by Roger Russell

Much as their development of Internet-based applications raised the stakes in tax prep software, vendors RIA and CCH are now upping the ante in tax-planning technology.

The tax compliance giants are going head to head with separate applications that do the spadework in finding tax planning prospects — CCH’s ClientRelate, and Tax Alerts from RIA, a Thomson business. Both products link the companies’ respective tax compliance and tax research products to identify clients who may require tax-planning services as a result of the tax implications of recent regulatory or legislative changes.

Riverwoods, Ill.-based CCH’s ClientRelate combines its Tax Research Network with its ProSystem fx application to pinpoint clients who are affected by new tax developments, or who may benefit from additional services. It performs three types of searches:

● Search by tax bulletin. The program navigates the practitioner’s entire client base to see which clients are impacted by new tax law developments.

● Search by client. ClientRelate will analyze a particular client’s tax data to find which services might be most beneficial to them.

● Search by service. ClientRelate will check across the preparer’s client base to see which clients would benefit from a particular service.

A companion research tool, SmartRelate, does for state tax research what ClientRelate does for the federal side.

RIA’s Tax Alerts is a daily Web-based compliance news service, with reports showing the impact of developments on completed tax returns. Each item is analyzed with regard to its significance, with suggestions on how the tax professional should respond. The service can be used as a stand-alone news service, but it is generally used as a link between RIA’s Internet-based research vehicle, Checkpoint, and RIA’s GoSystem RS.

For GoSystem Tax RS and InSource Express RS users, the service provides a summary report on the number of clients affected by a reported tax development. It gives a description of the data queries used to determine the impact on completed RS tax returns.

The service provides links to Checkpoint and a database of client letters to explain tax developments to clients affected by the development.

Tax Alerts, with its ASP-driven technology, performs its search queries on the server hosting the preparer’s tax returns. ClientRelate, on the other hand, does its tax return queries at the level of the preparer’s hard drive. Both CCH and RIA tout the security of their respective search systems.

Meanwhile, other vendors are continuing to develop their traditional tax planning applications. Many have some sort of “what if” scenario built into their tax preparation program, while others produce a beefed-up, stand-alone program that can produce graphs, charts and client letters, and that integrates with their other software.

However, Internet-based tools are commanding increased attention right now because of the opportunity to provide real-time information to the tax planner and more immediately identify tax-planning opportunities in an increasingly competitive market.

The type of planning product that integrates tax research with tax compliance “is a top technology,” and one that “will enhance the client relationship, increase productivity and grow business by helping practitioners to mine their existing client data,” said Val Steed, chief executive of Centerville, Utah-based technology consultants and trainers K2 Enterprises.

Dexter, Mich.-based Creative Solutions, a Thomson business, has made several enhancements to its Ultra Tax Planner, whose core capabilities include analyzing multiple tax strategies for multiple years. The results can be communicated to the customer using a standard group of reports or by customizing a set of reports for specific clients. The program includes built-in word processing and graphing capabilities. Ultra Tax Planner imports client data directly from Ultra Tax.

Ultra Tax also contains a data mining tool with 30 queries based on the new tax act, according to Jack LaRue, vice president of marketing for Creative Solutions. “If the tax preparer wants to find clients impacted by tax law changes, this makes it easy,” said LaRue. “We have other pre-canned queries that we introduced a number of years ago,” he said, and the database manager makes it possible for the preparer to come up with his own queries of client return forms.

San Diego-based Intuit’s ProSeries has a built-in capability to project “what if” scenarios forward for 10 years. Plano, Texas-based Lacerte’s Tax Planner goes a step further. “It allows the preparer to project clients’ future tax liability under multiple scenarios and provide a detailed professional report, including graphs,” said George Olivarietta, senior product manager.

“The Tax Planner integrates with Lacerte’s individual tax program, and provides four different types of analysis — a year/case analysis, a married filing jointly/married filing separately analysis, a difference analysis, and an adjustment analysis,” he said.

Washington D.C.-based BNA Software’s stand-alone Income Tax Planner has the capability to interface with GoSystem, Lacerte, ProSystem fx, Ultra Tax and Petz Crosslink 1040. Users can project taxes for 10 years, 10 scenarios, or any combination of the two up to 10 columns of data. A linked client letter feature allows the preparer to write a client letter while still in the program and links amounts from the analysis to the letter.

Carrollton, Texas-based RIA Compliance has designed its GoSystem Tax to interface with both BNA’s Income Tax Planner and CSI’s Ultra Tax Planner. GoSystem’s data mining tool, FormSource, can mine over 400,000 fields, according to product marketing manager Boyd Gackle.

“As a result of the Jobs and Growth Tax Act, our clients have used FormSource heav-ily,” said Gackle. “Every time a new tax law change comes about, they query their returns to find out who is affected by a change, and can give those clients immediate service.”

CCH has built tax-planning capabilities into its ProSystem fx Tax, which can show clients how changes will affect next year’s return. It also produces specialized reports, as well as a facsimile of the next year’s 1040 return.

A separate ProSystem fx Planning module has a spreadsheet-style interface that integrates with ProSystem fx Tax, and can calculate up to 30 tax scenarios per plan. It allows the preparer to view or print multi-year forecasts in side-by-side views for comparison. A plan variance option allows the preparer to pinpoint plan differences by percentage or dollar amounts.

Many other tax prep packages allow the preparer to make projections. For example, Franklin, N.C.-based Drake Tax Solutions has a “quick estimator” that does next-year projections. Randolph, N.J.-based TaxSimple has a number of tax-planning worksheets for practitioners to do projection analyses of following years. And Rome, Ga.-based Universal Tax plans a similar function for a future release.

Another product, PPC’s Federal Tax Planning Service, serves as a starter kit for tax planning and includes strategies and case studies for individuals, partnerships, C corporations, S corporations and limited liability companies. It includes two PowerPoint presentations with scripts. Its tax planning Roadmaps show the practitioner how to identify planning opportunities from a completed tax return.

While ClientRelate and Tax Alerts are pushing the envelope in the continuing evolution of tax planning tools, Lacerte’s Olivarietta noted that tax planning is “just one of the pieces of the larger financial planning picture. You look at life’s events and calculate what impact those would have on a taxpayer’s future liabilities.”

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