Practitioners tend to view tax season with mixed feelings. On the downside, there's getting clients to send you the data you need to construct their return, and determining how much of what they give you is actually germane to the return.
Long hours, missed weekends and frayed tempers add to the witch's brew.
Still, tax prep is a, if not the, major source of revenue for many firms. And seeing an increasing bank balance, at least for the short term, helps most put up with all of the aggravation coming their way for months at a time every year.
Given the important role that tax prep software plays during tax season, we surveyed the major providers, asking them what they see as concerns, and what changes they are in the process of making to their products for the upcoming tax season.
Tax prepartion software vendors indicated that they are following a number of events that may possibly have an impact on forms and calculations, some for tax year 2011 and others for years following.
Some of these include President Obama's recent American Jobs Act, which at press time had just been sent to Congress; the tax-related measures floated by the Congressional Select Committee on Deficit Reduction; and possible tax-relief provisions initiated by the Federal Emergency Management Agency for those business and individual taxpayers in disaster areas declared as a result of Hurricane Irene and Tropical Storm Lee.
Finally, the tax solutions and products providers emphasized that they expected that the new mandatory e-filing rules that went into effect for this upcoming tax season would put even more emphasis on the vendors' tax prep systems to reduce the number of returns not accepted.
Several noted that they have put educational and help programs in place to train preparers in how to prepare and register for electronic filing and obtain a PTIN if they don't already have one.
The IRS requires that preparers who file 100 or more returns in 2011 do so electronically, and for the 2012 tax season, that number will drop to 10 or more. That pretty much means that every paid preparer is going to need to file their clients' returns electronically. Registered tax preparer competency testing was expected to start in October, and this is another area where vendors are expected to offer help.
Below is a summary of what's in the pipeline for the encroaching filing season from the top tax vendors.
According to Leslie Bonacum, vice president of communications, CCH is enjoying its strongest e-filing tax season through its ProSystem fx Tax and Global fx tax compliance solutions. For the 2010 income tax filing season, CCH's electronic filing platform was used to electronically transmit more than 11 million state and federal tax returns. At times, the CCH electronic filing platform transmitted nearly 100,000 tax returns an hour, with nearly a million tax returns filed on April 18. This was accomplished with an availability rating in excess of 99.995 percent.
CCH also has a new enhancement - the ability for tax preparers to get an e-mail notification when a tax return is accepted by the IRS and/or state taxing authority.
For the upcoming tax season, CCH will continue to add all new states and forms that become available for e-filing. Additionally, it will continue to evaluate existing software solutions to make them stronger and more comprehensive, and will continue to build out its customer service and support teams.
In 2012, as more professional firms digitize their workflows, one new workflow solution that CCH will be offering this year is the ability for tax preparers to batch-publish taxpayer organizers directly to ProSystem fx Portal, providing workflow efficiencies.
CCH Small Firm Services
For the upcoming season, ATX and TaxWise will continue implementing the Modernized e-File platform, implementing the IRS Phase III of MeF to include 132 additional federal forms. Additionally, the two tax prep systems will continue state 1040 MeF forms and business MeF forms.
Improvements are also being made to enhance product workflow. New for 2011, ATX will contain an expanded automated Schedule D import function for the 1120 to help simplify recording client stock transactions. Another enhancement to take place this fall is the new user interface for Scan & Fill. This scan-based, automated document management system will feature a new layout and was scheduled to be launched in September.
TaxWise Online is preparing for its fourth year as a strictly cloud-based professional tax compliance program. While currently only available as a 1040 module, this year the program will be enhanced with a more robust taxpayer interview format to help expedite the return preparation process.
CCH Small Firm Services' Electronic Return Originator Bank Application went live in June, giving customers advanced access to register with Santa Barbara Tax Products Group to offer refund transfer products.
New for 2011, SFS has lowered its pricing on TPG Refund Transfers by eliminating a previously fixed transmission fee and reducing the technology fee. And for tax professionals who do not offer bank products, Small Firm Services has a comprehensive suite of integrated solutions designed to attract and retain clients.
New for 2011, the Western Union MoneyWise MasterCard will be available as an instant-issue card that tax preparers can distribute to their clients and then be used immediately once the refund is deposited by the IRS. Small Firm Services will also be offering iTransact Merchant Account Services, which provides the ability to accept credit cards to facilitate client payment, as well as FeeCollect, which simplifies client payment by deducting tax preparation fees directly from the client's refund.
For the upcoming tax season, assistant director of marketing Becky Reed revealed that updates of the preparation software include the addition of state apportionment screens in Forms 1120, 1120S and 1065 to simplify data entry for multi-state business returns. Business tax return preparation will produce a book depreciation schedule, and ownership changes will now be entered on one screen in the business packages. Drake has also instituted improvements to the income/deduction screens in the business tax prep packages based on customer feedback.
The federal individual system will now automatically limit the e-filed name on the 1040 returns to 35 characters. All characters will print on the return but there will be a note if it has been shortened for e-filing.
Tracking in the 1040-TRAC screen now breaks apart EF and return prep tracking. Additionally, in regards to Modernized e-File in 1040 for federal and state, Drake is utilizing its existing resources to ensure a smooth transition for its customers.
Other areas in progress include SecureFilePro - Web-based client portals and secure file sharing. Reed said that Drake has improved its Letter Editor feature, adding a Letter Outline tab in Letter Set-up for improved navigation. With the upcoming tax season, the software will automatically check for updates, rather than making the preparer do this manually.
Drake will also be offering related training and CPE webinars.
Intuit has several product lines for professional preparers, in addition to the consumer-oriented TurboTax software. These include Lacerte Tax, ProSeries Tax and ProLine Tax OnLine. Intuit also provides tax research software for Lacerte and ProSeries with material provided by BNA.
