Intuit has been keeping abreast of all the developments with the recently enacted tax legislation, but the tax prep software giant is warning that its software is still dependent on the Internal Revenue Service updating all of its forms, schedules and instructions on time.
On Tuesday, the IRS announced that it would delay the start of tax season for individual returns until January 30, with some kinds of returns not accepted until late February or March because of the all too recent enactment of the American Taxpayer Relief Act only about a week ago (see IRS Delays Tax Season until End of January). Intuit was one of the industry participants on a call Tuesday afternoon with the IRS, which was set to provide the latest update on when tax season would begin. Intuit plans to be ready no matter what happens.
“With all the news surrounding the tax law changes enacted by the government, Intuit remains dedicated to its customers by providing the latest information and also updating our products quickly and accurately, and hopefully that relieves some of the stress for the accounting community,” Intuit senior tax analyst Mike D’Avolio, CPA, said in an interview Tuesday before the IRS call. “We do continue to update our blog articles with the latest information.”
D’Avolio noted that for Intuit’s ProSeries line of professional tax software, the current software in the field already incorporates many, but not all of the tax law changes the government recently enacted, including the provisions that expired at the end of 2011 and have an impact on the 2012 tax season.
“Then there are several provisions that will require additional updates to the calculations, and we’ll provide those with the January 18 release of the software,” D’Avolio added.
For Intuit’s Lacerte line of professional tax software, the product release on January 9 will incorporate the extension of the tax laws that the government recently enacted, according to D’Avolio. For Intuit Tax Online, the release on January 10 will incorporate the extension of the tax law changes.
“Fortunately with all three of our products, we’re able to have the tax law changes incorporated into the software very quickly,” said D’Avolio. “With our computer programming and coding, we’re able to switch back and forth pretty readily with a lot of these extender provisions. Depending on which way the tax law was going to go, whether the extender provisions did get extended or not, we’re able to flip the switch pretty readily for all of our products. We’re pretty much ready for whatever the IRS has in store.”
For the consumer tax prep market, TurboTax currently has the extender provisions already incorporated. “They were guessing the government would extend the provisions so their calculations are consistent with the way the tax law has been changed,” said D’Avolio.
One of Intuit’s competitors in the consumer market, TaxAct, also said Tuesday that it has been updated with the latest tax law changes.
D’Avolio noted that Intuit encountered a similar situation in 2010 when there was a delay to the filing season for certain types of tax returns. “For instance, if you had a Schedule A, you had to wait until about a month until mid-February to file, so we’re ready if there is a delay for some or all of the tax returns,” he said. “What we do is we would allow the preparer to print the returns and then send them in when the IRS is ready. And then on the electronic filing front, what we have is kind of a blocking or a diagnostic mechanism saying, hey, you’re not able to transmit this tax return yet because the IRS has not opened tax season for certain impacted returns. So we’re able to block and then allow the returns to go through once the IRS is ready.”
However, despite Intuit’s preparedness this tax season, it and other tax software vendors still need to wait until all of the latest forms and schedules are ready from the IRS. On Tuesday, the IRS revealed that not all of the forms would be ready by late January. The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit), along with a number of other forms. Another holdup is the instructions.
“In addition to the IRS accepting tax returns, we also have the forms and instructions to deal with,” said D’Avolio. “Unfortunately since the IRS has not released final instructions yet, our forms are not yet final, but we will update the software once we get final instructions and forms from the government. We do have the calculations in place, or for Lacerte soon to be in place, but unfortunately we don’t have the final forms and final instructions. But behind the scenes the calculations are running under the assumption that the tax laws did get extended, which they did.”
Intuit has been fielding questions from its tax preparer customers for a while now. Before a deal was reached between Congress and the Obama administration, preparers were asking the company about the tax law changes and whether the government would allow the country to go off the fiscal cliff or not. They also wanted to know whether Intuit would be able to react whichever way the legislation went. “That gives them some comfort knowing that the products are updated with the latest calculations,” said D’Avolio.
He advises Lacerte and ProSeries desktop software users to turn on the automatic updates feature to get the latest product updates, including the final forms when the government releases them. “If the customers have the automatic updates on, then they’ll get the updates with the latest tax forms,” said D’Avolio. “Secondly, continue to check our blog and Web resource pages, where we provide the most up-to-date information, both on the government front as well as on the product front.”