2014 tax software survey.

• Author: Bonner, Paul

For the second year in a row, the beginning of income tax filing season was delayed. This year, the delay was due to a 16-day partial government shutdown in October 2013 that resulted in a Jan. 31 start date for the IRS to accept electronically filed returns. Other complicating factors included the advent of the net investment income tax, the new 39.6% top tax rate bracket, and the return of the itemized deduction limitation and personal exemption phaseout.

Software vendors nonetheless managed to roll out their updated versions on time, and users were generally satisfied with the results obtained with the products.

Profile of Respondents

Most respondents to our annual survey of tax practitioners were in small to midsize firms, with 21% of users working as sole practitioners, 41% in firms of two to five preparers, 27% in firms of six to 20 preparers, 7% in firms of 21 to 100 preparers, and 4% in firms larger than that. A majority of respondents prepared between 51% and 75% of returns for individuals and 26% to 50% of returns for businesses. Fifty-seven percent of respondents had sole or primary authority for deciding which software to use, and another 28% had some input into the decision.

Major Findings

Of the 3,833 CPA respondents who indicated that they prepared tax year 2013 returns for a fee, 3,817 predominantly used one of 15 software products identified by the survey; of those, users of each of eight products identified in Exhibit 1 ("major products") made up at least 1% of the responses. This year they include CCH Axcess Tax (1.4%), which was not represented in the 2013 survey. The three products with the greatest number of users were in nearly a dead heat: Lacerte, ProSystem fx, and UltraTax CS, which accounted for 24%, 22%, and 24% of respondents, respectively. ProSeries was used by 11% of respondents an Drake by 9%, both higher than in 2013. Notably, the share of ATX users dropped markedly from 11% in 2013 to 4% this year, likely the result of serious performance problems with a new version last year. However, 2014 users of ATX reported a satisfaction average rating of 4 on a 5-point scale, which, while slightly below that of most other products, represented a significant rebound from the 2.1 rating in 2013. Users of GoSystem Tax RS accounted for only 2.8% of respondents, down slightly from 3.5% in 2013. Other products asked about but whose users accounted for less than 2% of all responses combined were Intuit Tax Online, TaxAct, TaxSlayer Pro, TaxWise, and TurboTax.

Exhibit 1: Overall ratings All ATX CCH Drake GoSystem products Axcess Tsx RS Tax Overall rating 4.3 4.0 3.4 4.5 3.4 How easy was the 4.4 4.4 3.8 4.8 4.2 update/installation process? How easy was the 4.2 4.2 3.4 4.4 3.2 software to use? How well did it 4.3 4.4 4.0 4.8 3.5 handle updates to forms? How well did it 4.3 4.1 3.7 4.4 3.5 handle transfers of data within returns? How easy was paperless electronic filing (including, for example, sending 4.4 4.4 4.2 4.7 3.5 PDF attachments)? How well did it 4.1 4.1 3.6 4.2 3.4 handle multistate business returns? How well did it integrate with your accounting and other software? 3.6 3.1 3.7 3.3 3.3 Rate your software's 3.9 3.7 3.2 4.1 3.1 conversion package.* How easy was it to 3.6 3.2 3.7 3.5 3.3 import data? Would you recommend it to someone starting a tax practice?** 66.4% 74.0% 35.2% 92.2% 36.7% Lacetre ProSerte ProSystem UitraTax fx CS Overall rating 4.4 4.1 4.3 4.5 How easy was the 4.5 4.6 4.1 4.5 update/installation process? How easy was the 4.4 4.3 3.9 4.2 software to use? How well did it 4.3 4.3 4.1 4.5 handle updates to forms? How well did it 4.3 4.3 4.0 4.5 handle transfers of data within returns? How easy was 4.4 4.4 4.3 4.5 paperless electronic filing (including, for example, sending PDF attachments)? How...