Monday, June 3, 2013


Regular readers of THE WANDERING TAX PRO know that in my 40+ years of preparing individual income tax returns I have never used flawed and expensive tax preparation software to prepare a 1040 or 1040A - and I never will!  I prepare between well over 300 federal income tax returns manually each year.

When asked what software I use I simply point to my brain.

The closest I ever came during the first decade of my career (late 70s), when I was employed as a “para-professional” by the Small Business Department of Deloitte Haskins + Sells, one of the then “big eight” accounting firms.  I would complete a manual “input sheet” for a client’s 1040 that was given to a clerk to enter into Computax.  I remember feeling back then that by the time I completed the input sheet I could have actually prepared the manual return.

I do submit many NJ state returns online directly to the NJ Division of Taxation via the Division’s NJWebFile website to be able to take advantage of the direct deposit option (not available on manual NJ state returns).  Unfortunately there are too many restrictions to this system.  But this does not require purchase of a separate software package.  It is free.

While reading the current issue of the newsletter of the PA chapter of the National Association of Tax Professionals, in which my reminiscence “My First 1040” also appears, I came across an item titled “2012 – My Tax Year from Hell” by the newsletter’s editor Samuel A Wingard, RTRP.

Here is one of the things that made this past tax filing season so hellish for Samuel –

One thing I had not anticipated this year however was tax software that would prove to be as dysfunctional as our Congress. My company chose this year, with all its uncertainties and last minute changes, to rewrite their program to operate with the IRS MeF system. I was totally astounded that such a large and heretofore reliable company could so badly bungle the job. Bugs constantly appeared in the program followed by updates purported to fix the bugs but frequently only adding new bugs. Even now there are still outstanding issues with the program. Needless to say I am shopping for new software.

In talking with other preparers since the end of tax season, I have learned that mine was not the only company that had major problems providing reliable software. In fact, one company was unable to release a program at all leaving their users to scramble at the last minute to obtain and learn a new program, a truly daunting task. Other preparers have related hardware crashes and the misery of updating to a new operating system. I had to switch from Windows XP to 7 the year before this and recall all too well my frustration with learning the new system.”  

Samuel is not the only tax pro who has complained about problems with their tax preparation software this past filing season.  Several fellow taxpro bloggers have also discussed their frustrations in posts.

This past tax filing season was no different than any other for me - except for the fact that I now work out of a home office in PA instead of a home office in NJ.  My tax season always starts on February 1st – because of the January 31st deadline for W-2s and most other information returns – and this year it started on schedule on February 1, 2013.  I experienced no excessive delays in preparing returns and getting them back to my clients for filing – other than having to wait for K-1s or corrected Consolidated 1099 Statements from brokerage houses, which is a problem every year.

The refunds of some clients may have been delayed (although I have not received more than the usual amount of complaints), but there was no delay in my preparation process.

At almost every Continuing Professional Education session I attend either the workshop leader or participants discuss problems they have with their tax software when attempting to claim a particular deduction or credit, often explaining how they have to “force” the correct number into the system.  

I have found that relying on flawed and expensive tax preparation software tends to make some tax preparers lazy.  Over the years, when reviewing prior years’ returns of new clients, I have often come across stupid and unnecessary errors that existed simply because the preparer, often a CPA, did not take the time to properly check the math on the return spat out by their software program.  A computer-generated 1040 needs to be checked and double checked as thoroughly as a manually prepared one.

The case for the plaintiffs in Loving v IRS included an argument that the cost of the 15 hours of required continuing professional education under the IRS mandatory RTRP licensing regime was excessive and would cause them to go out of business.  The cost of continuing professional education, a true necessity for all tax preparers, is nothing compared to the initial and annual update costs of flawed tax preparation software, a necessity only to be able to submit federal returns electronically.

At a CPE session in San Antonio some years ago, conducted by legendary veteran tax pro and former director of the IRS office of National Public Liaison (a division of the agency that serves as a link to tax professionals, business associations, taxpayer assistance groups, and federal agencies) Beanna Whitlock.  BW asked the participants if anyone still prepared 1040s manually.  Of course my hand was the only one that went up.  Beanna said she wanted to shake my hand - because I was the only one in the room who really knew how to prepare 1040s!

Any you wonder why I do not use flawed and expensive tax preparation software.



KH said...

Just curious: how do you handle the IRS efile mandate? Did you get a waiver, or do all your clients "choose" to file on paper?

Robert D Flach said...


The mandate states that a preparer is required to file electronically all federal individual income tax returns he "files" on behalf of clients.

In its infinite wisdom the IRS considers that I "file" a client's return if I personally mail the sealed envelope with the signed manual return to the IRS.

I file only one federal individual income tax return - my own.

Each of my clients signs a statement (which is attached to my copy of the return) that states-

"I do not want to file my return electronically and choose to file my return on paper forms. My preparer will not file my return with the IRS. I will file my paper return with the IRS myself."

I have yet to be questioned by the IRS on the 300+ manual returns I file each year.


TSE said...

Good question KH!

In my 30+ years of experience, I've seen too many preparers that rely solely on their software. Unfortunately software turns preparers into data entry folks. Our clients are hiring us to do data entry - they're hiring us for our strategies! Robert, it's refreshing to see that you haven't fallen "victim" to the data entry trap!