Tips, tricks and traps of CD-ROM tax research.

The quantity of tax material now available on CD-ROM is staggering, and electronic tax research via CD-ROM is the state of the art. In October 1995, Part I of this article examined the benefits of CD-ROM tax research versus hard-copy research and discussed planning a research strategy, selecting the appropriate database(s), search terms and connectors, and constructing keyword search terms. That methodology enables a researcher to obtain preliminary results. Part II focuses on the steps to be taken after obtaining CD-ROM search results, including analyzing the initial results, modifying the search request when necessary, deciding when to conclude research and documenting results.

Part I of this article, published in October 1995, addressed the advantages of CD-ROM (compact discread only memory) tax research versus hard-copy research, planning a research strategy, selecting the appropriate database (s), search terms and connectors, and constructing keyword search terms. That methodology led to obtaining preliminary results from the search of a CD-ROM database.

Part II explores the steps to be taken after obtaining CD-ROM search results, including analyzing the initial results, modifying the search request for any necessary follow-up search, determining when to conclude the research and documenting the results.

Analyzing the Results

Searching a tax database typically produces some results, which need to be reviewed (even if they are eventually shown to be unproductive). To facilitate review, the CD-ROM software usually has a method of listing search results.

In reviewing preliminary search results and discovering any relevant underlying tax authority, the researcher will most likely be thinking, "Do the search results developed to this point answer the research question?" Perhaps the most difficult aspect of tax research (whether computerized or in hard copy) is to know when the best result (and, consequently, the appropriate point at which to stop researching) has been reached. This will be addressed later; for now, consider the following in analyzing the results of a CD-ROM search request:

1. Are the critical client facts sufficiently analogous to the situation addressed in the tax authority yielded by the research? 2. Is the tax authority discovered during the search the best result available? 3. Is the tax authority still relevant (i.e., has it been superseded by subsequent tax legislation, cases, rulings, etc.)? 4. Has a definitive, "on-all-fours" answer been found?(1) If the answer to any of the first three questions above is "no," the researcher probably needs to reanalyze the results and rethink the search strategy. Assuming that the initial search request has been unproductive, a follow-up search request may need to be, among other things, narrowed or broadened.

Narrowing or Broadening a Search Request

Generally, the tax research objective is to try to find favorable authority on point with the client's situation. While one might settle for less than perfect results because perfection cannot always be achieved, the researcher must nonetheless feel comfortable that the best possible results have been obtained. How does a researcher increase the chances of obtaining the best results? The first step is to determine if inadequate search results are the consequence of too few or too many hits.

Too Few Hits

If too few hits have been retrieved, focus on the search request. Is it too narrow in scope? Consider the following possibilities that could prompt the need for a revised search request when the current results are too narrow or otherwise unacceptable:

* Is the fight" database(s) being searched? Consider alternative approaches. * Are all keywords appropriate and sufficiently broad in scope, or should a search with additional keywords be considered? If the terminology is believed to be inadequate, use a thesaurus to broaden the number of keywords. * Should wildcards be used in the search request to obtain permutations of the keyword(s); Using wildcards (e.g., the asterisk (*) and question mark ;)) can prove very productive. However, tax researchers are often surprised at the number of derivatives of a root word that yield unrelated (and unwanted) results. * Are all the pertinent facts known, or do additional facts need to be ascertained, Similarly, are all assumptions correct or must additional assumptions be made? (A review of the facts and assumptions may also yield new keywords.) * Consider discarding the least-necessary keywords to any subconcept that may be artificially restricting access to the answer. For instance, avoiding use of certain keywords with the AND connector (see below) may be appropriate. * Should connectors be reordered or modified; For example, the use of OR might be more appropriate than the use of AND. Similarly, the requirement that keywords be within x number of words" of one another may be overly restrictive. As a general rule, do not start with a "within x number of words" restriction unless it is essential to tie two terms together; instead, use it only after obtaining too many potentially relevant documents to review.

These methods help when research results are nonexistent or otherwise unacceptable. If these techniques are not used, the researcher risks obtaining no answer at all, or, worse yet, obtaining the wrong answer.

Too Many Hits

When a tax researcher receives too many hits (i.e., an inordinate number of documents, review of which would be burdensome and inefficient), consider how the search request can be restricted to obtain fewer, more relevant documents. Too many hits may have occurred, for example, from using terminology in initiating a search, instead of using it merely to limit a search.

