BKD's Simply Tax Podcast: Tax Technology of the Future

September 10, 2018


BKD CPAs and Advisors' Simply Tax Podcast #39: Tax Technology of the Future with SurePrep CEO, Dave Wyle

Episode Info:

The prevalence and pace of technological advances can make the future a moving target for businesses and their owners. Successfully adapting and keeping up with these changes is a challenge facing many industries and the tax profession is no exception.

Host Damien Martin sits down with guest Dave Wyle to discuss advances affecting taxpayers and tax professionals, the skills needed to navigate the changes they bring about and ways to keep up with it all.


Dave’s story and how it led him to develop accounting-related technology solutions @ 2:04
How technology has advanced since Dave began working in the accounting industry @ 4:40
• Tax professionals should be excited about advances in technology @ 8:03
• Ways to keep up with changes in technology @ 10:52
• Advice for taxpayers on working with tax professionals that use technology @ 13:02
• The skills Dave has used to develop innovative solutions and manage change @ 16:18
• Predictions on technological advances over the next five years @ 20:44
• Dave’s advice to Damien on parenting @ 24:56

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David Wyle is the president and CEO of SurePrep, a provider of tax productivity solutions to U.S. public accounting firms. Prior to founding SurePrep, Mr. Wyle founded and was CEO of ePace! Software, creator of the industry-leading paperless engagement program that was rebranded as ProSystem fx Engagement after it was purchased by CCH Incorporated in 2001. Prior to founding ePace! Software, Mr. Wyle was a CPA with the accounting firm Coopers & Lybrand.

Podcast Transcript

Dave’s story and how it led him to develop accounting-related technology solutions

Dave: So I started in the industry as a preparer. I was with Coopers and Lybrand. I started out on the audit because you need to start out in the audit in California and then I went to tax and I became a tax senior. So I prepared the returns and I put together the work papers with tape and staples and red pencils and blue pencils, kind of the old classic style. And I thought you know there's got to be better way to do this.

Damien: Like tape the actual tape from the ten key to the workpaper?

Dave: Oh yeah. Put the page reinforcers for the echo clips yeah. Exactly yeah. Even tape the eight-and-a-half by eleven page to the eleven-by-fourteen workpaper.

Damien: Well clearly because then you could have it the right direction. It’s perfect.

Dave: Exactly. So I remember thinking I feel like I'm in kindergarten cutting and pasting, literally using these types of devices. At that point I had the vision for a paperless audit package because I just come from the audit practice and I created IPE software which had the product base engagement and that was a paperless audit package that eliminated carrying around an audit trunk. And it was also for any type of trial balance-based engagements so that included business tax returns or tax provisions where you're importing trial balances and needing to have those trial balance accounts coded to different line items and then flowing to work papers. And so I sold that to CCH in 2001. In 2002, I started SurePrep and you know in some ways a dog only has so many tricks. So I went from paperless audit to paperless tax.

Damien: From accountants out there, everybody's kind of touched some shape of form of this process. That was such a big change in a part of that process, but you really just went from, “this doesn't make sense” to “let's find a better way to do it.”

Dave: Yeah I guess in a way I got out of public accounting fairly quickly. I was only there for about two and a half years, but public accounting has basically defined my life because all the technology I've worked on has been about improving processes and providing automation to public accounting firms.

How technology has advanced since Dave began working in the accounting industry

Damien: When you made that switch over to tax what's that process been like? Obviously, some of the technologies have even advanced since that point in time even when you started, I would imagine. How has that process looked and what has that meant?

Dave: I mean it's just really gone forward tremendously. Back then there was no idea of a paperless tax without scanning documents. Sharing is hard. Collaborating is hard. Automation is hard because you can't use OCR to extract data from documents. So it's really gone through a complete transformation and it and we're seeing that continue.

Dave: So some of the new things that are out there that are exciting, we talked earlier about the fact that how so many PDFs now that people are getting aren't scanned they're the original PDFs and the ability to extract the data directly from the file and know that it's a hundred percent accurate without worrying about any type of OCR errors. So complete document automation without any errors, without any time to review or verify, that's something that's coming down the line.

Dave: And I guess the bigger trend is the time that people are spending or used to spend gathering documents and organizing documents and inputting documents. That's getting replaced by software that connects clients with their CPA. Software that helps clients gather documents either automatically or more conveniently and have those documents streamed to their CPA and giving their CPA the tools to automate the organization and entry of those documents.

Dave: And then taking it further down the chain to the reviewer, giving the reviewer tools to be able to quickly know if they've looked at this before or not and show what's new so I don't have to re-review the whole file. The ability to collaborate between offices is something that's been happening for a while, but the ability to better collaborate with clients is something that's growing now in technology.

