Isaac M O Bannon

For many firms, annual tax compliance services represent the largest single revenue stream, often amounting to more than half of their annual gross. Individual return preparation, primarily involving clients who visit the office one time per year, make up the bulk of these receipts.

With such an important part of their practice’s income at stake, many professionals have been concerned with the perceived “commoditization” of preparation services. That is, with the continued encroachment of online do-it-yourself filing programs now even extending into business returns, to many the profitability of tax services looks threatened.

If preparation services existed in a vacuum, if a professional preparer offered only the same service as one of these programs, and if return preparation processes stayed static, then that might be a just concern. But tax professionals offer much more, in terms of both service options and the quality of those services, and improved workflow processes continue to make practices more productive.

Of course, the value of professional preparation starts with training and expertise, in addition to access to resources that can help clarify complex situations. This year’s Congressional SNAFU with the AMT reminded many consumers of how little they know when it comes to their taxes. But the value of the professional runs much deeper, and professional tax compliance systems have evolved greatly over the last few years.

Program developers once strived to provide accurate calculations and forms libraries, and they achieved this — all tax systems are reliable in this aspect. The vendors then turned their sights on maximizing the productivity and efficiency of the professionals who use their programs. Each practice is different, so to meet this challenge, the vendors have taken different approaches to meet the unique needs of the types of professionals who use their programs. This has resulted in new and enhanced features that not only improve and streamline workflow processes for the professional practice, but also offer client service and communication improvements.

For clients, one of the more visible of these added-value features also serves as a continuation of a practice’s paperless office strategy: Online client portals and data organizers. Giving clients online on-demand access to electronic versions of prior-year returns and other documents is a convenience factor and reduces the filing and storage requirements in the firm.

Integrated tax planning capabilities has also enhanced client service. Having the ability to explain why a client’s return turned out a certain way is a cornerstone of the tax engagement, but being able to proactively help them reduce their exposure and liability is a tangible benefit the client can readily see. For one-visit clients, this benefit can easily lead to an additional engagement in the middle of the year to revisit their taxation issues and develop strategies to help them. Some programs even offer client-ready reporting functions with graphical elements to help explain current and projected scenarios.

http://www.cpatechnologyadvisor.com/print/The-CPA-Technology-Advisor/2008

Business Financial Services

Isaac M O Bannon