Review of Tax Preparation Systems — 2007

Also of note, the Thomson Creative Solutions and RIA GoSystem lines have been
under the Thomson Tax and Accounting wing for several years, and their names
will soon reflect that, with the dropping of the Creative Solutions brand on
all products and the removal of RIA from the GoSystem line (RIA’s research
will continue with its current naming). Once again, Thomson has owned both companies
for several years and is just finalizing the brand transition. More information
on these acquisitions and their potential impact on the market is available
at www.TheTechGap.com.

The Big Three makers of professional tax preparation software are now Intuit
(which makes Lacerte and ProSeries), Thomson Tax & Accounting (which makes
UltraTax CS and GoSystem Tax RS), and CCH, a Wolters Kluwer business (which
has the ProSystem fx, TaxWise and ATX brands). The remainder is headed by Drake,
whose extremely loyal user base makes up just under 10 percent of the professional
tax preparation market.

Technological Advances
Most tax systems can do pretty much the same things when it comes to calculations
and completing tax returns. Most have been on the market for 10 or 20 years,
or even longer, and have long since ironed out the bugs in calculations. The
difference these days between the higher-priced systems and the less-expensive
ones is generally everything else that tax packages are now capable of doing
— from data integration between various modules, like automatically transferring
K-1 data and parent/child return information, to productivity tools, system
diagnostics, research integration, support options and workflow design. Then
comes integration with third-party programs like write-up, trial balance, practice
management, Word, Excel, and other programs.

The continued quest for the “paperless office” has been one of
the driving forces for technological evolution in many of these products, with
increased tie-ins to digital document management and storage systems (which
will be reviewed in upcoming issues). Various online options, which some of
the higher-end products in this review offer, also have helped the paperless
push, while at the same time enhancing client collaboration through secure online
portals that also reduce fileroom time for firm staff members.

Zero manual data entry is the latest goal of developers, using optical character
recognition technology (OCR can read numbers and text on scanned documents)
along with form recognition capabilities (to know what form is being scanned).
Combining these two functions with a tax system will mean that forms can be
centrally scanned and data automatically pulled by the system to populate returns.
Currently, Intuit’s Lacerte and ProSeries are the only two tax programs
to offer this as an add-on option, but the products from Thomson and CCH should
be adding their own in coming years. SurePrep, a third-party developer of accounting
and tax services and solutions, offers OCR and document recognition as an outsourced
service to users of the most-used professional tax preparation products.

Pricing
According to many professionals, pricing is the least important aspect of their
technology purchase, but then it is often the most discussed issue. Well, the
good news is that price levels have gone down significantly over the past few
years for tax systems geared toward small firms, and pricing for the high-end
products has remained fairly static. What this means for the professional is
that if your smaller firm or practice has a fairly non-complex client base,
then you can probably get a system “good enough” to meet most of
your needs for less than $2,000, and maybe even cheaper. For the bigger firms,
this means you may be able to justify moving up to a full-featured system.

This Review
For this review of tax preparation systems, we have recombined all of the products
that perform year-end and special compliance reporting for the major entities
into one review section. While most of the programs here are geared toward business
and individual filing and support 1040, 1041, 1120, 1120S and 1065 returns and
their state equivalents, many also support forms 706, 709, 990 and 5500. Each
product is reviewed in the following categories: Learning Curve, Use/Workflow
& Productivity Tools, Integration/Import & Export, Support/Training
& Help System, and Relative Value. Every firm is different, and different
software packages are geared toward the needs of these different firms. Therefore,
the Relative Value section provides an overall assessment of how well the product
meets the needs of its own target audience and which type of firm would see
the greatest benefit from its use. Pricing information is included for each
product, but please note the specific package for which the pricing is quoted,
as many of the products offer additional modules or networking capabilities.
Each review is capped by an overall rating.

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