Users Grade Tax Software

A record number of CPAs responded to our fourth annual professional tax software survey in which we invited AICPA members to disclose, among other things, what tax-preparation software they use and how they evaluated various aspects of their products.

In past years, only members of the Tax Section were included in the e-mail survey. This year, in an effort to get a more comprehensive assessment, we expanded the survey to include all Institute members. As a result, the number of responses ballooned from 2,248 last year to more than 6,000 this year. For Tax Software Vendors see Exhibit 1.

This year, continuing the consolidation trend, CCH (a Wolters Kluwer business) acquired TaxWise Power Package and ATX/Kleinrock; however, both vendors will continue to function. So now three vendors dominate the tax software market: Intuit, with two products—Intuit Lacerte and Intuit ProSeries; CCH, with three products—ProSystem fx Tax, ATX and TaxWise; and Thomson, with two products—UltraTax and GoSystem Tax RS. For more details, see Exhibit 2.

PRODUCT LOYALTY
One way to measure product satisfaction is brand-switching. This occurs when users move from one product to another until they find one that most closely matches their budget, needs, skills, hardware requirements and, most importantly, their comfort zones—which includes that intangible judgment of how the product feels.

This year 4% of the survey respondents reported they definitely plan to switch brands. By product, 14% of TaxWorks users and 13% of TaxWise users plan to switch. Products with the highest percentage of users for 2006 who switched from the 2005 tax year were TaxWise (17%), Drake (16%) and TaxACT (12%). For more details, see Exhibit 3A (Overview).

Among the 312 respondents who switched products, 36% listed price as one of their reasons and 24% listed a lack of necessary functions.

POPULAR PRODUCTS
The most widely used product, according to our survey, was CCH’s ProSystem fx, with 30% of the 6,109 responses. Not far behind was Intuit’s Lacerte Tax with 26%, followed by Thomson’s UltraTax with 18%. That’s one product each for the three companies that dominate the tax preparation market. See Exhibit 2 for details. Broken down by parent company, here’s how the tax software market appears to be divided:

All the categories of product satisfaction (ease of installation, learning, use and network operation) were about the same as last year.

UltraTax scored highest in overall satisfaction with a 1.3, followed by Drake with 1.4. For ease of installation, TaxACT led with a perfect 1.0. (However, use caution in assessing the results for TaxACT because it was rated by only 33 users.) ATX and Drake tied for second place with 1.2. TaxACT also scored first for ease of both learning and use, with 1.2 and 1.3, respectively. GoSystem came in last, with a 2.5 for ease of learning and 2.4 for ease of use.

Operation of programs on users’ networks, which for years was problematic for many, no longer appears to be a serious issue. GoSystem, with a 1.7, while still considered satisfactory, was rated the lowest.

NEED HELP?
The products that received the highest marks for technical support were Drake, with 1.3, and TaxACT and UltraTax, each with 1.4. The help desk with the fastest response to users’ calls was TaxACT, with 1.2; it was rated fastest last year, too. When there’s a choice, most users opt to ask for help via the telephone rather than e-mail. For Technical Support, see Exhibit 4.

DATA LIMITATIONS
Whether or not you’re shopping for a new product, we think you’ll find this data of value. But use the information as a starting guide—not a definitive arbiter of which product is best for you. While the assessments of your peers are not unimportant, what suits them—even most of them—may not meet your needs. Hard as it is to do, the only effective way to assess whether a product is best for you is to put it to the test. That means loading a sample of the software and adding live data to see how it works for you. For Filing Statistics, see Exhibit 5.

Also, while surveys can be useful tools, they also can be dangerous, because unless you determine their source and how they’re calculated, they can be misinterpreted. This survey is no exception.

While we strive to report the numbers accurately, be aware that some numbers have more significance than others because questions that target a subset of respondents have a larger margin of error. This is not to say the reported result is inaccurate, just that it’s more likely to be inaccurate. That’s why we add a column to many of the tables that shows the total responses for each question. Use that as a guide in assessing the statistical validity of responses.

Products Included, Excluded
The JofA identified 13 tax profession programs for this survey and invited theirvendors to submit detailed data on the products. However, when the 6,198 surveyresponseswere tallied, only 10 products received enough hits to be included in the rating results. These 6,109 responseswere the basis for the calculations in the tables.

We determined that a product needed at least 30 hits for the ratings to be calculated with relative validity. The three products that missed that mark were IntelliTax, Tax$imple and TaxSlayer Pro. Although we did not include the three in the product ratings, we did keep them in Exhibit 1 (Tax Software Vendors) and Exhibit 6 (Product Details) for readers who are interested in examining those products in more detail.

Due to rounding, percentages in all tables maynot add up to 100.

Stanley Zarowin, is a contributing editor to the JofA. His e-mail address is stanley.joatech@gmail.com.