PracticeManagement

536 the tax adviser august 2010

By: Alexandra DeFelice

2010 Tax Software Survey

These results mirror those in the 2009 survey (see http://tinyurl.com/2009SoftwareSurvey) in which Drake and UltraTax again were in a virtual tie with 4.439 and 4.436, respectively, Lacerte came in third with 4.43, and GoSystem trailed the rest of the field with 3.55. However, there was a notable rise in the percentage of respondents who disliked the price of their packages and a rise in the percentage of respondents turning to chat for technical support.

There has also been an increasing trend of companies making their prod-ucts available online, according to feed-back from vendors

MethodologyThe survey, which received 12,018 re-sponses, was conducted in May 2010. The exhibits show detailed answers for 9 of the 17 products included in the survey: ATX

1040 (CCH), ATX MAX (CCH), Drake, GoSystem Tax, Lacerte, ProSeries (In-tuit), ProSystem fx Tax (CCH), TaxWorks (RedGear Technologies), and UltraTax CS. Information and ratings for products that received fewer than 100 responses—Cross-Link 1040 by Petz Enterprises, Great Tax by Greatland Corp., Intuit ProLine Tax Online Edition, TaxACT, TaxSimple, TaxS-layer Pro, TaxWise, and TurboTax (Intuit’s consumer product)—are not included in this article, but product information pro-vided by the vendors is available online (see www.journalofaccountancy.com/web/2010TaxSoftwareSurvey.htm). Great-land did not submit the requested data, so information about that vendor’s product is not listed.

Products and UsersUsers of CCH’s ProSystem fx Tax soft-ware once again dominated the number

The Tax Adviser and the Journal of Accountancy conducted a survey of AICPA members who prepared 2009 tax returns for a fee to de-

termine which tax preparation software products were the most popular, what aspects of those products preparers liked, and what they disliked. Of the 17 products identified for the survey, Drake and UltraTax CS, a Thom-son Reuters product, were in a virtual tie for first place for the highest over-all rating. Drake scored the highest (4.44) on a scale of 1–5, with 5 mean-ing “very good.” That was just a hair above UltraTax CS, which received a rating of 4.43. Intuit’s Lacerte product came in a close third, scoring a 4.38, with Thomson’s other package, GoSystem Tax RS, receiving the lowest score, 3.39 (for the overall ratings, see Exhibit 1 on p. 537).

the tax adviser august 2010 537

Exhibit 1: Overall ratings

ATX

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aTax

CS

Overall rating 4.11 4.29 4.44 3.39 4.38 4.32 4.13 4.13 4.43

How easy was the update/installation process? 4.41 4.56 4.72 4.14 4.46 4.63 3.96 4.38 4.46

How easy was it to use? 4.17 4.37 4.31 3.12 4.29 4.36 3.75 4.32 4.18

How easy was it to learn? 4.13 4.36 4.23 3.07 4.21 4.34 3.55 4.34 4.01

How well did it run on your network? 3.94 4.18 4.70 3.83 4.38 4.34 4.22 4.14 4.38

Average rating by each product’s users on a 1–5 scale, with 5 being the best.

Exhibit 2: Why did you switch from the software you used for the 2008 tax season?

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CS

Accuracy 10.7% 0.0% 21.4% 25.9% 9.8% 10.4% 5.8% 5.7% 22.2% 9.7%

Conversion process 2.2% 0.0% 0.0% 0.0% 4.9% 1.6% 1.2% 3.6% 0.0% 2.9%

Ease of importing data 4.3% 0.0% 0.0% 0.0% 7.3% 2.7% 2.3% 6.7% 0.0% 2.9%

Ease of use 13.6% 20.0% 14.3% 11.1% 29.3% 5.5% 10.5% 15.5% 11.1% 14.6%

Installation process 2.8% 0.0% 0.0% 0.0% 4.9% 1.6% 0.0% 4.7% 0.0% 1.9%

Integration with other software 17.6% 20.0% 0.0% 3.7% 19.5% 23.0% 11.6% 24.4% 11.1% 8.7%

Learning curve 4.7% 0.0% 0.0% 3.7% 12.2% 1.1% 1.2% 4.7% 0.0% 10.7%

Number of forms/comprehensiveness 10.8% 0.0% 0.0% 0.0% 14.6% 8.7% 23.3% 3.6% 0.0% 5.8%

Price 45.1% 40.0% 35.7% 22.2% 22.0% 49.2% 61.6% 53.4% 33.3% 38.8%

Support 10.8% 40.0% 21.4% 0.0% 17.1% 11.5% 14.0% 7.3% 0.0% 6.8%

Tax research included in package 2.6% 0.0% 0.0% 0.0% 4.9% 1.6% 2.3% 2.6% 0.0% 1.0%

Other 31.1% 40.0% 50.0% 44.4% 36.6% 25.7% 11.6% 34.7% 33.3% 34.0%

Shows percentage of respondents who answered that they switched from the particular software; multiple responses were permitted.

