From the April/May 2008 Issue
I suspect that all of you are pleased to have the 2008 tax season behind you.
Whether this was the most successful season in memory or a complete disaster,
now is the best time to stop and have a debriefing with your tax department
and administrative staff. Ask about the things that have gone right and wrong,
the changes that worked (as well as those that didn’t work), and what
your people would change if they could do things differently. Your junior staff
(and future new hires) will benefit from investing time in mapping the Firm’s
processes. If you have documented your procedures in prior years, then the junior
staff should confirm and update those documented procedures based on immediate
Once your procedure maps are updated, then you are ready to look for products
IF you have made a determination that new or different products are needed.
Innovative firms annually review the next best competitive product via a webinar,
even if this only helps you appreciate and discover new features in your own
product. If you review, select and implement a new product, make sure to revise
your procedures to accommodate the new product. That being said, I do realize
that firms change tax software about as often as individuals change doctors
I believe that once you have allowed your mind to clear, the time is right
to begin researching products that can help you in the 2009 filing season. You
should be able to improve your tax department effectiveness and profitability
by applying current technology and techniques.
Many technologies have made notable progress in recent years, including the
following: 1040 Workpaper products that scan, organize and populate tax returns;
engagement managers that automate and streamline the transfer of data from client
software to tax software; online contextual tax research; document management
and distribution systems; workflow management and tracking systems; e-filing,
and, of course, the improvements in the application suites themselves. This
article highlights some of the leading products in each of these categories.
1040 Workpaper Products
One area that has made significant progress in the past three years is the product
genre that scans, organizes and populates tax returns from client documentation.
These products take W-2s, 1099s, K1s, brokerage statements, organizers and other
documents that have been run through a production quality scanner, and produce
a bookmarked PDF. Some products can then take the organized documentation and
extract numbers for automated entry into your tax software (“populate”).
For example, SurePrep’s 1040Scan application enters the data into ProSystem
fx Tax, Lacerte and GoSystem RS. SurePrep has approximately 500 business
rules that allow things like cost basis information to be retrieved from brokerage
statements. CCH has made good progress this past season with its ProSystem fx
Scan product after implementing more sophisticated capture software. This system
improves productivity with an annotation tool called PDFlyer. A new player to
this space, Copanion, is using a complete new recognition technique and has
had its web-hosted system available for limited use this year.
Not to be outdone, Acct1st has introduced a product to ease annotations of
PDF files called Tick, Tie and Calculate. (Of course, outsourcing can be an
alternate way to handle tax processing loads.) Major competitors in this category
include SurePrep 1040Scan, CCH ProSystem fx Scan, Copanion GruntWorx
and Thomson GoFileRoom TaxSort.
Engagement Managers & Integration of GL or Trial Balance into
the Tax Applications
Many firms have set standards that dictate that all corporate returns
must be processed through an engagement manager or trial balance product. The
trick to making this productive is to set up templates and automate as many
of the interfaces as you can. Specifically, you want GL data (like that from
QuickBooks) to import into the engagement manager, and export the tax data directly
into your tax software.
Engagement managers like CCH’s ProSystem fx Engagement or Thomson’s
Engagement CS help your tax department organize work, and, if you can coordinate
with your auditors, much of the tax organization can be done by the audit teams.
When the mapping codes are set up correctly in CaseWare, the process of importing
QuickBooks data, producing a trial balance and importing the key numbers into
your tax software normally takes only a few minutes. Additionally, if you don’t
use an engagement manager, your Trial Balance software should feed the tax return
easily, as well. Major competitors in this category include CCH’s ProSystem
fx Engagement, CaseWare Working Papers and Thomson Engagement CS.
Online Contextual Research
Online, web-based research has simplified contextual research. The major publishers
look for more ways to integrate the research products into applications. For
example, CCH@Hand uses the context menus of Microsoft Office to make tax information
readily available. Additionally, the news services offered by these vendors
can inform you of major changes automatically, or on a recurring basis. Major
competitors in this category include CCH, RIA Checkpoint, BNA Tax Management
and Tax Analysts.
Maintaining your final published work product and destroying it when an appropriate
retention policy is reached are the major advantages of document management
products. Rapid retrieval of information for better client service is another
key benefit. Delivery of documents through web portals is another very helpful
feature and a competitive advantage your firm should consider. Major competitors
in this category include Acct1st EDRMS, Doc.It DMCCH, CCH ProSystem fx
Document, Interwoven Worksite, Thomson FileCabinet CS and Thomson GoFileRoom.
Workflow is the ability to electronically move documents through an organization.
Sometimes workflow is more important than document management and should be
implemented first. Current workflow vendors not only assist with assigning,
moving and monitoring work, but also help with due-date monitoring and scheduling.
The two competitors with the largest market share in this space are XCM Accounting
Workflow and Thomson’s GoFileRoom ClientFlow. Executive Editor Greg LaFollette
and I will be discussing the topic of workflow in a CPE-eligible webcast on
May 8, 2008 (see page 63 for more information).
With tax law getting more complex, few practitioners could accurately prepare
a tax return today without a tax preparation product. Major publishers of tax
software have different capabilities and ease of use. A fatal flaw of many firms
is not taking the time to retrain on a product they have used for some time,
which could result in the firm missing out on dozens of features as well as
easier and faster ways to process the returns. One example for users of CCH’s
ProSystem fx Tax would be using the worksheet view.
Major competitors in the tax suites category include CCH ProSystem fx
Tax, CCH Small Firm Services TaxWise, Intuit Lacerte, Intuit ProSeries, Thomson
UltraTax CS, Thomson GoSystem ES, Drake Software, and the other vendors in the
tax compliance suites review that starts on page 8 of this issue.
e-filing can drive costs out of your practice. This feature is available from
all of the major software publishers. You should be cautious that your final
tax return image is captured at the time of the e-filing. You’ll need
someone to watch the status of e-filed returns to ensure that exceptions are
Additionally, remember to review your fundamental technology. For most tax
departments, we recommend three monitors, desktop computers, and production-quality
scanners from Fujitsu or Canon for maximum productivity. This year, you can
expect significant retraining because of Vista and Office 2007 implementations.
Our normal recommendation is that you consider using a single publisher to
improve your chances of good integration between applications. However, if you
can’t find one publisher that does everything you need, consider the products
here as possible solutions for your tax practice. And as you know from years
of experience, if you keep doing the same thing you’ve been doing, you
are going to get the same results. Do you want to make the next tax year easier