2019 tax software survey

It’s hard to imagine a tax season without preparers’ forming opinions about their return preparation software — and perhaps wondering how things might have gone with another product. Consequently, the JofA and The Tax Adviser are thankful for the thousands of CPAs who took the time to share their perspectives on their software’s performance once again in this annual survey. Professional tax preparation software represents a crucial tool for CPAs’ practices and, as many of them have said clearly in this and previous surveys, a substantial financial investment as well.

This year, of course, was the first in which tax preparers had to apply most of the many new and altered Code provisions brought about by the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. It was with some suspense that, when filing season began, practitioners looked to how well the software providers had revised and adapted their systems to take the new laws into account. Encouragingly, given the extent of the changes, most survey respondents gave their software relatively high marks for its handling of TCJA-related changes (see the sidebar “Software Kept Up With TCJA, CPAs Say,” at bottom of page).

The survey also for a fourth year asked about the incidence of taxpayer identity theft uncovered among respondents’ clients, and for a third year, this problem abated, with a 5-percentage-point decline from the prior year in respondents reporting it, to 21% (see the sidebar “ID Theft Falls Still Further,” below).

PRODUCTS COVERED AND PROFILE OF RESPONDENTS

The survey asked about 13 products by name and allowed respondents to say they used some other software product not listed. And, as in previous years, seven of those products drew a sufficient number of responses to be included in the tables and most of the analysis provided in this article. For last year’s results, see “2018 Tax Software Survey,” JofA, Sept. 2018.

These seven products (with the percentages of all respondents using them) include three products from Wolters Kluwer: ATX (5.2% — a percentage point lower than in the 2018 survey); CCH ProSystem fx (15.4%, also a percentage point lower than in 2018); and CCH Axcess Tax (7.8% — reflecting the biggest percentage-point increase of any product this year from 2018, when it was 4.2%). Two products by Intuit Inc. were Lacerte, the second-most-used product, with 17.5% (unchanged from 2018), and ProSeries, with 11% (down from 12.7% in 2018). Drake Tax accounted for 14% of respondents, slightly below 2018’s 14.3%. The most-used product was once again Thomson Reuters’s UltraTax CS, with 19.9% of respondents — a slight increase from 2018. The six other asked-about products plus write-ins altogether accounted for 9.2% of users, with the highest among them being Intuit ProConnect Tax Online, with 3%. For the percentages for all 13 products, including a breakdown of their usage among firms ranked by ranges of numbers of preparers, click here.

The respondents were predominantly in small to midsize firms; nearly one-third reported themselves to be sole practitioners. Another 37% were in firms of between two and five preparers, and 18.7% were in firms of six to 20 preparers. Firms of 21 to 100 preparers were represented by slightly over 7% of respondents. Those in firms of 101 to 500 preparers were nearly 2% of the sample, and those in the largest firms, with over 500 preparers, were 2.5% of the respondents. These percentages skew slightly toward the larger firms from the 2018 sample or, rather, conform more closely to the historical average.

Firm size tends to correlate with the use of one product over another. For each of the firm size ranges, the percentage use of each of the seven major products is shown in the table “Favorites by Firm Size.” As previously, among sole practitioners, Drake Tax was the leading product at nearly 26%, with ProSeries not far behind at nearly 22%, both close to last year’s findings in this respect. Looked at another way, the overwhelming majority of users of ATX, Drake Tax, and ProSeries were in firms of five or fewer preparers (97%, 94%, and 92%, respectively, compared with nearly 70% of all respondents in firms of that size range). One change year over year, however, stands out: CCH Axcess Tax, as noted above, increased its market share represented in the survey. And while it did so most pronouncedly among the largest firms, to nearly 78% in the over-500 range (up from 56% last year), it also increased in every size range, even slightly among sole practitioners (1.8%, from 1.2% in 2018). CCH ProSystem fx, which was also well represented among the largest firms, showed its highest use in the upper midrange of firm size. More than half of respondents in firms with between 21 and 100 preparers used it.

Involvement in selecting the software

Recognizing that the choice of tax software is not always strictly objective or may be constrained in other ways (one leading write-in for the best-liked aspect of a software product was “have always used it” or a similar comment), the survey attempts to get a handle on what might be considered one source of bias: the respondent’s involvement in selecting the particular software. For all the major products, nearly 69% of respondents said they made the decision, and another 21% had some input into it. This tracks, in turn, with firm size. The highest percentage of “decision-makers” were for ATX and Drake Tax, both associated, as noted above, with smaller firms. Conversely, the lowest was for CCH Axcess Tax, at 31%, for which nearly 41% had no say in choosing it.

Types of returns

Respondents for whom individual returns constituted the majority of their workload were 76% of the users of all seven major products, while 88% said business returns were less than half of their returns, both nearly identical to last year. As might be expected — again, given that it was the most-used product of larger firms represented in the survey — CCH Axcess Tax users were significantly more likely to report a majority of returns were for businesses (nearly 27% of users), followed by CCH ProSystem fx (nearly 21%).

