1040 Workpaper Software Makes Personal Tax Easier

From the Sept. 2008 Issue

If you have more than a few 1040s to prepare in your firm, the new generation of 1040 workpaper tools that can scan, organize and, in a few instances, populate your tax software with numbers is worth reviewing. The problem is a difficult one to solve, but most of the major publishers and a number of startup companies have tackled the problem. You should, too.

This product genre has a number of offerings that are quite good, and many are covered elsewhere in this month’s issue (see www.cpatechadvisor.com/go/2079). Three of my favorites are SurePrep’s 1040Scan, CCH’s ProSystem fx Scan and Copanion’s GruntWorx. Other notable products include ATX/TaxWise Scan&Fill and GoFileRoom TaxSort. I have a pretty good list of tax products and the corresponding workpaper technology at www.cpafirmtechnology.com. Finding and organizing client tax data before preparation can be a time-consuming and tedious task. Surveys completed by Copanion showed that finding, organizing and entering client tax data averages 40 percent of the total time required to prepare a tax return.

Here are the key things you need to know when selecting 1040 workpaper software for your firm or your individual practice:
Many 1040 workpaper products interface into popular tax products. If you are involved with CCH’s ProSystem fx Tax; Thomson Reuters’ GoSystem RS or UltraTax CS; or Intuit’s Lacerte or ProSeries, options are available for you to buy, integrate and solve the problem completely, including the entry of data.

Using a 1040 workpaper product can change your processes, and you should plan accordingly. Key decisions include the following:

a) Who does the scanning — staff or practitioner?
b) 1040 Workpaper products assume scanning the client documentation on the front side. Has your firm been “post” scanning after all organization, tick marks and review is complete? How is this process going to change? How much sorting of documents will you let the software do?
c) How will you make annotations? Does the firm need to license additional tools like Tic, Tie & Calculate from Acct1st? Do you need more training on Adobe Acrobat? Does the supplying vendor have any tools to assist with the process?
d) How competent are partners, seniors and managers at using technology? Can they effectively run the electronic systems? Are they willing to be trained?
e) Will review be on paper or online? If review is online, does the firm’s need increase from one to two or three monitors?
f) How do you control the workflow of tax returns? Will you need a replacement for your control sheet? Will you need workflow software like XCM or GoFileRoom FirmFlow?
g) How will you ensure data accuracy on products that can do optical character recognition (OCR)? Who will work with the processed returns to map the data into your tax software? How is this training going to take place?
h) Do you have properly installed production-quality scanners like the Fujitsu fi-6140 or fi-6240? Do you have the resolution set to the firm or manufacturer’s standard, most likely 300 or 600 DPI (dots per inch)? Do you have the image cleanup software Kofax VRS installed and working properly? Are all of the other scanners and multi-function copiers also set to the standard and the images passed through Kofax VRS, as well? Have you instructed practitioners and staff to only use the other devices when the production scanners are not available?
i) Have you decided on a standard naming convention for the files? Do all team members know how to insert and process those late-arriving pages?

What are the top reasons for using 1040 workpaper software? The following benefits can be realized with an electronic workpaper product: