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 Jof A 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), PL. 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").
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").
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," Jof A, Sept. 2018, tinyurl.com/y21md78x.
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 fie (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, follow a link in this article online at journalofaccountancy.com/software.
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...