By Paul Bonner
September 1, 2020
Hardly anything about 2020 could be considered normal, and the annual tax software survey of AICPA member tax preparers by the JofA and The Tax Adviser is no exception. For perhaps the first time ever, the survey had to couch its questions about tax season in the present tense, for the simple reason that, with the IRS's postponement until July 15 of the April 15 return due date, tax season was not yet over, as it usually is when the survey is deployed. The COVID-19 pandemic and federal disaster declaration that resulted in that postponement and many other legislative and administrative relief measures affected CPA tax preparers' tax season as well (see the sidebar, "Amid a 'Brutal' Tax Season").
The survey also for a fifth year asked about respondents' experience with clients whose tax-related identities were stolen, indicating that this issue, once in the forefront among those disrupting tax season, has continued to recede.
PRODUCTS COVERED AND PROFILE OF RESPONDENTS
The survey invited respondents to select their software from among 13 products and write in others not mentioned; of these, the same seven products as in past years accounted for most of the responses, led by:
- UltraTax CS with 20.7% of respondents;
- Lacerte with 16%;
- Drake Tax with 15.1%;
- CCH ProSystem fx with 12.4%;
- ProSeries with 11.4%;
- CCH Axcess Tax with 7.3%;
- ATX with 6.4%.
The remaining 10.7% was divided among Intuit ProConnect Tax Online, TurboTax, GoSystem Tax RS, TaxAct, TaxWise, TaxSlayer Pro, and others. CCH ProSystem fx's representation was three percentage points below that in the 2019 survey, and Lacerte slipped by 1.4 points. ATX and Drake Tax both gained 1.2 points from 2019. However, the ranking order by usage of all seven "major" products was unchanged.
Some products are favored by smaller firms, others by larger ones, and the sample's overall profile of respondents by firm size can affect relative representation of each product. The 2020 survey sample featured a higher percentage of single-member practices (37.2%) than in 2019 (32.7%), which could account for the greater number of users of ATX and Drake Tax, both associated with smaller firms. Correspondingly, 2020 responses from members in medium to large firms, generally the province of CCH ProSystem fx users, were slightly fewer: 9.4% in firms of 21 or more, compared with 11.4% in 2019.
Lacerte and ProSeries are Intuit Inc. products, while ATX, CCH Axcess Tax, and CCH ProSystem fx are Wolters Kluwer products. UltraTax CS is a Thomson Reuters product. For more information on correlation of product with number of preparers in a firm, see the table "Favorites by Firm Size." More information on all 13 products is available here.
The chart shows that Drake Tax is the leading product among sole practitioners, used by nearly 28% of respondents in single-preparer firms. Nearly the same percentage of respondents in firms of the next tier, two to five preparers, used UltraTax CS, and among those in the next tier, six to 20 preparers, UltraTax CS was used by one-third of respondents. But by far the highest representation of any product in any of the firm-size cohorts was the nearly 73% of respondents in the largest firms, those numbering more than 500 preparers, who used CCH Axcess Tax, which correspondingly predominated in the largest firms as measured by number of clients: 62% of respondents with over 5,000 clients used it.
Overall, respondents for whom a majority of the returns they prepared were for individuals rather than businesses were nearly 76% of users of the major products, and those for whom business returns were less than half were nearly 90%, ratios that remain relatively consistent over the years. Respondents for whom a majority of returns were for businesses were most likely to have used CCH Axcess Tax (23.4%) or CCH ProSystem fx (17.5%).
Being personally responsible for choosing the software can affect how an individual perceives and rates it and also correlates to firm size. Some confirmation or sunk-cost bias is probably latent in the survey results, since respondents often report using a particular software mostly because they have done so for a long time and are used to it. Nearly 95% of ATX users made the decision to use it, followed by ProSeries (91.3%) and Drake Tax (89%). Only 30% of CCH Axcess Tax users made the choice, although another 30.5% had input into the decision. Overall, only 10.6% of all respondents reported a lack of any involvement in deciding on their software. But among respondents in firms of 501 or more preparers, that percentage rose to 85%.
The overall rating users gave their software (on a scale of 1 to 5, with 5 being the highest) averaged 4.4 for all seven major products (see the table "Overall Ratings"). Drake Tax users gave it an average rating of 4.6; the lowest was 4.0 for CCH Axcess Tax, which also rated significantly lower than others on ease of use (3.6, against an average 4.3 for all seven products). CCH Axcess Tax did edge above the average for ease of importing data, however (3.6; average 3.5). UltraTax CS also ranked above average for data importation (3.7), and ATX and Drake Tax below it (3.0 and 3.3, respectively).
