Putting the W in Tax Organizers

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Rob Carmines is hoping for great things this tax season.

The Newport News, Va.-based firm of Carmines, Robbins and Co. is making a big push to get clients to use Web organizers for the 2004 Tax Season.

Encouraged by last year's results, Carmines plans to arrange appointments prior to tax season with 66 percent of his approximately 600 individual clients.

Partner Insights

"I will impress upon my clients the importance of completing the Web organizers. It allows us to discuss more than the return," says Carmines.

For clients more skilled with computers, Carmines finds some of the main benefits of the organizer are the ability to email gain loss schedules straight from their brokerage accounts, scanning W-2s and emailing them, or attaching them along with the organizer.

Please Don't Send the Kitchen Sink

During tax season, the Claremont, Calif.-based firm of Schaefer and Co. has trained its clients not to send them the kitchen sink.

The firm believes the secret to success is CCH's Web organizer, Tax Notebook.

Some firms may send the Tax Notebook in a mass email to their clients, but not Schaefer and Co. owner James Schaefer finds the key to getting clients to utilize the Tax Notebook is how it's deployed. The firm puts together a pocket folder for clients to aid them in organizing their 2003 income tax information with the Tax Notebook. The folder is broken down by divider pages and gives clients the following instructions.

* "Review and sign the engagement letter (return it with your tax papers).

* Access the Internet and follow the instructions at tab 2. See tab 5 at the left for your login ID and password. Complete your tax information. You may save and logout at any time and return to work later. When you have completed you information, please click the "Send Tax Notebook to Firm" icon. This will send the information.

* Mail tax papers as noted at left under tab 3. Please note that we do not begin our preparation procedures until we receive you tax papers (W-2s, K-1s, and 1099s.)

* Send us your information sometime in February. (No later than March 15th please).

"A little extra effort on our part minimizes questions from our clients. We've made an investment in providing the folders and our clients see this. It makes them more willing to thoroughly complete the organizers," adds Schaefer.

The firm completes one thousand 1040s per year, and has been offering Internet or email-based organizers since Creative Solutions brought them out. Last year, 98 clients used the Web organizer, up from 88 in 2002. "The number using them has not increased as much as I would have hoped," says Carmines. He believes there are several reasons for Web organizers not taking off faster.

"First, when email or Internet organizers came out, there were a few glitches in them. Then, by the second year, many client servers didn't allow '.exe' files to be downloaded so the client had to download and then rename the file. By the third year, most of the glitches were gone, but some clients had given up due to confusion. Last year, the Internet organizers went pretty smoothly, and we're hoping for an even better year," he adds.

Web-based tax organizers are becoming more widely available, but can preparers like Carmines get their clients to utilize them efficiently? Tax software vendors and firms alike have mixed feelings about the advantages of these organizers.

CCH, Creative Solutions, RIA, and Lacerte have seen increased interest and have added new features for the upcoming season, while Orrtax and Drake feel Web organizers just don't fit their customer base. Not to mention that both Intuit's ProSeries and ATX had Web organizers that were pulled after one season on the market with both companies citing lack of demand.

Susan Davis, a partner at the Fort Lauderdale, Fla.-based firm of McMillan, Unruh and Davis, used the ProSeries Web Organizer with clients. She says, "The client would put their amounts for the current year next to the amounts used in the previous year. I would push the button and their numbers would appear in the tax software for the current year. Wow! The return was done (provided the client understood the previous year's total for the field that was in the prior year). Nicer still, I had no liability because the client provided the amounts."

This may appear to be a tax preparer's dream, but Davis begs to differ. "Realistically, if this is how returns are prepared, then the client should be using TurboTax and self-preparing. The organizer is for the preparer's benefit, not the client," says Davis.

According to Davis, tax returns prepared by using organizers are a commodity. She prides herself on offering a practice based on dealing with clients during the year as tax decisions are being made.

"The organizers are available in December. By that time, all the tax decisions are historic," she says. "If they wait until the year the return is due to contact me, I spend my time educating them as to the cost of that decision and why not to do that again. I can only hope that the organizers have been discontinued because the preparers are providing better service to their clients."

James Schaefer, owner of the Claremont, Calif.-based firm Schaefer and Co., disagrees with that assessment. His firm completed 75 out of the 110 1040s it prepares with CCH's Web organizer, Tax Notebook.

Lack of Demand

Both Drake Software and Orrtax pride themselves on being customer- driven companies. And, that's why they don't offer Web-based organizers--their customers don't want them.

"The majority of our customers are high-volume tax preparers, and all they need is pro forma information and checklists. These features are available in our paper organizer," says Scott MacKenzie, product manager for the Orrtax IntelliTax for Windows from Bellevue, Wash.-based Orrtax.

James Stork, vice president of tax development for Franklin, N.C.-based Drake Software agrees, "We do not currently offer a Web-based organizer because we haven't experienced a great demand for one." Drake does, however, offer paper organizers for the federal 1040, 1120, 1120S, 1065, 1041, and 990.

Focusing on what clients want, Drake offers paper organizers that can be printed for a group of specific clients, or one client at a time. They also provide the ability to print to PDF and email it to a client, a condensed organizer that doesn't include all forms, and the ability to print the return with last year's data or blank.

Although only about 20 percent of users have tried the organizer in its Classic product, Orrtax still sees benefits in adding a Client Organizer to the 2004 IntelliTax for Windows product. "Some offerings attempt to generate a completed return by asking an overwhelming amount of taxable income questions to a preparer's clients. However, our intent with the IntelliTax for Windows organizer is to trigger issues, remind them of prior-year information, and provide an avenue for them to be thorough in data gathering," adds MacKenzie.

Schaefer has been using the product since it started with a version on floppy disk four years ago, and there's been no turning back. "All new clients we take on must use the Web organizer, and about 50 percent of our old clients are using it. In fact, we have some clients who insist if we stop offering Tax Notebook, they'll leave us," says Schaefer.

He says it now takes the firm one-third less time than before to complete returns. "The time saved can be devoted to thinking about the future. We're a step closer to balancing the firm's workload."

In addition, it helps retain customers. "Before the Web organizer, if I had a customer who lived in California and moved, chances were I would have lost them as a client. Not now. With the organizers, my clients are already adjusted to using email and the Web to communicate with me," says Schaefer.

Reducing Tax Season Stress

Imagine this scenario: If a preparer has 500 clients, at an average of 30 pages per printed organizer, 15,000 pages of printed tax data would be produced.

With each paper organizer, preparers have to mail the organizer to the client after the prior year's information has been rolled over and printed, wait for the client to fill the organizer in by hand, send it back for corrections, and then manually key in the data, or pay someone to do it. "Not only is this labor intensive, but all these steps lead to transaction errors," says Boyd Gackle, product manager for GoSystem Tax RS.

For the first time last tax season, Carrollton, Texas-based RIA offered a Web organizer, MyTaxInfo, to round out the GoSystem Tax RS offering.

According to Gackle, RIA customers sent out approximately 1,000 organizers, and the number of customers using Web-based organizers is increasing.

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