Tax Prep Open Source Code Effort Reports Promising Start

A fledgling Internet-based tax preparation platform offering free software to tax preparers and an open source code to that software from which programmers could theoretically build other technologies key to the tax prep process, has attracted a handful of practitioner members and is discussing potential development opportunities with at least one of the tax prep industry’s top five software companies, according to the site’s founder, a CPA.

“Providing an open source code format has never been done in tax preparation, but it has been done successfully in many other areas. We are just taking this proven system into a new place and we fully expect to be able to make a difference,” said Richard Braman, a Fort Lauderdale, Fla. tax professional and founder of Tax Code Software Foundation www.taxcodesoftware.org.

Braman, who also continues to operate his online tax service, Braman Tax Services, Inc., declined to name the software company interested in his new foundation but said an announcement about the discussions may be made in the next week or two. He is hopeful of attracting additional vendors to his open code development program, claiming that it will ultimately lower their software development costs.

Open source code projects are typically collaborative efforts in which programmers improve upon a standard code and share the changes within each project’s own communities of members. Braman likens his upstart group to Apache Software Foundation, www.apache.org, an open source code project for the development of Web server technologies.

“Whenever you have a standard way of doing something, it will result in better solutions,” Braman said

To be sure, his expectations may be overly bold considering that Apache, according to postings on its Web site, now surpasses Microsoft's Internet Information Services in the Web server software marketplace. While Braman says that his open platform will reduce the costs of software development, it remains to be seen if established tax prep software developers, with long histories of generating revenue from selling licenses, would want to devote the time and effort to technology upgrades on a public platform.

Braman is using tax preparation software he developed for his tax services company as the foundation’s underlying technology. That software supports most tax calculations and forms and provides electronic filing capability, but it would be up to the foundation’s members to enhance the core with technologies that could, among other things, include every conceivable calculation and worksheet for particular tax issues.

Braman and his software had been part of the Internal Revenue Service’s (IRS’s) Free File Alliance, an Internet-based consortium of software vendors that provide free federal tax prep services to low and moderate income taxpayers. Braman said he bolted the alliance upset over management policies, which includes the ability of its members to market other services, such as Refund Anticipation Loans (RALs), to the program’s taxpayer users.

The IRS responded that Alliance members may provide additional services to both paying and non-paying clients, but notes that it has placed certain limits on RAL marketing. It first announced those limits on Oct. 25, 2005.

First among the foundation’s projects is the development of Extensible Markup Language (XML) tool for tax preparation, according to Braman. XML is a fast-evolving Web standard for exchanging data that tags specific document items so that they can be retrieved and collated automatically. XML development has been among Apache’s top projects.

XBRL is the XML standard that an accounting profession-led group has developed for business reports.
~JC

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