Dave: And then, of course people have heard about the term API’s: Application Programming Interfaces. An API for anyone who's not familiar with it is a way that a software program can use another software program rather than a person using the software program. So if right now a person needs to go to a software program and print a tax return and downloaded and upload it into a document management system, an API could be programmed to automatically print that based on a trigger like how a return preparation process goes into a certain status, it can print the return and automatically put it in the document management system.

Dave: So APIs are allowing people to connect multiple third-party applications. You use GoSystem for tax and maybe SharePoint for your document management system, SurePrep for your tax document automation and TaxCaddy with your clients. So you get multiple systems and you can tie them all together, or connect the dots as we say. That now that's a very new emerging field where you can totally streamline workflow and take out all of those manual steps in between by connecting third-party systems through APIs so that you don't have manual steps and moving data or files from one system to another.

Tax professionals should be excited about advances in technology

Damien: Coming into the profession, what's that gonna mean? If I’m like you were in the beginning, in the first couple years of the profession, it's gonna look and feel different with all these technologies. Is that something that should be concerning? Exciting? What's your take?

Dave: I think it's exciting because once again I go back to sitting at my desk at Coopers and Lybrand to now not even being the one to do the initial organization or entry of documents. A preparer can almost jump right into a role of reviewing data and just making sure it's in the right place and that it's flowing to the right area, but not having to do the actual input.

Dave: So it actually raises the level of their job to a higher level than otherwise it would be and it places an emphasis on other types of tasks. Tax is known for drudgery with a lot of data input and stuff like that. Technology alleviates that and allows professionals to focus on softer skills: working with clients, understanding their clients’ business, searching for opportunities. I think that that's a more rewarding path and I think it means that tax professionals either, young or new, in order to accomplish that have to embrace technology.

Dave: There's a mindset that's involved. If you want to be a successful tax professional, you need a mindset that embraces technology and a skill, which is good in any industry, which is to manage change and project management so that when we know that there's a new technology that will benefit us, how do we implement it? How do we gain acceptance from the firm? That skill’s gonna do you good no matter what you do. But it's important in taxes as well, otherwise you're gonna be stuck doing things one way forever and you won't progress.

Damien: You know it's interesting as talk about as an addition to the team. I was listening to a podcast from Adam Grant and he's talking about this forum they were talking about ways to maybe make artificial intelligence and some of these technologies feel like a part of the team and welcomed and more inviting. They're joking around calling it Sally or something. I think that's almost what you're saying is we'll take some of that data input stuff and have Sally take care of that, then you can focus on some of the higher value stuff.

Dave: That's a great idea. Right now people are saying, “send it to SurePrep,” but maybe we need some more inviting name like Sally. I’ll have to think about that but that's it that's a good one, yeah.

Ways to keep up with changes in technology

Damien: When I thought about that even just with the process, it sounds like it's really embracing all the tools in the toolbelt to kind of use them and compile them in different ways. How do you go about those things if you're somebody ten years in their career? How are you able to keep track of all these things that are changing? Because in change management things are moving pretty quickly. How do you do it?

Dave: Yeah you know you have to do the research and then be open to change. On this concept of change, there's really no way to avoid it because either you're going to manage the change or the change is gonna manage you.

Dave: And what I mean by that is this. Let's take a look at one of our products which is TaxCaddy. TaxCaddy is something that CPA firms can have their clients use and it helps the client gather documents more easily. It gives a great app for taking pictures of documents, the picture gets taken as a PDF that can be OCR’d. It will automatically retrieve documents from bank and brokerage firms, it gives a list of just the documents you need and you can upload it from a Dropbox account.

Dave: So it gives multiple intakes that then flow into a streamlined system for the CPA firm. They don't have to download those documents from somewhere else and upload them to SurePrep. It creates a streamlined workflow. Now let's say you don't do that. Well your clients are going to still be sending you documents using technology. They're gonna be taking pictures and emailing you a 20 megabyte picture of their w-2 that you need to do something with as an attachment to your email, right?

Damien: I may have been there. I may have experienced that.

Dave: Right, or they're gonna send you a link to their Dropbox or Google Drive account and ask you to download their documents. They might email you documents. They're gonna be much more liable to do that than to use a document management system you ask them to use. They're much more liable to just send it to you in whatever way is most convenient to them.

Dave: And now you're gonna be stuck with documents coming in through all these different channels and having to download from someone's Dropbox account. So you're gonna be brought into the new technology world whether you like it or not. The question is are you going to be using it in such a way that it crafts an efficient workflow for you? So there's really no way to avoid it. Are you gonna be in control of it and make sure that you create something that's streamlined for you?

Advice for taxpayers on working with tax professionals that use technology

Damien: What would you say to taxpayers in terms of working with professionals that are maybe leveraging some of these advantages and technology and embracing them rather than waiting for them to come to them?

