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Users size up tax software: product ratings gain, but vendor support slips.

Although AICPA tax practitioners rated this year's crop of tax-preparation software superior to the products they used last year, they gave lower grades to vendors' technical support. But for many tax practitioners, the bigger story was that the number of tax-software products continued to decline, forcing newly orphaned customers to go through the agony of selecting a new package and converting their client tax files to make them compatible. Such were the highlights of the Journal of Accountancy's spring 2004 survey of 2,010 AICPA tax-department members.

The average satisfaction rating for the nine professional products included in the survey was 4.09--out of a possible 5.00--up from last year's average of 3.61, with Intuit's Lacerte posting the highest overall ratings with a score of 4.43 (see exhibit 2, page 72). Three products tied for third place with a score of 4.35: Drake Software, Thomson Creative Solutions' UltraTax and CCH Tax and Accounting's ProSystem fx Tax.

The average cumulative rating for technical support slipped sharply to 2.44 from 3.50 last year, although respondents reported an improvement in the way their software ran on their networks--4.09, up from 3.50.

For a list of the vendors included in the survey, see exhibit 1, below.

SHRINKING MARKET

The survey also revealed that not only is the field of vendors dwindling, but the existing market is becoming more concentrated, with four products appearing to lead the field with the most customers: Intuit's Lacerte and ProSeries, CCH's ProSystem fx Tax and Thomson Creative Solutions' UltraTax.

Evidence of the growing concentration can he deduced from the data in exhibit 2. Although more than twice as many tax practitioners responded this year than last (2,010 vs. 993), making the 2004 data more statistically reliable, only nine products received the 10 or more responses needed to qualify for inclusion in the survey. That's down from 12 last year.

In addition, tax year 2004 will see at least three fewer tax software products on the market. Thomson Creative Solutions, which owns UltraTax and RIA's GoSystem Tax RS, acquired the customer lists of Tax Relief and Exact Tax, both of which withdrew from the market. Also, Best Software sold its CPA Software Visual Tax customer list to CCH, which will he attempting to migrate those customers to its ProSystem fx Tax.

Caveat: The lopsided response in favor of just four products makes the individual scores of the remaining five products statistically unreliable. GoSystem Tax RS received just 50 responses, Max Plus 44, TaxWorks 29, Drake 17 and TaxWise 12. However, we believe the cumulative average of all nine product scores in exhibit 2 is statistically reliable.

Currently, there are only 16 tax software products on the market that provide all the necessary federal forms and can calculate taxes for every state with an income tax. That's down about 20% in the past decade. Aside from the packages reviewed in this survey, other products on the market include GreatTax, Orrtax, Dunphy, Taxslayer, Petz Crosslink, TaxSimple and TaxAct.

When a software publisher acquires a competitor, it usually just wants the customer list; the acquired product usually becomes defunct and the buyer seeks to convert the orphaned customers to its brand. But when Intuit acquired Lacerte a few years ago, it took a different tack: Because both the Lacerte brand name and product were so popular, Intuit decided to continue the package under a joint name.

TROUBLE FOR PRACTITIONERS

The current turnover rate--the percentage of customers voluntarily moving to a new product or being forced to switch because their current product was being withdrawn--ran at about 13% last year (see exhibit 3, page 72).

Most tax practitioners are not happy about market consolidation--and for good reason. Switching tax packages is no small matter. First of all the CPA firm has to install the new product on its network, praying its computer system is sufficiently robust to handle the change; if it isn't, the customer must go through the often difficult and expensive process of upgrading the hardware.

Then, since each tax package operates differently, the firm's tax professionals must learn to run the new software and become familiar with all its unique technical nuances. And finally, the firm has to put all its client tax data through the new vendor's conversion software to make the returns compatible with the new package--all the while worrying whether the conversion process will leave it with hours of work tracing for evidence of errors.

Confirming the difficulty and frustration with conversion software, the survey showed it is nearly universally disliked. With but one exception--Intuit's Lacerte--tax practitioners generally gave low grades (2.33) to these converters. Lacerte received a 4.17 (exhibit 3).

