Time to Plan the Taxes


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Michael Deutsch, president of Michael S. Deutsch & Associates in Walworth, Wis., a longtime user of Intuit's Lacerte Tax Planner, views tax planning as a tremendous revenue opportunity for tax professionals. "We go through and develop tax plans for our clients. If you aren't doing tax planning for clients you are missing a revenue opportunity," says Deutsch, who does tax planning for more than half of his 500 tax clients and charges extra for service.

Many tax professionals, like Deutsch, understand the importance of being able to offer efficient tax planning, especially in light of the current economic uncertainties.

"The whole planning environment is very murky with a lot of uncertainties and you have to get into scenario planning," says Jim Reeves, senior vice president of new product development for the tax and accounting business of Thomson Reuters.

Partner Insights

Mid-April may officially mark the cooling off of the tax season scuttle but, as tax preparers know all too well, that is the time for preparers to begin helping clients with their tax planning needs and minimize the tax they may face the following season. Looking to assist professionals with their tax planning service, vendors are working to bolster planning tools with time saving features and more comprehensive analysis.

To help tax preparers not only boost revenue but also leverage their role as trusted advisors, several companies, like BNA Software, are bolstering their arsenal of products.

BNA Software currently offers three product lines-its flagship Income Tax Planner, as well as the BNA Estate & Gift Tax Planner and Corporate Tax Analyzer-and plans to launch a fourth in early 2009.

According to Dean Sonderegger, product director for BNA Software, the company will launch for the first quarter of 2009 the new BNA Wealth Manager, which will combine the corporate tax and individual planners.

"What we are seeing a lot in the marketplace is the commoditization of the tax prep business," says Sonderegger. "At the same time, you are seeing demand for additional services in wealth and estate management."

Its flagship Income Tax Planner-which he says has a 40 percent share among firms with 10 or more associates-enables users to, for example, link in and out of Excel, do 20 side-by-side columns of federal and state projections for multiple past or future years and/or scenarios, and estimate quarterly payments and print federal payment vouchers. In addition, the product goes back to 1987 to facilitate audit and unfilled return engagements. BNA Tax Planner is priced at $835.

For the Income Tax Planner the company just launched in late September a new release to support the AMT patch. In addition, Indiana has been added for the nonresident taxes so the planner now supports 32 states.

Brenda Sellers, a sole practitioner located in Woodinville, Wash., near Seattle, is a longtime user of BNA's Income Tax Planner and finds the product to be effective in meeting the needs of her high net worth clients.

"I think [for] anybody who does planning for high net worth clients it makes sense to use this product," says Sellers, whose clients have a net worth ranging from $3 million to $60 million.

Sellers specifically likes that the product enables her to conduct an array of what-if scenarios and can import data from compliance systems.

Sellers notes that she would like to have more options and flexibility to determine how scenarios may play out when helping clients with their tax planning needs.

Newcomer Latino Tax Software is aimed at meeting the needs of the Latino market. The company's new tax prep program, called MultiTax, is currently in beta and is expected to be available by January.

What makes the product valuable, according to Manuel Alvarez, president and chief executive officer of the Oakland, Calif.-based company, is that it caters to the Latino market; enables users to prepare and manage multiple years (1997 to 2007) of tax returns in a single integrated solution; and prepares, manages and tracks ITINs/W-7s.

"Initially, the application was developed based on the need I saw in dealing with immigrant communities," says Alvarez. He continues that often these taxpayers have not filed returns in the past and are delinquent so having the ability to easily manage several years at a time is important. Alvarez says that about 85 percent of his clients are Hispanic.

In addition to preparing multiple years of tax returns in a single integrated solution and requesting ITINs, the tax program prepares and e-files current year tax returns so it is designed to replace a preparer's current tax prep program. With the click of a button, the program can be converted into English or Spanish.

One reason the multi-year capability is handy is that many Hispanics have not previously filed returns, including undocumented aliens or those whose culture has led them not to trust government taxing agencies.

The system displays five years of W-2s on the same page. Alvarez says this differs from most tax preparation packages for which the preparer would need to open the prior year tax package to export the data to the current year.

Being able to serve the Hispanic market will only grow increasingly important as evidenced by the latest figures released by the U.S. Census Bureau. Data shows that the nation's Hispanic population increased 1.4 million to reach 45.5 million in July 2007, or 15.1 percent of the estimated total U.S. population. It is estimated that the Hispanic market could reach 102.6 million by July 2050, constituting about 24 percent of the nation's population by that date.

"[By 2050], 25 percent of the population will be of Hispanic origin and the number of taxpayers is growing even faster," says Alvarez. The U.S. Census Bureau states that, in 2007, almost 34 percent of the Hispanic population was younger than 18, compared with 25 percent of the total population.

Alvarez says the program is also ideal for preparers dealing with clients-regardless of their ethnicity - who are delinquent in their taxes and, given the program's ability to prepare and manage multiple years, is helpful in tax and scenario planning.

Pricing varies depending on the needs of a firm, but for an initial license for a single office for federal and states (by the end of 2008 it plans on having the six to seven states with the highest concentration of Hispanics available) it is $800.

Latino Tax Service has also put together marketing materials in Spanish to explain the basics of the American tax system to Spanish speakers, for example, how to apply for a Social Security number.

Those lessons are part of a set of marketing materials Latino Tax is selling to preparers who wish to address this market.

CCH Choices

CCH offers users its ProSystem fx Planning, which is customizable and allows practitioners to develop, calculate and review tax scenarios and create planning strategies for their clients. The product offers both federal and state planning and future-year estimating scenarios.

According to product manager Ron Sosinski, the company also offers a tax projector that enables users to do some tax planning for the following year within the tax prep program. This application, however, is not as robust as ProSystem fx Planning.

Sosinski says the tax projector currently "serves a niche and what we have currently fills a need." Given that, CCH is not looking to make any major changes to the product at this time.

Jane Pfeifer, a principal at firm Clark, Schaefer, Hackett & Co., has been using CCH's ProSystem fx Planning, which links with the tax preparation software, for many years and finds the product helpful in meeting her tax planning needs.

"The easy linking from the tax preparation software allows us to transfer the prior year information into the planning software," says Pfeifer, who is located in Columbus, Ohio. "[And] the ability to set up multiple cases allows us to run multiple scenarios for clients."

Like many tax preparers, Pfeifer has found AMT to be a significant issue in tax planning. "Currently, we are waiting for Congress to approve the patch. If the software could run projections with and without the patch, it would be helpful," she notes.

While Pfeifer has been using the tax planning product for many years she says she does wish that the product would be updated more frequently. "It took awhile for last year's AMT fix to be added," says Pfeifer.

Since the company's acquisition by CCH, TaxWise sells BNA Software's Income Tax Planner, as part of the TaxWise suite, According to Dave Olsen, director of product management of Small Firm Services for CCH, the tax planner "wasn't a great fit for our customers."

According to Olsen, TaxWise has tax planning functionalities already built in so the company is examining how to build on that to potentially develop a standalone tax planning component.

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