Dave: I would say that for taxpayers who want to work with a CPA in a modern fashion like how they might work with any modern financial institution, where they have an app, where they can go on and see what's requested of them, and take pictures of documents like you might take a picture of a check to deposit a check, take pictures of documents to deliver them, sign an engagement letter or an e-file authorization online and on your phone by putting your thumb on it on your iPhone and signing it that way… For taxpayers who that sounds appealing to, guess what? You're in luck. This technology now exists and will make your life easier.

Dave: Of course, there's gonna be a variety of… one example I use a lot is this. You can deposit a check with your iPhone or Android app and it's super convenient. But not everybody does that. You can still mail, you can still fill out a deposit slip and mail it in with a check, you can still go to the branch during lunch and wait in line until you get to the teller and deposit the check there.

Dave: They haven't taken away those avenues. So you'll still need to cater to a few different ways that taxpayers like to work. But once again to bring in that example of banks, banks now are so much smaller. You don't have those huge banks anymore that have 20 teller windows. What you have is a lot more banks in terms of locations, each one a lot smaller and that's all because of the app.

Dave: So they still provide a way to service people the old-fashioned way, but it's really reduced the size of the offices and allowed them to have them in more places. And they can still service people that have preference to do the deposit on paper or in person. So you have a lot of that. Some people want to come into the office to get their taxes done, some people just want to mail in all of their paper documents, but some people want to work digitally.

Dave: I think a firm needs to cater to all three of those, but that portion that does it digitally is growing and the other two are shrinking. One of the things I hear all the time is “We have some older clients but we have a hard time keeping their kids because their kids see us as not a technologically progressive firm.” I've heard firm saying that offering things like TaxCaddy helps keep subsequent generations as clients of the firm.

Damien: You know it's funny. Even just from this past weekend I have young kids and I had a check to deposit. I decided rather than to do the scanning thing, I thought it would be kind of neat to take the kids and show them where money comes from and where they keep it. It was one of those really big branches and it's closing in a month for that reason, right? They just don't need that real estate, they can open up the new smaller one down the street. Like you said the world's changing and we need to be aware of that.

The skills Dave has used to develop innovative solutions and manage change

Damien: Now you know you talked about how you started off on the audit side, creating a platform for paperless there in automation. Same thing on the tax side. So there's something to you and the skillset that you have. So if you were going to name a skill or two, something that you focused on for yourself personally in your career that's allowed you to change and keep up with change, what would you say that it is?

Dave: You know I think that from my standpoint I like solving problems. To me when I see the inefficiencies, I automatically think, “How could we make it better? How can we solve it?” And I enjoy selling other people on the concept and I enjoy having people say that, “Oh gee this was good I really like it.”

Dave: And so that's where I get my enjoyment from. When I walk into a firm and I see our software up on the screen or I see someone write a testimonial that says, “This was great. It made tax season easier” I like that,” So those were the things that motivated me to take this path and I think that everyone has to find the things that interest them and motivate them because then you'll be good at them.

Damien: And I think even too, obviously you've managed to balance and create and build and to do and to also work on the business as a business owner. Is there any advice on doing that? Because what immediately struck me about just working with you is that you're in it, but you’re thinking about it. You're on both sides. How do you balance those things?

Dave: Well the most important thing is to build a team. I know that sounds cliché, but there's a saying that I have which is that the easiest way to do something right is to do it yourself. The hardest way to do something right is to get someone else to do it for you. That is for me the most important saying in business. If you do everything yourself then, there's no growth. There's no way for you to grow. And if you get other people to do it for you that's how you build an organization, that's how you build a business, and that's how you free yourself up to go on to the next thing, to take on the next project to look at something new or look at improving something. When I was young and I started my first business when I was 24 years old, E-Pace, I thought that maybe being an entrepreneur and a businessman was about having great ideas. But growing a bigger business now, I've really realized it's about getting people and having them be able to become productive for you so that you can then do something else and get more people.

Dave: Now in taxes, audits or accounting firms in general, it's really not a whole lot different. If I'm a tax partner and I do all my own work, then I'm limited to my own time and I'll never grow. Is it harder to bring on a junior preparer and get the same quality product as if I prepared it myself and I'm a 20-year veteran? Of course that's harder. If I just prepare it myself, I'm gonna get a better return in shorter time than the combined time of getting a preparer to do it and then me reviewing it and then sending it back for corrections… That combined time will be more total hours between the two of us and if I just do it myself, but if I don't invest in that I'll never grow.

Dave: And I'll never build a business with a leverage model where I can make money from other people like preparers and reviewers and the staff under me. If I can increase the number of staff that I keep busy, then obviously the amount of money I can make, there’s no theoretical limit. But if I'm just doing it myself then it's the number of hours I have.