As evidence of the intense competition to acquire orphaned customers, of the nine products assessed here, all but one--GoSystem Tax RS--provided free conversion software (exhibit 3). GoSystem, which charges $2 a return for conversions, is owned by RIA, which in turn is owned by Thomson, the publisher of UltraTax.

TECHNICAL SUPPORT

Mention the words technical support to a tax practitioner and often you'll get an earful of complaints about bad service and long hours of holding on the telephone for a tech-support representative. After all, the last thing CPAs want to hear when they call with questions during the critical days before April 15 is a busy signal, a recording or an ineffective response to a question. The average cumulative rating for technical support fell to just 2.44 from last year's 3.50 (exhibit 2).

E-FILING GAINS

Preparers electronically filed a larger number of both federal and state tax returns: 39.4% of federal returns were e-filed this year, up from 24.5% last year. The state statistics were similar: 35.6%, up from 19.4% (see exhibit 4, page 74).

Six of the nine vendors charged tax preparers extra for e-filing, with fees as high as $1,350 for an unlimited number of e-filings (see exhibit 6, page 76). The three that didn't charge were Drake Software, GoSystem Tax RS and Max Plus.

Only three vendors Thomson for GoSystem Tax RS, Intuit for ProSeries and CCH for ProSystem fx Tax--charged tax practitioners a the for the software used in e-filing. GoSystem charged for e-filing but didn't charge for each return filed. An average of 31.5% of the practitioners passed this fee along to clients, and 37% said they planned to add such a charge next year (exhibit 6).

PRODUCT LOYALTY

The software package with the most loyal customers appears to be ProSystem fx Tax (exhibit 3); 97.8% of its users said they planned to buy the product again next year. Hot on the leader's heels was UltraTax, with 97.2% reporting they planned to remain customers. For all nine products, 89% of respondents said they planned to stay with their vendor--showing an apparent 11% voluntary turnover rate. Once again we suggest you not read too much into the individual ratings for those products with fewer than 100 responses.

We had hoped the survey data would reveal which products were gaining customers and which were losing them. Unfortunately, since only about 11% of respondents voluntarily switched alliances, it was evident the resulting switching population (11% of 2,010 and divided among nine vendors) was too small to provide reliable individual results.

However, one statistic on product switching did stand out: When asked for the major reason they switched products, 32% of the respondents cited price.

SPECIAL SERVICES

We were surprised to discover that online organizers--those software add-ons that make compiling raw tax data relatively painless for taxpayers and a labor saver for the tax preparer--were not very popular with either tax practitioners or their clients. Although all of the nine products in the survey contained such organizers, only 19.1% of the responders offered them to clients (see exhibit 5, page 75), and when they did, only 16% of their clients used them.

Tax-refund advances remained a minor marketing feature. Only 5.1% of the tax practitioners said they offered refund advances, and growth in the service will be about 10% next year: 5.6% said they planned to offer it.

PROFILE OF RESPONDENTS

Of the 2,010 AICPA tax-department members who filled out the survey, 12% were sole practitioners and 80.3% were from local, one-location firms (see exhibit 7, below).

We had hoped to correlate the type and size of firm with the software used, but again we were stymied by the fact that some packages received very few responses. However, four packages--Lacerte, ProSeries, ProSystem fx Tax and UltraTax--received enough responses to provide at least a conditional analysis. It appears the leading software used by sole practitioners was ProSeries and the leading local-firm package was ProSystem fx Tax. There were too few responses from regional, national or Big Four firms to provide reliable conclusions.

Because of the continued intense competition in the tax-software market--and if history is any guide--further consolidation is likely to continue. And as the number of products shrinks, it's evident the market will see still more concentration.
Exhibit 1: Tax Software Vendors

 RIA
Vendor Drake Software (owned by Thomson)

Tax program Drake Software GoSystem Tax RS

Address 235 E. Palmer St. 2395 Midway Rd.
 Franklin, NC 28734 Building 1
 Carrollton, TX 75006

Telephone 800-890-9500 800-865-5257

E-mail address info@drakesoftware.com gosystem.sales@thomson.com

Web site www.drakesoftware.com http://gosystem.thomson.com

Vendor Intuit Inc. ATX Inc.

