James Bourke
James Bourke

Paper, Portal, CD or E-mail?

What are the alternatives for delivering the tax return to the client?

October 26, 2009
by James Bourke, CPA.CITP

With utilization of technology so prevalent in our profession, many firms struggle with the most appropriate method to use to deliver the final tax product to their clients.

Up until just a few years ago a CPA firm would not even have thought twice about how to deliver a tax return to their clients, but with more clients requesting the final work product in digital mode, many firms have listened and have rolled out multiple forms of digital delivery methods to their clients.

Though paper is still the prevalent delivery method for most firms today, many are starting to replace or supplement that method with delivery in some digital form.

If your firm is like most, although you provided your individual and entity clients with a paper copy of their returns, they call you when they refinance, secure new debt, enter into large financial relationships, complete college loan applications, etc. They inevitably request the return in digital format to facilitate the submission process. So why not give them that digital image at the time of completion? Using most tax applications today, printing to a PDF document is just as easy, if not easier, than printing a paper copy.

For purposes of digital delivery, the recommended approach would be either portal or compact disc (CD). I would never recommend using e-mail to deliver a tax return to your client. Why?

  • Unencrypted e-mail is not secure.
  • Some state regulations specifically prohibit the use of unencrypted e-mail to deliver such confidential or private information.
  • E-mail can easily be sent to the wrong recipient. This delivery method also results in a copy of a client’s tax return sitting in multiple places (i.e. your file room, your sent box, your client’s inbox and archived on various mail servers). The storage in multiple places makes it very difficult to enforce the firm’s document retention policy.
  • Most e-mail accounts for business owners are not private (i.e. IT personnel, administrative assistants and other third-party vendors could potentially access), thus allowing others to access such unintended information contained on the returns.

Delivery via Portal

There are numerous vendors in this space, including most of the vendors behind the industry’s most popular tax preparation applications.

A good client portal will generally have the following characteristics:

  • Web-based
  • Accessible 24/seven
  • Secure and protected
  • Easy to access
  • Fully integrated into the CPA firm’s existing electronic storage facility

Firms using a portal establish the initial login credentials for their clients. Clients have the ability to modify or replace the initial credentials with those of their choosing. An advantage of the portal delivery method is that the CPA firm has the ability to control the length of time a return sits available for access by their clients. In the event of loss of a client or some other disruption in service, the firm can generally immediately disable access to the portal.

The portal approach also places a greater burden on the client to “come and get the return” versus the firm incurring an additional cost to furnish the digital return on some type of media, such as a CD.

Another advantage with the portal approach is the portal’s ability to act as the client’s file or storage room. Many firms have not only digitized their final work product, but also client-source documents and client tax-organizers and made these items available to the client. Some firms have even turned this concept into a revenue generating option, charging a monthly fee for such storage and/or access.

Delivery via CD

Many firms prefer this approach to portal for the following reasons:

  • CDs are physically delivered to the client, thus resulting in something tangible being sent to the client.
  • CDs place the burden on the client to store their CD for future reference versus. the burden on the CPA firm to provide access to the information.
  • CDs and/or data files can easily be password-protected.
  • CDs can be labeled and enclosed in the CPA firm’s branded materials.
  • CD shipping costs are substantially less than paper costs, especially with large, multistate-entity returns.

If you choose to use the CD method, always password-protect the data on the CD and relay the password information separately from the package that accompanies the CD when delivered to the client.

The final point is that you need to get your client to buy in. Or do you?

The firms that have made a successful transition from paper to digital have done it by default. Many firms send pretax-season correspondence to their clients. In that correspondence insert a paragraph such as:

“This year our firm will be delivering your taxpayer copies of your tax documents in electronic (PDF) format. We believe such delivery helps to insure that your confidential information remains secure and private. If you have any questions on this delivery method, please give us a call.”

The above approach definitely works. Firms that give clients the “option” of receiving their copies in electronic format, with paper delivery as the default delivery method, generally find that the non-response by their client does not necessarily mean that they prefer paper.

So start the planning process now to make this tax season one of your best!

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James C. Bourke, CPA.CITP, CFF is a partner at WithumSmith+Brown where he is director of Firm Technology. He is a past president of the New Jersey Society of CPAs and currently serves on AICPA Council and the Chair of the AICPA CITP Credential Committee. He was recently named Top 100 Most Influential People in the Profession.