This year’s tax return filing season appears to be proceeding smoothly, despite the initial confusion that was generated by the seemingly annual last-minute tax legislation.Included in that flurry of new guidelines were the Tax Increase Prevention Act of 2007, which passed in December and included an Alternative Minimum Tax patch for the year that required some fine-tuning of the Internal Revenue Service’s computers to process returns that might be subject to the AMT; and the Mortgage Forgiveness Debt Relief Act of 2007, which also passed in December, and excluded mortgage debt forgiveness for homeowners whose home at foreclosure sold for less than the outstanding mortgage, if a portion of the unpaid debt was forgiven. In total, more than 10 forms this season were affected by the AMT patch.

Nevertheless, it has been pretty much been business as usual for both CPA firms and vendors this season.

“It’s been running very smoothly,” explained Jo Ann Cummings, product manager for CCH ProSystem fx Tax. “E-filing is going well, although we did have an issue with the e-filing of farmers’ returns that were due on March 3. They didn’t release the forms until March 3, the day that they were due, so they extended that date.”

“Tax season so far is pretty normal,” echoed Teresa Mackintosh, senior vice president of professional software and services at Thomson Tax & Accounting, which produces the GoSystem RS and UltraTax CS tax prep packages. “We had some forms delays and electronic delays with the year-end tax bill, but that is going according to plan and is to be expected.”

Use of Web-based organizers continues to increase from year to year, she noted. “Practitioners are taking advantage of Web organizers about 25 percent more than last year.”

RSM McGladrey has experienced double-digit growth for a number of years, and this year is no exception, according to Rick Klahsen, the head of tax advisory and compliance at the firm. “But that doesn’t mean that there haven’t been any glitches,” he said.

For starters, he cited the impact of Code Section 6694. “It raised the standards applicable to tax preparers, but unfortunately didn’t change responsibility for taxpayer positions, so the preparer is held to a higher standard than the taxpayers,” he said. “We can’t sign the return unless there’s a specific disclosure on Form 8275, so if that situation arises, we have to discuss it with our clients in order to avoid the possibility of preparer penalties. It simply slows down the process for us because of the number of conversations with our clients.”

Meanwhile, Lacerte is having one of its best seasons, according to group product manager Jorge Olavarrieta. “We were proactive in communicating to our customers the late legislative changes that impacted this year’s filing,” he said. “We built some enhancements around the installation process to eliminate any disruption in installing updates. Now it doesn’t require them to exit the program to install the update.”

Lacerte parent Intuit’s TaxAlmanac, the Wiki-based free tax research resource, has already surpassed last year’s record of 9,000 unique visitors in one day, noted Olavarrieta. “This season, we’ve already had 9,000 unique visitors on multiple days, with a 40 percent year-over-year increase in daily visits,” he said.

Intuit’s ProSeries has also experienced a smooth season thus far, according to group product manager Kathy Kirkendall. “Our customers have reported that the impact of the tax law changes were easier to understand this year than in prior years,” she said. “We’re also seeing a decrease in ‘help’ calls over last year.”

Rather than send out multi-page organizers, this year ProSeries is encouraging practitioners to send out a simplified Client Checklist. “They mail it to all of their clients, rather than a selective list as they did with organizers. They find that many clients are now calling to make an appointment right away, even the ones that are procrastinators,” she said.

“The Alternative Minimum Tax delays have changed the curve, so the early season bubble has moved back a bit,” noted Gene Goldenberg, vice president of marketing and product strategy at CCH Small Firm Services, a division that includes TaxWise and ATX. “The early filers usually peak around the time that every one gets their W-2s, the first week in February. But this year we saw a bigger surge the second week in February, around the time the IRS started accepting the AMT forms. There were actually people in the profession who thought that they couldn’t file anything until February 11, the day the IRS started accepting the AMT forms.”

“Everyone started late, but we’re still ahead of last season, so we’re optimistic that it will be a great year,” Goldenberg said.

Drake Software also started out slowly as a result of the Alternative Minimum Tax forms delay, according to John Sapp, CPA and vice president of sales and marketing. “But now we’re up over 8 percent on accepted [e-filed] returns,” he said.

The application of FIN 48 has also caused some uncertainty, observed RSM’s Klahsen. “The Financial Accounting Standards Board said it would delay the application of FIN 48 to nonpublic companies, but the announcement was unclear. It left a lot of questions unanswered until they clarified it in mid-January. Because of the delay, there was some work that was pushed back.”


Delays in the issuance of Form 1099s also contributed to the problem, according to Klahsen. “It’s been going on the last few years. Banks and brokerage houses issued them, and then amended them,” he said. “After they experienced this a few years in a row, our clients tend to hold off filing and make sure the financial institution doesn’t issue an amended 1099. it makes sense for them, but it slows us down.”

Alan Osmolowski, head of the tax department at the New England regional firm of Carlin Charron & Rosen LLP, agreed. “The delay in 1099s has been a big issue with us,” he said. “A number of the large houses, such as Morgan Stanley, Vanguard and Fidelity, have been given permission by the IRS to delay issuing 1099s until the end of February, so the number of individual returns we’ve been able to start is less than where we were at this point last year,” he said, adding, “It will cause workflow compression as the season goes on.”

Last year about 13 percent of all 1099s issued nationwide had to be corrected, Klahsen noted. “Overall, our clients’ 1099s were higher than that — 15 or 20 percent. We’re hoping that the increased numbers that were issued later means that fewer amended ones will be coming in, although we’ve already seen a few.”


For San Francisco-based Sterck Kulik O’Neill Accounting Group Inc., the flu, rather than last-minute regulations, was an unexpected glitch to an otherwise smooth season.

“In the past, people never took sick time during tax season,” said director of marketing Galen Workman. “But this year each of our partners has been out sick at least once.”

The firm has had success in encouraging customers to send in their organizers early, according to Workman. “We enter them in a giveaway. They received 100 entries if they sent in their organizers during the first week of February, then we tapered off the number of free entries each week,” he explained. “We’re giving away an Amazon Kindle and several Apple Nanos. The point is not to solicit new business, but to bring attention to our clients to send in their information earlier, and so far, it’s worked.”

For new business, the firm advertises with Google AdWords, said Workman. “We get about 40 percent of our customers from the Internet and most of those are from Google,” he said.

Holliston, Mass.-based preparer Larry Novick noted that his clients don’t seem affected by the slowing economy. “I’ve raised my fees and no one has complained,” he said.

Novick is also affected by the difference in preparer versus taxpayer standards. “I’ve been filing a lot of Form 8275 disclosure statements,” he said. “It will be interesting to see if agents will be able to look at all the Form 8275s, because when you file electronically, the computer isn’t reading it.”

Meanwhile, the IRS said that e-filing is off to a fast start — as of early March, it was up 5 percent from returns filed for the same period last year. Taxpayers filing from their home computer grew by more than 14 percent from the same period last year. A large number of these are from the Free File program, the free federal tax preparation and electronic filing program for taxpayers developed through a partnership between the IRS and the Free File Alliance LLC.

This year, Free File allows taxpayers with an adjusted gross income of $54,000 or less in 2007 to e-file their federal tax returns for free. That includes 70 percent of all taxpayers, or 97 million, according to the IRS.

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