Software Survey: For tax research, the only constant is change

Technology certainly has had a tremendous effect on the way accounting and tax preparation are performed. A large part of that is because the way the profession is practiced is governed by regulations and standards promulgated by various regulators, standard-setters, and various state and municipal governments.

Research in these areas is a necessary evil. People without a photographic memory can’t possibly remember the relevant code and standards from one client to another, much less from one year to another. Even with a remarkable memory, the sheer number of changes in numerous laws, regulations and practices make it an overwhelming task, even should you be up for the challenge. Just the changes in the Tax Code caused by the Tax Cuts and Jobs Act are still reverberating through the practice of tax preparation and financial planning. And that’s before you add in the chaos that the Wayfair decision has caused.

Fortunately, the days of enormous binder subscription services are pretty much gone, along with the even more onerous task of keeping them updated. First, optical media caused a huge shift in the way research was done and the resources needed to perform it. Then, the creation of internet and cloud services pretty much put the final nail in the loose-leaf approach. There are still plenty of paper-based research options, but they are easier to use, better organized and, for the most part, frequently ancillary to other, more interactive, products.

But one constant in the area of research is change. The fact that change has such a huge impact here means that, as with your tax preparation software, you need to evaluate the approach you and your vendor take to this vital application on a frequent basis. To give you a good start in this endeavor, we conduct our yearly survey of the state of the art in providing research to accountants and tax professionals, what the issues are in this area, and what research providers are doing to address them.


Always something new

One question that we added to our list this year was in the area of product offerings, and whether the vendor covered tax research, accounting research, or both. We were also curious about the availability of practice aids in these areas. Most of the vendors responded with a positive “Yes” to offering products that addressed all of these areas.

“Thomson Reuters Checkpoint offers comprehensive tax and accounting research products, complete with practice aids, interactive workflow tools, diagrams and more,” said Adam Gretz, senior manager for the tax practitioners segment, noting that its products include a number of workflow tools, worksheets, decision trees and more.

At Wolters Kluwer, Bas Kniphorst, the vice president of product management for Tax & Accounting Research & Learning (U.S. and Canada), said, “We offer both tax research and accounting research/practice aids … . CCH AnswerConnect provides tax research and the CCH Accounting Research Manager provides accounting and audit research.”

And Bloomberg Tax & Accounting noted that it, too, has products in both areas, according to president Lisa Fitzpatrick.

The Tax Book, meanwhile, is more specialized, according to its head of business development, Jacob Meyer: “Our primary focus is on tax research — keeping accountants up to date on the ever-changing tax laws so they can better understand tax situations and, in turn, explain tax situations to their clients. But scattered throughout our tax research books, online tax research solutions, and self-study continuing education courses we offer updates regarding accounting methods, procedures, etc.”


TCJA continues to reverberate

The Tax Cut and Jobs Act is now more than a year old, but its effects continue to be felt by almost every practitioner. Between the changing regs and changing forms, there’s enough going on to keep even the most sanguine practitioner hopping and concerned.

Our panel of vendors is quite aware of these concerns, and they place a great deal of emphasis on ongoing product development and offerings.

“Our clients need information yesterday,” said Meyer at The Tax Book. “So we try our best to offer products that will keep them informed all year long. The product we released last year and have continued with this year is our ‘What’s New In-Depth’ publication — this book is offered in two releases throughout the year. The first release is titled ‘The Early Edition’ and comes out in August, and the second is titled ‘Tax Season Edition’ and is available February 1, covering all that is new in the world of tax law and especially focusing on impacts of the TCJA most recently. The Tax Book WebLibrary (our online tax research solution) provides every book we publish in an easy-to-search format, and is updated automatically. TTB WebLibrary also includes our Update Service, archives of our books dating back to 2009, and all the government documents for easy cross reference.”

According to Gretz, Thomson Reuters also had a host of products and practice aids to offer this year, including a complete analysis of the Tax Cuts and Jobs Act as well as multiple TCJA-related interactive tools, including the Qualified Business Income Deduction Worksheet, the Business Interest Expense Worksheet, the Kiddie Tax Calculator, and the Choice of Entity Analyzer. “In addition to the interactive tools, we also published new Checkpoint Catalyst Topics, such as ‘Qualified Business Deduction from Partnerships, S Corporations, LLCs and Sole Proprietorships (IRC § 199A)’ and ‘Section 965 Transition Tax on Accumulated Foreign Earnings,’”
he said.