The table also provides assessments of ease of updating and installing the software, how well the software handled updates during tax season, transferring data within returns, e-filing, multistate business returns, and integrating with accounting and other software. UltraTax CS stood out in responses to the question of how well the product integrated with other software with 3.7, while ATX lagged with 2.8, against all products' average 3.4. While, as noted above, users of CCH Axcess Tax on average prepared more business returns than others, they were not particularly enamored of its capabilities for preparing multistate business returns, ranking it a 4.0, below the other six major products.
Asked if they would recommend their software to someone starting a tax practice, Drake Tax users were the most sanguine, with 98% saying "yes." Only 63% of CCH Axcess Tax users, on the other hand, endorsed that product for startup firms.
LIKES AND DISLIKES
As in past surveys, this year's survey asked respondents to pick their top three likes and dislikes about their software from among 11 choices, plus "other," with a chance to write in something else. However, this article begins a change in how the results are reported. Previously, we gave the answers for each attribute as a percentage of the total number of responses for that product; this year, we are showing each attribute choice as a percentage of the number of users of that product. With a smaller denominator, these percentages are generally higher than in previous years and can add up to more than 100% for each product. We did this to make it easier and more natural to discuss the results as a percentage of users than as a percentage of those users' total choices. That said, the relative rankings and trends remain consistent with those of previous years, most prominently showing strong attitudes toward the products' prices.
Nearly 89% of Drake Tax users picked price as one of the three things they liked best about it; the next highest was ATX at 61.5% of users (the average for all seven was 27.3%; see the table "Top Likes"). Drake Tax users also were the most likely to approve of its support (74%, compared with an average of 32%). However, relatively few Drake Tax users liked its number of forms and comprehensiveness (21.6%), as was the case with ProSeries users (38.4%). CCH Axcess Tax users were the most likely to see number of forms and comprehensiveness as a primary merit (78.4%), followed closely by CCH ProSystem fx (74%).
Asked separately whether their software contained all the forms they needed, however, Drake Tax users said "yes" 89.3% of the time. Leading in answers to this question were UltraTax CS (92.9%) and ATX (90.7%). Users of CCH Axcess Tax and CCH ProSystem fx answered "yes" to having all needed forms at 86.6% and 89.4%, respectively.
Two other favored traits besides forms/comprehensiveness were the most likely to be chosen for all products on average: accuracy and ease of use. CCH ProSystem fx predominated for accuracy (72%), followed by CCH Axcess Tax (nearly 66%) and UltraTax CS (61.4%). Only 22.4% of Drake Tax users picked accuracy as a top like. For ease of use, ProSeries users were the most likely to pick this as a like (73.4%), followed by Lacerte (70.1%) and ATX (62.4%). Consistent with the numerical rating for ease of use discussed above, CCH Axcess Tax users generally found other things to like than ease of use, with only 25.1% picking that attribute.
Price headed the top dislikes for more than a majority of users of all seven products combined, as mentioned above, with 78% of Lacerte users disfavoring that product's price tag (see the table "Top Dislikes"). Close behind was CCH ProSystem fx at one-tenth of a point lower. Over three-quarters, 76%, of UltraTax CS users disliked its price, as did nearly 60% of CCH Axcess Tax users.
Only 1.4% of Drake Tax users disliked its price, but 45.2% of them registered disapproval for "tax research included in package" (against an average of 24%), and nearly 37% found its integration with other software wanting. While only a small portion of users of ProSeries picked number of forms/comprehensiveness as a top dislike (21.1%), when asked directly in another question if that software contained all the forms they needed, they were the least likely of users of all the seven products to say "yes" (68.2%).
While write-in "other" dislikes ran the gamut of reasons, nearly one-tenth of the 330 entries mentioned updates: their frequency, their slowness, their timeliness, updating for state returns, and a lack of information about their reason or what they covered. These complaints were not concentrated on any single product. General performance issues were also frequent complaints.
TECHNOLOGY, TRAINING, AND SUPPORT
Some respondents commented favorably in "other" likes about cloud deployment of their tax software, but those using it still are a small minority. This year, when asked where their software resides, 82.1% of major product users said it was on their own hard drive or network — for five of the seven products, the percentage was over 90% — and only 17.9% said it lived on the vendor's server. This ratio was nearly exactly the same last year, with only slightly more cloud computing users than in 2018. CCH Axcess Tax, which Wolters Kluwer characterizes as cloud-based, was the only product for which most users reported accessing it on the vendor's server (84.1%).