PracticeManagement

538 the tax adviser august 2010

of people completing the survey, com-prising 33% of the 12,018 total re-spondents; 22% used Lacerte, and 19% used UltraTax CS. Last year, 28% of the 9,776 respondents used ProSystem fx Tax, 19% used Lacerte, and 14% used UltraTax.

Just over half of this year’s respon-dents prepared returns for more than 500 clients. Among those, 44% used ProSystem, 20% Lacerte, and 19% Ultra-Tax. Among respondents who prepared returns for 500 or fewer clients, 26% used Lacerte, 21% ProSystem, and 18% UltraTax.

Switching Products Mostly Due to Price

As is generally the case, only a small minority of respondents (6%) switched

their tax preparation software from an-other product before this year’s tax sea-son. However, that was up from the 4% of total respondents in last year’s survey who said they had switched. While 89% of this year’s respondents said they plan to use the same software next season, 2% will not, and the remainder said they don’t know.

The primary reason respondents switched was price, with 45% of switch-ers selecting that choice, a large increase from the 36% in last year’s survey. In-tegration with other software came in a distant second, with 18% of switchers selecting that reason. (See Exhibit 2 on p. 537.)

Consistent with the “why did you switch” question, by far the highest per-centage of total respondents (41%) selected

price as the factor they liked least about their software, up from 35% last year. Users of the more expensive products—ProSystem fx, Lacerte, and UltraTax CS—also had the highest percentage of respondents giving low scores on price. Forty-three percent of ProSystem users chose price as their least-liked feature, as did 56% of Lacerte customers and 54% of UltraTax customers. (See Exhibit 3 above.)

The price of Federal 1040 for new Pro-System fx customers is $3,585 (the same as last year). Lacerte costs $2,799 for un-limited users (a $100 increase from the prior year), and UltraTax CS costs $2,375 (a $125 increase).

On the opposite end of the spectrum are the 7% of total respondents who picked price as the feature they liked most. Among

Exhibit 3: What did you like least about the tax preparation software you used for the 2009 tax season?

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CS

Accuracy 2.2% 5.3% 5.8% 2.9% 11.8% 1.1% 0.9% 1.7% 9.0% 0.8%

Conversion process 1.5% 3.2% 3.3% 3.5% 0.8% 1.3% 0.8% 1.0% 4.5% 2.2%

Ease of importing data 3.1% 5.3% 5.3% 5.8% 3.8% 3.0% 2.3% 3.0% 4.5% 2.6%

Ease of use 6.0% 1.1% 3.1% 4.6% 22.0% 1.7% 2.2% 9.2% 0.7% 3.5%

Installation process 1.5% 3.2% 1.7% 0.6% 0.9% 1.2% 1.4% 1.6% 4.5% 1.5%

Integration with other software 6.5% 12.6% 16.4% 20.0% 5.3% 6.9% 5.1% 5.4% 10.4% 3.9%

Learning curve 6.5% 3.2% 2.8% 8.1% 14.3% 1.8% 2.0% 10.1% 1.5% 6.4%

Number of forms/comprehensiveness 4.7% 4.2% 1.1% 8.4% 4.4% 4.3% 16.9% 2.7% 11.9% 2.0%

Price 41.5% 5.3% 7.2% 2.6% 12.5% 56.4% 31.2% 43.0% 4.5% 54.4%

Support 6.0% 13.7% 13.9% 1.7% 7.8% 5.7% 8.0% 6.5% 9.0% 2.8%

Tax research included in package 8.4% 17.9% 14.5% 12.5% 6.6% 7.0% 14.7% 5.6% 20.9% 8.7%

Other 12.2% 25.3% 24.8% 29.3% 9.8% 9.7% 14.5% 10.4% 18.7% 11.3%

Percentages are of users who indicated that they predominantly used that product, except “All products” column, which shows percentage of all respondents. Some columns do not add up to 100% due to rounding.

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540 the tax adviser august 2010

products with 100 or more respondents, 47% of Drake’s customers picked price as the feature they liked most, followed by 43% of ATX MAX customers and 40% of TaxWorks customers. Drake costs $1,495, ATX MAX is $1,154, and TaxWorks is $1,395.

