There has been an increasing reliance on tax preparation software in recent years, but will the tax software industry be affected much by the 2008 Presidential election? Tax preparation software has become a multi-billion dollar industry. But will either Obama’s or McCain’s tax plan eliminate the need for tax software altogether?
Co-founder of Tax-Compare.com, Leo Welder, doesn’t necessarily think so. “In order for there to be a major impact on tax software, the IRS is going to have to become the sort of comprehensive resource that tax software market leaders like Tax Cut from H&R Block and Turbo Tax are for their customers,” says Welder, who wonders if the government would have the same motivation to help consumers maximize profits as the tax software industry has.
Many leading tax software programs include a tax calculator and error check capability. Additionally, people who use tax preparation software receive help with everything from maximizing tax deductions to learning useful tax tips that can apply to those who work at home, people who have lost their jobs, small businesses and many other categories.
But preparing taxes has been rather costly. BarackObama.com states, “Experts estimate that the Obama proposal will save Americans up to 200 million total hours of work and aggravation and up to $2 billion in tax preparer fees.” Taxes have become major issues in the economic debate between Barack and McCain, and the media has reported on the stark differences between each candidate’s tax platform. A summary of the candidates’ proposals can be found on each candidate’s website. JohnMcCain.com lists “A Real Choice For Simpler Taxes,” which is in essence a two-rate tax code with a “generous standard deduction.” But Obama’s proposal, listed on BarackObama.com, aims to reduce tax preparation time to “less than five minutes” by mandating pre-filled tax forms to be sent to taxpayers by the IRS.
While both candidates aim to eliminate the difficulties that make tax filing stressful for many Americans, only Obama calls attention to taxpayers’ reliance on third parties—tax preparers.. Paid tax preparation refers to the use of accountants or tax experts to help prepare taxes. Utilizing tax software, however, has been the more popular choice: 20 million people in 1999 and 2000 used tax software to calculate tax returns, according to a study done by IBM and the Urban Institute. Perhaps tax software has become so popular because of the communal spaces tax software providers create, such as the “Live Community” on TurboTax.com. These live communities help enable people to ask questions and give advice to other tax payers.
While some people doubt that the IRS replace tax software, others say that tax assistance is best provided by the business sector. When asked for his response to the tax plans of the Presidential campaign frontrunners, Gaines Kilpatrick, co-founder of Tax-Compare.com, was unruffled.
“Everybody wishes they could do their taxes in five minutes, but when has the government ever been known to be speedy?” says Kilpatrick, “It wouldn’t be surprising if many people were still utilizing tax software in 2009.”
Voting for the 2008 Presidential election will take place this November. It remains to be seen whose tax plan will be implemented for the 2009 tax filing season. For additional information regarding online tax software, visit Tax-Compare.com.