Tax program Lacerte Max Plus

Address 5601 Headquarters Dr. P.O. Box 1040
 Plano, TX 75024 Caribou, ME 04736

Telephone 800-765-7777 877-728-9776

E-mail address None sales@atxinc.com

Web site www.lacertesoftware.com www.atxinc.com

 CCH Tax and Accounting,
Vendor Intuit Inc. a Wolters Kluwer company

Tax program ProSeries ProSystem fx Tax

Address 2632 Marine Way 21250 Hawthorne Blvd.
 Mountain View, CA 94043 Torrance, CA 90503

Telephone 800-934-1040 800-739-9998

E-mail address None sales@prosystemfx.com

Web site www.proseries.com www.tax.cchgroup.com/
 pfx/products/tax

 Universal Tax TaxWorks by
Vendor Systems Inc. Laser Systems

Tax program TaxWise TaxWorks

Address 6 Mathis Dr., NW 350 North 400 West
 Rome, GA 30165 Kaysville, UT 84037

Telephone Sales: 800-755-9473 800-230-2322

E-mail address sales@taxwise.com sales@taxworks.com

Web site www.taxwise.com www.taxworks.com

 Thomson
Vendor Creative Solutions

Tax program UltraTax

Address 7322 Newman Blvd.
 Dexter, MI 48130

Telephone 800-968-8900

E-mail address csi.sales@thomson.com

Web site www.creativesolutions.
 thomson.com

Exhibit 2: Rating the Tax Software
Satisfaction
1 = very dissatisfied, 5 = very satisfied

 Were you
 satisfied
 with the With the With the
 Number of installation ease of ease
 respondents process? learning? of use?

Tax program

Drake Software 17 4.65 4.41 4.35
GoSystem Tax RS 50 4.47 3.65 3.64
Lacerte 584 4.50 4.33 4.42
Max Plus 44 4.20 3.75 3.58
ProSeries 148 4.56 4.39 4.39
ProSystem fx Tax 731 4.21 3.80 4.10
TaxWise 12 4.08 3.67 3.67
TaxWorks 29 4.48 4.14 4.24
UItraTax 395 4.52 3.97 4.17
Average 4.41 4.01 4.06

Total 2,010

 Percentage
 Overall whose
 Overall product Support software
 product rating Support rating ran on a
 rating last year rating last year network

Tax program

Drake Software 4.35 3.98 1.94 3.94 82.4%
GoSystem Tax RS 3.92 * 2.48 * 82.0%
Lacerte 4.43 4.32 2.24 4.13 87.6%
Max Plus 3.59 4.05 2.90 4.02 59.1%
ProSeries 4.24 4.07 2.48 4.00 70.1%
ProSystem fx Tax 4.35 3.96 2.09 4.15 94.9%
TaxWise 3.42 3.64 3.33 3.25 75.0%
TaxWorks 4.21 4.24 2.34 3.86 75.9%
UItraTax 4.35 4.19 2.18 4.11 91.6%
Average 4.10 3.61 2.44 3.50 79.8%

Total

 Percentage who
 Network said the product
 Network rating contained all the
 rating last year necessary forms

Tax program

Drake Software 4.43 4.05 94.1%
GoSystem Tax RS 4.21 * 79.2%
Lacerte 4.33 4.17 84.2%
Max Plus 3.42 3.65 97.7%
ProSeries 3.70 3.59 62.8%
ProSystem fx Tax 4.38 4.13 87.9%
TaxWise 3.88 3.56 91.7%
TaxWorks 4.18 4.10 75.9%
UItraTax 4.32 4.23 88.5%
Average 4.09 3.50 84.6%

Total

* Not rated last year.

