Even after being an experienced tax practitioner, the possibility of tax rejections are always there and may annoy you to the core. Since nowadays, tax preparation highly depends upon tax software due to excellent capabilities in terms of fast preparation, the highest level of accuracy, efficient collaboration with other associated tools, and the tax software help us to prepare, analyze and submit the tax returns easily and effectively.
Though, sometimes we don’t achieve expected success even after putting in lots of hard and smart work together. In most of the cases, reasons come out to be inadequate tax software that we relied on. As a wise tax practitioner, we must know those possible reasons for tax software that led us towards an average season. The reason not only helps us to chose an adequate tax program but also gives us a broad understanding of the programs available in the tax industry.
A few simple flaws in our tax software gave lots of tiring moments. So, it’s time to analyze some insight information about how a tax program is approved by the IRS. Once a vendor wants to test their piece of tax software with IRS, there is the following process to be followed:
- The first step starts with the IRS publication stating test tax returns and instructions. Those publications are explicitly listed on a MUG&P page. Publication 1436 is for individual and 5078 for business returns.
- Software vendors notify IRS’s e-desk that they plan to test a list of forms that they want to further include in their tax program. However, it is not necessary for a tax software vendor to include all the forms. They might go with some selected forms.
- The tax software vendor uses IRS’s publications to create test returns and formats it into XML format.
- The software vendor submits the test tax returns (XML format) to the IRS.
- E-desk assistor checks the test returns for the accuracy. The motif of the first level checkup is just to ensure that the data transmitted to the IRS is without any errors.
- During the final check-up, if IRS finds the tax software performs all the functions correctly, it approves the tax software for electronic filing.
- After the approval from IRS, vendors are allowed to market their products for electronic filing for returns either selective or all.
So, before a tax software hits the market, it is designed, analyzed and further tested at IRS parameters to ensure that it doesn’t contain any bugs or dysfunctional features. It is always advised by the tax practitioners to double-check their tax programs if that was approved by the IRS.