Best-Liked FeatureEase of use earned the highest per-

centage of overall responses (26%) for best-liked feature, followed by number of forms/comprehensiveness at 22% and accuracy at 21%.

Intuit’s professional tax products led the way in ease of use, as they did in last year’s survey, with 44% of ProSeries users and 40% of Lacerte users selecting that feature. (See Ex-hibit 4 above.)

Help NeededWhile ease of use was the overall best-

rated feature, a great majority of respon-dents (83%) still needed technical support

from their tax vendor. This is up from 74% last year. Among products with 100 or more respondents, Drake once again scored the highest rating (4.71

out of 5) in response to the ques-tion “How easy was it to get tech-nical support from the vendor?” Last year Drake’s rating was 4.70. UltraTax came in second with 4.34, compared with 4.33 last year. Go-System came in last with 3.54, down from last year’s rating of 3.60. (See Exhibit 5 on p. 542.)

In terms of the quality of that support, Drake also ranked first, with 4.44 (down from 4.52 last year), UltraTax came in second with 4.34 (up from 4.32), and Go-System rated last with 3.41 (down from 3.58).

Exhibit 4: What did you like best about the tax preparation software you used for the 2009 tax season?

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CS

Accuracy 20.5% 2.0% 3.7% 3.3% 15.0% 24.6% 14.9% 26.3% 5.0% 18.7%

Conversion process 0.1% 0.0% 0.3% 0.0% 0.5% 0.0% 0.1% 0.1% 0.0% 0.0%

Ease of importing data 2.3% 0.0% 0.3% 0.3% 6.0% 1.0% 1.1% 2.6% 0.7% 3.6%

Ease of use 26.5% 24.0% 18.9% 18.4% 13.3% 40.2% 44.2% 17.8% 24.1% 23.6%

Installation process 0.7% 0.0% 0.0% 0.3% 4.1% 0.7% 1.3% 0.2% 0.0% 0.4%

Integration with other software 7.0% 0.0% 0.3% 0.3% 4.9% 0.6% 2.9% 6.6% 0.0% 22.0%

Learning curve 2.6% 0.0% 1.1% 0.8% 2.3% 3.9% 4.9% 1.8% 2.1% 2.2%

Number of forms/comprehensiveness 22.2% 25.0% 26.1% 9.2% 28.7% 17.8% 9.6% 32.8% 9.2% 16.7%

Price 7.0% 40.0% 42.9% 46.9% 1.4% 1.8% 14.7% 0.5% 40.4% 2.3%

Support 6.2% 0.0% 1.3% 17.3% 10.3% 4.4% 2.5% 6.1% 14.9% 7.8%

Tax research included in package 1.2% 7.0% 3.5% 1.6% 0.6% 0.7% 1.0% 1.7% 0.0% 0.7%

Other 3.8% 2.0% 1.6% 1.6% 12.9% 4.3% 2.8% 3.6% 3.5% 2.1%

Percentages are of users who indicated that they predominantly used that product, except “All products” column, which shows percentage of all respondents. Some columns do not add up to 100% due to rounding.

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542 the tax adviser august 2010

Most users (94%) turned to the phone for support (up from 93%), 32% used e-mail (up from 31%), and 15% used live chat (up from 10%).

Several vendors have introduced other forms of help, which were reflected among the 3% of respondents who wrote in additional responses. These included online da-tabases/knowledge bases, FAQs on the vendor website, fo-rums, and remote help options that allow the vendor to log in to a preparer’s computer to see the problem.

Importance of IntegrationAs noted earlier, integration with other software—or lack thereof—was the second most cited reason that people switched tax preparation software.

Many vendors say they are expanding the number of products their tax software product integrates with, to include not

only their own prod-ucts but also those of other vendors.

For example, La-certe integrates with other Intuit prod-ucts such as Quick-Books but also with BNA Tax Planner. ProSystem fx Tax integrates with the entire ProSystem fx Suite as well as GainsKeeper Pro (a CCH product), Basis Pro (CCH), BNA, and Sage FAS (Fixed

Asset Software). Drake allows for import-ing information from Microsoft Excel and Access, QuickBooks, and Sage Peachtree. GoSystem integrates with a variety of other Thomson Reuters products, such as Practice CS, File Cabinet CS, and Check-point, as well as products from several

other vendors, including BNA, Copanion, SurePrep, and Caseware.