Bloomberg Tax & Accounting and Wolters Kluwer also introduced new products to address the changing regulation and practice scene. Fitzpatrick detailed some of Bloomberg’s new products: “Among the most requested items from our clients are more planning tools. To address this increased demand, we created calculators to help tax practitioners model out various tax scenarios for BEAT, GILTI and Section 199A. Calculators also provide links to key sections of the relevant Tax Management Portfolios to provide the background needed to understand the provisions.”

A printout of Congress's tax reform bill, "The Tax Cuts and Jobs Act," alongside a stack of income tax regulations

International concerns were not ignored, she noted: “On the international front, we recently added a significantly enhanced tool to allow users to compare current domestic law withholding tax rates for a variety of income types with withholding tax rates specified in hundreds of bilateral tax treaties for more than 140 international jurisdictions. The tool helps users devise the optimal tax strategy.”

Nor was the accounting side left out: “In the past year, we also added the Financial Accounting product to our next-generation technology platform. This offering provides accounting professionals with the intelligence they need to plan and comply with U.S. GAAP requirements. Financial Accounting combines analysis and interpretations from leading experts with the latest news, FASB Codification, time-saving practice tools, and more. The new platform provides improved search and search tools such as search suggestions and BNA Picks that provide quick access to the most relevant information based on your keyword search, as well as workflow tools, including Workspace folders where you can easily print and share research across users.”

Finally, Wolters Kluwer’s Kniphorst said that the CCH AnswerConnect editorial team is constantly building out information within the platform to keep the most recent information available. As interest in topics including the TCJA grows, new Federal Topic Pages are added to provide context, examples and guidance to customers who subscribe to the platform.

Are humans still necessary?

Vendors were also vocal about where the technology is taking research and practice aids. Pushkar Bhoopalam, research lead for tax product at Thomson Reuters, feels that there is plenty of room for innovation. “AI is becoming a key component of business transformation across the spectrum — from consumer technologies to B2B applications. However, the research space in general, and tax research in particular, has been slow to adapt advances in artificial intelligence and cognitive computing,” he said. “We at Thomson Reuters have been able to keep pace with these advancements with the help of our Center for AI and Cognitive Computing. We recently launched Checkpoint Edge that leverages these advancements to add significant value for our customers. The basic essence of Checkpoint Edge is to infer the intent behind the complex tax research process. At every step of the research workflow, the platform tries to predict the research need and intent by recommending key questions and concepts so that the researcher can get to a more precise answer more quickly than ever. Moreover, advancements in machine learning help the solution learn from 200,000-plus unique users using Checkpoint on a daily basis.”

However, The Tax Books’ Meyer isn’t so sure AI is the way to go: “No doubt AI is on its way and only going to grow in the tax industry, but I personally haven’t seen much impact within the tax research field of late. Our online tax research solution allows the user to search by topic and keyword, which in turn we formulate references from our publications and government documents. This ensures the accountant can understand their client’s tax situation and have access to the required government documents to help support their position.”

A quick look into the future

Finally, we asked our respondents what trends and developments they expect in the next couple of years. The vendors are uniformly optimistic that technology will have a significant effect on the way research is conducted, and that the need for sophisticated research products will continue to grow.

Bloomberg Tax & Accounting’s Fitzpatrick sees more regulations and confusion in the works: “Mandates at all levels of government — states, U.S., international and supra-governmental (such as the EU) — for taxpayers to disclose even greater amounts of information to taxing authorities. This will continue to put increased pressure on multinationals and their advisors to understand new developments and requirements to mitigate risk as well as seize opportunities for their businesses. Additionally, implementation of the TCJA requires regulations and we anticipate guidance and regulations to continue to be issued, so tax research providers need to stay on top of their game to continue to stay on top of developments as the occur. Similarly, in relation to Wayfair, there is a lot of new uncertainty. For example, we are working through new questions of tax collection responsibility for marketplace facilitator transactions; either the retail technology platform (e.g., eBay, Etsy) or the individual seller,” she said.

According to Wolters Kluwer’s Kniphorst, “As new AI technologies like machine learning, predictive analytics, and robotic process automation continue to be applied in new ways, the research experience will continue to evolve to be more intuitive and predictive, improving speed-to-answer. Wolters Kluwer also expects the integration of tax compliance workflows with research platforms to get even tighter, so professionals can spend less time researching outside of their tax compliance tools. Finally, these tools will also start offering integrated professional development opportunities with CPE integration through nano-learning with courses available directly from research topic pages and delivered through a robust online CPELink learning platform that includes on-demand webinars.”

And The Tax Book’s Meyer offered these observations: “Everyone is glued to their smartphones. I wouldn’t be surprised if there are more tax-related applications, and also other offerings compatible with smartphone technology, on the horizon. Webinars are a growing trend too. Accountants need their continuing education and there are more and more options online to earn those credits through webinars.”

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