Four Ways Accountants Can Win Over DIY Tax Preparation Software Users

With continual improvements and affordable pricing, Americans are increasingly turning to DIY tax preparation software like TurboTax and H&R Block. In addition, the IRS also offers the ability to file taxes for free, given that a taxpayer fits certain criteria.

A study of 500 taxpayers across the US commissioned by Canopy, found that taxpayers were more than two times more likely to use DIY software than accountants, but often lacked satisfaction afterward. It also explained the reasons they chose to file using software: cost, time savings, and because their tax situation became less complex.

This article outlines four steps accountants can take to reverse this trend, gain an edge against tax preparation software, and win or retain clients:

1. Streamlined services for an audit

Financial audits are expensive and time-consuming, so offering tailor-made audit solutions for each client is a very appreciated service.

A National Society of Accountants (NSA) 2017 survey revealed that “the average hourly fee for an in-person IRS audit is $150 and the average fee for an IRS audit response letter is $128.

Only 8.8% of preparers never charge for an audit response letter. Sixty-two percent charge for IRS audit response letters when the return was prepared by another party; 47.5% charge when they are not at fault for a return they prepared and 10.3% always charge for an IRS response letter.”

For current clients, it can be a good idea to provide special pricing for those who are loyal.

2. Offer additional services or partner with other service providers

With the proper training, licenses, and experience, accountants can handle a client’s overall financial situation—providing services like legal advice, insurance, or investment products.

For example:

If a tax preparer has a life and health insurance license, they can profit from additional income from gross commissions.
With the Affordable Care Act, accountants can add integrated enrollment directly into their offerings.

Expanding a practice beyond pure accounting can result in a substantial increase in value add for clients and revenue for the firm.

If an accountant can’t offer these additional services, partnering with other professionals like attorneys, financial advisors, insurance agents, or others can open extensive new possibilities for the firm.

3. Seek out business clients

Taxpayers who own businesses are 28% more likely than those who don’t use the service of an accountant. Therefore, when looking at developing their practice, accountants need to prospect in this direction.

According to a 2019 Accounting Today survey, small businesses are one of accounting firms’ biggest clients. They found that business clients tend to stay with their CPAs. “Two-thirds of small businesses that had worked with accountants or CPAs in the previous year were “not very” nor “not at all” likely to switch to another accountant, and another 18 percent “neither likely nor unlikely.”’

4. Focus on data privacy

Data privacy is a big concern regardless of whether a taxpayer chooses to file with a software or an accountant. 61% of people who used tax software cited data security as a stress factor. Thus, considering that data privacy is an important matter for the majority of taxpayers, it may be a good practice for accountants to look at how data security is handled at their firm and communicate accordingly.

Given that taxes are an annual obligation for every American, accountants find themselves in a unique position of being able to ease a lot of people’s lives by improving their financial well-being. I believe that with the right offering and communication, accountants can partially reverse the current DIY software adoption for people who are looking for a more individualized and better service.

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Larry Furr is Chief Product Officer at Canopy.