The Look of Tax Software

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The face of tax preparation software is changing. In fact, the face of desktop software in general is changing and tax software is part of a bigger trend as applications increasingly take on the appearance of Microsoft products.

Across the industry, proprietary word processing packages are either giving way to the ubiquitous Microsoft Word, or at least getting friendlier with Word, and many tax software packages are becoming friendlier with Word and Excel. The rationale is to give users an interface they are familiar with and there are few in business who are not familiar with the Microsoft desktop applications. So CCH is adding a worksheet interface for ProSystem fx while Intuit chairman Scott Cook has publicly hinted that his company's ProSeries will get an Outlook interface sometime soon.

"We think the interface is going to be a big hit," says Kevin Robert, president of CCH Tax and Accounting. Preparers, he continues, grew up with Excel, so they will latch on to the new interface.

Partner Insights

In fact, CCH isn't just plugging the Microsoft connection with ProSystem fx Tax, it is also getting more Microsoft-like with its Tax Research Network through CCH IHand, which will enable preparers working in Word or Excel to log on to TRN without leaving those applications.

Intuit hasn't said much about the Outlook interface for ProSeries, but considering that two Microsoft products, Microsoft CRM and the Navision accounting line, now sport Outlook interfaces, it's likely that the overall market will increasingly see desktop business applications that resemble Outlook.

Meanwhile, Petz Enterprises underscored that operating in Windows isn't the same as having a graphical interface. The company has redesigned its CrossLink Tax software to give it a true Windows interface.

"We had maintained the character-based interface," says Chuck Petz, vice president of product development for the Tracy, Calif.-based company. When it came to adopting a graphical interface, Petz wanted a truly graphical interface, along with the speed of data entry on a character-based system.

"It's been a long evolution to get the interface together to let the preparer quickly do the tax return," he continues.

Similarly, RIA is looking at ways to make the appearance of its GoSystem line more appealing. "We are going through our 1040 applications, looking at them from a different perspective, how can we make it easier for our clients to enter data," says Boyd Gackle, product manager. RIA is looking at improvements in screen layout and organization to make its tax application easier to use.

On the client letter side, TaxSimple is adopting Word for preparing transmittal letters, invoices, and cover pages. And while not everyone is racing to use Word to edit client letters, many vendors are working to improve their appearance, or to enhance the letters' content. Lacerte, for example, has provided a tool to give preparers the ability to more easily edit client letters so that they can customize the documents. Drake is enhancing the formatting of reports, bills, and letters, while Orrtax is provided a comprehensive client letter that can include state information for both its IntelliTax Classic and IntelliTax for Windows software. TaxWorks' new letters include Privacy Policy and Nelco is also enhancing its custom letter functions. The Nelco letters will now give the preparer the ability to add text to the letter, while providing separate letters a variety of returns, including amended, extensions, K1s, and IRAs.

Petz is enabling users to import documents generated by its report writer into Word or Excel and has revamped its client letter capabilities to provide word processing features such as spell checking and a choice of fonts, although the company is not using Word itself.

Although it's not implementing a Microsoft interface, ATX has designed the appearance of its Max software to improve navigation to provide the look and functionality of the Return Manager to its Rollover Manager, Preparer Manager, E-Service Manager, and Bank Manager.

Meanwhile, ATX is seeking to battle for business in all ends of the market. The company has been largely known as a provider of low-cost software that does not have the features to match competitors in the upper end of the market. That is changing, says its CEO, Glynn Willett.

ATX has improved its calculation engine to the point that the company feels the engine is comparable to Intuit's ProSeries. The company intends to upgrade the engine for the 2005 software to compete with Lacerte and CCH's ProSystem fax.

"We can't say our calculation engine is as strong as Lacerte's and ProSystem's, but we will be there next year," Willett says. "What they excel at is the state calculations and allocations between multi-state returns."

ATX has already had some success battling on the low end. Intuit has implemented new products to counter a loss of customers during the last tax season. (See related story page 18) Willett sees the battle being fought on price-performance basis.

"What we keep on doing is adding more and more features while Intuit has been taking away features to save costs," says Willett.

Actually, there aren't many price changes in effect for the 2004 software. Intuit raised prices on Lacerte by 1040, but held the line on ProSeries. The only other increases came from Creative Solutions, also up 4 percent, and CCH, which raised the price of ProSystem fx Tax by 2.7.percent. Otherwise, prices remained the same, except for the notable case of Drake Software, which slashed prices by 30 percent.

On the Web

Meanwhile, interest in Web-based processing is growing, although in no way can the trend be called a big hit. But the market is getting one new online entry as Petz launched its VTax preparation system.

Perhaps launched isn't the right word. VTax has been on the market the last two tax seasons, but Petz didn't widely publicize the system and perhaps less than 10 percent of its preparers used it during the last tax season.

"It was available last season, but we wanted to make sure it was going to fly," says Chuck Petz. "It worked and it was great."

VTax is designed principally for multi-office preparers and it deals with some of the issues that Orrtax is addressing with its IntelliManager-how firms can manage and process returns from multiple offices. For companies that operate offices in different regions, the need to install software in each location and to consolidate results is a problem. Internet-based preparation and filing solves that.

"This allows us to put the tax prep software into whatever location you happen to be in," says Petz. "You don't have any pre-season set-up or post-season close-down."

Meanwhile, ATX edged toward the Web by marketing the ATX TaxAccelerator Server Suite, a Web-based system for high-volume filers of 1041s and expatriate forms. That system is suitable for preparers handling more than 50,000 returns. "It's basically what used to be dominated by Fast-Tax," says Willett.

When it comes to providing a Web-based system for more garden variety 1040 filers, he notes, "We'll take that technology when there is demand and apply it to the 1040."

Still, RIA remains the only major player with most preparers doing their data entry on the Web via the company's GoSystem RS, now entering its seventh season. Even there, RIA has made an accommodation to those on the road with RS to Go, to enable preparers who are working offline to enter data into GoSystem and upload it when they are able to connect to the Internet.

CCH, which had 2,500 customers for its Global fx system, expects to add another 1,500 this year, still a relatively modest amount.

But while Web-based processing hasn't boomed, an increasing number of vendors are offering Web-based tax organizers, or making an effort to increase usage of the organizers that are already available.

Creative Solutions has had a Web-based organizer available for its UltraTax software and is working to make it easier to use, says Jack LaRue, vice president of marketing. One of the problems is that many preparers still have yet to enter the Internet age.

"Two-thirds of accountants don't have a Web site yet," says LaRue. "Customers are not yet interacting with the accountant on the Web."

So it's likely that more CSI customers will be interested in the print version of its organizer, which will be available in a condensed version that will consume as few as five pages when printed.

For GoSystem RS, RIA has added the ability to import Quicken data into MyTaxInfo, its Web-based organizer. MyTaxInfo isn't new-it was introduced last year, but that was only a limited roll out.

"It went rather well," says RIA's Gackle. There were about 1,000 organizers used to gather information electronically. He expects that usage will increase this year. "Clients have indicated that they will begin to use that more and more," Gackle says.

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