GENERAL PERFORMANCE

Respondents on average gave the seven major products slightly lower marks on overall performance this year (4.2 out of 5, compared with 4.4 last year (see the table “Overall Ratings”)). For at least the second year in a row, Drake Tax users gave it the highest overall rating (4.6 both years).

Although use of CCH Axcess Tax grew, as noted above, satisfaction with it did not. On average, CCH Axcess Tax got a 3.6 rating this year, half a point lower than last year. (However, see the “Likes and Dislikes” section below for evidence that its users did appreciate certain key attributes more often than those of other software.) Others of the major products were within 0.2 points of the previous year’s overall rating. Comparing the scores on more specific questions shown in the table, although all of them for CCH Axcess Tax were slightly lower than the year before, the biggest drop was for “How well did it handle updates during tax season?” This registered a 3.7, while in 2018, users had rated CCH Axcess Tax a 4.4 for updates, a 0.7 point decline. But most of the major products were down at least slightly on this question (it also figured more prominently this year in write-in comments for most of the products), which might be expected, considering that TCJA changes likely necessitated more frequent and thorough updates than in previous years.

Malware attack and outage

To some extent, CCH Axcess Tax and ATX users’ responses could reflect the troubles Wolters Kluwer and its customers experienced in early May, when the company noticed technical anomalies in its systems, which it then traced to malware it found in those networks. The company took its cloud applications for both software programs and others offline for a few days while it tested and restored the services. No data was said to have been stolen, nor did the infection spread to customers, the company said. The suspension came well after the April 15 income tax filing deadline, but the IRS was prompted to extend filing deadlines for affected customers, as the May 15 deadline loomed for exempt-organization returns and those of some calendar- and fiscal-year partnerships and S corporations. Perhaps more to the point, the outage coincided with the deployment of this survey; a few respondents mentioned it in write-in comments, described later.

Best for a new practice

Consistent with generally lower ratings for all the major products this year, the proportions of respondents endorsing their software as a good choice for a new tax practice were mostly lower than last year, notably so for CCH Axcess Tax at a little under 57% (see the table “Overall Ratings”). Last year, 69% of its users would have recommended it to someone starting a tax practice. Drake Tax, however, invariably the highest-rated product on this question, rose slightly higher still, to over 98%.

LIKES AND DISLIKES

Accuracy of the software was the “like” most often chosen across the board in sheer numerical terms, and users of CCH ProSystem fx picked accuracy most often as a quality of the software they liked (as a percentage of likes for each major product), at nearly 28% (see the table “Top Likes”). By a slightly higher percentage, they also approved of its number of forms/comprehensiveness, also more than users of any other major product.

For at least the second year in a row, ProSeries led the other major products in likes for the attribute that respondents overall picked the second most often: ease of use.

As usual, ATX and Drake Tax were the only products for which a plurality of users’ likes were for price, at 29% and 33%, respectively, while 14% of ProSeries users’ likes were for its price.

Top “dislikes,” also as usual, were dominated by price, showing Lacerte users as the most often disaffected at 41%, the same as last year (see the table “Top Dislikes”). Users of CCH ProSystem fx and UltraTax CS faulted their price 36% and nearly 37% of the time, respectively. Disfavor for product support was broadly higher for several of the major products, with Lacerte essentially unchanged and ProSeries lower than in 2018. Some of these votes against CCH Axcess Tax and ATX could reflect users’ experience with the company’s malware attack mentioned earlier and its communications with customers.

While ATX and Drake Tax were appreciated for their price, they were more likely than other major products to be faulted for their integration, or lack of it, with other software, at 12% and 18.5% of their users’ dislikes, respectively. ProSeries and Drake Tax also registered relatively more dislikes than others for number of forms/comprehensiveness, at 13% and nearly 11%, respectively. On the other hand, when asked separately if their software contained all needed forms, Drake Tax users were more likely to say “yes,” at nearly 85%, than the average for all major products (82%). ATX led on this “all needed forms” question at 92%. Drake Tax users once again picked “tax research included in package” as a dislike more often than others.

Write-in comments

Only 6.7% of users of major products chose “other” as a dislike. They then could write in one not listed (although more than a dozen did so to, in effect, give two thumbs down for price, by both selecting it and writing it in). As mentioned in the sidebar “Software Kept Up With TCJA, CPAs Say,” some comments took issue with their software’s implementation of the new Sec. 199A qualified business income deduction or other TCJA-related changes in tax law.

A significant number of respondents took the opportunity to complain about the timeliness, frequency, or other inconvenience of software updates during tax season, a consideration that the survey asked users to rate in general terms (see the table “Overall Ratings”) but did not include as a choice in likes and dislikes. Forty-one respondents, more than one-tenth of total write-ins, included the word “update” or “updates” in a comment, with some saying that updates were too frequent, necessitated re-reviewing returns, required rebooting computers, or interrupted work in other ways. Several of these mentioned updates in connection with the TCJA specifically.

