December 1998 Issue

Resources out there, just waiting for you. Emerging Technologies, The Internet, the IRS, an By Eric E. Cohen and Walter C. Schmidt

In Brief

A Competitive Advantage

Given the pace of technological development today, CPAs cannot afford to be left behind. With the tax preparation season just around the corner, it is not too late to implement strategies that will enable CPAs to maximize their productivity.

The authors review a number of different ways to maximize today's technology. Contact management software can be invaluable in building and developing strong, year-round relationships with clients. New software suites can eliminate redundant databases and possible data errors by consolidating client information.

There is also a wealth of information for practitioners available on the Internet. As the IRS continues to use technology to streamline returns and refunds, CPAs will have to be on top of the most efficient means of tax practice. The sheer volume of tax information now accessible on Federal, state, and corporate sites can be a double-edged sword.

Emerging technologies provide new ways of completing old tasks, almost daily. Which ones you decide to adopt and how soon you add them to your tax preparation technology arsenal is up to you. One thing seems certain though: Just as we moved from DOS to Windows, we are moving (or being moved) toward the elusive "paperless" office.

Before You Prepare--Keep in Touch with Clients

Contact Management Software. Relationship marketing is the latest business buzzword. Major marketing relations firms (see are now emulating the consultative relationship for which accountants have traditionally been known--and they're doing it better. These relationships have been built by the CPA who knows her clients, is a friend and neighbor to them, and is familiar with their lives. With judicial use of contact management software, a CPA can have that type of relationship with more clients; yet, few firms have embraced the technology.

Let us look at a familiar scenario. Jane of Amalgamated Corp. calls for Partner Sam, who is out of town. The receptionist grabs the first passing staff person to find the manager of the job. Once the manager, Barb, has been found, she speaks with Jane, but has little idea of what is going on in Sam and Jane's conversations. So Barb says she will get back to Jane ASAP.

Enter contact management software. The receptionist knows to whom to forward Jane's call, Barb has a history of Jane and Sam's contacts at her fingertips, and Jane feels like her CPA firm knows and cares about her.

Contact management software--

* communicates information to clients on a scheduled basis or according to a predetermined campaign to orchestrate a better relationship;

* keeps track of important information about clients and schedules follow-up contacts at appropriate times;

* offers date- and time-stamped notes to record discussions with clients, so that information is ready for others to use when the primary client contact is unavailable;

* maintains contact with clients, getting and capturing any changes or vital information on a regular basis, making the relationship with tax clients more than just a year-end event; and

* attaches profile listings to client records, helping the firm send targeted information to clients and identifying those that may require special attention when tax laws change.

Popular contact management software includes ACT! (, Goldmine (, and Telemagic ( New versions of these products designed specifically for the CPA are in the works. An interesting client database system that will soon reach the United States is BalaBoss ( While it does not keep contact history, it is preconfigured to store more of the common information in the accountant's office, such as the location of files and important filing dates.

Reduce Redundant Databases

One of the issues facing every practitioner's office is the problem of multiple and redundant client databases. The use of separate scheduling systems, time and billing systems, write-up systems, tax packages, contact management systems, and word processors has led to a multitude of client listings--their addresses, phone numbers, and other information--scattered haphazardly throughout a firm's system.

When client information changes, it needs to be dispersed throughout all client databases. The family suite of programs has emerged to help with this task. In these suites, the client contact, write-up, audit work paper, financial reporting, and tax modules all share a common database. By reducing redundant databases, maintenance is reduced, time saved, and potential problems averted. Another benefit of integrated suites is that any changes entered in the workpapers after initial work are automatically carried forward to the tax product. In a number of cases, changes can be made from within the tax product without needing to start the workpaper product.

Two popular families of product suites are CCH's ProSystem ( and CLR's GoSystem ( The GoSystem client module, for example, incorporates many features you might expect in a contact management system and shares its data with the other components of its suite.

Preparing Taxes: Nothing but Net?

Those same suite products will be relying on the Internet for added functionality. A number of firms are now using CLR's GoSystem Tax RS, which gives the practitioner GoSystem's capabilities in a remote server solution. All of the software and data is stored at CLR and accessible through a Web browser. This gives the preparer multiuser and multiyear access through the Internet or a private network connection. And regardless of where the preparer is when the need to make or review a quick change to a return occurs, the information is only a phone call away. For offices considering telecommuting or preparing returns on site, remote access through the Internet is a trend worth watching.

Meanwhile, CCH's ProSystem FX is incorporating library functions that will let the practitioner with multiple offices set up a central repository for tax returns that other offices can access. Each office will be able to maintain separate billing records and will have in-depth reporting, tracking, and security capabilities.