Before proceeding, however, remember that "hitting" too many documents is not necessarily bad. Notwithstanding the suggestions that follow, CD-ROM researchers ma,%, actually need to review the large number of existing results to find the one or more relevant tax authorities that could answer the research question.

On the other hand, assuming that the researcher needs to restrict too-broad search results, it must then be determined how to reconfigure the search request to restrict excess output. The objective is to "filter" a prior search request to ensure the new results are more relevant to the research question. Accordingly, consider the following factors:

* Are too many hits the result of a poorly defined research question? Re-review the facts, and consider redefining the problem and appropriate keywords. * Is the excessive number of retrieved documents the result of use of improper keywords or use of wildcards? Any review of too many hits should start with actually scanning some documents to find which words, if any, are causing false hits. To the extent these words are yielding inappropriate documents, they can be removed from the search request or "notted" out (i.e., eliminated in the search request by the appropriate software syntax). * Could the appropriateness of hits be increased by adding new keywords to the existing ones? If so, review the hits for new terms and phrases, then use these with proximity connectors to search the database(s) again. * Can fewer, more appropriate results be obtained by modifying connectors? For example, the use of AND might be more appropriate than OR, or the requirement that keywords be connected? "within `x' number of words" could be too liberal, so that x" should be reduced.

Searching the Elusive Research Question

Not every research question converts easily to keywords and appropriate connectors. Frequently, good search requests are too hard to construct. Clearly, this can occur when there appears to be no answer to a research question or where the question is not well defined. Some causes an suggested answers to an elusive research question are note below.(2)

Correct CD-ROM Database?

If the answer to a research question can only be found i a database that has not been searched, obviously researcher will not find it until this database is searched. For example, letter rulings lack precedential value because they apply only to the taxpayer requesting the ruling; nevertheless, they provide guidance through citations to relevant authority and reflect the IRS's current thinking (as of the date of issue). Thus, the rule is to consider all potentially relevant CD-ROM databases.

Client Factoids

Often, a client will call asking for more information about something recently read or heard. The difficulty, course, can stem from the fact that the client may have forgotten the media source and/or may have confused t facts and apparent tax result. This situation presents both an ill-defined research question and the problem of looking for tax authority when the facts and law are less than specific.

Generally, to overcome or minimize such limitation the researcher should try free-form searching over multiple databases. Assuming that this tax matter relates to recent case, ruling or proposed legislation, the research may want to pay particular attention to recent tax developments.

Example: Client D, whose marriage is impending, heard that the difference in tax rates between married and single individuals is being repealed (i.e., there will no longer be a marriage penalty).

Although several tax databases might be reviewed to verify or deny this information, D is probably referring to a provision in the Contract with America.(3) The search query marriage penalty" in a CD-ROM database containing H.R. 1215 will reveal both Section 102 of that bill, "Credit to Reduce Marriage Penalty" (which proposes to amend the Code by establishing new Sec. 24), and the related discussion in the House Ways and Means Committee report. The provisions of the bill yield the conclusion that only a small credit is provided; thus, the marriage penalty is not eliminated.

The Unanswerable Question

Sometimes a tax question is unanswerable, but the tax practitioner is nevertheless obligated to provide an answer. In such a situation, besides using the strategies already discussed, consider the following:

First, search results are only as good as the keyword search terms and proximity connectors used. While CD-ROM searching provides both thoroughness and speed, it is only as exacting as the present search request, and even can be too precise for successful results. For example, if a search request searches for two words within three words of each other and in any order (e.g., "research" within three words of "development"), and, in the best answer, those words lie within five words of each other, the search request will not be successful. Here, the answer to the "unanswerable question" is to make sure that the search request is not too restrictive. Start with a broad search request and narrow it to fewer words only if an unmanageable number of hits is found.

Second, consider returning to hard-copy tax materials. For some questions, keywords are just too evasive or the database containing the answer is unavailable in electronic form. For instance, major treatises in a particular topical area (e.g., Bittker and Eustice(4)) are invaluable references, but are not always available in an electronic format. Use of the "old" hard-copy method may provide a new line of reasoning and/or additional keywords. Thus, by viewing the research problem in this light, the researcher may discover new insights to solving a tax problem, including better methods to search CD-ROM databases.

Finally, when no answer is even remotely obtainable, the researcher may be aided by temporarily setting the issue aside and proceeding with something entirely different (i.e., providing for a period of "incubation"). If time permits, let the issue go for at least one night. In the next search, even a slight, heretofore untried modification to the search request may yield a productive answer.

