Tax Organizers-Worth the Effort?


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There's no doubt that one of the biggest challenges facing accounting professionals who offer tax organizers is simply getting clients to fill them out come tax season. However, Patricia Schwan, the practice director for the International Expatriate Services practice of Grant Thornton, has found one way to overcome such hurdles-money. "We factor the clients' efforts into our pricing quotes. Our price increases if we have to fill in their information from original receipts, forms, etc. ourselves," says Schwan, whose firm uses GoSystem Tax's online client organizer MyTaxInfo, as well as the paper organizer for a select few.

The strategy appears to have paid off. Schwan says that about 85 percent of the clients fill out the organizer, and most of the rest fill out the paper organizer. This helps the firm, which has 50 offices across the United States and is the U.S. member firm of Grant Thornton International, work more efficiently and gives its clients complete control over what information is used to prepare their tax returns.

Nevertheless, industry sources agree that, in general, there are obstacles that remain when it comes to tax organizers. Either firms have trouble convincing the clients to fill them out or the clients try to complete the form but get discouraged by the confusing language and plethora of questions. Clients may also believe that by filling out the organizer they are doing the preparer's job for them.

Partner Insights

"They feel they are paying the profession so much money that they shouldn't have to fill it out," says Kathy Kirkendall, group manager for ProSeries.

Recognizing the value such organizers can provide to firms and the inherent challenges that exist, software vendors are taking steps to beef up their offerings and make them easier to use.

"We need to offer an application that is easy and intuitive to the client, that makes it easy to do online," says Boyd Gackle, product manager for GoSystem Tax. "And the CPAs need to train their clients on why it is important to fill out."

When clients enter their data into MyTaxInfo, it is directly imported into GoSystem Tax RS, which eliminates the additional data entry that is necessary when a client completes a paper organizer. The organizer can be customized to meet the specific needs of a client.

The client benefits from the fact that the organizer can be accessed anytime, anywhere via the Internet and requires no software installation. Files or other documentation can be attached for the preparer to review.

With its clients increasingly shifting to the RS platform, the vendor opted to discontinue for the 2007 tax year its CD-based Individual Tax Organizer in favor of the online MyTaxInfo, which has been available since tax year 2003. There are no plans to discontinue the paper organizer, which still appeals to certain clients.

Gackle says 3,500 online organizers were completed this past tax season, about a 50 percent increase compared with the year-ago period.

He predicts that the usage of online organizers will grow going forward as Baby Boomer tax professionals approach retirement and more of the tech-savvy younger generation enters the workforce. Online organizers are an attractive tool for preparers, saving not only time but money on postage, as the organizers are usually dynamic and can populate Pro Forma data from the previous year, download and integrate it into a vendor's tax prep software to eliminate the rekeying of data, are customizable and usually have the capability to notify a preparer when the organizer is complete.

Gackle says that most of the new features being added to MyTaxInfo are behind the scenes and pertain to data validation, so that CPAs will have the validation tools needed to ensure any errors in the organizer are found before the data is imported into the tax return.

MyTaxInfo user Schwan says she would like to see a help feature added, where if a user hovers the cursor over a section in the organizer it will give answers to commonly asked questions about that specific section. She also suggests that the system prompts people ahead of time about what type of information they will need before beginning, and features the ability to download the organizer to a local machine so it can be completed at the client's pace.

"[One] challenge for clients is figuring out what information they need to have on hand before filling in their organizer," Schwan says. "Often the organizer is full of technical tax terms, which makes it confusing for the clients."

In conducting research, Intuit learned that clients either don't understand what data and documents they need to collect for the tax preparer or they simply forget to bring in a required document. As a result, ProSeries has designed the new Client Checklist in easy-to-understand language that is personalized for each individual client. It is a move that, according to ProSeries, will "revolutionize collecting client's tax information."

"We talked to clients as well in their homes and learned that they want professionals to remind them what to bring in," says Kirkendall. "They want to make the tax professional's job easier."

While many tax prep vendors say their organizers offer a checklist of sorts, Kirkendall says what makes the Client Checklist unique is that it is a single document explaining in easy-to-understand language what documents they need to bring in.

"Other [organizers] are built with the needs of the tax professional in mind, not the payer in mind," Kirkendall says. "This is a whole new way of putting it in the language of clients."

The document list is automatically created from prior-year data and the explanatory text that helps clients gather the right documents can be edited by the tax preparer.

To encourage preparers to try the Client Checklist it will be offered for free to those who use PowerTax, PowerTax Lite and 1040 Unlimited. Next year it will likely be available for an additional fee.

Kirkendall says the goal is for 30 percent of customers to use the checklist for the first year. It is believed that it will increase the success rate of the accountants getting all of the right information from their clients in the first visit. It also helps tax preparers add value to their services.

"We feel we are just touching the surface and feel there is a way to redesign how professionals work with their clients," says Kirkendall, who noted that it also is offering new Client Presentation and Client Advisor tools.

To help tax professionals further demonstrate their value beyond just the tax return, the Client Presentation can create charts and graphs of a two-year comparison of income, deductions and exemptions. The Client Advisor enables preparers to make tax recommendations for the next tax year based on the client's age, dependents, education, income, etc.

Intuit's Lacerte will continue to offer the print and electronic organizer that is currently part of the product, but will not be offering the Client Checklist for this year. However, that could change in the future.

Also recognizing the importance of offering an organizer online, Orrtax is testing a Web organizer this year with 15 to 20 firms. A full rollout of the organizer is planned for next year.

"A lot of our clients are asking for Web development," says Annette Hancock, product manager for the Web organizer.

The online organizer, which is part of and integrates with Orrtax's IntelliTax Individual, is similar to the Windows-based organizer that Orrtax currently offers. Beginning this month, Orrtax will send the link to its EROs testing the product. They can then paste it as a link on their Web site or rebrand it. Taxpayers will then receive a password and PIN to access the organizer.

It is expected that the final product release will include a dynamic checklist, based on what information is entered, instructing taxpayers what information to provide to their tax preparer prior to the tax return preparation.

"I think that many of our clients will want to add this onto their site," says Hancock.

Lyle Petersen, VP of sales for TaxWorks, says the company currently offers a tax organizer that integrates with its paperless office and can be emailed or printed and mailed to a client. However, the company is looking to launch a Web-based organizer, possibly next year.

In an effort to urge more preparers to take advantage of its current tax organizer offering, TaxWorks, which recently joined H&R Block as an independent subsidiary, this year made its organizer customizable so users can insert letterheads, add borders, etc. It also integrates with the scheduler so a prescheduled appointment can be sent to the taxpayer with the organizer.

"We have found that most [tax preparers] like to send them out as a reminder that it is time to come back," says Petersen. In other words, the organizers are as much of a marketing tool as they are a data collection tool.

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