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Tax Preparation Suites Review – 2005

As the primary revenue source for many practices, the productivity of a tax system is key to the firm's profitability.

For individual filers, TY2004 is barely in the rearview mirror, and extensions will have many professionals and their clients looking over their shoulders for several more months. But with April 15 gone, most tax professionals are shifting their focus back to their year-round client work: write-up, audits, sales tax compliance, payroll and other services. It should also be the time that firms assess the productivity of their tax preparation programs and consider alternatives while the ‘season’ is still fresh in their minds and there is adequate time to research products on the market, and time to implement and train staff in the event a new package is selected. As the primary revenue source for many practices, the productivity of a tax system is key to the firm’s profitability.

When considering changing tax preparation software ‘many practitioners think first of the price of the software, but software cost is only one of many considerations, and not necessarily the most important,’ said Norman M. Golden, First Vice President of the California Society of Enrolled Agents (www.csea.org) and principal of San Mateo-based tax practice Norman M. Golden, EA (www.goldentax.com).

‘When a firm is deciding whether to make the change, they also must consider the time and cost required to convert existing data, how complete that data conversion will be, and when they will be able to conduct the conversion.’ Mr. Golden said that compared to the days when tax firms were reliant upon service bureaus, preparation costs have gone way down while returns-per-staff member productivity has soared, even for offices using the most expensive products on the market. ‘The purchase price of tax software has to be a factor, but primary concerns have to focus on transferring prior client data without re-entry, and on how the software will help the practice to be more efficient.’

For this review of Tax Preparation Suites, each of the programs selected for review provide compliance for forms 1040, 1041, 1065, 1120C, 1120S, 990, 706, 709, 5500 and corresponding state support. While there are several additional programs on the market that offer support for many or most of these entities and may suit many firms’ needs, we had to draw this line somewhere. Many products that fall short of our definition of a ‘comprehensive tax suite’ will be reviewed in our June/July issue, along with programs that fill specialty compliance needs.

For the purpose of assessing the cost of the various programs in this review, we developed, in conjunction with our editorial board, a hypothetical office with the following staff and client demographics: 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. Additionally, the prototype office will file 50 1120S forms, 25- 1120C, 20-1065, 10-1041, 10-990, 10-5500 and five form 706/709. While this may not precisely match your firm’s requirements, it should help you assess the pricing and capabilities of the systems reviewed. Pricing information will also be noted when per-return filing is not included in license cost.


ATX ‘ Total Tax Office Plus
ATX produces several tax preparation programs that can be purchased separately or in bundles. The Total Tax Office Plus package includes the company’s MAX preparation software for forms 1040, 1041, 1065, 1120, 1120S, 990, 706, 709, 5500, municipal forms, sales and use tax, and also the premier research offering from Kleinrock, which provides electronic versions of federal and state research libraries and tax law analysis that integrate with the tax preparation software, as well as Kleinrock’s Employment TaxExpert, 1040 Quick Answers, Federal Tax Bulletin, Total Tax Guide, and additional materials including more than 10,300 forms and CPE options for professionals. The system costs $2,100 for a four-user license and includes unlimited e-filing of 1040s and 1120 returns.

CCH Tax & Accounting ‘ ProSystem fx Tax
ProSystem fx Tax is a module-based compliance system that includes applications for year-end individual, business and other entity reporting to federal, state, city and county taxing authorities. The software, from noted tax research publisher CCH Tax & Accounting, also has available options that integrate or otherwise enhance the ProSystem fx Tax system, including tax planning and analysis, financial and estate planning, document management, practice management suite, client organizers, a variety of research tools and a web development tool application. The company also develops programs for trial balance, fixed assets, sales tax compliance and write-up/engagement and document management. The cost for our prototype firm (details on page 8) would be approximately $11,000 based on catalog pricing, although additional discounts are available through bundling and promotional offers. The company also offers a pay-per-return pricing system for firms with lower volume. CCH representatives can provide a more accurate pricing estimate based on firm specifics.

