Using OCR technology to populate tax software

We use UltraTax software and have tried using their Source Document Processing to populate the input screens. In order to use the Source Document Processing we need to scan our client’s tax documents as they arrive in our office. By scanning at the front-end, we still have to scan late-arriving data like corrected broker 1099s and K-1s. Source Document Processing automatically labels and organizes the client’s source documents and places them in File Cabinet CS. However, our preparers have found numerous errors in the populated input screens reporting that they could input the data themselves quicker than it frequently takes them to correct the errors.

In order to verify the populated input screens and complete the input, the preparer still needs to sort and organize the client’s information. OCR technology does not eliminate that step. We are considering eliminating the use of UltraTax’s Source Document Processing and then scan the client’s documents at the back-end, after all data has been received and sorted. The scanned data would then be organized in File Cabinet CS, but not labeled.

Before we make that change, has anyone found an OCR provider that they are happy with? Is anyone using Gruntworx?

I looked at Gruntworx extensively last summer. I found the same thing you did, number of errors & time to find and correct them basically eliminated any advantage.

In general, we see errors in OCR whether it is for tax prep purposes or anything. "5" comes out as an "S". The OCR does not catch a decimal point. A zero comes out as letter "O". 1's & l's. Etc. Etc. So I doubt switching from UT to Gruntworx is going to eliminate those issues.

We have used UT for a few years now and have struggled with the decision to use OCR or manual data entry straight in to Source Data Entry. Somebody has to carefully review the numbers in SDE prior to importing in to UT regardless of manual entry or OCR. We have concluded it is about a wash between the two methods as far as time and errors.

However, I do like the fact that the documents are labeled in File Cabinet when using the OCR. Especially for clients with lots of documents, being able to easily find the right 1099, K1, W2 is nice. So, if it is a client like that, we use OCR.

Regardless of method, we scan documents in at the beginning. If we receive additional documents during the whole process, they are scanned in as received. That makes it easier for folks to work remotely if needed, documents do not get lost, accidentally destroyed, etc.

I used Intuit's Pro Line Import a couple of years ago (with Lacerte) and had a similar experience. It would also populate numbers in various input fields where it did not belong (despite their algorithms to prevent this kind of occurrence).

There is no substitute for the human element of experience (not only where/how to enter data, but what the results should look like).

I too have looked at the Proseries offering and have decided that it would cause more harm than good. I am all in favor of time-saving technology but not at the expense of accuracy. I can make enough of my own mistakes. I would worry that it would also lead to a level of complacency. Don't want a scanner deciding where to put my numbers!!

We actually had a great experience with Gruntworx this season. I love how it organizes the PDF so that it's indexed by type of form. That alone sped up the review process. Gruntworx was our go-to method of handling 1099-Bs and worked great for returns with many source docs. We didn't bother for the returns with minimal source docs.

I agree that it is no substitute for human review. It doesn't know what forms 1098s should be coded to so it leaves the form code blank (leaving the mortgage interest off the return entirely). It does create brand new forms in the system (so if you brought 3 W-2s forward from last year and the client has the same three again, now there are 6 in the program - 3 blank and the 3 imported). Overall, though, we found it was worthwhile.

Thanks everyone for your input. I think we will wait for more improvements in OCR technology.

Any updates on SurePrep and Gruntworx ? Several firms I've chatted with say SurePrep is very accurate (I assume they use the one human verified, but havent confirmed)

One person uses Gruntworx w human verification, says it's worth using but slow turnaround and won't bring in any state K1 info. Didn't say if it even brought in state muni int/div items. Assume not.

SurePrep fee structure byzantine. Seems much higher than Gruntworx. Gruntworx simple.

Gruntworx using humans to verify their ocr. Thats' apparently why they couldn't scale up quickly when they took on a bunch of new customers. They only grab the summary page info of consolidated brokerage statements. So if div interest is shown as tax exempt, they assume its 100% state tax exempt. Have to verify if that's true for UT.

For addtl fee they will ocr and human verify 1099B trades and codes, and provide excel sheet. But oddly they won't put subtotals on the excel for you to check against statement even though internally they create a ver with subtotals. There's a way to do that without messing up the import.

They have no plans to expand to state data for any forms. Too hard to keep up with and train people. I guess that's why SurePrep is a lot more expensive.

