The past tax season saw continued growth in the do-it-yourself market, while the complexity of the Tax Code, and the likelihood of end-of-year or next-year retroactive changes, will increase the need for software at both the consumer and professional levels.
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Although the number of vendors has declined recently as a result of the acquisition of smaller companies by the dominant players, the industry remains competitive. In addition to the requisite updating to reflect tax law changes, manufacturers continue to augment their packages with enhancements that increase ease of use.
This year is especially troubling with regard to changes, with expired and expiring provisions, and the health care provisions, all of which may or may not be extended or repealed in either a lame duck session of Congress or a new Congress convening next year.
"This isn't the first time we've encountered some degree of uncertainty," said Jordan Kleinsmith, associate product manager, enterprise, at Thomson Reuters Ultra Tax CS, GoSystem and GoFile Room. "We've had a good deal of experience at it. In fact, we've been building in contingencies and making sure we're able to address whatever scenario we end up with -- it's par for the course."
The biggest challenge facing tax preparation as a profession is the slow trend toward the commoditization of tax work, according to Kleinsmith. "Clients, especially the younger generation, are expecting a different value proposition from their tax preparer," he said. "They're not looking just for someone to fill out the return and be done with it. They want proactive guidance for next year's changes, and they want it done more on the front end, rather than reacting. That trend is driving the need to commoditize so the preparer can set aside the time needed to address the strategy component with the client."
Some of the more fundamental changes are in the GoSystem line for next year, Kleinsmith indicated, including a new print program, a revamped interface and an improved navigational structure.
Over the past few years, Ultra Tax has been expanding its ability to service larger firms specializing in complex returns, while at the same time being a good fit for smaller firms with simpler returns, Kleinsmith said.
Although TaxSimple, purchased by Thomson Reuters two years ago, continues as an online consumer tax prep program, the aspect of TaxSimple that served the professional market has been rebranded Agile Tax. Agile Tax will bring greater productivity and flexibility to the professional tax preparation space as a result of its cloud-based structure, extensive paperless capabilities, and convenient, subscription-based payment model, according to director Jeff Fritz.
CCH has added numerous enhancements to its Prosystem fx Tax and Prosystem fx Tax (SaaS), according to product line managers Angela Askew and Jo Ann Cummings.
"We gave a lot of enhancements going into our electronic filing status system," said Cummings. "Among other things is the ability to send to the preparer an e-mail notification when Form 8879 [e-file signature authorization] is ready." Another enhancement has to do with returns on extensions. "We've put returns on extension in a different background color, so the preparer can look at the display and know right away which returns are on extension," she said.
Moreover, the preparer can filter out extended returns, and print a PDF report inside the return that shows all attached PDF files. "Inside the return, we also have an e-file status report," said Cummings. "Many taxpayers have large multistate returns. This will show each taxing authority that you are e-filing, so you can see for each state whether the return has been accepted or rejected."
Another feature is the ability to batch e-file extensions for business returns. "We've had it for Form 1040 returns, and we're adding it to business returns," she said.
Many exciting features will be announced at the upcoming users conference, Askew noted, adding that uncertainty in the tax landscape is greater now than in most years. "It's always uncertain at this time of year, and in an election year more so," she said. "But we have such a well-staffed team and a broad view in both publishing and software, so we have the ability to react quickly."
CCH Small Firm Services likewise has put its offerings, ATX and TaxWise, through an extended development process, focusing on productivity gains. Both deliver improved functionality, making it possible for the tax professional to be more efficient when working on returns. And the company has recently launched a new Marketing Resource Center, designed to help tax and accounting professionals who are looking for ways to grow their business. Users can access the site through their ATX or TaxWise Solution Center.
Drake Software has focused on extensions of what they've been doing over the past few years, according to senior vice president James Stork. "We've enhanced our Web-based solutions and hosted sites of solutions," he said. There are two new platforms for 2013, Drake Hosted, in its pilot year, and Drake Zero. "Drake Hosted is a cloud-based SaaS model using Citrix technology, where the full desktop software program is installed and hosted in the Drake Cloud," said Stork. "Drake Zero is an evolution of Web 1040 (our Web-based platform for multi-office business models where a high value is placed on procedures, controls and oversight)."
Two technologies that Drake is building on for 2013 are its GruntWorx and SecureFilePro, both in their pilot year last year. "We are continuing to enhance both products, which, at their core, streamline communication and workflow and facilitate the paperless office," said Stork.
THERE'S ALWAYS MORE
Intuit's Lacerte Tax has expanded its e-file form package, adding more business e-file support, according to spokesperson Yasmeen Salahuddin. Federal 1041 extensions, as well as a number of state business returns, have been added. (State e-file is included in all Lacerte Unlimited for individual and business returns.) Increased e-file functionality will result in faster acknowledgements, better diagnostics and more input warnings to help resolve errors faster.
Intuit Tax Online is a cloud-based tax solution. Its Tax Online Mobile, a mobile app that allows users to view client lists, check e-file status, and access tax return PDFs, has been expanded for use on Android devices (it currently supports the iPhone and iPad).
Among the improvements to increase performance are a 40 percent faster login, and faster input screen loading and PDF rendering. An in-product Twitter feed provides timely and relevant news about the product, and a filtered list of knowledge-based articles provides information based on the customer's search terms.
Intuit has also expanded the e-file capabilities of its ProSeries Professional Edition, including Form 1040 Modernized e-Filing with support for PDF attachments. Numerous e-filing capabilities have been added for state business returns that support e-fiilng.
ProSeries e-File Resource Center is designed to help make sure professionals are aware of all e-file compliance requirements and to help those new to e-filing make the transition as quickly and smoothly as possible, said Salahuddin. And ProSeries Tax Import has been enhanced to reduce the time spent manually entering client data by importing client information from online financial institutions and printed documents.
TaxWorks by RedGear has retooled its five-pane return screen to make entering and delivering returns easier and faster, according to technical writer Alan Haacke. New efficiencies begin right at the home screen, which incorporates "Practice at a Glance" features, which help organize a tax practice's needs with a customizable to-do task list to remind the preparer of incomplete items that need to be addressed, and upcoming appointments. A Recent column enables the preparer to quickly return to the most recent returns.
A multi-return view allows the preparer to have a number of returns open at any time, while the e-file dashboard gives real-time status on e-filed returns. The preparer can view rejected returns and quickly correct them with links directly to the area of the return that was rejected. And a client card contains client information that can be updated without modifying prior-year returns.
Virtually all software manufactures are hedging their bets regarding the tax landscape for next season, while preparing for multiple scenarios.
"You always prepare for the unknown even when you think you can predict it," observed Drake Software's Stork. "You have to make sure you can switch gears quickly. At the end of the day, preparers need to start on time, and we will be prepared to do that."