can cost as little as $75, including labor, software and hardware costs. In the United States, the costs can reach as much as $150, accountants told AP.

But the practice has come under scrutiny from lawmakers and industry officials concerned about potential privacy implications of shipping tax-preparation work to foreign countries.

"I am gravely concerned that consumer data is being sent overseas without proper safeguards," Sen. Dianne Feinstein, California Democrat, wrote in a letter to the chief executives of several financial firms last month.

"In my view, American companies which are outsourcing consumer data to foreign countries must assume responsibility for the data. American consumers simply do not have the resources or legal remedies to address misuse of their information by foreign companies or their employees," Mrs. Feinstein wrote.

The American Institute of Certified Public Accountants, the industry's largest trade group, recently published an article in its newsletter to remind its members about the need to protect the privacy of their clients when outsourcing, a spokeswoman said.

It is not illegal to ship tax-preparation work overseas, and tax preparers are not required to inform their customers if the work was done in a foreign country, according to Sam Serio, an Internal Revenue Service spokesman.