Tax Technologies: Win, Lose Or Draw?

Article Tools

• April-May 2008 Issue
• Post a Comment
• Print This Article
• Email This Article to a Friend
• Save This Article
• Order a Reprint

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 past experience.

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 or religions.

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.