2008 Review of Tax Research Systems

From the January 2008 Issue

At the dozens of tradeshows, conferences and other meetings that our esteemed
executive editor, Gregory L. LaFollette, CPA.CITP, speaks at each year, he often
shares a PowerPoint slide of the “Conscious Competence” model, which
demonstrates various stages of learning. In short, there are four general stages
of learning that apply to all of us in varying degrees for different subject
matter:

• Unconscious Incompetence — Where a person doesn’t
  know how to do something, but they also don’t know that they lack this
  knowledge.
• Conscious Incompetence — An individual does not
  have the knowledge/skill set to do something, but knows that they are lacking
  in this area and may or may not attempt to gain the knowledge.
• Conscious Competence — This is where a person understands
  a subject/activity but still must focus on the processes involved in order
  to perform the task successfully.
• Unconscious Competence — This is where an individual
  not only knows and is proficient at a task, but the knowledge is so comprehensive
  and the person has done it so often that it is essentially ingrained into
  the person’s psyche. “Driving a car” is Greg’s example
  … it’s just automatic after a few years. See Greg’s August
  2004 column at www.CPATechAdvisor.com/go/215
  for a more in-depth look at the “Concious Competence” model.

Now, when it comes to tax preparation, there are probably only three and a
half stages, since tax law is constantly in a state of flux. That is, although
a professional might be nearing the height of “unconscious competence”
(basically running on auto-pilot through most simple returns), there is always
the challenge of new deductions, credits, depreciation methods and other issues
with which to deal. When encountering one of these situations, the tax or accounting
professional knows how to process the information and can complete the return,
but he or she must do so more consciously.

Of course, most of your clients and, by far, most individual self-filers out
there fall into the Conscious Incompetence category, which is why the IRS and
tax compliance are such mysterious headaches to them. But as a seasoned tax
professional, you not only have the knowledge and understanding of the subject
matter, you also generally know what you don’t know, but you have resources
at your disposal to find out — tax research resources.

Back in the old days (about five to 10 years ago), large tax firms (or those
with complex clients) would maintain libraries of books and resource materials
on tax information for federal, state and local compliance for all entities.
Shelves filled with tome after tome of cures for insomnia. While the Internet
hasn’t totally rid professional practices of its printed materials, most
tax research has migrated to online sources, or at least programs that frequently
go online to check for updates. Considering the volatility of tax law, this
certainly makes more sense than issuing new publications every month.

But the tax research systems on the market today also offer greatly simplified
and automated search functions along with notation and review capabilities and
analysis of tax law. For practices with fairly simple needs, free online resources
offer the basics, like several IR Code, agency regulations and publications,
revenue rulings, penalties and other government source documents. For further
insight into these areas, several inexpensive systems offer additional resources,
including state taxing authorities, as well as providing forms and contact data
for those jurisdictions.

Firms that serve clients with more complex returns can get research systems
that integrate with the firm’s tax package and automatically update them
to new laws or other issues that may affect specific clients. Many of the tax
research systems also provide customization options for saving routine searches,
tracking news and e-mailing key tax staff. Some also provide tools for integration
with Microsoft Word and search functions that can be easily accessed from within
any program. Options for tax planning and case studies are also available.

Tax compliance can be a complex process, which is why tax professionals continue
to offer a service that is valued by many Americans. Nobody knows everything,
but the value of the tax professional is in being aware of the knowledge he
or she needs, and having the tools to find it.

The products in this review section were reviewed in the following categories:

• Ease-of-Use/Search Routine looks at navigation features,
  including the accessibility of search tools and functions, and how research
  tasks are generally performed. It also considers how results of searches
  are presented to the user.
• Content notes the research libraries available within
  a program, including primary federal and state sources, analysis and news
  content.
• Customization identifies the modification options available
  for users to tailor the program to their needs. This can include the saving
  of search parameters, interface modification, sorting and filtering of search
  results, and other options.
• Integration/Output looks at how the program interacts
  with other systems, primarily tax compliance programs. Additionally, the
  output capabilities are addressed, including reporting and export tools.
• Support & Updates address the training aids and assistance
  features in the program, including the Help utility and other functions
  that aid in learning and using the system.

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