Following Up

The follow-up to a CD-ROM search result is very similar to the follow-up when researching via hard copy. For instance, if the researcher finds tax authority on point, the full text of such authority should be skimmed, then read. When a document is not available in hard copy or it is preferable to access it from the CD-ROM (or an online service), it may be easier to print the full text of the authority and read it offline.

Also, the researcher needs to shepardize the potentially relevant authority. Besides the printed versions, citators (e.g., Prentice-Hall, Commerce Clearing House, Shephard's) may be available on CD-ROM or on online tax research services (e.g., LEXIS, WEST-LAW). Of course, these online services can also be used to find full-text authority not available on CD-ROM or when the research demands the most up-to-date authority.

Stopping the Search

Perhaps the hardest step in the research process is knowing when to stop searching. Although this can be relatively easy in some situations (e.g., finding a regulation and accompanying example on point), too often it is not. Obviously, it i easier to know when to stop researching a straightforward and routine problem, as opposed to a complex and unusual one.

One important rule is that the laws of probability apply searches (i.e., it is virtually impossible to find every potentially relevant document). For the typical research situation, less than 10% to more than 30% of the relevant documents will most likely be undetected. This usually occurs because of one or more of the following:

* The difficulty of the research question. * The depth and quality of the available electronic and hard-copy tax libraries. * The adequacy of time and budget to devote to the research problem. * The researcher's skill and experience.

A second important rule is that there is always an answer, with varying degrees of certainty in its relevance to the research question. Tax practitioners reason by analogy, relying on precedent and making conclusions that are seldom absolutely certain. What does the researcher do when the question seems not to have been completely answered? At some point, a judgment has to be made. Sometimes the answer is arrived at simply by using the best reasoning and related available authority to generate an acceptable conclusion. Not every answer will be based on tax authority on point with the client's facts and research issue.

If it is rare to find all documents relevant to the research question, how does one determine when the search is sufficient and should be concluded? Obviously, if there is certainty that the correct answer has been discovered, the research should stop. Certainty, however, is only relative, and what may appear complete to one researcher could seem incomplete to another. Therefore, in addition to the criteria discussed above, the following signs indicate that the research is complete (or at least adequate). * What level of relevant tax authority was obtained during the research? Do the Code and underlying regulations provide the answer or has only a district court case in a circuit other than the client's been found? * Has the "loop been closed?" Do different tax services, treatises and/or primary authority keep pointing to the same tax authority in support of an answer? * What does the IRS say (if anything about the problem? There is some comfort when a position favorable to a client is supported in letter rulings and/or IRS publications.(5) On the other hand, an adverse IRS position may prompt a continued search of authority for the preferred answer. * Have all search possibilities been exhausted, or are there other factors that could prompt a different tactic?

While this list is not exhaustive, it does suggest the types of considerations involved in deciding the circumstances under which to stop searching.

A False Sense of Security

A dangerous by-product of CD-ROM tax research (and, for that matter, most forms of electronic research) is the false sense of security some researchers perceive from having electronically searched for the answer. A researcher might consider computers and keyword searching to be virtually infallible. The reality is that CD-ROM research is only as good as the thoroughness, quality and technical skills of the tax researcher using electronic search methods to access a database. It is easy to assume, for example, that if certain keywords, connectors and databases yield certain results, such results are the best and most accurate, while the truth may be that inadequate or even false results are being generated.

Documentation

Generally, the procedures for documenting CD-ROM research are the same as those for hard-copy research. After reading the full text of any authority relied on and shepardizing it (if appropriate), the researcher should document the research with a working paper, memorandum or opinion letter.

CD-ROM Documentation Techniques

When working with computerized searches, it is important to keep track of the various keyword search requests used. It is extremely frustrating to review later a list of results that do not show the search requests and databases used to generate them. Fortunately, CD-ROM software typically stores search requests in a search history file that can be accessed later or printed for filing with the research documentation.

Most tax CD-ROMs provide additional documentation techniques. Specifically, CD-ROM software often includes "clipboard" and "notes" features. A clipboard provides a miniature word processor for taking notes while using a database. The clipboard contents can later be printed or saved for importing to a regular word processor. Similarly, a note tool, which also permits note-taking related to a tax problem being researched with a CD-ROM database, can effectively serve as electronic "post-it notes" (i.e., each note actually "sticks" to that part of the database, or even from a disc to an updated, subsequent version of the disc).

Another advantage of CD-ROM-based research is that any relevant documents can be immediately printed or saved to a computer file. This avoids the inefficiency of trips to the copy machine. In deciding what to print or save (beyond what is generally expected in documenting any client research), keep in mind the following:

1. The firm's research documentation policies. 2. The person who will review the research conclusions and his documentation requirements. 3. The documentation to be provided to the client.

