2012 Review of Tax Document Automation Systems

However, it is important to have realistic expectations of what the software can accomplish. Although tax document automation utilities have dramatically progressed, they may only be able to get a tax return 80 percent complete, for example. Each of the vendors recommends that human eyes verify the amounts captured by the OCR software and ensure that they are properly reported on the tax return.

Successfully adopting a tax document automation product requires more than simply purchasing the software. A firm should invest in a good document scanner and make sure that documents are scanned at a good enough quality level for the OCR to properly read the text. The “garbage-in, garbage-out” phrase certainly applies to the scanning step of tax document automation. Firms will also need to map out new workflow procedures and processes. The roles and responsibilities of both professional and administrative staff change when tax document automation software is implemented. Training staff to properly use the new hardware and software is key to making sure the tax document automation train doesn’t derail.

I encourage practitioners who are still skeptical of the effectiveness of tax document automation technologies to at least give them a try. Each of the products reviewed has some sort of evaluation version or a limited number of free uses. When testing, firms should use a variety of source documents with different scan qualities to see how the software performs. Even though each falls just short of waving a magic wand that instantly completes tax returns without human effort, they provide timesaving tools that help many firms become more efficient and profitable.