Of increasing importance to Intuit, according to a company spokesperson, is the industry's focus on the virtual and paperless office - to provide 24/7 access to client files, from anywhere, on multiple devices, and reduce the amount of paper that is generated in the preparation and filing process.
Toward that goal, Intuit's Tax Online Web-based solution enables the creation of a virtual office. It's currently testing Tax Online Mobile, an app that allows a tax preparer to check the e-file status of a client's return and refund via a mobile device. The Tax Research for Lacerte and ProSeries solutions are also available via the iPhone and iPad.
Additionally, to help practitioners move toward a paperless office, Tax Import for Lacerte and ProSeries imports relevant tax data directly into Lacerte and ProSeries, either by downloading it directly from financial institutions or by importing it from scanned source documents.
Similarly, Tax Research for Lacerte and ProSeries provides online access to key research documents, powered by BNA, within the Lacerte and ProSeries programs, and attaches the research findings directly to a return in one click to increase productivity within their workflow.
New and improved features in Lacerte Tax include helping preparers new to e-filing get up to speed to meet IRS mandates. The Lacerte e-File Resource Center is designed for new e-filers to help users make the transition to e-filing as quickly and smoothly as possible. Lacerte now provides state e-file for no additional charge. Planned additions include Florida extensions and estimated payments for the 1120 and 1120S; Idaho 1065, 1120 and 1120S; Louisiana 1120 and 1120S; Massachusetts 355U; Missouri 1120 and 1120S; New York extension and amendments for the 1065, 1120 and 1120S; Texas 1040, 1065, 1120 and 1120S; and Wisconsin 1041.
Lacerte has also enhanced workflow processes by including an e-organizer and trial balance utility. An improved document management system lets preparers organize, view, edit and send documents in electronic format. There's a 1041 Tax Organizer and the Quick Employer Forms give users the step-by-step guidance to create and file 1099 and W-2 forms for clients' employees and independent contractors in three easy steps.
New and improved ProSeries Tax features for tax year 2011 include expanded state e-filing. Recent additions will include: Pennsylvania, Minnesota and Texas 1065 and 1120; Louisiana and Oregon 1120 and 1120S; and Georgia 1065. The ProSeries e-File Resource Center is designed for new e-filers to help make a smooth transition to e-filing. Intuit has also added more forms. These include the Michigan business tax, federal 1041, and Minnesota 1041. Intuit is also adding support for the Minnesota 1041, Idaho 1120 and West Virginia 1120.
Intuit said that it is also making it easier for clients to receive refunds and make preparer payments. With the Intuit Refund Card, a prepaid Visa card, users can give clients without bank accounts the option to receive their refund via the card in as fast as eight days, instead of waiting up to four weeks for a refund check. And, in partnership with Santa Barbara Tax Products Group, QuickCollect gives the preparer's clients the option to pay for the tax prep services out of the client's refund.
As with Lacerte Tax, Quick Employer Forms gives users the step-by-step guidance to create and file 1099 and W-2 forms for clients' employees and independent contractors in three easy steps.
The third product for professional tax preparers is Intuit Tax Online, a Web-based tax software that allows users the freedom to take their practice with them and finish returns at home or on the road. Preparers will also be able to generate e-filing extensions and payments for business and individual returns.
Intuit has also improved application performance and data entry, and expanded client management capabilities. Tax Online now has a mobile application, and later this year it will see an improved tax return review process.
With the acquisition of TaxSimple last year, it has become a part of Thomson Reuters' heavy-hitting tax lineup, which includes the GoSystem Tax RS line for enterprise clients, and UltraTax CS for the midsized practitioner. TaxSimple is focused on the smaller practice that may not want or need the features that the other two Thomson Reuters tax preparation systems provide.
According to Jack LaRue, senior vice president of Thomson Reuters Tax and Accounting, TaxSimple is in the midst of being integrated into Thomson Reuters' overall product line and will not be making major changes to the system, other than updates necessary to accommodate any changes in the Tax Code and forms. On the state side, Thomson Reuters will be adding significant additional state and municipality coverage, taking advantage of the significant R&D capability provided by its other divisions.
Improvements and additions to UltraTax CS include the ability to print 1120, 1065, 1041, 990, 706, 709 and 5500 tax returns directly to a NetClient CS portal. This feature already exists for 1040 returns.
Usability improvements include full support for up to four monitors with independent views: current-year input screen, prior-year input screen, tax form view, and an additional client-facing view of the tax form. The improved support includes the ability to view prior-year data at the same time as current-year data. Prior-year data and tax forms (preparer view and client view) are automatically synchronized with the input screen.
For the upcoming tax season, UltraTax CS will provide improved tick marks and notes, including many more tick mark icons and permanent icon-to-user assignments, including the ability to assign colors to different preparers for improved return review techniques. The homepage has been redesigned and now provides the look and feel of Windows 7.
UltraTax CS also adds new 990 products for Arizona, Indiana, Michigan and Minnesota.
Many of the known improvements to the GoSystem Tax RS system are designed to make it easier for the preparer to customize the look and process of return preparation. Improvements in preparation workflow include variable tax data fields that automatically transfer unique data for each client, streamlining the data entry process.
Recognizing that the GoSystem Tax RS system is used in firms with many client types, many improvements have been added in the area of filing instructions and cover letters. New, customizable filing instruction templates provide complete control over template formatting and paragraph content.
This tax season, there's a new template editing tool that uses a familiar word processing interface, and preparers have the ability to create custom paragraphs and insert them anywhere in the template. The software now also provides preparers with the ability to insert logos in the body of the template. These editing capabilities can be locked, so that users can access the templates, but are unable to edit them.
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