Exhibit 3: Switching Products

 Percentage who Percentage who
 planned to use would recommend
 the same product the product
 next year to a colleague

Tax program

Drake Software 88.2% 94.1%
GoSystem Tax RS 93.9% 82.0%
Lacerte 95.3% 93.8%
Max Plus 83.3% 79.1%
ProSeries 85.5% 87.7%
ProSystem fx Tax 97.8% 94.9%
TaxWise 66.7% 66.7%
TaxWorks 92.9% 96.4%
UltraTax 97.2% 92.3%
Average 89.0% 87.4%

 Percentage who Satisfaction
 converted from with conversion
 another product package rating
 last year (1=poor, 5=good)

Tax program

Drake Software 17.6% 2.50
GoSystem Tax RS 10.2% 2.33
Lacerte 1.2% 4.17
Max Plus 27.3% 2.55
ProSeries 0.7% 3.00
ProSystem fx Tax 3.2% 3.30
TaxWise 25.0% 2.33
TaxWorks 20.7% 3.50
UltraTax 14.0% 3.35
Average 13.3% 3.00

Reasons for switching to another products

 Drake GoSystem Lacerte Max Plus
 Software Tax RS

Price 32.0% 0.0% 14.3% 91.7%
Hard to use or install 8.8% 0.0% 57.1% 8.3%
Poor support 11.2% 20.0% 28.6% 0.0%
Lacked necessary functions 13.6% 0.0% 57.1% 8.3%
Was not accurate 3.2% 0.0% 14.3% 0.0%
Other 53.6% 80.0% 42.9% 16.7%

 ProSeries ProSystem TaxWise TaxWorks
 fx Tax

Price 0.0% 8.7% 66.7% 83.3%
Hard to use or install 0.0% 4.3% 0.0% 0.0%
Poor support 0.0% 21.7% 0.0% 16.7%
Lacked necessary functions 0.0% 21.7% 0.0% 0.0%
Was not accurate 0.0% 0.0% 33.3% 0.0%
Other 0.0% 65.2% 33.3% 16.7%

 UltraTax Average

Price 20.0% 37.1%
Hard to use or install 9.1% 9.8%
Poor support 5.5% 12.3%
Lacked necessary functions 9.1% 12.6%
Was not accurate 3.6% 6.4%
Other 67.3% 38.5%

Exhibit 4: Filing Statistics

 Number of
 federal returns Percentage Percentage
 prepared for the prepared for prepared for
 2003 tax year individuals businesses

Tax Program

Drake Software 534 80.8% 19.2%
GoSystem Tax RS 1,646 58.4% 40.9%
Lacerte 771 69.7% 32.1%
Max Plus 373 72.0% 28.0%
ProSeries 448 71.4% 30.1%
ProSystem fx Tax 1,236 65.3% 35.3%
TaxWise 476 75.6% 24.4%
TaxWorks 578 75.4% 24.2%
UltraTax 856 71.0% 30.1%
Average 769 71.1% 29.4%

 Percentage Percentage
 of federal of federal Number of
 returns returns e-filed state returns
 e-filed last year prepared

Tax Program

Drake Software 62.3% 40.5% 390.0
GoSystem Tax RS 27.7% 4.6% 1,978.9
Lacerte 34.3% 19.1% 654.5
Max Plus 32.7% 25.2% 313.4
ProSeries 25.9% 14.8% 370.8
ProSystem fx Tax 28.5% 15.5% 1,350.3
TaxWise 62.4% 47.8% 412.8
TaxWorks 40.9% 30.2% 518.8
UltraTax 39.6% 22.6% 734.2
Average 39.4% 24.5% 747.1

 Percentage Percentage Percentage
 of state of state who charged
 returns returns e-filed extra for
 e-filed last year e-filing

Tax Program

Drake Software 47.0% 27.2% 33.0%
GoSystem Tax RS 27.2% 3.0% 13.3%
Lacerte 31.0% 17.2% 20.9%
Max Plus 28.8% 20.0% 35.5%
ProSeries 21.5% 11.6% 30.6%
ProSystem fx Tax 25.5% 13.4% 44.0%
TaxWise 53.1% 35.3% 30.6%
TaxWorks 49.0% 27.3% 45.5%
UltraTax 37.1% 20.0% 48.1%
Average 35.6% 19.4% 31.5%

