A Bundle of Tax Software

A changing smorgasbord of bundles awaits software buyers.


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Once upon a time, a score of tax software vendors raced to add forms and features to their software. It's been a few years since there were that many companies selling tax applications. As the remaining vendors have filled in their product lines, that has meant there were fewer major changes to forms and features.

That has meant price changes, whether for new users and renewals, along with a changing array of product bundles aimed at getting preparers to switch.

There are two groups of users that might want to explore switching. Those are the customers of Dunphy Systems, whose tax software line was just purchased by Creative Solutions. Also viewed as possibly interested in switching are CSI customers who once used Tax Relief, the product that CSI purchased from MicroVision (now AccountantsWorld) three years ago. Their three-year freeze on price increases has expired, and competitors are trying to lure them.

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Almost the Last of DOS

This year marked a milestone as Creative Solutions acquired Dunphy Systems, an Ohio-based company.

Dunphy was notable for one reason: It was the last remaining company in the tax market - indeed one of the few in any professional market - that sold only DOS-based applications.

The CSI acquisition leaves only Intellitax Classic from Orrtax Classic for diehard fans of the vanishing operating system.

DOS isn't the only thing vanishing, as Microsoft continues to spur the need for users to upgrade to the latest versions of its Windows systems. The company has announced that it is no longer providing technical support for Windows 98, 98 Second Edition, or the Millennium edition.

While this year's early renewal offers are history, vendors are using other techniques for tempting users. That includes Petz Enterprises, which is conducting what it calls the "Switch Campaign" to encourage users of competing products to buy its CrossLink tax software. For $795, new customers can get all federal and state individual forms. That deal will be offered until the end of July.

"It's been fairly successful," says Chuck Petz Jr., vice president of the Tracy, Calif.-based company.

ATX/Kleinrock, based in Rockville, Md., also has an aggressive program to entice switchers, under which it mailed out 100,000 CDs of its 2005 tax software.

Vice president Ken Crutchfield told prospects to "give us an afternoon" and try the software, which they can use throughout the summer. The company has further lures out, because it has already provided the conversion utilities for UltraTax CS, ProSeries, and Lacerte.

Pricing is also key for TaxWise this year. Last year, the company sliced the cost of its basic 1040 software to $695 from $995. For 2006, that price has dropped to $595. But few practitioners use just the federal 1040, notes Gene Goldenberg, vice president of marketing for the Rome, Ga.-based company.

TaxWise been tinkering with the different bundles that make up the bulk of the purchases by practitioners. For example, it used to offer a package with up to five states. But a customer survey showed that most small practitioners didn't need that many states. So a new scaled-down Pro Business package for those who only need business returns, federal modules, and modules for just three states costs $712. Meanwhile, last year's Pro Business, which provided specialty business, all states and federal forms for $1,012, has been renamed the Pro Business & Specialty Package, and now includes state efiling modules for $1,192.

Among the less-expensive products, price is an important part of the competitive formula. It's often the major factor in getting firms to make a switch. For example, Newark, N.J.-based Ifuekosa Tax Service, a TaxWise user since 2003, switched from ProSeries because of price.

"Unfortunately, price is the only factor for me," says Omoregie Akenbor, the company's director.

Well, perhaps there are other factors. Akenbor contends that, compared with ProSeries, TaxWise requires too many steps to access documents such as the employee business expense document, Form 2106.

To the Web

While Internet-based tax preparation is not yet the norm, the use of Web-based tools is growing rapidly.

On the consumer side, Intuit's TurboTax for the Web had 50 percent growth in the last season, compared to a 4 percent increase in sales of Turbo-Tax units at retail. Intuit, however, doesn't see enough interest to move ProSeries and Lacerte to the Web.

But use is picking up. Teresa Mackintosh, vice president of marketing for Creative Solutions, says that her company has sheen a sharp increase in the use of hosted products through its Virtual Office.