Both Gruntworx and SurePrep (i'm told) use Utax's excel import function to get their ocr'd info into UT. How they can do that for forms that UT doesn't provide users with Excel import function puzzles me. Gruntworx runs an Excel macro which some AV especially MS Defender has insisted on blocking recently. One user described creating dummy 1040 client to get SurePrep to ocr docs for, and then imported into UT 1041. But that probably was only for the limited items UT explicitly allows excel import. Anyone out there doing that for Gruntworx or SurePrep?

correction: Gruntworx creates an Excel sheet from common OCR's preprinted govt w2's, 1099's, 1095, first page of Fed K1's etc. It also performs an OCR on consolidated brokerage statements but uses humans to check the OCR into Excel.

Preparer can review the resulting Excel sheet, make changes, exclude entire items.

Then somehow an Excel macro populates UT Source Doc Processing module. Looks just like a moderately fast typist.
From that pointc, it's the same process as using SDE no matter how the data got into SDE.

Will know In a day how well it handled common consol brokerage statements. Couldn't be worse than UT OCR.

Pity it completely ignores state muni int/div info, but I could see why

On those oil/gas k1's with walrnings not use Part III data, GW ignores the warnings and sucks in the numbers in Part III>

based on something I saw flash on the web, GW is owned by Drake. No confirmation of that.

Tech support is unusually good and responsive. So far, i'd say the product is similar to what users say about Drake tax app: limited but good at the basics.

PS The bookmarked pdfs are not pretty like TR's but they're usable.

post deadline comment: GWX saved my bacon when per diem people no showed. My long time employees had quit for computer monitor related monitor issues last year and could not find good permanent replacements.Turnaround slowed down to a couple of three days about 2 weeks ago but got back to less than 24 hours after that, faster if dont chose the human reviewed security transaction option. Cheap too. Tech support great but not needed after you've done a few. Accuracy exellent on k1's and consol brokerage statements. Out of 25 returns, averaging 10 ocr'd documents, about 10 numeric errors all caused by scan artifacts. I'm going back to telling my clients to send me original docs which I'll scan back to them, unless they make copies to keep for themselves. Many are fine w sending me downloaded brokerage pdfs. Bigger clients are giving me view only access. But GWX ONLY does Federal input from those. Picked up SITW fine from W2's but I don't think it reliably picked up CA SDI. Caught doc mistakes human staff and i have missed sometimes like IRA brokerage statements.

Main beef is really a limitation of UT: you populate UT with the GWX Excell sheet by running a macro, that fills in the UT "SDEntry" module, which was designed for admin staff to input tax data. Then you open UT client and have to accept each document and sometimes each line of each doc by clicking. There's no "accept all" option that I see in UT. That gets tedious on returns with 30 K1's

Like the (much?) more expensive SurePrep, only 1040's are supported. But some SurePre users get around that for K-1's and maybe 1099 data for 1041 and 1065 clients by creating dummy 1040's that they send scanned docs to SurePrep, and bring them back into to UT SDE as correct type. But SDE for 1045 and 1065 is much more limited than it is for 1040's. Havent tried that yet but will.

Anyone have updated epxerience to add to this conversation? I have been resistant to this change but it is getting harder and harder to hire and retain good staff. Something needs to change! Sureprep sounded great but was quite expensive. I am looking into Gruntworxs.

Started with Gruntworx a few years ago and it was the BEST decision I've made in a while. We use their validate option and I would say it's 99% accurate. It virtually replaced a basic data entry tax person. Definitely try it out. I'm a huge fan.

Anyone have updated epxerience to add to this conversation? I have been resistant to this change but it is getting harder and harder to hire and retain good staff. Something needs to change! Sureprep sounded great but was quite expensive. I am looking into Gruntworxs.

Our firm has chosen the CCH Scan & Autoflow this year to go along with CCH Axcess. We've looked at Ultratax source data processing a couple years ago and were unimpressed. It remains to be seen how CCH Scan & Autoflow works for a full tax season, but so far it does a better job recognizing PDFs than I thought it would. We are only going to send IRS docs (W-2s, 1099s,etc) through the Autoflow since the software has no idea what to do with non-IRS forms (taxpayer summaries, etc). Preparer will combine the separate PDFs during the prep phase.

I previously used SurePrep for 4 years and the CCH AutoFlow + PDFlyer products for 3 years. (PDFlyer is the PDF-based workpaper product, and AutoFlow does the data population to the tax software.)

I briefly tested GruntWorx, and I've tested TR's Source Document Processing (SDP) a few times over the past 12 years.