 Percentage who
 planned to
 charge extra for
 e-filing next year

Tax Program

Drake Software 6.3%
GoSystem Tax RS 37.2%
Lacerte 42.3%
Max Plus 38.9%
ProSeries 50.4%
ProSystem fx Tax 37.0%
TaxWise 36.4%
TaxWorks 48.1%
UltraTax 36.1%
Average 37.0%

Exhibit 5: Special Client Services

 Percentage Percentage of Percentage that
 offering filings that planned to offer
 tax-refund included such that service
 advances advances next year

Tax program

Drake Software 11.8% 6.0% 11.8%
GoSystem Tax RS 0.0% N/A 0.0%
Lacerte 0.2% 10.0% 0.3%
Max Plus 9.1% 12.0% 13.6%
ProSeries 3.4% 3.3% 2.7%
ProSystem fx Tax 0.6% 2.0% 1.1%
TaxWise 8.3% 15.0% 8.3%
TaxWorks 10.3% 3.0% 10.3%
UltraTax 1.8% 6.3% 2.0%
Average 5.1% 6.4% 5.6%

 Percentage that Percentage
 offered on line of clients
 organizers that
 this year used them

Tax program

Drake Software 17.6% 60.0%
GoSystem Tax RS 14.3% 4.7%
Lacerte 27.0% 15.6%
Max Plus 20.5% 9.8%
ProSeries 13.0% 23.7%
ProSystem fx Tax 28.3% 13.7%
TaxWise 8.3% 1.0%
TaxWorks 14.3% 4.0%
UltraTax 28.6% 11.5%
Average 19.1% 16.0%

Exhibit 6: Product Details

 Drake Software GoSystem Tax RS

Product prices

1040 $995-$1,495 Starting at $2,500

1040 renewal $995-$1,495 Starting at $2,500

State package Included Included

State renewal Included Included

Additional fee for No No
laser package

Pay-per-return $495-$545 for the No
pricing first 50 returns

Additional cost for No $5/federal;
electronic filing $2/state
software

Additional cost for No No
electronically filed
returns

Conversion package Yes Yes
available

Additional cost for No $2/return
conversion package

Filing

Direct filing (DF), service Both DF
bureau (SB) or both

Files state returns Yes Yes
electronically

Allows for electronic Yes Yes
signature

Market

Number of users, 16,658 75,000
2003 package

Percentage of renewals 95.35% 95%
from 2002 package

Number of years in 26 39
business

Support

Toll-free number No Yes
for support

Days and hours (Eastern M-F 8-10; M-F 9-8;
time) support available Sat. 8-6 Sat. 10-6;
during tax season Sun. 11-5

Days/hours support M-F 8-9; M-F 9-8
available during off-season Sat. 9-5

Number of tax-season 209 24 (for 1040 only)
support staff

Online support Yes Yes

Technology

Operating systems Windows 98, 2000, Windows 2000, XP
available ME, XP, NT

Recommended Windows XP, but Windows 2000, XP
operating system all of the above
 are fine

Program size in Mb 57 Mb 273 Mb (1040 only)

Minimum RAM 64 Mb for Windows 128 Mb
recommended 98, 2000, NT and
 128 Mb for Windows
 ME, XP

Display and data

IRS data displayed on screen Yes Yes

Vendor data displayed on screen Yes Yes

Batch processing Yes Yes

Heads-down data entry Yes Yes

Program management tools

Reports Yes Yes

Organizers Yes Yes

Labels Yes Yes

Client letters Yes Yes

Scheduling program Yes No

Other packages available

Online tax-preparation option Yes Yes

State packages Yes Yes

Multistate package Yes Yes

Does your products include the following?