Keeping Up with Uncle Sam

When it comes to government and taxes, a wealth of information has been made available for the cost of a download. The only problem is how to efficiently locate that information. It is out there, somewhere--all you have to do is find it. Tax professionals have the advantage of knowing (as well as anyone can really know) the nomenclature of the Federal, state, and local taxing authorities. So why not take advantage of that knowledge?

The technology of the Internet can now put a massive, even overwhelming, amount of information at the user's fingertips. And that's where professional knowledge comes into play. Looking under government/taxes on a well-known search engine, we found page after page of possible sites to check. One such site was the IRS homepage--not a bad place to start, but we went one step further. The IRS has the Digital Daily site tree ( search/site_tree.html), which amounts to a combination table of contents and search index. It is organized into three columns: "topic index," which allows the selection of a topic or scrolling through the full list; "topic description," which displays a brief description of the selected topic; and "topic links," which lists all of the pages related to the topic.

The very first topic is, fortuitously, "alternative filing options." This selection contains information on how to file taxes electronically, and refers the visitor to also see "alternative payment options" and "alternative refund options." We were also linked to "electronic services section"; "alternative filing options for individuals"; "electronic filing questions & answers for taxpayers"; "alternative filing options for businesses and organizations"; and TeleFile. All this information with one click of the mouse. Much faster and easier than starting on the IRS homepage and wandering haphazardly.

Not to be outdone, the New York State Department of Taxation and Finance has its own site index (www. While nowhere near as detailed as the IRS site tree, the New York site does have an alphabetized listing of pages and a categories list. There is also a separate "forms, instructions, and publications" index ( forms/default.htm). This site is broken down into current and prior years, and has two major listings: "tax specific forms/instructions" and "applications, certifications, publications, miscellaneous items."

By now, most all of the other states have websites for downloading forms and obtaining filing information. Some of the sites mentioned later have links to all the state sites. But we need law and order! We want to read the regulations, the code, what Congress has said, and what fellow professionals have agreed or disagreed upon. No problem:

* The Bureau of National Affairs, Inc. (BNA) has opted for a directory of its publications. Each publication has its own homepage, which can be reached from the directory ( prodhome/); a product index also is linked to this directory.

* Time Management Inc., a subsidiary of BNA, has a similar directory, which it calls "Print Resources" (

* Commerce Clearing House (CCH) has a site map that includes its tax research products and tax news and articles (

* The Research Institute of America's (RIA) product catalog (www.riatax. com/precat.html/) links you to different pages for all of its CD-ROM products and print publications. It also is linked to various brochures, demos, and software updates.

* Lacerte Software has a product information page ( products/prodline.htm) that reminds us of some flowcharts we have done--only better. In addition to product line information, the page is linked to newsletters, support services and presentation products.

Another characteristic of the Internet is the linking from one website to another to make information from the linked site available to more users.

The CPA Journal's own website ( has had, for the year or so of its existence, links to many informative sites--including all the state tax departments. It also has a link to a very good site that contains all that a tax practitioner would need, and more. It seems that there is a professor of accounting at the University of Northern Iowa who has some spare time. He has set up his own LLC, acquired an enviable domain name, and maintains a comprehensive index of tax and accounting resources on the Internet. This coveted domain name is

Dennis Schmidt's "Tax and Accounting Sites Directory" has three main categories: "tax sites," "accounting sites," and "other useful sites." Each of the three major categories are further broken down into various subcategories (Federal tax law, state taxes, and tax forms, to name just three). And, as if that weren't enough, this homepage has its own separate site and web search engines. On the "Federal tax law" page, we find eight major topics: tax legislation, tax code, regulations, court decisions, rates, payroll, U.S. tax treaties, and other administrative. Each major topic includes many different detailed topics, which in turn provide any number of links. For example, we turned to Summaries of the IRS Restructuring and Reform Act of 1998. This detailed topic included four links, to the sites of CCH, Ernst & Young, the JCT (Joint Committee on Taxation) Summary of Conference Agreement, and KPMG.

One of the authors boasts his own "Accountant's Home Page," a large, popular set of links for accountants in practice and industry ( Another good place to stop is your state society's homepage, which can provide a level of membership service and interactivity not available at a more general site. The NYSSCPA's site (, for example, features breaking news, a professional library, and links to many accounting and business resources. Members' discussion forums provide the opportunity to pursue subjects with fellow practitioners or specialists at a depth that otherwise would not be possible.

