Capturing Data

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Danta, Chase & Co., a small CPA firm with 15 employees in two offices nestled in Washington State, serves the tax needs of 175 small business clients and processes more than 2,000 returns a year, so having tax preparation software with a high level of integration is critical. “The best thing about UltraTax is the integration with other Thomson products. It really speeds up the process,” says Otto Chase.

Many tax and accounting professionals agree with Chase as firms continue to deal with staffing concerns and mounting workloads. As a result, firms today are looking for software applications that deliver enhanced integration and a streamlined workflow.

And one of the major goals of integration is to eliminate rekeying data. That, coupled with scanning technology to bring data into the tax software without user intervention, is a major trend as vendors prepare their 2008 tax software.

Partner Insights

However, the 2007 experience was a bit tricky. Both Intuit and CCH had difficulties with their scanning applications. Both say things will go more smoothly this year.


Jorge Olavarrieta, group product manager for Intuit’s Lacerte, says that the company is focusing on streamlining the process of collecting information from clients, streamlining the entering of data and evaluating technology such as Scan & Fill to eliminate rekeying of data. However, the company is not ready to talk about specific steps being taken for the next edition of its software.

But one improvement to data capture, the Schedule D Import Tool, has already made life easier for CPA Bryce Forney of Forney Accountancy in Pleasant Hill, Calif., who has been using Lacerte for the last five years.

“Schedule D import is amazing in terms of reducing the input time for capital gains and losses. I enter all Schedule Ds into Excel now and use the import tool because I can enter information in Excel much faster than the Lacerte interface,” says Forney, who processes about 100 individual returns and about 20 business returns.

However, he would like to see more core functionality around a paperless office.

“They have an index your scans program, but the program still assumes that we’re printing tax organizers, instead of converting to PDF and emailing,” he says. “I would like to be able to flag questions within the tax return and have an email automatically generated to the client as a result. Right now, I feel like I can’t use Lacerte as my central workplace; I am constantly bouncing out to Outlook and my client folders,”

The ability to scan source documents was available in the 2007 version of UltraTax, the package from Thomson Reuters Tax and Accounting through a pilot program.

Teresa Mackintosh, marketing vice president for the group, says its experienced positive results from the program, which enables practitioners to scan in source documents and take advantage of optical character recognition to eliminate the re-keying of data.

The module currently identifies and captures data from about a dozen forms, including W-2s, 1099-INT, 1099-DIV, 1098, 1099R, 1099MISC, 1098E, 1098T and 2439. Mackintosh says it was too early to say whether additional forms would be added for the upcoming tax season.

Mackintosh says that during the pilot it correctly named the form 80 percent to 85 percent of the time, and accurately read the information from the form 60 percent to 65 percent of the time.

“I want to really emphasize that it was a pilot with the intention of improving the engine. The engine learns through experience, so those numbers will improve over time,” says Mackintosh.

Similarly, CCH’s Small Firm Services, which markets the TaxWise and ATX lines, is seeking to improve format recognition. In its 2007 software, the unit introduced Scan & Fill, a product originated by its parent that enables users to scan in such documents as W-2s and 1099s, which can then be exported to TaxWise or ATX.

Dave Olsen, director of product management for CCH Small Firm Services, says it is enhancing the products to better recognize unknown formats. The scanning of documents is tied to the document management system so documents can be automatically store in a client’s folder.

Petz Enterprises is seeking to capture another kind of information—digital signatures—and is beta testing this year a digital signature pad for its CrossLink desktop software. The signature pad, which is much like one found in a retail store, captures a taxpayer’s signature, turns it into a PDF and embeds the signature into the appropriate areas of the tax return.

“This is a convenience for the preparer and tax- payer,” says Chuck Petz, vice president of product development for Petz Enterprises, who notes that, for security reasons, the signature is timed and dated so it cannot be used at a later date for other documents.

Franklin, N.C.-based Drake Software was also in a test mode last year, for capturing W-2 data. John Sapp, CPA, Drake’s vice president of sales and marketing, says the company will roll out this year’s W-2 Imports, which enables W-2 data to be directly imported into the tax prep software.

For its 2007 software, the company added a Schedule D import function to eliminate data entry. For the next tax year, it will include business packages instead of just 1040 modules.

Although scanning source documents isn’t involved, Randolph, N.J.-based TaxSimple is pushing more toward a source-document-based approach in its desktop application. President John Vora says having the screen image resemble source documents, it is easier for a less experienced staffer to enter data into the tax application.

This approach was introduced last year and is now favored by as many as 80 percent of the company’s clients, says Vora. Next year, the Vora will look to add more source documents like moving expenses.

The Push for Suites

The other element in eliminating data entry via the integration of applications is pushing vendors to emphasize the sale of suites, not just of single applications.

“The trend that is continuing and overshadowing is streamlining workflow and business processes,” says Jo Ann Cummings, product manager for CCH’s ProSystem fx Tax.

David Hall, tax partner at Las Vegas-based L.L. Bradford & Co., which began using ProSystem fx in 2002, appreciates the software integration that CCH offers, enabling the firm to work toward becoming a paperless environment.

“As far as forms and what they offer and the ability to meet the needs of large firms they are great,” says Hall, who notes that the firm processes about 1,500 returns a year, which includes individual, business and consolidated returns.

While CCH and UltraTax have established suites, the new suite on the block is one announced by another part of the Thomson Reuters operations as that company brought together a number of its products in the April launch of the Enterprise Suite.

The suite’s tax core is GoSystem Tax ES, formerly known as GoSystem Tax RS, Added to that are two products from the UltraTax family, Engagement ES and Practice ES, along with GoFileRoom ES, based on the company’s Internet-based document management system.

This move is in line with the company’s focus on offering enhanced integration. According to David Bishop, director of GoSystem product management, Thomson is working to deepen its integration within the suite of products. “We are integrated with Engagement ES, which allows computation of the tax return while in the software and the seamless transfer of data,” Bishop adds.

Being able to get source documents into the hands of tax preparers is also an important piece of the workflow process and Internet portals are an increasingly important in this process.

Thomson’s UltraTax business was an early player in this arena and Mackintosh says that more than 200,000 customers are using portals. This includes clients using UltraTax/1040 Portals, designed for annual 1040 clients; NetClient CS, a client portal system; NetStaff CS, a portal system for firm staff; and Web Employee, a portal service for employees of the accountant’s clients.

In the fall, the company will enhance the tax portal to include an e-lockbox so customers can upload documents such as wills and trusts.

CS user Chase not only appreciates the integration offered through the application, but also enjoys other technology like the portals.

“I use the secure portal Web delivery for 1040s and my clients love it. It saves me paper and postage enough to pay for the license. More importantly, I have some loan officer clients who are actually referring work to me because they like it if their customers use this technology to provide those lenders loan documentation,” he says.

Troy Patton, CPA, managing partner of Patton & Associates of Indianapolis, has been using UltraTax for about eight years.

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