An E Kind of Year

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Tricia Armistead's firm in Jackson, Ga., completes about 800 tax returns a year and "does everything electronically," says Armistead, president of the CPA firm Tricia P. Armistead. Looking back several years, Armistead, who uses Petz Enterprises' CrossLink 1040, may have been considered an exception to the rule. But today, firms such as hers are the norm as consumer awareness of efiling gains steam and an increasing number of states mandate efiling.

In fact, last year the IRS estimates e-filed returns represented 62.5 percent of all returns processed. It is likely the number of efiled returns will only grow.

Given the trend, preparers dare not stand on the sidelines. Many are focusing on efiling and developing new or enhancing existing efile hubs that enable preparers to conveniently have information on e-filed returns at their fingertips.

Partner Insights

But the continuing automation of tax preparation is not just about transmitting returns to tax authorities electronically.

"What we are seeing is an increasing move to digital processing. Efiling is playing an important role in that," says Jack LaRue, senior vice president at Creative Solutions.

Ensuring a smoothly running, mostly paperless office and eliminating the re-keying of data to save preparers' time also are high on vendors' to-do lists for the tax season.

At Creative Solutions, when preparers visit the UltraTax Web site, a link takes them to an efile status area where they can check the status of an efiled return. LaRue notes that last year the number of UltraTax users efiling increased by more than 25 percent.

In addition, CSI has begun barcoding W-2s for 2006. Using the barcode scanner, preparers can simply scan in-rather than key in-data fields and demographic information. LaRue says the company is working with the IRS to develop a standardized format for barcoding W-2s.

If the concept catches on, it represents a tremendous opportunity for the industry and will have a huge impact on the productivity of preparers, as W-2s are the "single most-common document" that professional preparers must enter, explains LaRue.

CSI also provides dual-monitor support, where a user can have an input form on one monitor and a government form on another monitor, with the ability to do real-time changes. LaRue says that about 40 percent of users are in a dual-monitor environment.

Following the Trend

Likewise, Orrtax Software Solutions is also setting its sights on enhanced automation and integration, according to Mark Dean, the company's director of product management.

With the Built-In Auto-Updates automated feature, users no longer have to worry about manually applying the latest program Service Releases.

Meanwhile, the Tax Payer Prior Year Debt feature will help simplify a user's bookkeeping by notifying an office of any fees receivable or balance due a tax customer may have on record.

Orrtax is also adding Integrated Receipt Tracking, a cash receipt tracking feature designed to help users track which clients have paid for tax returns and services.

In addition, Employer Identification Number data is now available on forms where EIN company information is required. Users enter the EIN, and then the company name and address are automatically displayed on each return after the information is entered the first time.

In another step of electronic linking, business states will integrate with IntelliTax for Windows and IntelliManager. Data that needs to be shared between the 1040 and business returns will be automatically filled in.

Jackie Harrington, president and owner of Harrington Tax and Accounting of Springerville, Ariz., has been using Orrtax products for about eight years and currently serves about 600 clients.

She would like to see a few more worksheets in the 1040 package.

"I have used other software and I have found that I enjoy working in worksheets. I would like to see more," Harrington says.

However, when it comes to customer service, Orrtax "is leagues above everyone else. If I have a problem it will be addressed," Harrington says.

At Drake Software, the focus is on efiling, the delivery and efficiency of software, and on firms completing mid- to higher-end returns, says John Sapp, vice president of sales and marketing.

For efiled returns, the Franklin, N.C.-based company has implemented automatic linking between an efile error message and the field that caused the error.

The company has beefed up reporting to include expandable and collapsible "trees" for client reports.

Drake also has given its statements and worksheets a more polished look; added a W-7 form for taxpayer identification; and added the Telephone Excise Tax Credit, which is automated.

While Drake continues to bolster its tax product offering, much of the focus remains on customer support and training.

In fact, customer support is one of the main reasons Drake user Thomas Smith has stayed with the software company for 16 years.

"Drake support is head and shoulder above any company in any industry," says Smith, senior operations manager of Express Tax Returns of Rocky Mount, N.C. The firm completes around 15,000 returns a year, of which about 97 percent are efiled.

In addition to valuing customer support, Smith also likes the software's ease of use, and that users only need to enter the data one time.

A Web Push

While its desktop software CrossLink remains an important focus, Petz Enterprises is placing a major emphasis on its Web-based product V-Tax by bolstering its direct mail pieces, running additional magazine ads, and further educating its internal staff, says Charles Petz, vice president of product development.

The online professional program, which is designed for service bureaus with multiple offices, has experienced an 80 percent to 90 percent spike in usage, says Petz. One reason for the growth is that the program works well for franchises such as finance companies that are looking to get into the tax prep business as a new source of business.

"They are usually already asking customers to bring in tax forms because of the financial services," Petz says.

Among the new features for V-Tax is support for city income tax preparation. The company is expanding federal, state, and city forms, as well as the reporting capabilities of the V-Tax system.

New features for CrossLink include support of credit-card processing for balance-due payments, extension payments, and estimated tax payments.

Petz Enterprises user Armistead says because her firm is completely paperless, she would like to see enhancements in the electronic arena.

"We do everything electronically, and we are hoping they will do corporate packages for nonprofits," says Armistead. She also would like to be able to file extensions electronically.

Getting Smart

New for Lacerte users is a SmartMap, which places the trial balance and Lacerte in-put screen on one screen. Preparers simply drag and drop information to update data.

There's a Lacerte SmartMap database that assigns tax lines to accounts. SmartMap does almost all the set-up work for the user for almost all clients, and all new assignments are saved in SmartMap so users are building their own custom database, says Jorge Olavarrieta, senior product manager.

New for both Intuit's Lacerte and ProSeries tax lines is Source Doc Auto-Entry, which allows users to scan source documents and import the data into the tax software, simplifying data entry.

Yvette Hogan, president of Fayetteville, Ga.-based Van Huss, Hogan, McCurry & Associates, has been using Lacerte for 20 years and says the Source Doc Auto-Entry "is pretty amazing and I see how we can use that new feature in our office."

Intuit also is launching a new Lacerte research product and forms library.

Given that full-service firms need to work especially quickly, the ProSeries product has been simplified and made easier to use to speed the process.

For example, input screens have been redesigned so users can better know what to enter and how to enter it. According to Olavarrieta, the changes have shaved off more than a minute of time per return.

ProSeries also has made it easier for users to correct errors as the system identifies them, and walks users through each field to correct the errors.

The ProSeries price has been reduced. This year the price is $999, down from $1,500 last year for unlimited 1040 and unlimited states.

Richard Johns, owner of Tulsa, Okla.-based Richard A. Johns, CPA, who has been using ProSeries for at least five years, says he finds the user interface very easy to use, almost "a hybrid between having a help screen and fill-in forms screen."

One suggestion Johns has, not just for Intuit but the industry in general, is enhanced fixed asset management software. "I have been unsatisfied not only with ProSeries but all other fixed asset management software," says Johns. "It does what it needs to but I haven't found one that integrates well into the practice management side."

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