A majority of users of the seven products said they received no formal training in the software from the provider (62.9%). Users of CCH Axcess Tax were the most likely to have received training (57.3%), followed by Drake Tax (44.2%) and UltraTax CS (42.7%). CCH Axcess Tax users, however, did not rate that training particularly highly (3.7 out of 5, with an average rating for all seven products of 4.1). The only major products to rate higher than that average were Drake Tax and ProSeries, at 4.5 and 4.2, respectively.
As noted above, Drake Tax users were prone to pick support as a top like; they were also the most prone to say they needed technical support during tax season (86.6%), and, consistent with the "Top Likes" table, they rated the tech support highest in quality and ease of obtaining it, 4.6 and 4.8, respectively, compared with an average rating of 4.0 and 3.9 for all seven products (see the table "Technical Support"). ProSeries and ATX users reported needing support less often than most (62.8% and 67.8%, respectively).
CPAs continued to receive their technical support predominantly by telephone (nearly 92%), followed by live chat or messaging (31.8%) and email (26.7%). Notably, live chat/messaging edged out email for the first time this year. In 2019, email was used by 28.3% and live chat/messaging by 27.1% of major product users.
For a fifth year, the tax software survey also asked about CPAs' experience during the current tax season of having clients victimized by tax identity theft, and for a fourth year, the reported incidence declined. From a high of 59.3% in 2016, the percentage of respondents saying any clients were victims declined to 17.4% in 2020, down from 20.7% in 2019 (see the graph, "Identity Theft"). Most who did report ID theft said few clients were affected; for nearly 97%, less than 5% of their clients were affected. Correcting the resultant problems remained relatively onerous, however, with a rating of 3.0 out of 5 (with 1 being the most difficult and 5 the easiest), about the same as previously.
The COVID-19 pandemic has led to many unforeseen circumstances and unintended side effects, notably, the delay of return due dates until July 15, coupled with taxpayer relief measures that increased the number and types of calculations CPAs were called upon to implement. Despite those uncertainties, CPAs' perceptions about their tax software programs appear to have changed little from the more settled recent past — fortunately for anyone seeking fixed expectations amid a sea of change.
Results and methodology
This year's survey was conducted June 1—12 and received 3,210 responses from CPAs who indicated that they prepared tax year 2019 returns for a fee. The survey asked about 13 software products by name; respondents could also provide information about other products. Most of the discussion and data in the tables accompanying this article concern the seven most commonly used software products, for which 2,866 users gave answers. For more information about the responses and company information on basic features and options for the seven major products, click here.
Amid a 'brutal' tax season
CPA tax preparers were also polled separately during tax season for their views on the July 15 delayed filing and payment date and whether they thought it should be postponed further. This poll was carried out by the AICPA Tax Executive Committee (TEC) in May, surveying members of the AICPA Tax Section. The questions were: "Based on the current COVID-19 environment and the impact on your tax practice, do you anticipate being able to file returns or extensions for your clients by the July 15 deadline?" and "Do you believe the IRS should automatically extend the July 15 filing and payment deadline?" Edward Karl, CPA, CGMA, the AICPA vice president—Taxation, and Chris Hesse, CPA, the TEC's chair and a tax principal of CliftonLarsonAllen LLP's National Tax Office, related the results in a blog post and a JofA podcast. The upshot was that a majority of members said they could meet the July 15 deadline, but a plurality said they preferred a further postponement to Oct. 15, with others favoring other dates. The IRS soon after made the issue moot by announcing the July 15 date would stand.
Few respondents mentioned tax software in either case, but many of the nearly 1,000 written reasons they submitted for their answers revealed the stresses they and their clients faced. Many who favored no further postponement sent comments along the lines of this one: "Let's get this brutal tax season over sooner than later!!!" Scores of comments said further delay would only invite more procrastination on the part of clients.
Some CPAs reflected, though, on the toll the tax season was taking on themselves and their staffs. They lamented the productivity hurdles and extra work of learning and advising on the details of new tax provisions and Paycheck Protection Program loans, loan forgiveness, and tax effects. Plus, in their personal lives, disease prevention and family care while staying at home required more of their time and attention.
And many worried about their clients who were beset by financial dislocations. One compared the situation to medical triage. "I am already anticipating who will need help with offers in compromise or CNC [currently not collectible] status. I have had to make judgment calls based on who needs my time the most."
Partly because of the client financial concerns expressed in the survey, the AICPA is advocating for tax administrative and penalty relief with the IRS (see the TEC's comment letter).