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Moncton Times & Transcript ~ Tax Help Plus ~ Software Issues ~ February 6, 2007 - 25 Feb 2007 by TaxHelp
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First is not necessarily best. I was reminded of this once again last week. It’s the time of year in our offices when we begin to ramp up for the upcoming tax season. After all, the Canada Revenue Agency’s processing facilities are now shut down as they get ready to undergo conversion. Starting next Monday, they will again be live and actively assessing the newest tax year – 2006.
Anyway, we had our staff kickoff on the weekend. While our people receive on-going training from many different sources, a couple of times a year we assemble them in a casual academic environment and talk about the changes – both tax and procedurally. As I’ve stated before, probably this year’s biggest challenge is going to be for those who had previously owned Aliant shares. This includes both the private investor and the myriad of employees who have been granted stock options throughout their careers. The biggest problem will be to determine what the adjusted cost base of the shares is, particularly for those who have owned them since the Bruncor days.
But in addition to the tax changes, we test and review all our systems to ensure that any operational problems are kept to a minimum before we file a tax return. And while we have yet to do any real world client processing and filing, unfortunately for many people who have discounted their returns at other organizations and have sold their refunds, a surprise could await them.
We use what we like to think of as the best professional software available. I’ve personally known the people involved virtually since the beginning of the tax software market back in the 1980’s. In one of my other lives I was a beta tester, and as a result I came to have an extremely good understanding of the product’s design.
Occasionally I am asked if I think there is much of a future in the professional tax preparation market. After all, people can pick up the forms and mail a return in, or they can buy some software and let it do the work right through to the electronic filing of the return.
Quite frankly, I believe that our market will grow. As the tax regime continues to grow in complexity, returns can be filed correctly without being filed with the maximum deductions and benefits claimed. The laws are always changing and firms like ours that employ hundreds and hundreds of years of experience are able to make the difference for a small cost relative to the thousands of dollars in taxes the average individual pays.
Additionally that experience uncovered a challenge that had gone unnoticed by the software provider until we contacted them on Friday. As with any new credit, the key is to test the impact on the logic and the systems so that no unintended consequences appear. In the latest version of the software that we use, by applying the law on a change that happened in the middle of last year, the calculated refund incorrectly was increased by over $1,900. And while it didn’t happen in the most common tax preparation scenario, it did happen in the fourth most popular set of circumstances.
So what does it mean? Probably for those people who have filed already with a tax preparation service, some number of them will have potentially had their refund incorrectly calculated. This will result in one of two scenarios. Since it involves government sourced income, the return may be corrected at assessment. However, as with any new program, the discrepancy may not be caught until later in the year when the taxpayer will then be presented with a bill. For discounters who have already processed refunds and provided their clients with cheques, there will either be shortages generated or their clients will be questioning the results next summer.
What’s the point that I’m trying to make? The error was uncovered by one of our people with decades of experience. When we presented it at the weekend staff jamboree, we prefaced our comments only by asking the participants if they noticed anything interesting. We then keyed the scenario into the software. As they watched the display unfold, we then created the entry that generated the error. While we said nothing, an audible gasp was heard from the audience. It was the voice of experience. The staff mentally knew what should be transpiring in rough numbers. They were floored to see what had the software had calculated.
People sometimes say to me that filing their own return is easy because they use software. While they are correct if they know all the theory and changes, many people would never have noticed this error. It leads me to wonder, even with programs that are error-free, how much tax refund the self-filer leaves on the table?
By the way, we still have a few times left for any group looking to have someone come out and offer a session where we discuss the newest tax changes. These events usually run somewhere around an hour once a question-and-answer is completed and are offered both during the day and evening. Most important, there is no charge for this service.
Roger Haineault is with Tax Help Inc. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 388-9000 or by emailing roger@help4taxes.ca
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