Putting Tax Prep on the Web


The dot-com bust and slow market acceptance delayed the move of many business functions, including tax preparation, onto the Internet. But like it or not, functions once completed on the accountant’s desktop are increasingly moving to the Web.

Tax prep is no exception.

Features such as online tax organizers, online support, and package tracking are spreading. But no technology offers more promise of a revolution than automated data entry via the Web. Intuit first marketed the concept as TurboTax Connect, resulting in what it called the Automated Tax Return, in 2000. This year, Intuit talks about Instant Data Entry, and appears to have retired the other terms. But the concept is the same. The software can reach out via the Web to payroll processors and brokerage houses, any participating vendor that provides W-2s or 1099s. The Intuit program had about 40 participants last year, but got greater credibility this year when payroll giant ADP signed up.

Partner Insights

Intuit won’t be alone this year. CCH will launch a similar program with its CompleteTax, a system designed for do-it-yourselfers, but which also offers them the opportunity to elect to have professional assistance in preparation. CCH won’t reveal how many vendor partners have signed up, but officials note that five major payroll vendors probably account for 90 percent of the outsourced payroll market.

How soon will programs such as IDE spread to the professional products? That development seems inevitable, but the timing is uncertain and probably depends on the ability of the software companies to line up enough vendors to cover 98 percent of those organizations that produce W-2s and 1099s.

The technology itself should be simple at this point. The only difference between Intuit’s TurboTax and ProSeries is the limitation on the number of copies of a tax return that can be printed by TurboTax.

Creative Solutions seems to be moving the same direction. Its use of account aggregation tools from ByAllAccounts will ultimately let it harvest investment losses and gains for Schedule D and pull the data right into UltraTax. It’s not hard to imagine that extending to W-2s.

Professional preparers should view this technology as something that will help them, not take away business anymore than QuickBooks or TurboTax has eliminated the need for professionals. If anything, QuickBooks has provided a lucrative business and TurboTax users simply have an electronic shoebox that the preparer can work with more easily, while charging at least the same, if not higher fees. Many DIYers want a professional review of their work. And it’s hard not to believe that high-volume preparers would use these themselves to eliminate a mind-boggling amount of data entry involved with W2s and 1099s for hundreds of returns.

Let’s all hope this process comes soon.

Robert Scott -- Editor-in-Chief

Taking Firms to the Web

Publishers of tax and accounting software have attempted to drive the CPA community online with bargain-priced Web-site-creation deals.

Now they’re throwing branding opportunities and remote accessibility into the mix. So is it working, asks the story Crafting Web Presence, by Senior Editor Richard McCausland.

McCausland also examines whether human resources software makes sense as a standalone purchase, or is inextricably bound with payroll, in HR Angles for a Promotion..

On the Web or not, CPAs are the target of vendors who want to leverage their role as trusted advisors. In The State of CPA Programs, Associate Editor Carly Lombardo catalogs the opportunities that vendors are providing.

Meanwhile, It’s time to take one last look at the tools on hand before embarking on another journey into the land of tax preparation. Tools and trends are examined in Tax Season Preview.

Finally, death and taxes are a certainty, and so are people who want to get paid. Reviewer Barry Knaster explores the workings of some leading payroll software applications.

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