2016 tax software survey.

• Author: Bonner, Paul

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PREVIEW

* Find out how CPAs rated the tax preparation software they used in 2016 and how it handled common tasks.

* Learn which products respondents considered best for a new tax practice.

* Learn which features CPAs liked best and least and why some switched from one product to another.

Get a group of CPA tax preparers together, especially while their memories of tax season are fresh, and their talk soon will turn to their tax preparation software and how it might have made the ordeal easier. So The Tax Adviser and the Journal of Accountancy are thankful to the thousands of AICPA member tax preparers each year who similarly but on a large scale "talk shop" through this survey. This year, to be exact, 3,851 of them returned a response indicating they prepared 2015 tax returns for a fee.

Products Covered and Profile of Respondents

Eight of the 15 software products the survey named had significant numbers of users, in proportions that have shown only temporary fluctuations in recent years: UltraTax CS, a Thomson Reuters product (23% of respondents); CCH's ProSystem fit (21%); Lacerte, by Intuit (17%); ProSeries, also by Intuit (12%); Drake Software's Drake Tax Software (11%); CCH Small Firm Services offering ATX (5%); CCH Axcess Tax (2.5%); and GoSystem Tax RS, another Thomson Reuters product (2%). Thus, four companies continue to effectively dominate the CPA tax software market, as reflected by the survey. Other products of the 15 were each used by less than 2% of respondents and are not included in the exhibits accompanying this article. Use of Lacerte was down slightly from 20% in 2015. Shares of the rest were within a couple of percentage points from the 2015 survey, with UltraTax CS and CCH Axcess Tax slightly higher than last year and ATX, Drake, and ProSeries slightly lower.

Choice of tax software tends to correlate with the size of the respondent's firm, and the respondents skewed slightly toward midsize firms from sole practitioners this year, which might account in part for an increase in share of products that are more likely to be used by midsize and larger firms. This year, sole practitioners were 30% of respondents, compared with 36% last year. Thirty-six percent were in firms of between two and five preparers (same as last year), and 22% in firms of six to 20 (up from 19% in 2015). As previously, 7% worked in firms of between 21 and 100 preparers, and less than 4% in still larger firms. Seventy-six percent of CPAs surveyed prepared more returns for individuals than for businesses, although nearly all respondents prepared some business returns. For 89% of them, business returns represented up to half of their volume. Users of ATX, Drake, and ProSeries were most likely to have a lower ratio of business to individual returns.

General Performance Ratings

Levels of general satisfaction with tax return preparation software were virtually unchanged from last year. UltraTax CS and Drake continued for at least the third consecutive year to receive the highest overall rating of 4.5 out of 5 (see Exhibit 1 on p. 571). As previously, Drake users gave it the highest ratings of any product for ease of installation and updates, and updates during tax season (both 4.8). Drake, Lacerte, ATX, and UltraTax CS all received favorable ratings for ease of use. Also, as previously, the overall rating for GoSystem Tax RS was the lowest (3.6) among the eight major products, with CCH Axcess Tax (3.7) next lowest. It may be worth noting in that regard, and with correlation again to firm size, that GoSystem Tax RS also had by far the highest percentage of respondents who had no input into the decision to use it (53%), with CCH Axcess Tax the next highest at 29%. ATX, Drake, and ProSeries were most likely to have been chosen by the respondent, at 95%, 91%, and 89%, respectively. For all eight major products combined, 64% said they solely chose the software, with another 24% having input into the decision.

Electronic fifing generally was considered easy for all products, although GoSystem Tax RS registered a below-average 3.7. All eight products got lower ratings for importing data and integration with accounting and other software, with average ratings of 3.6 and 3.5, respectively. UltraTax CS appeared to have an edge in this regard, scoring 3.9 on both questions.

Asked if their software provided all needed forms, 16% of all respondents answering the question said it did not. The...