Tax Software 2008


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Tax preparation vendors are speaking a new language. Well, it's not a new language. It's just one that's being spoken in many more areas of the United States-Spanish. Of course, vendors are still filling out their product lines with new state and federal individual tax forms. And last year's hot trends of adding document management features and reducing data entry are still important developments.

However, both consumer and professional-oriented tax prep vendors are ramping up the features available to Hispanics. It's a big deal for those who have Hispanic clients, of course, and it's a really big deal for tax software vendors who are looking for growth in an otherwise saturated market.

Among companies making a major move into the Spanish-language market is Thomson Reuters with its UltraTax CS software. The company is expanding into Puerto Rico, in large part because of its experience with other applications in its CS line.

Partner Insights

"We have had huge success in Puerto Rico in engagement and practice management products," says Teresa Mackintosh, vice president of marketing for the Dexter, Mich.-based UltraTax operations.

Puerto Rico has thousands of businesses that need to file returns for the United States as well as for Puerto Rico, so the company is introducing 1120 and 1065 business forms. It will also be offering Spanish client documents and many 1040 states with large Spanish-speaking populations.

Similarly, CCH Small Firm Services is increasing the forms and services available to preparers who deal with Spanish-speaking clients.

"We have about 75 of the most commonly used forms in the 1040," notes Gene Goldenberg, vice president of marketing for the Rome, Ga.-based operation. "You can toggle back and forth between English and Spanish."

CCH is not offering the same features in its ATX line. Goldenberg says that the reason is that the Hispanic market frequently involves high-volume, multi-office locations that utilize many products, which fits the market that has historically been served by TaxWise.

According to Drake Software vice president Kerri Carpenter her company has Spanish-language support and is converting phone support messages to Spanish.

The new kid on the Spanish-speaking block is Latino Tax Service, which is fielding MultiTax, for differing needs of this market.

Initially, Manuel Alvarez intended that MultiTax, the product marketed by his company, would simply be a program that offered preparers the ability to deal with multiple tax years in one program. Users would still need a tax preparation package to prepare the 2008 forms.

But that quickly changed as his company began pushing MultiTax as a product that is especially designed for the Hispanic population, which has a lot of members who haven't paid prior-year taxes.

"We sell two products: one is the software and one is the marketing kit," notes Alvarez.

The ability of the package to handle multiple years could be one of the more interesting features brought to the professional market in some time. The software has the ability to display five years information from W-2s on the same page, without needing to import it from prior years' packages.

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

Bellevue, Wash.-based IntelliTax has also taken several steps to reach its Hispanic audience and its customers' Hispanic clientele.

For example, all default client letters it ships with the product are available both in English and Spanish. Any additional documentation it adds each year, such as 7216 regulation support for tax year 2008, is bilingual. The product also offers Form W-7 to support its customers through the process of applying for ITIN for those taxpayers who (or whose dependents) may not have Social Security numbers.

And the vendor offers bilingual customer support, explains Ton Yazici, director of product management for the Bellevue, Wash.-based company that changed its name from Orrtax Software Solutions during the last year.

Some of items that are not currently available, but are on the radar, include printing IRS forms in Spanish and localizing the product so it can be viewed in either English or Spanish.

Better Scanning

One development that got a lot of attention in the 2007 tax year software was scanning software that would populate tax returns with data from source documents.

Unfortunately, problems with software from some of the top companies produced part of the attention. But CCH and Intuit, which both had difficulties, say they have new technologies that will produce better results.

CCH has rolled out ProSystem fx Scan, which employs optical character recognition, to recognize source documents. If a return is open and a document has been scanned, a message will appear in the tax program to inform the preparer data is waiting to be imported into ProSystem fx Tax.

"It will not import it unless you say to," notes Jo Ann Cummings, tax product manager. While scanning is being performed, OCR validation can also be performed. The preparer can choose what information to import and where that data should be entered by the software.

Meanwhile, scanning products are becoming more common. Thomson Reuters tested a scanning system during last year's tax season and has made that an offering for its complete preparer base this year, while Drake Software has expanded the import capabilities of its W-2 Express.

Petz Enterprise also moved a bit more into the digital world with its CrossLink software, but limited its approach to adding support for digital signature pads to enabling preparers to capture taxpayer signatures.

Webbing It

While professional preparers haven't turned in droves to using Web-based products, there is a continuing move to the Internet.

Among companies ramping up for the Web is Intellitax, which is continuing to test an online offering called IntelliTax Online. Last year, in early beta testing, it processed more than 5,000 federal returns.

The company notes that it began offering a Web organizer last year and is looking to expand the capabilities in the future. However, "nothing specific" is slated for the upcoming tax season.

Petz didn't take its CrossLink package to the Web-fully. Web-based operation is still the province of its V-Tax-but the Tracy, Calif.-based company did add electronic capabilities.

Preparers will be able to send bulk and individual text messages to taxpayers without needed to exit the tax software package.

TaxWorks went the opposite way on online preparation, having withdrawn the consumer-oriented from the market. Although the company did not say so, it seems likely TaxWorks will point users toward TaxCut Online, which is offered by its parent, H&R Block.

Meanwhile, Internet portals are starting be talked about by more vendors. Until now, Thomson's UltraTax has been by far the player most committed to making portals available for the exchange of client information.

However, Intuit has been hinting broadly it will have them this year for both Lacerte and ProSeries. Drake Software is talking about making them available for the 2009 tax year.

Few users perhaps, are more vocal advocates of online preparation than Glenn Adams, a partner with Adams Hook, a four-person CPA firm based in Bessemer City, N.C., who has been using CCH's Global fx system since 2004.

"I am probably one of its biggest supporters," says Adams, whose firm prepares about 900 individual and 300 business returns each year. "I can give you one reason-it's version control."

Adams notes that if someone has not yet received a new version, once the preparer logs into Global fx, it recognizes him and automatically provides the update.

The second major benefit of Internet-based preparation is remote access. "I can walk into your office or into your vacation home and access the information," he says.

Thomson Reuters, the company with the most active Internet-based system for professional preparers, brought its online tax product into a closer relationship in what has been named the Enterprise Suite and the Web-based GoSystem RS product, has been renamed GoSystem ES.

One of the strongest links involves the online document management system, now called GoFileRoom ES. Users utilize QuickLaunch, a feature that can query GoFileRoom from other applications within the enterprise suite, without having to launch GoFileRoom.

The Cost of Software

There were a number of price increases among professional tax products and they were largely single-digit changes with the exception of Intuit's ProSeries.

However, Intuit raised the price of the ProSeries federal 1040 to $1,299, up $200 from last year, an 18.2 percent increase. And the company took three previously free packages, Client Advisor, Client Checklist and Client Presentation, and packaged them into a bundle called ProSeries Plus for $249.

Intuit explains its decision stating that the pricing reflects the value of its products. It may also reflect Intuit's need for more revenue from a segment that saw revenue growth of only 1 percent for the year ended July 31.

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