Dave: I think that concept is important in every business. It's important in the accounting. But yeah that is my underlying business concept which is that I could do it myself but the harder thing and better thing is to get someone else to do it for me and do it right. Which means sit with them, the first time do it for them, then watch them, then you know once they are making fewer and fewer errors you review less until you don't need to review it all. Then you just trust them and then that person can start developing people. To me that's the key to building a business.

Damien: It sounds so easy when you put it that way. You sell the cliche team part, but yeah that that really is the hard part.

Dave: The hardest way to do something right is to get someone else to do it for you.

Predictions on technological advances over the next five years

Damien: Where do you think, five ten years from now, any thoughts on where things we're heading or things to be looking for?

Dave: It's funny you mention it. It's really hard to look that far out. I'll give you just one anecdote. I was meeting with a CPA firm a couple days ago and they said, “You know, in the old days we just we got all of our documents in the mail and we scanned through just one process, which is easier than today where we're getting them through so many different channels.” So I said, “When you said, ‘in the old days’ when was this?” And they said, “About five years ago.”

Dave: So five years ago was the old days. Five years from now, Lord knows what you know what there might be. But you know in-between that time, the ability to automatically retrieve data directly from their source such as from payroll companies or financial institutions or mortgage companies, the ability to automatically retrieve that data and extract the needed data with a hundred percent accuracy is around the corner.

Dave: There's document aggregation and there's data aggregation. Data aggregation is like if you have a Mint account or a Yodlee account. That's where you can download transactions and balances and see how I have these balances for these credit cards or these balances on these bank accounts and here my transactions. That’s data aggregation, but the data that's available to be able to download transactions from a bank doesn't really allow you to perfectly reconstruct a 1099 consolidated or something. There would be no way to actually know that you've reconstructed the numbers. So we're focused on right now on document aggregation, which is pulling down the documents, the actual 1099s themselves, but since they’re original documents, the information for those documents are embedded in the file. It's not just an image.

Dave: So we think that one of the things that's around the corner is automatically gathering these documents direct from the source and extracting data with 100% accuracy. That's one big focus of ours.

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Dave: Another is more and more API features so that customers can integrate SurePrep software with all the other products that they use in their firm to create a total streamlined workflow and I think an aspirational goal like in the next five years would be to ultimately transform the tax preparation process into what I would call continual preparation. And what I mean by that is, right now most CPA firms wait to start the tax return until they have most of the documents. So they just keep it there until there's enough there that they feel it's ready to get started.

Dave: The problem is that last document might not come until March 15th, let's say there's you know 19 other documents and the 20th document is the K-1 that you get on March 15th. You're waiting to get all those other 19 documents entered and reviewed because for that. This makes the preparation process even more concentrated in a small period of time. Workload compression is worse because of this issue.

Dave: So imagine if the day a 1099 becomes available, which might be in late January early February, it gets automatically retrieved, data extracted, the document put in the work paper, file the data put in the tax return, and someone could even get some kind of notification or email like a preparer where they can click on it and just review the data and say “yep that looks okay,” and it signs off that document in the work paper and in the return. And so just as documents come-in they just kind of get automatically put in the return in the work papers, people do a spot check in a very quick way and reviews it. So now on March 15th when that 20th document comes in, it's the last document to input. And you can input it knowing that nothing else has changed from the other 19 documents because you reviewed each one of them and you know the only changes of the return is that 20th document you got on March 15.

Dave’s advice to Damien on parenting

Damien: One last thing I'm going to ask you. I noticed we haven't had a chance to talk about this yet. You've got the World's Greatest Dad as your screensaver. I’ve got twins at home. What age are yours?

Dave: I have a boy that's 12 and a girl that's 11. She must have done that for my screensaver maybe three years ago when she was eight, so she hasn't done a new one for me since then. Hopefully she still feels that way.

Damien: So what advice would you have for me? You have years more experience under the belt than I do, but you’re very obviously passionate about what you do and balancing all those things, what would you what would you tell a guy like me that's you know kind of looking up at the years ahead.

Dave: Patience. Have patience. Try to have good humor. When they do something, try not to be too hard on them, take it with a little bit of humor and that'll go a long way towards good relations. Spend time together and that's about it. I think that sometimes parents have a tendency to be impatient with their kids and often kids with their parents. I know that I'm more impatient with my parents than with some stranger that I meet on the street and that can get in the way of relationships. So just patience and understanding that they're just kids.

Damien: Well good stuff all right. Thank you again for taking the time here and we’ll look forward to kind of seeing what the next five years here have in store for us.

Dave: Let's check back in a year and we'll see where we are.

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