Lacerte ‘ Lacerte Tax 2004
Lacerte offers a module-based tax preparation suite for virtually all year-end compliance reporting, including 1040, 1041, 1120, 1120S, 1065, 706, 709, 990 and 5500, as well as versions of these modules for all states with corresponding reporting requirements. The company also produces add-on productivity applications, such as a Tax Analyzer, Tax Planner, Document Management System and others that can be bundled into the tax preparation system. To meet the filing and user license needs of our prototype tax practice (detailed on page 8), a firm could expect the total cost of a bundled Lacerte package to be about $7,500, including e-file transmission costs. A 15 percent discount is available for customers renewing their software. Lacerte also offers a pay-per-return model starting at $400. This is for pay-per-return ONLY users. If a customer purchases any product for unlimited use, all other Lacerte tax products are available on a pay-per-return basis with no deposit required. (Pricing data is based on TY2004 information and may change prior to TY2005. Lacerte offers additional pricing programs, and individual firm characteristics may also influence final price.)

Laser Systems ‘ TaxWorks 2004
TaxWorks provides support for preparation of all state and federal year-end reporting, including 1040, 1041, 1065, 1120, 1120S, 706, 709, 990 and 5500 and their state equivalents. Software developer Laser Systems offers the program in individual modules or in suites focused on individual, business and the other entity types, bundled with the company’s state modules and tax planning software. The approximate cost for our prototype firm (see page 8) would be $3,995. TaxWorks uses a site license approach, which means the software can be used by any number of networked users in the same geographic office location at no extra charge. This pricing does not include e-filing transmission fees, which vary from $1 to $5 per transmission with volume discounts available. TaxWorks is also available on a pay-per-return basis (‘Per Unit Pricing’ is their term).


TaxWise ‘ TaxWise 2004
TaxWise offers a variety of tax preparation applications, including individual and business bundles. The Power Package includes 1040, 1120, 1120S, 1065, 1041, 706, 709, 990, 5500 and state preparation products. TaxWise also produces Client Write-Up, Fixed Asset Management and Trial Balance programs that can integrate with the firm’s tax package, and offers the CCH Research Link and BNA’s Tax Planner. The $2,156 license for the Power Package supports use by multiple users in a networked office, as do all of the TaxWise packages. TaxWise charges e-filing fees of $1 per federal and 50 cents per state return. Following our prototype office needs on page 8, this would bring the anticipated approximate cost for the tax season to $2693.50. TaxWise also offers a pay-per-return system with a license fee of $100, where federal 1040 and first state can be filed for $15; business and specialty returns for $30 with first state. A deposit is required, which acts as an escrow account for filing charges.

Thomson Creative Solutions ‘ UltraTax CS
Notice the name change? Thomson Creative Solutions rebranded its UltraTax product. With more than 200 modules available for 1040, 1041, 1065, 1120, 1120S, 706, 709, 990, 5500 and state and municipal equivalents of these forms, UltraTax CS provides a comprehensive tax compliance system that can integrate with Thomson Creative Solutions’ suite of tax planning, asset management, professional accounting and productivity programs. Through a singular database, the program enables data sharing across programs, providing true integration and data consistency across all applications. Licensing of the program to support our hypothetical four-person practice (see profile on page 8) would cost approximately $6,240, inclusive of electronic filing fees. The system can also be used on a pay-per-return basis.

RIA ‘ GoSystem Tax RS
Although other tax vendors are starting to take notice and are preparing to offer online preparation systems, GoSystem Tax RS from RIA, a Thomson business, remains the premier offering. It offers support for the complete breadth of tax compliance, with available modules for individuals, businesses and other entities, including 1040, 1041, 1065, 1120, 1120S, 706, 709, 990 and 5500. The company also continues to produce a CD-based version of this program, but the online version is reviewed here. As a remotely hosted application, the system easily integrates with RIA’s tax research products and includes other web-centric features, including the ability for authorized users to access the system from any location, even a client’s business location. Pricing for the modules needed for the four users of our prototype firm (see page 8) would cost approximately $15,000, although pricing may be considerably less depending upon actual firm needs and usage. The company noted: ‘This fact pattern does not represent the typical user or market for GoSystem Tax RS. While certain functionality requirements due to the complexity of the returns may cause a firm with this fact pattern to require GoSystem, this type of firm is not representative of the company’s market. Pricing is offered with assumptions of minimal return complexities and with no operational and system customization. In most cases, custom pricing is required due to the nature of services available.’