2020 tax software survey: COVID-19 upended tax season; Did CPAs' tax software help them cope?

• Author: Bonner, Paul
• Position: Certified public accountants

Hardly anything about 2020 could be considered normal, and the

annual tax software survey of AICPA member tax preparers by The Tax Adviser and the Journal of Accountancy 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 lx 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 fit'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 fir 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 fir 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 at thetaxadviscr.com/sofrware.

Favorites by firm size Number of preparers 1 2 to 5 6 to 20 21 to 100 101 to 500 ATX 12.6% 6.5% 1.5% 0.6% 2.3% CCH Axcess Tax 1.7% 5.6% 10.0% 28.9% 48.8% CCH ProSystem fx 7.0% 11.0% 23.2% 39.2% 20.9% Drake Tax 27.7% 16.8% 5.2% 0.0% 4.7% Lacerte 14.8% 20.6% 24.0% 7.2% 7.0% ProSeries 21.5% 12.5% 3.1% 0.6% 0.0% UltraTax CS 14.6% 26.9% 33.0% 23.5% 16.3% Number of preparers 501 or more ATX 0.0% CCH Axcess Tax 72.7% CCH ProSystem fx 13.6% Drake Tax 4.5% Lacerte 0.0% ProSeries 2.3% UltraTax CS 6.8% Percentage of respondents saying their firms are in that size category who used each software. Some columns do not add up to 100% due to rounding. The chart shows that Drake Tax is the leading product among sole practitioners, used by nearly 28% of respondents in singlc-prcparcr 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 individual-, 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 ProSystcm 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%...