It is important to remember that Internet addresses can and do change at a moment's notice. Websites disappear and move and, sometimes, might just be temporarily unavailable. So don't give up: Try again later. When all else fails, use your favorite search engine (such as or to find the new address.

Other Internet News Resources

Keeping Track of Issues that Affect Clients. The Internet is an important tool to improve client service by keeping up on changes in tax law and the business environment. Hundreds of websites provide resources, updates, and other tools. However, there are also tools that work while the practitioner is occupied. These agents cull information from the Internet that meets a practitioner's predetermined search criteria.

What's in the news? Tools like Excite's Newstracker search through the news reports found at thousands of newspaper and other online news sources to bring you the latest in the issues that face your firm and its clients. Click on Newstracker and set up as many news research agents as you want. You can come to your Newstracker whenever you want and have it present relevant news articles--what amounts to your own electronic clipping service.

If you are interested in what's in the newsgroups, there are services that can e-mail summaries to you. The newsgroups are the great discussion areas of the Internet, where "the entire realm of human knowledge passes every four days." The free website Reference ( lets you set up agents that filter through the gigabytes of daily newsgroup postings and deliver relevant discussions. You don't have to go to to pick up your results--they are sent via e-mail on a customized cycle.

Electronic Filing, Payments,
and Refunds

So you want to become an Electronic Returns Originator (ERO)? Both the IRS and NYS websites mentioned previously provide information concerning current electronic filing systems. The IRS has enhanced their e-file (ELF) system to allow tax professionals to file both Federal and state tax returns at the same time.

The Electronic Federal Tax Payment System (EFTPS) is being phased in to replace the TaxLink System. Under EFTPS, tax payments will move electronically from a bank account to the IRS, which will automatically update your records. This program applies to both businesses and individuals.

The IRS e-file application package, which is necessary to become an authorized provider, includes Application Form 8633, and is available for download. Also available is information concerning the Electronic Tax Administration (ETA) Coordinator whom you need to contact before completing the application. Once in the program, you will obtain an Electronic Filing Identification Number (EFIN) for each service center you use and, if appropriate, an Electronic Transmitter Identification Number (ETIN). Participating transmitters will be assigned (as prescribed in Publication 1345) a Declaration Control Number (DCN) for the electronic portion of each return received from a taxpayer. EROs may not offer, nor in any way participate in or facilitate, a Refund Anticipation Loan (RAL) in connection with any return filed under the Form 1040 online filing program. A RAL is money borrowed by a taxpayer based on a taxpayer's anticipated income tax refund.

The IRS also maintains e-file demographics, a database that contains useful information about electronic returns filed in your area. The IRS provides it "to assist you in increasing the numbers of electronic returns you process." The IRS e-file marketing and promotional campaign for 1998 includes a number of materials and products offered freely to tax professionals. The new 1998 e-file logo can be downloaded in both GIF and JPG formats. Guidelines for its use are available. The ETA Promotional Products Release summarizes the e-file promotional material and explains the products that will be delivered to EROs.

What else is there? Publication 3007, Let Us Introduce You to IRS E-file, provides answers to the most frequently asked questions about IRS e-file. There are authorized IRS e-file provider decals and placards you can display on your door or window. Publication 3010, IRS E-file Stickers, are peel-off stickers for e-file returns. Publication 3011, Direct Mail Postcard, advertises IRS e-file and allows you to promote your service as an authorized IRS e-file provider. You can download a postscript copy of this card, personalize it, and take it to your local printer. Publication 3012, Local Live Read (Radio Script for Providers to Place), advertises your IRS e-file service and directs prospective customers to you as an authorized IRS e-file provider. It can be downloaded and personalized. Publication 3015, IRS E-file Poster, advertises IRS e-file's fast refund advantage, and is available in two sizes. Publication 3018, Newspaper Ad, for You to Place, advertises your IRS e-file service and directs prospective customers to you, as an authorized IRS e-file provider. It, too, is available in two sizes.

As if that is not enough, the NYS website has its own copious compilation of electronic filing information. All yours for the download. *

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Eric E. Cohen, CPA, technology coach at Cohen Computer Consulting of Rochester, N.Y., is chair of the NYSSCPA Emerging Technologies Committee. He is the computer columnist for the Rochester Business Journal and the author of John Wiley & Sons' Accountant's Guide to the Internet. He can be reached at, and his homepage can be found at Walter C. Schmidt, CPA, operates a computer consulting and accounting practice. He is a board member of the Massapequa Chamber of Commerce and the South-East Nassau Educational Partnership for Change, and past president of the NYSSCPA Suffolk Chapter. He can be reached at, and his homepage can be found at www/ ~walts.

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