1120 Yes Yes

 Included in price of 1040 Yes Yes

1120S Yes Yes

 Included in price of 1040 Yes Yes

1065 Yes Yes

 Included in price of 1040 Yes Yes

1041 Yes Yes

 Included in price of 1040 Yes Yes

990 Yes Yes

 Included in price of 1040 Yes Yes

706 Yes Yes

 Included in price of 1040 Yes Yes

709 Yes Yes

 Included in price of 1040 Yes Yes

 Lacerte Max Plus

Product prices

1040 $2,140 $985 plus shipping
 and updating

1040 renewal $1,819 10% early renewal
 discount

State package $235-$340 Included

State renewal $199.75-$289 Included

Additional fee for N/A No
laser package

Pay-per-return $22/return federal Unlimited returns
pricing and one state included

Additional cost for No No
electronic filing
software

Additional cost for Unlimited federal: No
electronically filed $1,350 or $2/
returns return federal and
 $2/return state

Conversion package Yes Yes
available

Additional cost for No No
conversion package

Filing

Direct filing (DF), service SB SB
bureau (SB) or both

Files state returns Yes Yes
electronically

Allows for electronic Yes Yes
signature

Market

Number of users, About 40,000 2,036
2003 package

Percentage of renewals About 95% 65%
from 2002 package

Number of years in 25 12
business

Support

Toll-free number Yes Yes
for support

Days and hours (Eastern M-F 10-10; Sat. M-F 8-10; Sat.
time) support available 11-6; Sun. 1-6; 9-5. Super
during tax season 24-hour support support: M-F
 during week ending 8-midnight; Sat.
 on April 15 9-5

Days/hours support M-F 10-9 M-F 8-8;
available during off-season Sat. 9-5

Number of tax-season Not disclosed 200+
support staff

Online support Yes Yes

Technology

Operating systems Windows 98, ME, Windows 95, 98,
available NT 4.0, 2000, XP ME, 2000, XP, NT

Recommended Any of the above Any of the above
operating system

Program size in Mb 26 Mb 800 Mb

Minimum RAM 128 Mb 64 Mb
recommended

Display and data

IRS data displayed on screen Yes Yes

Vendor data displayed on screen Yes Yes

Batch processing Yes Yes

Heads down data entry Yes No

Program management tools

Reports Yes Yes

Organizers Yes Yes

Labels Yes Yes

Client letters Yes Yes

Scheduling program Yes No

Other packages available

Online tax-preparation option No Yes

State packages Yes Yes

Multistate package Yes Yes

Does your products include the following?

1120 Yes Yes

 Included in price of 1040 No Yes

1120S Yes Yes

 Included in price of 1040 No Yes

1065 Yes Yes

 Included in price of 1040 No Yes

1041 Yes Yes

 Included in price of 1040 No Yes

990 Yes Yes

 Included in price of 1040 No Yes

706 Yes Yes

 Included in price of 1040 No Yes

709 Yes Yes

 Included in price of 1040 No Yes

 ProSeries ProSystem fx Tax

Product prices

1040 $949 (add $399 for $2,850
 network license)

1040 renewal Same Call for details

State package $249-$349 $295-$725

State renewal Same Call for details

Additional fee for N/A No
laser package

Pay-per-return $15/return $26/return
pricing federal; $11/ federal; $21/
 return state return state

Additional cost for Unlimited federal: Federal: $100;
electronic filing $750; unlimited $50/state or $100
software state: $400 for all states

Additional cost for $3/return federal; Unlimited federal:
electronically filed $2/return state $1,000; state:
returns $250/state or $500
 for all states; or
 federal: $100 plus
 $3/return
 transmission
 charge; state: $50
 per state plus $1/
 return or $100 for
 all states plus
 $1/return.

