CPA Practice Advisor

NOV 2015

Today's Technology for Tomorrow's Firm.

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16 November 2015 • www.CPAPracticeAdvisor.com TAX DOCUMENT AUTOMATION SYSTEMS Reviews Streamlining Tax Preparation by Isaac M. O'Bannon, Managing Editor I n today's modern tax practice, eliminating data entry continues to be the holy grail. Manual data entry is, to be blunt, time consuming and error prone, and this limits how many tax clients a frm can manage each year. Simply put: Time + errors = less revenue. Many frms, however, have found a way to literally do more with less. When preparing client tax returns for any type of entity, accurate data is obviously a necessity, but finding ways to streamline it, and even improve accuracy, is the goal of tax document automation systems. While there are several such programs on the market, some of which work only with one tax sofware and some that work with several brands, they all are designed to increase the efciency of the tax return production process. Converting Raw Data to Digital Tax document automation systems actually perform several functions, starting with the initial scanning of a client's tax documents into the frm's computer or, in some cases, through a secure cloud portal. When this is done, the sofware uses optical character recognition (OCR) to look at the digital version of the document and determine what it is, typically a tax source document such as a W-2, 1098 or 1099, but some systems can also identify K-1s, brokerage statements and other documents. Digital Workpapers & Tax Form Population Afer identifying what the form is, the sofware then grabs information from each feld (such as Form W-2 line 1) and either automatically populates the information into a cli- ent's tax return (with review processes built in to ensure data is correct), or creates digital PDF workpapers. Tese digitized tax binders include bookmarks, contents pages and inter-related documents ofen linked for easier naviga- tion when the professional goes through the documents. Te digital binder is compiled in typical tax engagement order, with types of documents grouped together. Some of the systems even help keep track of which documents are still missing, providing the preparer or the client with automated reminders to get those documents to the tax preparer. Te systems that ofer automatic population of tax returns include the review features because there is still occasional error in the scan, usually when client documents are in poor shape (crumpled, folded or faded). But the OCR technology the systems use is now quite accurate and has been in use for more than a decade. Te tax sofware also ofers drill-down access from a tax return feld down to the scanned original document Whether a frm has a solo-practitioner or a larger staff of professionals and admins, tax document automation systems are now well-proven to reduce the time associated with entering client data, particularly for clients with multiple documents. Tat increased efciency, in addition to decreased rates of manual data errors, allows frms to take on more tax clients with the same number of preparers, resulting in greater revenues and proft for the frm. Te reviews in this section look at the core func- tionality of each tax document automation system, which documents their scanning systems can identify and pull data from, determine which tax preparation software the programs work with for integration purposes, and which types of frms would typically see the greatest beneft from using the product. Firms considering such a program should use a demonstra- tion of a product before commiting to the new tech- nology. ● Isaac M. O'Bannon, Managing Editor Isaac M. O'Bannon is the manag- ing editor and digital content manager for CPA Practice Advisor (www.CPA PracticeAdvisor.com), drawing on nearly two decades of experience covering the areas of professional accounting , taxation, business productivity and consumer technologies. CORE PRODUCT FUNCTIONS/FEATURES PAPERLESS WORKFLOW INTEGRATION HELP/SUPPORT/ TRAINING OVERALL RATING CCH ProSystem fx Scan & AutoFlow GruntWorx Intuit Lacete and ProSeries Scan and Import SurePrep 1040SCAN Pro Thomson Reuters UltraTax CS Source Document Processing

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