CSI saw a 50 percent increase in Web-based applications from 2004 to 2005. Then, last fall, a more dramatic shift pushed volume up another 30 percent.

Certainly, the use of companion products and services associated with compliance software are increasingly moving to the Internet.

For 2006, Orrtax has launched IntelliTax Auto Update, which automatically updates federal and state content and program system updates for IntelliTax for Windows and IntelliManager.

"This gives customers the freedom to focus on their tax business while Orrtax manages the content,'' says Scott MacKenzie, group product manager at Orrtax. "It takes the worry out of program updates."

With Auto Update, users go to the Orrtax Web site and it automatically updates the program, or they can have it performed overnight, eliminating the user's need to engage in the time-consuming update procedure.

An Integrated Receipt Tracking System is now offered for IntelliTax for Windows. The system electronically records receipt of payments, eliminating the customers' need to handle paper receipts.

Like many companies, CCH is rewriting its software on the Microsoft .Net platform, a process that is expected to be complete in December 2008.

As part of that transition, ProSystem fx will release an Electronic Filing Status System in December. This new product allows users to perform all electronic filing transactions on the Web, submit returns to the IRS, stop returns released in error, view rejection details, and print reports and then import them to Excel.

"It will be on the market in October or November. It's the first phase of our .Net initative," notes Ernest Zoumot, director of product management for CCH.

Meanwhile, ATX has added the option to download its tax applications via its Web-based MyATX.

Zoumot says that CCH also saw a strong uptick of interest in Global fx Tax, its Internet system. The number of users has risen about 400 percent in the last year to almost 4,000.

"I think people are feeling more secure with the privacy and security of the data," says Zoumot.

"With ProSeries, it was right there," Akenbor says. "With TaxWise, you have to go through a few steps."

And he notes that with its flexibility and pricing, "ProSeries is wooing me again."

Making adjustments

ProSeries definitely has low-cost competitors like TaxWise in mind, as it has come up with new products and new pricing. This year, it has taken a more active approach to bundling both its Lacerte and ProSeries professional tax packages.

The 2006 Lacerte line features some aggressive pricing on bundling, including the 1040 Unlimited, which provides the federal 1040 form for $2,250 and the Unlimited State 1040 for an additional $340.

That compares to 2005's new user price of $2,140 for the federal form alone. The company has also offered ancillary products at 75 percent off list so that the Document Management System, normally priced at $450, is available for $112.50. The same discount is available on the Lacerte Research Library, Lacerte Tax Planner, and Lacerte Tax Analyzer.

Intuit is also offering a 1040 package for its ProSeries software, with the 1040 Complete priced at $999, which also includes the federal and all state individual tax forms. These adjustments follows last year's three-year price freeze for ProSeries users who renewed.

Some of Intuit's moves have been designed to compete with low-cost providers like TaxWise and ATX. A year ago, Intuit introduced ProSeries Basic for smaller tax practices that prepare 1040 and state individual returns. Basic starts at $250. The other new entry was ProSeries Express, priced at $795, for practices that prepare a high volume of returns and that need bank products. These include storefront preparation businesses. This year, a $999 bundle provides the use of all individual federal and state forms.

Intuit also expanded the features of the newer packages. For ProSeries Basic, the company added pay per return, charging $15 for the federal form and $3.50 for state forms, with efiling at $3 for federal returns and $2 each for state returns.

Meanwhile, Rockville, Md.-based ATX/ Kleinrock, which offers a wide range of bundles, had steeper price ranges on Max, at the top of its line, which went from $985 to $1,065 for 2006. Because of price competition from ProSeries Basic, ATX's increases on lower-priced products were smaller. The basic 1040 price rose from $375 to $390.

Greatland also increased prices on the eight variations of its Great Tax software. The range of product bundles appeals to users because it lets them be selective in their purchases.

"It's what customers like," says Cathy LaViolette, senior product manager for Greatland. "They don't want to purchase features that they aren't going to use."

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