[JumpCrisscross]

> Why isn't it all web at this point ?

They would lose sales if it were. People are sensitive when it comes to their taxes. And I imagine a good number of accountants use Turbotax in the back. There could be legal issues with them uploading clients’ tax information to a third party’s servers.

[formerkrogemp]

Actually, no, a good number accountants use Lacerte, CCH, or Drake. Some do use ProConnect by Intuit.

[PopAlongKid]

Competent and legitimate tax professionals use those products (and also UltraTax, from Thomson-Reuters, is quite popular).

However, fraudsters will use DIY software like TurboTax but then charge for it, evading all the provisions of tax law that pertain to paid preparers. This is not as severe a problem as it was say five years ago, since IRS has instituted a number of security features to weed out the fraudsters who efile.

[butlerm]

Violations of various regulations aside, who exactly is getting defrauded in this scenario? Are you implying that the paid preparers in question predominantly commit or help their clients commit various forms of tax fraud?

[PopAlongKid]

Yes. And as you mention, sometimes it is just the preparer committing fraud (e.g. falsely claiming refundable credits) without the client's explicit cooperation, although clients also spread the word about what a "great job" their preparer did for them. Since the preparer avoids associating themself with all the returns they prepare, it is much harder for the IRS to detect their pattern of fraud.

The IRS and industry vendors (including Intuit) have, under the label "Security Summit", implemented things such as collecting metadata (tracking the network address from where returns are filed, how long the return was open in the software, etc), stronger password requirements with MFA required to submit returns electronically, limiting the number of refunds paid to the same address or financial account, and optionally collecting driver's license info to confirm identity.[0] It seems to have been relatively successful, as the frequent complaints of ID theft (returns filed under someone else's name) have declined significantly as a result.

[0]https://www.irs.gov/newsroom/irs-announces-dirty-dozen-tax-s...

[everybodyknows]

Is there some regulatory hurdle that deters these companies from offering an end-consumer solution to individuals?

[PopAlongKid]

No, and some of them do. The "hurdle" is the target audience. These professional products usually begin at over $1K license cost per year and go well into five figures for larger tax practices. The pro products are designed to track the status of hundreds of returns, communicate and exchange documents efficiently with all those clients, allow multiple staff members to work on the returns, prepare various entity returns beyond 1040 such as S-corp, partnership, trust/estate, and all U.S. states that have tax, automatically share data between returns of related persons (shareholder/S-corp, partner/partnership, kids with high investement income/parents of those kids). The pro software usually supports a much larger number of less common forms than the consumer products and has better diagnostic support for unusual situations.

It's kind of like the difference between having an Oracle database server vs. having MS-Access on the desktop.

[everybodyknows]

LaCerte it seems has been swallowed by Intuit.

https://proconnect.intuit.com/lacerte/pricing-main/

Back in 1998:

https://www.wsj.com/articles/SB895525787581590000

[formerkrogemp]

I didn't know that. Thank you for educating me.