How is your practice planning to comply with the IRS mandate that will require all professional tax preparers to file electronically?
Listed are additional resources you may find helpful as you help your clients in preventing fraud.
While the IRS recently announced that the requirement for all tax-preparers to e-file would be phased in over two years—requiring all preparers who anticipate filing over 100 returns over the year to make the transition by January 1, 2011, and for all providers who anticipate filing 11 or more returns to comply by January 1, 2012—it is clear that the IRS is following its Congressional mandate to make the process of tax filing primarily electronic.
For many tax preparers who have already adopted e-filing, this deadline will pass unnoticed, and may even provide a competitive advantage. For other preparers who have put off adopting, or simply have not seen the need for a digital workflow, this is a crucial time to make long-term strategic decisions about technological adoption and cost management.
If your firm is faced with a need to upgrade its workflow in order to maintain current levels of efficiency while complying with the IRS e-filing regulation, the preferable strategy might be to spend as little as possible until the technology begins to truly benefit the practice.
One of the best reasons to start doing business in the cloud now is that cloud-based solutions can accommodate a paperless workflow. In this scenario, administrative support staff may scan incoming documents, which are then identified, labeled, and bookmarked by an automated, cloud-based software platform, where the tax preparer can quickly access the information to save valuable time.
“Smart Scanning” has been around for a while. In a recent study, 70 percent of firms reported that they were scanning tax documents. However, while scanning is the first step to a paperless workflow, cloud-based financial solutions, such as Copanion GruntWorx for tax document automation, and XCM for firm-wide tax workflow, help tax-preparers to leverage this practice, making them more efficient during the busy tax season.
Mandatory e-filing means that all tax preparer workflows will end in the digital space, so consider the ROI implications of using cloud financials to implement a streamlined, paperless process for your entire firm. Some of the questions firms should ask are:
- Will adopting a cloud-based workflow solution pay off by increasing productivity; and
- Will choosing more user-friendly solutions mitigate training costs?
As James Bourke, CPA.CITP, of WithumSmith+Brown, puts it, “Before deploying new technologies or replacing existing ones you need to ask yourself, ‘How will this deployment make us a better, more profitable firm, and is this technology aligned with our strategic plan?’”
With conventional, non-cloud-based software solutions, firms must consider not only the cost of the licenses, but also increased IT costs and the “planned obsolescence” model of traditional software, requiring additional large expenditures to upgrade.
Cloud financials, by contrast, are priced on a rolling per-user, per-month basis, with ongoing support, training, and upgrades to the platform included in the Service Level Agreement (SLA).
Some of the benefits of this model are:
- Ease of fitting cloud financials into a tight budget;
- Having new users trained as needed ; and
- Limiting IT expenditures
How is your firm preparing to meet the e-Filing requirement? Is your firm moving to a paperless tax workflow? Let us know by leaving a comment.