CD-ROM tax research.

• Author: Black, Robert L.
• Position: Part 1

In the last few years, the possibility of performing cost-effective tax research almost exclusively electronically has become a reality. Computerized online, full-text, keyword-searchable services (e.g., LEXIS, Westlawl have been around for about 20 years. Starting in 1989, tax service providers began to embrace the new medium of CD-ROM (compact disc-read only memory) for delivery of tax editorial services and primary tax authority. By 1994, an average of 86% of small public accounting firms and 97% of large firms used CD-ROMs; moreover, 75% of respondents to a 1994 survey indicated that they used CD-ROMs in performing tax research.(1) In the same year, more CPAs reported using CD-ROM-based research tools than their online counterparts.(2)

One CD-ROM can store about 660 megabytes of information (660 million bytes, or key strokes), representing about 275,000 pages of text. To put this in perspective, one CD-ROM can easily replace more than 100 feet of tax reference shelf space. The advantages of CD-ROM include massive data storage, indestructibility, mixed media formats, inexpensive drives, ease of use, low duplication cost and unlimited usage.(3)

CD-ROMs typically include electronic versions of vendor tax services, full text of the Code and regulations, revenue rulings and procedures from 1954 on, and IRS publications, among others. Further, depending on the vendor, the full text of tax cases, letter rulings and other tax authority may be available. Current CD-ROM tax vendors include (alphabetically): CCH Inc., Kleinrock Publishing, Matthew Bender & Company, Practitioners Publishing Company, Research Institute of America (RIA), Tax Analysts, Tax Management and West Publishing.

Part I of this article focuses on tips, tricks and traps in using CD-ROM databases; it is not acceptable to merely know how to search a database--a researcher must also develop the expertise to avoid pitfalls and establish techniques to ensure that the right answer is obtained in the least amount of time. Part II, in a future issue of The Tax Adviser, will address analysis of search results and search modification techniques.

CD-ROM vs. Hard Copy Tax Research

CD-ROM is not a substitute for printed materials, although it clearly may replace some (and eventually, almost all) hard copy.(4) When used without the corresponding hard copy counterpart, CD-ROM materials represent a significant savings in library costs (in terms of space saved and lack of need to file paper updates); the major vendors usually provide new discs each month.

The most common approach to CD-ROM research is to start with a client issue(s) and usually proceed to extract certain "keywords." For this purpose, keywords are words typically used in a tax service index or in other tax materials to access relevant materials for answering questions. This hard copy method, however, has at least three critical limitations. The results of an index search depend on (1) the finite number of words that the publisher has chosen to index; (2) the extent to which all occurrences of a word are indexed in the text; and (3) the ability to indicate word combinations and their proximity to each other in constructing the index. In electronic research, the use of Booleanlogic(5) proximity connectors provides a powerful tool for connecting indexed words to create a search request.

Tax research with CD-ROMs uses "hypertext" links. Hypertext is a tool by which certain words, phrases, titles or citations referenced in one piece of text may be linked to their full-text counterpart in another part of a text, which could be located in an entirely different volume. By linking these references, they can be accessed immediately to transfer the user to the full text of the referenced item.

For instance, most CD-ROM searches for a Code section yield not just that section, but easily accessible cross-reference links to, for example, the related regulations, definitions of certain words in a tax glossary, the corresponding portions of a multivolume tax service in which the section is discussed, or other Code sections cited within the searched section. After using a hypertext link to get to a second level, a user can return to the original document or explore new hypertext links in the second-level document to get to third- and fourth-level (or higher) hypertext-linked documents. Most CD-ROM tax products permit a user to backtrack through these levels and may even provide the means for any of them to be reviewed again at a later time.

Mechanics of Computerized Searching

Computerized database searches operate by taking the user's keyword(s) and searching the selected database index for occurrences of the word in the specific documents (or document segments) previously selected. This is similar to the index one might find in a tax service or treatise, except that almost every single word (i.e., potential keyword) is indexed (sometimes, "noise" words such as "and," "the," "are," etc. are not indexed).

Once the location of each keyword is identified, the search software begins to limit the relevant "hits" in a database search to those instances in which each set of keywords meets the proximity conditions (the restrictions of the keyword connector(s), explained below) included in the search request.(6)

Planning a Search Strategy

When a research problem arises, the first task is to define the problem to determine the focus of the research. When formulating a research problem, the researcher should identify it as a compliance problem or a planning problem. Compliance problems are usually easier to research because they generally occur after the fact (i.e., the facts have already been determined and...