As a young boy, I once accompanied my parents on a visit to their CPA’s office. I curiously looked around at the thick black books that lined the bookshelves, noticing that the tax court cases and internal revenue code went back to the early 1900s. Without a doubt, a time-travelling accountant from a century ago would be pretty impressed to see that all of these books and much more fit in a smartphone in the palm of a hand.
Online tax research software has been around for more than a decade and continues to evolve in nearly equally stunning ways. Software vendors have strengthened search capabilities, enabled researchers to collaborate, and added many libraries and tools. Today’s software isn’t just made for tax research; it’s full of interactive resources that facilitate better decision-making.
However, some practitioners’ use of the tax research software has not evolved as quickly. They simply search for the answer to a client’s question and quote the findings in a letter or e-mail to the client, and that’s all they use the software for. Unaware of all the tools their tax research software has to offer, they miss opportunities for tax planning with their clients or they spend hours manually creating a letter or chart that software can generate in seconds.
Check out our reviews of the three major tax and accounting research systems for financial professionals.
Tax and accounting professionals can use their research software in many innovative ways to truly be a trusted advisor for their clients. For example:
- Follow tax and accounting news within the research subscriptions, whether it be on a daily, weekly, or some other periodic basis. You will likely find updates applicable to your clients’ situations, and they will be impressed with your awareness of recent developments.
- When preparing multi-state tax returns, create a chart as an outline for the due dates, tax rates and other issues pertaining to each state. It is quite a bit more efficient than going to each state’s tax authority website and downloading booklets and instructions.
- Data mine clients within tax software and then search for planning opportunities. For example, a search for specific zip codes may reveal obscure local tax credits and incentives.
- Many accountants focus on getting a Federal tax return right, but give less attention to state and local tax issues. Effective use of research software can help determine nexus for both income and sales tax purposes, as well as apportionment planning. An example of this is Bloomberg BNA’s Tax and Accounting Center’s State Tax Nexus Tools, which generates reports and charts based on the answers to a questionnaire about a company’s activities in each state.
- IRS response tools (such as Thomson Reuters Checkpoint’s IRS Response Library) may be your first stop after a client receives a notice. Instead of writing letters from scratch, using sample response letters could save a significant amount of time.
- Take advantage of mobile site capabilities and apps (such as CCH Mobile). You may be able to search your libraries and then e-mail documents to clients while in the airport waiting for a flight.
The three tax research software packages reviewed have much in common. They are all web-based and contain many primary sources and helpful editorial libraries. However, they have their unique layout, search tools, mobile capabilities, charts/diagrams, and specialized content offerings. Those evaluating tax research software should test drive the trial versions, experimenting with all aspects including the mobile apps. After subscribing, training is extremely important in helping the user take advantage of the many tools and resources that the products offer. While I was impressed with shelves full of books as a young boy, today I admire scholarly accountants who use tax research software to its full potential.