For the September issues of The Tax Adviser and the Journal of Accountancy, more than 2,100 tax professionals shared opinions on tax preparation software. Editors Alistair Nevius and Paul Bonner discuss details of the annual tax software survey — what CPAs liked and disliked, and the difficulties of the most recent tax season for preparers and the software companies.

What you'll learn from this episode:

• An overview of the annual survey.
• How tax professionals feel about the price of tax software.
• Why this most recent tax season was "terrible."
• A summary of respondents' thoughts on how tax software companies responded to retroactive tax changes.
• More on IRS per diem rates for business travel.

Play the episode below or read the edited transcript:

To comment on this podcast episode or to suggest an idea for another episode, contact Neil Amato, a JofA senior editor, at Neil.Amato@aicpa-cima.com.

Transcript:

Neil Amato: Welcome back to the Journal of Accountancy podcast. I'm senior editor Neil Amato.

The Tax Adviser and the Journal of Accountancy have published annual surveys since the mid-1990s about what practitioners like and dislike about their tax preparation software. That survey is the focus of this episode, and you'll hear more on it after this word from our sponsor.

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Amato: This year, more than 2,100 tax professionals evaluated the software they used to prepare 2020 tax returns. The survey's findings are covered in depth in both The Tax Adviser and the JofA and that coverage will be linked in the show notes for this episode. Also, we have editors Alistair Nevius and Paul Bonner on the podcast to discuss the findings. First, for Alistair, can you just give us an overview of the survey?

Alistair Nevius: Sure, Neil. The survey goes out every year to members of the AICPA who are tax professionals. We ask them, if they have prepared tax returns for compensation, to evaluate the software that they used to prepare returns that year.

As you mentioned, we got 2,100 responses this year, which is a nice cross-section of the tax practitioner community. We asked them about 13 different tax software packages, from the big and popular to some of the smaller ones. We asked questions about how they liked the different aspects of the software so that we can capture a good overall picture of each software package. We ask about a wide variety of features so that when readers are looking at the survey results, we hope they get a clear overall picture of how users liked each software package.

Amato: For Paul, the respondents, as Alistair mentioned, were asked about likes and dislikes. Getting into more specifics on that, what are some of the highlights of those responses?

Paul Bonner: Well, Neil, every year we can count on our respondents to dislike the price of their software. That comes through loud and clear. I'm not sure why — they seem to cost a lot, most of them. There are a few, say, three of them for which that's not as big a concern, but for the seven, what I call the the major products, the ones who account for most of our responses, that's something they dislike.

Things they like about their software often are its accuracy, its ease of use, how comprehensive it is, and the number of tax forms it contains. Those are all things we ask about, too, and often tax software is liked for those reasons.

Amato: Next, we're going to go into the write-in comment section of this episode. We have a few of the write-in comments, and I'd like you to respond to those comments, I believe Alistair first. Here's the comment: "Updates took awhile, states took longer, terrible busy season. We file in most states. I'm not sure how any software could keep up this year."

Nevius: Well, I feel for that respondent. This was a terrible tax season for a number of reasons, a big one being that legislation was passed – in March, during tax season – that affected this year's tax season. As a practitioner, you never want to see that.

You don't want to see the rules changing in the middle of the game, and software companies had to scramble to make changes and push out updates during tax season. Tax season is a busy and stressful enough time as it is, and so we had asked specifically how did each software package handle these retroactive changes.

Some did better than others, but there were a lot of moving parts and there were a lot of issues that the software companies had to deal with on the fly. It was a busy season and eventually they pushed the deadline out a month just to help accommodate all the changes.

Amato: Now, Paul, the comment for you, and it's much shorter, is "Error messages about the recovery rebate credit."

Bonner: Well, as some of our tax practitioner listeners may recall, the recovery rebate credit is what you claim on return for 2020 if you did not receive it in advance and as an economic impact payment. The reconciliation of those two items was tricky because a taxpayer had to know what the taxpayer had received in the way of an economic impact payment and tell the practitioner. There wasn't really any software you could rely on for that purpose.

And, evidently this was a problem with some of the software products to get it to reconcile properly, depending on whatever screen they had to enter the economic impact payments with. That would determine what the credit was at the end of the return. I can see how it would be problematic.

But there were many such problems. We asked about these retroactive changes. For example, one of the comments, when we asked which of these retroactive things were handled well or poorly, I assume this one meant poorly, he or she just said, "Name one." This was a very stressful thing for all preparers, I suspect, because we got lots of write-in answers of all aspects of these retroactive changes.

Amato: In closing for both of you, what are your other takeaways besides it costs too much or it was a rough tax year? What are your takeaways from this year's survey?

Nevius: Well, I think one takeaway is, despite the issue of price for most of them and despite these problems, practitioners really do like their tax software, and they do think it performs well. That's been a steady thing over the last 20 years as we've been doing this survey — now all practitioners depend on software; that was not true when we started doing the survey — but this is a crucial tool in their practice and, overall, it really works well, and they appreciate how well it works. The survey gives you an opportunity to compare what you use with what other people use and maybe there's something out there that other people like better.

Bonner: I would just second that by saying, by the way, the rating out of possible five for handling retroactive changes was a four. We got write-in comments as well that said, "My software did a pretty good job." I like this one, who wrote, if I can add one more comment, "Congress is to blame, not any of the software companies." I feel like the practitioners who we surveyed appreciate the attempts of the companies to deal with a very difficult situation as they themselves did.

Beyond that, one thing that stood out for me in this survey is that we dropped entirely the question on identity theft, because it's just not being reported as a problem the way it was when nearly half of our respondents said they had clients with that problem.

It's down into the low double digits now, and we just felt like we don't need to ask about that anymore. That's one thing that's missing from this year's survey. But I think it's fascinating to see how these practitioners view this very difficult situation of retroactive tax changes.

Amato: Thank you to Alistair Nevius and Paul Bonner for their time and insight. Again, the full results of the annual tax software survey are in print and online in both The Tax Adviser and the Journal of Accountancy, and we'll link to that survey coverage in this episode's show notes.

Another article by Paul Bonner worth highlighting: Just as the Labor Day weekend began, on Friday, Sept. 3, the IRS issued its annual update of per-diem rates for business travel. You can find out more about those per-diem rates, which are in effect from Oct. 1, 2021, to Sept 30, 2022, in the show notes for this episode or by visiting journalofaccountancy.com.

In next week's episode, we'll have an update on several issues related to CPA ethics.

We'd love to hear from you about this show, so please take a moment to subscribe, rate, and review the Journal of Accountancy podcast. Thank you for listening.