Conversion package Yes (Drake Yes
available Software, Lacerte,
 ProSystem fx, Tax
 Relief, Saber,
 TaxWise, UltraTax)

Additional cost for No No
conversion package

Filing

Direct filing (DF), service DF Both
bureau (SB) or both

Files state returns Yes Yes
electronically

Allows for electronic Yes Yes
signature

Market

Number of users, 50,000+ 20,000+
2003 package

Percentage of renewals N/A 96%
from 2002 package

Number of years in 13 40+
business

Support

Toll-free number Yes Yes
for support

Days and hours (Eastern Jan.6-April 15: M-F 8:30-9:30;
time) support available Mon.-Thurs. 9-9; Sat. 9-8; Sun. in
during tax season Fri. 9-8; Sat. April 10-6;
 10-5; Sun. based 24-hour support
 on seasonal demand April 12-15

Days/hours support Mon.-Thurs. 9-8; M-F 9-8
available during off-season Fri. 9-6

Number of tax-season Not disclosed 450+
support staff

Online support Yes Yes

Technology

Operating systems Windows 98, XP, Windows 98, NT
available NT, ME, 2000 Workstation
 version 4.0,
 Millennium, 2000;
 XP Professional,
 MDAC version 2.6

Recommended Windows XP, XP
operating system 2000

Program size in Mb 2 Gb 100 Mb (includes
 laser forms)

Minimum RAM 512 Mb 256 Mb
recommended

Display and data

IRS data displayed on screen Yes Yes

Vendor data displayed on screen Yes Yes

Batch processing Yes Yes

Heads-down data entry Yes Yes

Program management tools

Reports Yes Yes

Organizers Yes Yes

Labels Yes Yes

Client letters Yes Yes

Scheduling program Yes Yes

Other packages available

Online tax-preparation option No Yes

State packages Yes Yes

Multistate package Yes Yes

Does your products include the following?

1120 Yes Yes

 Included in price of 1040 No No

1120S Yes Yes

 Included in price of 1040 No No

1065 Yes Yes

 Included in price of 1040 No No

1041 Yes Yes

 Included in price of 1040 No No

990 Yes Yes

 Included in price of 1040 No No

706 Yes Yes

 Included in price of 1040 No No

709 Yes Yes

 Included in price of 1040 No No

 TaxWise TaxWorks

Product prices

1040 $995 $1,095

1040 renewal $995 $995

State package $295 for 1-5 $345
 states; $695 for
 all states

State renewal $295 for 1-5 $200
 states; $695 for
 all states

Additional fee for No No
laser package

Pay-per-return $400 for up to $15/return
pricing 30 returns ($400 deposit)

Additional cost for No No
electronic filing
software

Additional cost for Unlimited federal: $1-$5/return
electronically filed $750; $1-$5/return federal (varies
returns federal (depending with volume);
 on volume); $1-$2.50/return
 $0.50-$1/return state
 state

Conversion package Yes (Crosslink, Yes, from
available Drake, Lacerte, most vendors
 Orrtax for DOS,
 Orrtax for
 Windows,
 ProSeries, Saber,
 TaxWorks and
 UltraTax)

Additional cost for No No
conversion package

Filing

Direct filing (DF), service Both DF
bureau (SB) or both

Files state returns Yes Yes
electronically

Allows for electronic Yes Yes
signature

Market

Number of users, 21,131 4,900
2003 package

Percentage of renewals 90% About 91%
from 2002 package

Number of years in 18 33
business

Support

Toll-free number Yes Yes
for support

Days and hours (Eastern M-F 8:30-midnight; M-F 9-10;
time) support available Sat. 8:45-5; Sat. 9-6
during tax season Sun. to be
 announced

Days/hours support M-F 8-4 M-F 10-7
available during off-season

Number of tax-season 200+ Varies during time
support staff of day or season
 (average 50)

Online support Yes Yes, via e-mail

Technology

Operating systems Windows 2000, XP Windows
available

Recommended Windows 2000, XP XP
operating system

Program size in Mb 160 Mb 80-100 Mb

Minimum RAM 128 Mb 128 Mb
recommended

Display and data

IRS data displayed on screen Yes Yes

Vendor data displayed on screen Yes Yes

Batch processing No Yes

Heads-down data entry Yes Yes

Program management tools

Reports Yes Yes

Organizers Yes Yes

Labels Yes Yes

Client letters Yes Yes

Scheduling program No Yes

Other packages available

Online tax-preparation option No Yes, via
 www.taxengine.com

State packages Yes Yes

Multistate package Yes Yes

Does your products include the following?

