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Is It Safe To Use Personal Accounting Programs To File Your Returns?

Posted on 13, May, 2013


In a surprise move in the world of accounting the Minnesota Department of Revenue advised tax payers in the state to not use Intuit products to file their tax returns. The reason for this was that there were several errors in the software which incorrectly calculated property tax returns, although multiple issues with the way the software prepared returns were reported. Basically this meant that anyone using Intuit, TurboTax or Lacerte software were going to file their tax return incorrectly, potentially leading to IRS audit issues.

Since this issue was reported Intuit have released patches for the software programs involved, and they're now functioning in accordance with the IRS filing requirements. While this might seem like a minor issue to some people it's worth noting that products from both the Intuit personal and professional range of accountancy programs were affected - this wasn't just limited to a handful of “Joe Shmoes” filing annual returns; in fact well over 10,000 people were affected in Minnesota alone.

There are a number of issues coming to light as a result of this decision by the Department of Revenue in Minnesota and the main one of these is that software of any type can contain errors, including some pretty serious ones. In fact this isn't the first time that errors have been found in these types of tax programs and it won't be the last, that's just the nature of the software industry. In short this casts a pretty large shadow over the idea that you can simply enter all your data and rely on Intuit, or any other accounting software package for that matter, to take care of all the thinking for you.

Another problem related to the way people assume that their accountancy software is perfect is that the human element has been almost completely removed from the process of bookkeeping. This is not to say that human beings are more accurate at calculating a tax record than a computer, but a trained accountant or auditor doesn't require a software patch for them to do their job properly. There's a lot to be said for the human touch when it comes to preparing a tax return, or any other financial statement, and you'll find that the more enlightened accountants out there do not simply rely on any one piece of software to do the job for them.

So what are the long-term effects here for anyone working in accounting or auditing role? In short it's a lesson that you cannot take anything for granted when working with computer data and that you should be manually checking every single tax return or set of books you're preparing for a client.

For people who keep their own books it's the same lesson in that you need to double check your tax return or financial statements before submitting them. If you did wind up with an IRS audit as a result of this type of inaccuracy in your returns, blaming the software you used is not going to make any difference to the outcome of that audit.

There is a duty of care on the part of companies like Intuit to ensure that issues like the above are kept to an absolute minimum, but the problem is that these automated accountancy "tools" are created by teams of human programmers. That leaves the entire programming process open to human error, which can then be magnified because of the frequent use of offshore programmers who are hired for a fraction of the salary paid here.

Try to make sure that you're taking steps which ensure that the mistakes these programmers make do not impact your livelihood or your business.


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