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Review of Tax Prep Suites — 2006

Fifteen years ago, the idea of changing tax preparation software could bring a tax professional to his or her knees in fear for several reasons: The IT headaches involved in switching systems; retraining preparer staff on the new program; and the lengthy and often inaccurate process of converting data files from the old system.

From the April/May 2006 Issue

Fifteen years ago, the idea of changing tax preparation software could bring
a tax professional to his or her knees in fear for several reasons: The IT headaches
involved in switching systems; retraining preparer staff on the new program;
and the lengthy and often inaccurate process of converting data files from the
old system. Ten years ago, it was still frightful for the same reasons and,
to some extent, remained as such until only a few years ago. As a result, most
tax professionals choose their compliance packages not after a periodic review
of what system would be best suited to meeting their firm’s needs, but
because they perceive that it is easier to stay with the same system. In short,
they let SALY choose their tax package (SALY = Same As Last Year). Considering
their past experiences with changing preparation software, this may appear to
be logical on the surface, but there are several problems with the argument.

First and foremost, since tax preparation is a primary revenue generator for
many firms, it follows that their tax preparation software is among the most
important. It is essential, therefore, that firms occasionally assess their
actual needs, how they use their software, and how their client base may have
evolved over the past few years. It may be that the practitioner is buying more
tax power than his 1040 base needs, or perhaps not enough power for the complex,
multi-subsidiary corporations or partnerships. Do you need upward and downward
integration of K-1 data? Are you moving to a paperless office? Do you need integrated
tax research, analysis and planning capabilities?

Second, most of the pains that professionals foresee from a software change
are, today, imaginary. All of the major tax programs migrated to the Windows
platform several years ago (or to an online system), which means that they are
all pretty easy to install (unless you have a large network or need geographically
disparate office branches to access the same files, you won’t need an
IT guy. But if you do have those needs, you probably already have an IT guy.)
Furthermore, these Windows-based systems offer generally the same style-of-use,
albeit with varying interfaces that can improve workflow to some extent, but
that is largely an argument of aesthetics. Because of this general ease-of-use
quotient, training and retraining times have greatly diminished, with most packages
not requiring an inordinate amount of time to gain proficiency. That said, any
change will require some effort, but periodic training and refreshers on software
should already be part of a firm’s in-house training program.

That brings us to data conversion. SALY wants you to use the same program
because it will “take forever” or “be too expensive”
or “too risky” to migrate proforma data. While this concern is important
and can still pose some challenges, most of the major tax software vendors provide
free data conversion from the other major tax software vendors. These conversion
systems vary from good to excellent, depending largely upon what software the
data is being switched from. Data conversion is a key factor when evaluating
a prospective replacement tax package.

Although most of the technical difficulties are now minor in comparison to
years past, the selection of a tax package is still a vital element to a firm’s
productivity. This means that, while changing systems should not be done without
serious consideration, it is also important not to just keep using the same
package year after year without the same amount of consideration.
Each of the programs in this review of Tax Preparation Suites provides compliance
for forms 1040, 1041, 1065, 1120C, 1120S, 990, 706, 709, 5500 and corresponding
state support. There are several programs on the market that specialize in individual,
corporate or estate compliance, or provide support for most but not all of the
above listed forms. These programs will be reviewed in the June/July issue of
this magazine, along with specialty compliance tax tools.

For this review, each of the programs that follows was scored in the following
areas: Learning Curve, Use/Workflow & Productivity
, Integration/Import & Export, Support/Training
& Help System
, Product Evolution & Vendor Vision,
and Relative Value (which provides a subjective assessment
of the dollar-value ratio of the software in terms of how it addresses the needs
of its intended users). Finally, an Overall Rating gives the
average of the review components, rounded to the nearest half-star. An Executive
Summary caps the review section, offering an overview and a summary chart with
all products and rating.

In order to provide a comparable cost basis, we used a hypothetical prototype
firm with the following staff and compliance needs:

  • Four networked users in a single office location, preparing the following:
  • 350 electronically filed 1040s with 325 of them being in the firm’s
    home state (25 with an additional state), and 25 being out-of-state.
  • 50-1120S forms,
  • 25-1120C,
  • 20-1065,
  • 10-1041,
  • 10-990,
  • 10-5500
  • and five form 706/709.

– – – – – – – – – – – – – – – – – – – – – – – – – – –

ATX/Kleinrock — Total Tax Office
ATX has rapidly developed a solid user base of
its tax preparation programs, offering a variety of bundled packages based
on practice specialty, as well as several accounting and engagement applications.
CCH, a Wolters Kluwer business–
ProSystem fx Tax
CCH, a Wolters Kluwer business, offers a full suite
of accounting and tax applications through its ProSystem fx Office line,
including ProSystem fx Tax, which provides professionals with a comprehensive
preparation and research system …
Intuit — Lacerte Tax
Lacerte has long been one of the most respected
tax suite offerings, providing a system that can be used on stand-alone
or networked systems with compliance reporting for the full spectrum of
TaxWise — TaxWise
TaxWise has continued to add to its suite of professional
accounting and tax preparation applications, and now offers tax compliance
support for all entities, as well as trial balance, fixed assets and write-up.

TaxWorks — TaxWorks
The TaxWorks system is a complete suite of tax
preparation tools, offering compliance for all entities required to submit
returns to state and federal agencies, including 1040, 1041, 1065, 1120,
1120S, 706, 709, 990 and 5500, as well as the state counterparts to those
Thomson Creative Solutions —
UltraTax CS
Thomson Creative Solutions offers what is arguably
the most comprehensive line of applications for public accountants that
includes its UltraTax CS professional tax compliance suite, as well as
tax planning, fixed asset management, write-up, trial balance, practice
management engagement, financial analysis, paperless document management
and client accounting.
Thomson RIA — GoSystem RS
RIA’s GoSystem Tax RS is at the pinnacle
of tax preparation systems, providing a comprehensive online solution
that spans the compliance spectrum and provides exceptional integration
with RIA’s renowned research products. The program continues to
be the only fully web-based professional tax solution offered by a major
vendor, a feature that makes GoSystem RS ideally suited to multi-office
practices or those needing the remote capabilities of an online system.

Tax Preparation Suites 2006 —
Executive Summary
So are you going to let SALY determine your tax package
for next season? “Same As Last Year” will work fine if you are
satisfied with your current package. But if you have found that it doesn’t
fully satisfy your needs and you’re not fully content, then explore
the other options.
Related Article — Where are the
Updates? Delays with Tax Forms is Common
If you were irritated at some point during the tax
season because some forms were not yet approved and included with your tax
software, you’re not alone. All of the major professional tax software
vendors experienced delays this year, and many received comments from their