Saved files can also be imported to word processor files for further reference and use in documenting research. Because it is possible to append a single file with all the relevant documents, it may be easiest to store the documents electronically, either on the computer or, preferably, on a floppy disk for the client's file or in a network archive system.

Finally, most CD-ROM software contains some method, such as a "work log," that permits tracking research time by client and research problem. Depending on the firm's timekeeping policies, a work log may prove convenient for billing purposes.

Effect of Copyright Restrictions

When retrieving documentation from a CD-ROM tax service in printed or electronic form, note the copyright restrictions reproducing its contents under the license to use a articular disc. Even though government documents (e.g., Code) cannot, by definition, be copyrighted as issued by the government, they can be copyrighted when they have been sufficiently transformed (such as by a CD-ROM vendor). Therefore, each vendor usually states in the license agreement the rights the user has to reproduce documents from a disc.

Generally, printing or saving documentation for internal use and, to the extent appropriate, sharing this data in communications with clients, is permitted. Some CD-ROM licenses, however, limit the user to use of data in "oral and written communications." Curiously, newer forms of client communications may not be permitted by some vendor licenses. Specifically, the use of e-mail to communicate internally and externally has become increasingly popular. Because most e-mail systems permit electronic "attachments" or "enclosures," copies of search results (e.g., rulings, cases) can be sent to colleagues or clients for review. However, a question arises as to whether these are electronic" communications, rather than "oral or written," and so not covered by the license. The same question arises when sending a fax of retrieved data. CD-ROM vendors probably did not intend to limit these types of communications when they are within the reasonable purview of client engagements and communications.(6)

Conclusion

CD-ROM-based searching offers easy access and efficiencies that could be cumbersome or expensive using traditional online tax services. Is CD-ROM here to stay? Certain technology gurus over the last several years have said it is a superb technology for at least the next five years (generally, without consideration of the more than eight-fold increase in CD-ROM storage capacity now on the horizon).(7) Nevertheless, a recent survey asked whether the Internet will replace CD-ROM, and will online "rise again" in the future? Some of the responses are quite interesting.(8)

In the end, success in using CD-ROM databases is driven by inspiration from the creative process as personified by the researcher, coupled with knowledge of the databases and familiarity with the appropriate search methods. Finally, luck plays a part as well. With time and use, hopefully, successful CD-ROM searching becomes almost an intuitive process.

(1) The term "on all fours" (or "on point") refers to a situation in which there is relevant tax authority factually similar and alike in all legally pertinent ways to the situation being considered. (2) See generally, Schwarzwalder, "Online Gambits, Tricks and Strategies in the Technology Databases," 16 Database 96 (Dec. 1993). (3) H.R. 1215, 104th Cong., 1st Sess. (1995). (4) Bittker and Eustice, Federal Income Taxation of Corporations and shareholders (Warren, Gorham & Lamont, 6th ed., 1994). To the author's knowledge, Bittker and Eustice is only available as an option on the first disc of the Research Institute of America's OnPoint System, which also contains several other major treatises. (5) this is not to suggest that research be done in IRS publications, which can be biased (or even incorrect) in support of the Service's position on a matter. Nevertheless, IRS materials based on revenue rulings and procedures can provide guidance and point to relevant authority. (6) The governing copyright statute is 17 USC Section 107; see Duggan, "Copyright of Electronic Information: Issues and Questions," 14 Online 20 (May 1991). (7) Major CD-ROM vendors recently agreed on a new standard for high-compression, double-sided CD-ROMs that will be available within about a year. These discs will hold about five gigabytes (5,000 megabytes) of data, comparable to the storage capacity of approximately eight of today's discs. Although they will require a new CD-ROM reader/drive, they will be backward compatible to enable current discs to be used. This new technology holds out the possibility of putting virtually an entire tax library on a single disc, which, if coupled with a laptop computer, provides complete portability (i.e., a "library in a box"). (8) The consensus seems to be that CD-ROM will always have a place. See Herther, "CD-ROM in Libraries: A Ten-year Anniversary Report," 19 Online 109 (May 1995)

Editor's note: Mr. Black is a member of the AICPA Tax Division Tax Computer Applications Committee. This article is adapted from the author's AICPA self-study CPE course, "Tax Research Using CD-ROM Services," which contains five fully functioning Cd-ROMs from three major tax research vendors.