1120 Yes Yes

 Included in price of 1040 No No

1120S Yes Yes

 Included in price of 1040 No No

1065 Yes Yes

 Included in price of 1040 No No

1041 Yes Yes

 Included in price of 1040 No No

990 Yes Yes

 Included in price of 1040 No No

706 Yes Yes

 Included in price of 1040 No No

709 Yes Yes

 Included in price of 1040 No No

 UltraTax

Product prices

1040 $1,975

1040 renewal $1,675

State package $200-$300

State renewal $200-$300

Additional fee for No
laser package

Pay-per-return $16/return
pricing federal; $9/return
 state

Additional cost for No
electronic filing
software

Additional cost for Unlimited federal:
electronically filed $1,000; $2/return
returns federal; $1/return
 state

Conversion package Yes, from
available 14 products

Additional cost for No
conversion package

Filing

Direct filing (DF), service SB
bureau (SB) or both

Files state returns Yes
electronically

Allows for electronic Yes
signature

Market

Number of users, 17,000
2003 package

Percentage of renewals 95%+
from 2002 package

Number of years in 25
business

Support

Toll-free number Yes
for support

Days and hours (Eastern M-F 9-10; Sat.
time) support available 9-6; Sunday before
during tax season filing deadline
 10-6

Days/hours support M-F 9-8
available during off-season

Number of tax-season 100+
support staff

Online support Yes

Technology

Operating systems Windows 98 SE,
available 2000, XP,
 Terminal Server,
 Citrix MetaFrame

Recommended XP
operating system

Program size in Mb 25 Mb

Minimum RAM 64 Mb
recommended

Display and data

IRS data displayed on screen Yes

Vendor data displayed on screen Yes

Batch processing Yes

Heads-down data entry No

Program management tools

Reports Yes

Organizers Yes

Labels Yes

Client letters Yes

Scheduling program Yes

Other packages available

Online tax-preparation option Yes

State packages Yes

Multistate package No

Does your products include the following?

1120 Yes

 Included in price of 1040 No

1120S Yes

 Included in price of 1040 No

1065 Yes

 Included in price of 1040 No

1041 Yes

 Included in price of 1040 No

990 Yes

 Included in price of 1040 No

706 Yes

 Included in price of 1040 No

709 Yes

 Included in price of 1040 No

Exhibit 7: Profile of the Respondents

Percentage responding to the survey

 Drake GoSystem
 Software Tax RS Lacerte Max Plus ProSeries

Number of
respondents for
each product 17 50 584 44 148

Firm type

Sole practitioner 41.2% 6.1% 14.0% 39.5% 26.5%
Local firm 52.9% 55.1% 81.5% 58.1% 71.4%
Regional firm 5.9% 28.6% 4.2% 2.3% 2.0%
National firm 0.0% 4.1% 0.3% 0.0% 0.0%
Big Four firm 0.0% 6.1% 0.0% 0.0% 0.0%

 ProSystem
 fx Tax TaxWise TaxWorks UltraTax Average

Number of
respondents for
each product 731 12 29 395

Firm type

Sole practitioner 5.1% 33.3% 20.7% 12.0% 12.0%
Local firm 82.0% 66.7% 79.3% 86.0% 80.3%
Regional firm 12.2% 0.0% 0.0% 1.8% 6.9%
National firm 0.7% 0.0% 0.0% 0.3% 0.5%
Big Four firm 0.0% 0.0% 0.0% 0.0% 0.3%


STANLEY ZAROWIN, a former JofA senior editor, now is a contributing editor to the magazine. His e-mail address is zarowin@mindspring.com.
COPYRIGHT 2004 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
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Author:Zarowin, Stanley
Publication:Journal of Accountancy
Date:Oct 1, 2004
Words:5058
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