Academic journal article Journal of Accountancy

Users Grade Tax Software: Industry Consolidation Continues

Academic journal article Journal of Accountancy

Users Grade Tax Software: Industry Consolidation Continues

Article excerpt

A record number of CPAs responded to our fourth annual professional tax software survey in which we invited AICPA members to disclose, among other things, what tax-preparation software they use and how they evaluated various aspects of their products.

In past years, only members of the Tax Section were included in the e-mail survey This year, in an effort to get a more comprehensive assessment, we expanded the survey to include all Institute members. As a result, the number of responses ballooned from 2,248 last year to more than 6,000 this year.

This year, continuing the consolidation trend, CCH (a Wolters Kluwer business) acquired TaxWise Power Package and ATX/Kleinrock; however, both vendors will continue to function. So now three vendors dominate the tax software market: Intuit, with two products--Intuit Lacerte and Intuit ProSeries; CCH, with three products--ProSystem fx Tax, ATX and TaxWise; and Thomson, with two products--UltraTax and GoSystem Tax RS. For more details, see Exhibit 2.


One way to measure product satisfaction is brand-switching. This occurs when users move from one product to another until they find one that most closely matches their budget, needs, skills, hardware requirements and, most importantly, their comfort zones--which includes that intangible judgment of how the product feels.

This year 4% of the survey respondents reported they definitely plan to switch brands. By product, 14% of TaxWorks users and 13% of TaxWise users plan to switch. Products with the highest percentage of users for 2006 who switched from the 2005 tax year were TaxWise (17%), Drake (16%) and TaxACT (12%). For more details, see Exhibit 3A (Overview).

Among the 330 respondents who switched products, 36% listed price as one of their reasons and 24% listed a lack of necessary functions.


The most widely used product, according to our survey, was CCH'S ProSystem fx, with 30% of the 6,109 responses. Not far behind was Intuit's Lacerte Tax with 26%, followed by Thomson's UltraTax with 18%. That's one product each for the three companies that dominate the tax preparation market. See Exhibit 2 for details. Broken down by parent company, here's how the tax software market appears to be divided:

Intuit        37%
CCH           36%
Thomson       23%
Other          5%

All the categories of product satisfaction (ease of installation, learning, use and network operation) were about the same as last year.

UltraTax scored highest in overall satisfaction with a 1.3, followed by Drake with 1.4. For ease of installation, TaxACT led with a perfect 1.0. (However, use caution in assessing the results for TaxACT because it was rated by only 33 users.) ATX and Drake tied for second place with 1.2. TaxACT also scored first for ease of both learning and use, with 1.2 and 1.3, respectively. GoSystem came in last, with a 2.5 for ease of learning and 2.4 for ease of use.

Operation of programs on users' net works, which for years was problematic for many, no longer appears to be a serious issue. GoSystem, with a 1.7, while still considered satisfactory, was rated the lowest.


The products that received the highest marks for technical support were Drake, with 1.3, and TaxACT and UltraTax, each with 1.4. The help desk with the fastest response to users' calls was TaxACT, with 1.2; it was rated fastest last year, too. When there's a choice, most users opt to ask for help via the telephone rather than e-mail.


Whether or not you're shopping for a new product, we think you'll find this data of value. But use the information as a starting guide--not a definitive arbiter of which product is best for you. While the assessments of your peers are not unimportant, what suits them--even most of them--may not meet your needs. Hard as it is to do, the only effective way to assess whether a product is best for you is to put it to the test. …

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