The way taxpayers have been preparing and submitting their tax returns to the government has evolved throughout the years. It started with manual filling of IRS forms by tax advisors, continued with the development of professional tax software that do most of the calculations for the tax preparers (allowing them to focus on tax advisory and planning) and ends with the most recent trend of e-filing, which allows taxpayer to prepare their own tax return without using a tax professional and submit their tax returns directly to the authorities online!
So, where do we go from here? Is e-file taking 100% of the industry? Is the tax preparer profession doomed? Some believe the future of tax filing is a combination between online tax software with “real-life-event-approach” and direct access to live tax professional for on-demand advice.
Back in the old days…
Before e-file and before tax software it was the tax professional who collected the relevant data from the taxpayer (which often brought a shoe box full with bills, receipts and tax information) and then spend hours (if not days) to manually fill out all the tax forms required by the IRS and calculating each and every line in each and every form. This extremely time consuming task, done to the light of many candles as you can imagine, left little time for tax advice or tax planning, resulted in more errors and resulted in longer processing time for a refund.
Computers, the super heros of the tax industry…
When computers arrived to the scene, the tax industry has slowly started change. Tax professionals, who quickly adopted the new comers, were able to prepare a return faster and with less errors, mainly due to the use of basic spreadsheets that made tedious calculations a much easier engagement. However it was still a manual process to fill out the actual tax forms, and mailing them to “Big Brother”.
Professional Tax Software – the real change maker…
It was not until professional tax software became available, when the industry saw some really big changes. Those new creatures had a library of tax software in them, permitting the users to key in, change, erase and add the tax data, and then print a complete return, all done on the computer. No more manual. Wow.