IMO, TR's SDP isn't very good, and is clunky to work with.

PDFlyer and GruntWorx are PDF based, and produce similar workpapers. They are both very good.

IMO, SurePrep is the best of the bunch - best OCR, best workpaper tool (SPBinder). It is not PDF based, but you can archive to PDF for archiving in your DMS. It's hard to explain SPBinder if you haven't used it, but it is easier and faster to make excellent 1040 workpapers than the PDF-based tools. The downside (aside from cost) is that is yet another tool, and it does require training. There is a cloud-based tool with a dashboard for routing 1040s from preparer to reviewer, etc. It is an excellent way to get started with a paperless workflow process. If you already have a good paperless workflow process for other types of work - it would seem to cause you to have a different tool tracking your 1040 work, and require some duplicate effort. This may cause it to be difficult to justify using a different process for 1040 work.

TR recently acquired SurePrep, so I expect there will be greater integration w/ UltraTax, GoFileRoom, FirmFlow, etc. - which may eliminate the duplicate effort mentioned earlier.

One thing to consider with any of the 1040 workpaper tools that use OCR is that they are most helpful on clients that have a lot of "standard tax documents" - i.e W-2s, 1099s, K-1s, brokerage statements, etc. The OCR software really doesn't know what to do when it sees a lot of pages of receipts, lists, schedules related to Sch C or E rental activity. There is a lot of variation in how this information looks, and I suspect that OCR / AI will always struggle with it. You may want to adjust your process to work with the strenghts of the OCR tool.

Our firm has chosen the CCH Scan & Autoflow this year to go along with CCH Axcess. We've looked at Ultratax source data processing a couple years ago and were unimpressed. It remains to be seen how CCH Scan & Autoflow works for a full tax season, but so far it does a better job recognizing PDFs than I thought it would. We are only going to send IRS docs (W-2s, 1099s,etc) through the Autoflow since the software has no idea what to do with non-IRS forms (taxpayer summaries, etc). Preparer will combine the separate PDFs during the prep phase.

We started this back in March (meant to earlier). Combined AutoFlow with PDFlyer and we scan the entire client packet together and AutoFlow everything that’s readable. Usually W-2s, 1099s, and K-1s. It can read and sort the organizer (not import handwritten notes of course), but we chose to use target sheets to sort to our own liking.

It was a game changer and we are looking forward to using it all tax season this year.

Thanks for the feedback - very helpful!

We have used both GruntWorx and Sure Prep.

We started the training with Sure Prep. We had to pay $5k up front, which was a big mistake on our part. We did the training, but fast realized this was geared toward a larger firm. The verification process takes a long time to complete. They say to have an admin person do the verify part, but it just wasn't practical for our firm. Using Sure Prep would have increased our time to prepare the returns. This is because we have a large volume of what I would consider mid-level 1040's.

GruntWorx works great. The OCR doesn't appear to be as accurate as Sure Prep. However the validation process is much faster.

Sure Prep has a place for a firm that is preparing high net worth 1040's and needs multiple levels of review. I see it more for a top 100 CPA firm rather than a firm with 10-12 employees like us. Gruntworx was just a better fit for our firm. It is cheaper and cuts the preparation time down.

Sure Prep would work well for a firm with a young staff that is tech savvy. Unfortunately it doesn't match well with our staff.

Thanks Taxman40 - something that I neglected to mention is that the size of your firm and the mix of the experience levels of your team members, as well as your workflow processes can be significant factors in determining which solution is the best fit for your firm.

The firm that I was with that implemented SP about 12 years ago had 30+ people and a good mix of experience at each level. SP was our first step at going paperless. We did a total redesign of our 1040 workflow processes. After a relatively short period of getting used to the "new way" - the 1040 process went beautifully - like clockwork.

My current firm consists of multiple locations of 5-10 people. We use the TR Virtual Office platform, and it works well overall. I evaluated implementing SP for us about a year ago, and ultimately decided that while they have a great solution, it was probably not the best fit for us right now. Aside from the challenges with our staff mix at the various locations, the process for using SP with UT on the VO platform seemed clunky and it was unlikely that I'd be able to get our users to make it work well consistently. (The recent acquisition by TR may lead to better integration with the VO platform?)

If you currently use an existing engagement management product that is PDF based, GruntWorx or PDFlyer may have an advantage in that they should be easier to integrate with your existing workflow processes and require less staff training to
implement.