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tax software lets you down

Injury to insult: when
tax software lets you down

Tax returns are due in just a few scant weeks. Who’re you gonna call? If you planned to use tax software on your personal computer, you should read this column first–you may need to get an update to your software or risk filing incorrect forms, facing lost data and dealing with frustration. On March 3, the Wall Street Journal reported that all the major tax packages are experiencing major problems–a.k.a. events, program anomalies, undocumented features or just plain bugs. CompuServe, America Online and the Internet have been filled with flames (heated letters of discontent) from those who feel mistreated by the tax software providers. Users lament buggy software, unanswered support calls and unanticipated expenses to retrieve fixes and updates.
Pressures on the providers This has been the year of the bug. The Wall Street Journal has had numerous articles about difficulties in the development of Windows software in many categories. However, bugs are really nothing new. As long as there has been software, there have been problems. Tax software providers face challenges on many fronts. Companies and products are in transit, tax laws are never firm and competitive pressures broaden the responsibilities of the software designers.
The challenges Companies and products are in transition. In 1993, Intuit bought ChipSoft, the makers of TurboTax and MacinTax. In 1994, Intuit acquired Parsons Technology, which became a wholly owned subsidiary. Parsons’ tax package, Personal Tax Edge, had to be licensed to Novell Inc. before the U.S. Justice Department would sign off on the acquisition.
Now Microsoft Corp. is working on acquiring Intuit (and in the bargain acquire both TurboTax and Personal Tax Edge). Meanwhile, Meca Software Inc.’s TaxCut package, which was licensed to other companies for relabeling, came under the umbrella of H&R Block (Block Financial Software). One of Meca’s other products, Managing Your Money, had been a competitor of Intuit’s popular Quicken for many years, but lost the competitive battle as Quicken emulated its higher-end features. Simply Tax, which last year was under Computer Associates International Inc.’s banner, became one of the flagship products of 4Home Productions, a new division of CA.
Tax laws are never firm. Congress continues to make changes that affect 1994 taxes as of this writing, some expected to be retroactive. Will the 25 percent health insurance deduction for self-employed individuals pass? Everyone says yes; no one knows when. The tax software providers live under the ongoing pressures of putting out software that complies with this ever-changing situation.
Competitive pressures have broadened the responsibilities of software designers. It no longer is sufficient to provide a text-based entry system that lets you put in your numbers and have it kick out a tax return. Now, to compete, you need to have IRS and independent documents, video footage from tax specialists, expert procedures to lead the user through the process–and oh, yes, it needs to add the numbers up correctly too.
The competitors In this competitive arena, TurboTax and TaxCut have been 1-2 finishers in evaluations for years. Computer Associates last year all but gave Simply Tax away to users to gain market share, and now boasts 800,000 users. There are many other tax software packages on the market, including popular shareware products. What can you look for in these packages?
Our three competitors all boast the same end product: electronic or printed tax returns ready to file, providing more than 85 forms, advice, internal checks and reduced duplicate entry. There are Windows, Macintosh and DOS versions of TaxCut and TurboTax, as well as CD-ROM multimedia versions. Simply Tax is available for Windows.
TurboTax and TaxCut can help both the novice and the expert, and are close to having a live expert at your side to lead you in the preparation process. Simply Tax is an excellent package, but is rough compared with the other two.
TaxCut is now sold by the tax people, H&R Block. The H&R Block version includes free answers from H&R Block staff (800-288-6322). There are two very interesting offers if you buy their software. One is that an H&R Block staff member will assist you if you are audited (not as legal representation, but to help you prepare and to appear with you). In addition, H&R Block will count your purchase price toward H&R Block preparing your return at their office.
Block Financial Software is not the only source for TaxCut. If you get any of the Kiplinger newsletters, you know the advice you can get from Kiplinger TaxCut, which is licensed from Meca and Legal Knowledge Systems Inc. Both Block and Kiplinger have the phones ready to receive your calls for help. For example, Kiplinger is open from 9 a.m. to midnight, Monday through Friday, and 10 a.m. to 4 p.m. on weekends, and offers fax-on-demand 24 hours a day. Their multimedia version includes on-screen video tax tips from Kiplinger experts. Kiplinger can be reached at 800-235-0217.
TurboTax relies on “The Money 1995 Income Tax Handbook” for its independent advice. Intuit offers support by phone 5 a.m. to 8 p.m. Pacific Standard Time Monday to Friday and 7:30 a.m. to 1:30 p.m. weekends; automated support; fax-on-demand services; a bulletin board system; and support on most online services. Intuit makes some interesting offers: a money-back guarantee (return by April 17, 1995, for full refund if purchased from Intuit), and they will pay interest and penalties on any errors the software makes.
Simply Tax from 4Home Productions, a division of Computer Associates International Inc., features tax tips from “The Ernst & Young Tax-Saving Strategies Guide,” a John Wiley & Sons publication. A built-in calendar and alarm system warns you of upcoming deadlines for returns and extensions, and other important dates. Simply is a master at importing data, from Simply Money, ASCII, Lotus 1-2-3, Quicken, Managing Your Money, TXF file formats and last year’s TurboTax for Windows and TaxCut for Windows. There is a 30-day satisfaction guarantee. Free support is available 9 a.m. to 11 p.m. during the week and 11 a.m. to 7 p.m. on the weekend, or GO SIMPLY on CompuServe.
The crisis of confidence You probably have seen the reports in every major paper about the crisis of confidence in tax software this year.
Two major problems with TaxCut have been noted. TaxCut users that started with the HeadStart version may lose detailed lists when bringing them into the final version. The software also seems to print out unnecessary forms. A “bug-free” update is available on CompuServe or by calling 800-829-1829.
Intuit’s TaxCut and MacinTax have suffered more in the press. Along with apologies and promises to make amends, Intuit, a company with an excellent reputation in the industry, has provided a list of six questions for its users:
Do you have disability income reported on a Form 1099-R?
Do you have taxable tips reported on Form 4137?
Are you taking depreciation or a Section 179 deduction for a vehicle or other asset?
Are you depreciating or amortizing an asset in the final year of its life or any asset used in a rental activity (other than a building)?
Are you preparing quarterly estimated taxes and have short-term capital gains in 1994?
Are you importing capital-gains data from Quicken?
If so, check your return; you may need a list of “workarounds” or an update to your software. 800-224-0948 is the number to call to get a bug-free revision of their software. Intuit estimates that less than 1 percent of their filers will be affected by these problems.
Simply Tax reportedly sometimes freezes when printing or saving returns. Call the support line for additional information on available fixes and updates.
The choices What should you do in light of all this?
If you have not yet filed your return, but bought your software a few months ago, call to make sure you have any available corrections.
If you have already filed your returns, review them for missing information or math errors, and amend as necessary.
Consider having your taxes done professionally this year.
As a CPA (although one who only provides computer advice these days, not tax preparation services), I might be considered less than objective when I recommend that every three years–at a minimum–you visit a professional tax preparer. That way, they can review the prior two years’ returns and amend them where necessary. In the remaining time before your taxes are due, you may want to consider this option strongly.
Bugs are nothing new to software, but when they bite during your tax preparation, it can be frustrating and scary. Although few filers are expected to be affected, and the press has trumpeted the problems so loudly that “Where’s O.J. when you need him?” has become the tax software provider’s lament on slow news days, you need to know if you may have been affected, and what to do to get back on course.
( Eric E. Cohen CPA owns Cohen Computer Consulting, which helps growing businesses cope with and benefit from computer technology.)


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