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Comment by bubblethink | Hacker News Reader

Why do all these tax companies have a web version and a desktop version ? Why isn't it all web at this point ?

> 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.

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

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.

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?

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...

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

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.

LaCerte it seems has been swallowed by Intuit.

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

Back in 1998:

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

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

Not everyone has bought into surveillance culture? I have an overwhelming preference for local software that I can prevent from backhauling my personal information into the permanent records of data silos. This goes doubly for non-mandatory services that tend to have shameless contracts of adhesion falsely purporting consent for such abuse.

FWIW TurboTax is eminently easy to pirate and crack to get state filing functionality. Network isolate the VM after you get the updates and state forms but before you start inputting data, and you can rest easy that no personal data is being exfiltrated. There's no need to support these regulatory capture parasites.

If you kill network access, sure. I don't think the software itself makes any guarantees about data privacy. For me, as a linux user, it's more effort to get windows vms for these things, but I do them because the desktop ones are often cheaper.

Sure. Like many things, local software is necessary to preserve privacy but not sufficient. Local proprietary software can brazenly work against the interests of the user, libre software can contain backdoors or other antifeatures, a peer-reviewed libre system can be cracked. But by heading in this direction, you retain the possibility of keeping your personal information as private as possible.

FWIW I'm a Linux user that runs most everything in VMs. Each year I create a new one for TurboTax, get the updates/stateforms, then disconnect and never reconnect it to the Internet. It's a little work, but can be done mindlessly while doing something else.

I take it that you send the forms by mail then ? Because efile would need network access, and that is half the reason I'm using the tax software in the first place.

Yep. The time of going to the post office is dwarfed by the headache of actually doing the taxes and checking that they seem correct. Disposing of them into the mail is downright cathartic.

I am glad there are still desktop versions where I can keep the software indefinitely and keep my data offline. I’ll go back to pen and a desktop calculator before I use a web app.

> I am glad there are still desktop versions where I can keep the software indefinitely

That's useless for tax software though, unless they are getting updated every tax year.

I recently had to go back and file an amended return for one state and file a return for an additional state for the past 5 years. It made my life a lot easier to be able to just install the past 5 years versions of TurboTax Desktop which I had saved the installers for. I was able to run through this whole process using the tax rules that were in place at the time.

Not sure if this would have worked on a web version or not, but I was pretty happy to have this option available to me.

Older versions of the software are useful for reviewing historical records and calculations in context.

Last night while preparing my 2021 return I opened up the 2020 software with my old return to review what I had done in the prior year.

I don't think the desktop version makes any guarantees about data privacy, analytics, or anything of that sort. It routinely connects to the mothership from what I can tell.

In my experience, I have never had an issue running them offline after downloading the updates and before inputing data.

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