For a more comprehensive list of products that each program integrates with, as well as more information about each tax preparation software vendor, in-cluding prices, features, contact informa-tion, and product-by-product survey re-sults, see www.journalofaccountancy.com/web/2010TaxSoftwareSurvey.htm.

tta

Exhibit 5: Technical support

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CS

Did you need tech support? * 76.0% 71.7% 93.5% 87.1% 82.6% 61.2% 85.6% 91.6% 87.4%

How easy was it to get? 3.73 3.83 4.71 3.54 3.90 3.73 3.87 4.19 4.34

How good was it? 3.88 3.90 4.44 3.41 4.02 3.84 3.91 4.05 4.34

Received support by: **

Phone 92.1% 90.7% 93.3% 97.1% 87.3% 91.3% 97.4% 96.2% 96.0%

E-mail 31.6% 33.1% 49.0% 19.8% 40.7% 19.5% 24.9% 54.2% 35.9%

Live chat/IM 11.8% 14.9% 4.7% 3.9% 22.0% 28.5% 17.5% 9.9% 5.4%

Other 6.6% 3.0% 1.5% 1.5% 2.7% 2.0% 3.3% 2.3% 1.6%

* Percentage of each product’s users answering “yes.”** Percentage of those users who received support; multiple answers permitted.All other answers: Average rating on a 1–5 scale, with 5 being best.

EditorNotes

Alexandra DeFelice is a senior editor at the Journal of Ac-countancy. For more informa-tion about this article, contact Ms. DeFelice at adefelice@aicpa.org or 212-596-6122.

the tax adviser august 2010 543

Products on the Web

The trend of moving toward the internet continues as vendors that traditionally offered desktop versions of their product introduced web-based versions.

Last August Intuit announced its plans for ProLine Tax Online Edition, a new SaaS professional tax software product powered by the Lacerte engine, rather than creating web-based versions of ProSeries or Lacerte itself. It is a pay-per-return model of roughly $19.95 per return in 2009 with no upfront license fees. The product launched in November. Pricing for 2010 had not yet been determined at press time.

In June 2009, Thomson Reuters unveiled a SaaS option for which users pay monthly software leasing fees rather than upfront purchase fees, starting at roughly $425 per month, and can access their software, including the CS Professional Suite of products as well as Microsoft Office and Exchange, over the web. CCH also released a SaaS version of ProSystem fx Tax in 2009, which starts at $450 per user per month.

Drake offers two types of SaaS offerings. Web1040 runs in a browser, so it requires no installation. Remote1040 is an application that customers have to download, consisting of a data entry module that runs locally on the customer’s machine. For both products, calcula-tion, printing, and e-filing all happen on the server and are executed over SSL encryption.

GoSystem Tax RS is web based, and Thomson says it plans to expand its web services, including online monitoring tools and additional products. UltraTax plans to enhance its tool for monitoring the status of e-file clients and to include an option to send an automated e-mail to the client when the IRS has accepted the returns.

Most vendors offer some type of online help, including chat, e-mail, or web-based discussion forums as well as blogs and videos. Online portals, through which accountants and their clients can exchange files, are also becoming popular. While portals can be used for dozens of purposes—from exchanging QuickBooks files that are often too large for e-mail to entering payroll information—an increas-ing number of accountants are using them to receive client source documents and post their completed tax returns, especially given the regulatory environment related to sending private information via e-mail. Web-based portals can be up and running in minutes, and those who use them say the learning curve is almost nonexistent.

Portals are not new—at least not to Thomson or CCH—but both vendors launched new versions of their products in the fall. The ProSys-tem portals start at $1,250 a year for 500 portals and 10 gigabytes of total storage. Thomson’s start at $175 per month ($2,100 annually) for 1,000 portals with 500 megabytes of storage per portal, plus a $500 one-time setup fee.

Drake does not offer client portals, but this year it is introducing Enterprise Office Manager, a web portal for multisite management. To secure e-mail exchanges with clients, the vendor is introducing the ability to password protect and encrypt PDF copies of tax returns. (For more information on portals, see “Client Portals: A Secure Alternative to E-Mail,” 209 Journal of Accountancy 36 (February 2010), www.journalofaccountancy.com/Issues/2010/Feb/20092359.)

Adding to the move toward using less paper, for 2010 Drake improved the PDF generation of returns and added the ability to back up files to the Drake Document Manager. Thomson plans to enhance the ability to run UltraTax CS efficiently across dual monitors, including the auto sizing of the folders block when the input screen is tiled with either the diagnostics or the tax form.

Many vendors also continue to focus on importing data from scanned source documents directly into the tax forms, eliminating data entry.