TECHNOLOGY, TRAINING, AND SUPPORT

Although cloud computing has become generally accepted as the norm for many professional realms including CPA practices (see, e.g., “What Tax Firms Need to Know Now About Technology,” JofA, June 12, 2019), tax software continues to be deployed by CPA survey respondents overwhelmingly on their own hard drive or network. This year, 82% of users of major products said that was where their tax software resided, with nearly 18% saying it stayed on their vendor’s server. Users of CCH Axcess Tax were the exception, for which 87% said it was on the vendor’s server. The overall responses show a slight change from 2018, when 86% said the software was on their own hard drive or network.

More respondents than in 2018 reported they received training in operating their software. However, that still left 66% of users of all major products saying they received no training. The biggest increase in training was for ATX at 17%, as opposed to 9.5% in 2018. (In both years, however, this was the lowest percentage for major product users.) ATX users also rated the quality of training more highly this year than in 2018, 4.2 out of 5, up from 3.9 on average last year. The highest percentage of training received this year was by users of CCH Axcess Tax at 60%. However, as previously, CCH Axcess Tax users rated that training the lowest in quality of all major products at 3.5 this year. For all the major products combined, training quality was rated an average of 3.9 this year.

Users reported needing technical support more often overall this year than in 2018 (84% versus 81%, respectively; see the table “Technical Support”). Asked how easy it was to get that support, Drake Tax users reported the highest ease, 4.8 out of 5, well above the average for all major products of 3.8. ATX and CCH Axcess Tax were slightly below the other major products in ease of obtaining support at 3.1 and 3.2, respectively — again, perhaps reflecting the outage. Support was obtained most often by phone, at 93%, virtually unchanged from 2018. Email and live chat or instant messaging were used slightly more often this year, with users of the CCH products registering the highest levels of both.

A TESTING YEAR COMPLETED

The last time tax reform was enacted on as massive a scale as the TCJA was in the Tax Reform Act of 1986, P.L. 99-514. Back in that age of paper filing and comparatively rudimentary software tools, tax preparers generally relied less on third parties to adapt their forms and schedules to the new reality. Now that most of the TCJA changes are baked into the modern professional software products that, like it or not, are indispensable to tax practice, CPAs may be able to get through next year’s tax season with fewer perplexities.

Results and methodology

The survey was conducted May 20—June 4, 2019, and received 3,422 responses from CPAs who indicated that they prepared tax year 2018 returns for a fee. The tables accompanying this article show answers for the seven most-used products of the 13 asked about in the survey. For more information about the percentages of respondents using each product and, for the seven major products, basic features and options and links to company websites, click here.

ID theft falls still further

While CPAs still have good reason to be wary of the threat of taxpayer identity theft to their clients and practices, this year’s survey showed a continuing trend of that problem receding. From a high of nearly two-thirds of respondents (59%) reporting having had clients during the 2016 tax preparation season who had been victims of tax ID theft, the reported incidence fell progressively to 21% for the 2019 season, a 5-percentage-point drop from the previous year (see the graph “Identity Theft”). The difficulty of resolving such cases remained little changed from previously, however, at an average of 3.1 out of 5, with a 5 meaning it was “very easy” to resolve.

The IRS has also reported fewer ID thefts in returns it has received in recent years, which it attributes to better filtering, analytics, and security measures. The Service also has sought to plug potential security leaks in the way it handles taxpayer transcript requests. These measures include ending its practice of faxing transcripts and no longer mailing them to third parties (see “Changes Coming to Tax Transcript Availability,” JofA, June 4, 2019).

Software kept up with TCJA, CPAs say

In this year’s Tax Software Survey, we were eager to find out how respondents regarded their products’ performance in a key and potentially problematic area: how well it handled the many new and changed Code provisions introduced for the 2018 tax year by the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. The responses seemed to reflect general satisfaction with the major products’ adaptation to the tax reform law. As the graph “TCJA Changes” shows, the overall rating for all seven of the major products with respect to the TCJA was 4.0 out of 5. Given that this was close to the overall level of satisfaction for all major products in all respects (4.2), it suggests there was less software-induced drama in tax offices than one might expect. In fact, the scores in this respect tracked overall satisfaction for each product fairly closely, except for CCH ProSystem fx, for which the TCJA score was 3.7, half a point lower than its overall rating, and UltraTax CS, lower than its overall score by 0.4 points.

Another notable feature of these scores is that they were generally slightly lower for the products most often associated with midsize to large practices and considered more full-featured and robust (CCH ProSystem fx, as noted above, and 3.5 for CCH Axcess Tax) but highest for Drake Tax, which rated less highly for criteria related to comprehensiveness, such as integration with other software.

The survey, as usual, also invited write-in responses to what users liked best and least, and some TCJA-related comments turned up in responses to the latter question. There were 10 mentions of “new tax law,” “TCJA,” or “tax reform” among least-liked features, plus another eight complaints specifically faulting the software’s handling of some aspect or other of “[Sec.] 199A,” or “QBI,” both referring to the new Sec. 199A qualified business income (QBI) deduction for noncorporate businesses, a key TCJA provision that is expansive in scope but novel in its particulars. Still, that is hardly a tsunami of discontent, and those complaints were registered by users of all of the major products more or less equally.

About the author

Paul Bonner is a JofA senior editor. To comment on this article or to suggest an idea for another article, contact him at Paul.Bonner@aicpa-cima.com or 919-402-4434.