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by HowardSoft®

"Professional software at personal prices."

Summer 2002

Big changes ahead ... order now!

There’s plenty to celebrate in the upcoming season, as we detail in this newsletter. So place your order now to be assured of receiving your update as soon as it’s released, since we ship on a first–in/first-out basis. Order by phone, fax, mail, or on the internet at

Sneak peek at the new IRS forms

The IRS has already released several advanced proofs for the next tax season, including Form 1040 and many of its schedules. Here’s a sneak peek:

  • New adjustments to income. There are two new reductions to income on Form 1040: (1) Up to $3,000 for higher education expenses and (2) a limited deduction for tuition and fees.
  • New credit. There’s a new tax credit of up to 50% of your IRA contributions for the year.
  • New tax bracket. The 10% tax bracket, long publicized but sloppily implemented, is now a full-fledged part of the IRS Form 1040 instructions.
  • New child qualifications for EIC. The requirement that a foster child, niece, or nephew must live with you all year to qualify has been eliminated. The requirements are now the same as for all other qualIfying children.


What else is new?

Upgraded e-file program. We are no longer partnering with Nelco for our e-file products. The result is better software integration, lower prices, and better customer service, as we detail in the right column.

HowardSoft pulls form graphics development in house. We have in the past purchased our graphic forms from Nelco. In recent years, however, this approach has led to customer dissatisfaction due to forms that don’t closely match the IRS forms and the lack of support for some printers. We now produce the graphic files ourselves, so that you’ll have:

  • No more hassles with Form 1040 tabs. You will no longer have to use a different set of tabs for facsimiles than you do for printing onto graphic forms.
  • Compatibility with more printers. We’ll ensure accurate printing not just on laser printers but also on the ubiquitous ink jet printers.
  • Faster printing. By using the latest Windows technology, we can assure that Windows-graphic printing will no longer have the slow performance of the prior formats.

Further automation. As usual, we are adding additional automation in selected areas to reduce your workload in preparing returns. Topping our list is the most popular suggestion from customers: the automaton of the Third Party Designee entry for paid preparers. We’ll tell you more in our next newsletter.


Big savings for e-filers

Now is the time to add e-file to your tax practice. We’ve made some big changes in our Professional e-file add-on for the coming tax season to give you smoother operation and lower prices. We’ll give you the details in a moment, but first let’s cut to the chase: a big price break for paid orders received by July 30th. There’s no better time to add e-file to your tax practice because the software is greatly improved and the price is right. Compared to the prices we had to charge last year, these prices are phenomenal:


Last tax season

Irrespective of when you ordered

Next tax season

for paid orders re- ceived by July 30

Standard Level:




$5.95 per return


$2.00 per return

Premium Level:




ZERO per return


ZERO per return

Why such a big savings? There are two big reasons why we can offer these low prices this year:

  • HowardSoft is doing more work in-house
  • We have a new e-file partner

In the past our e-file add-on was comprised of our own add-on to Tax Preparer plus Nelco’s conversion and transmission software. Our software generated data in Nelco’s proprietary print-to-disk format and Nelco’s software converted the data to IRS format then performed error checking and transmission. We had little control over the conversion, so there were times when problems arose because of Nelco’s inability to handle unique features of our data. By performing the conversion ourselves, we now have complete control over the process so we can ensure more reliable performance and customer service. Furthermore, because we no longer use Nelco’s proprietary format, we are no longer tied to Nelco’s high prices and can now offer much lower prices.

And the new partner is...

Who is it that holds such great promise for our next tax season? It’s NTS Service Corp., who has provided e-file transmission and banking services for several major tax software companies since 1989. Moreover, their transmission software (EFI – short for Electronic Filing Interface) has a number of advantages over Nelco’s software:

  • Understandable filenames. Rather than a list of cryptic DOS filenames from which to select, EFI shows you the taxpayer’s name and SSN for each e-file return generated by Tax Preparer.
  • Clear error messages. When EFI finds a problem in its pre-transmission error checking, it gives you a clear message that directly relates to the problem.
  • Full integration with Tax Preparer. EFI can be fully integrated with Tax Preparer so that the transition between the two is seamless.
  • Lower per return prices. For our Standard Level you’ll now be charged only $2.00 per return instead of Nelco’s $5.95 per return. And for our low-volume Economy Level, you'll be charged just $5.95 per return instead of $9.95.
  • Lower software prices. The regular price is just $450 for unlimited filing with NO per return fee, down from last year’s $675. Even better, order by July 30th and you’ll get "early bird" discounts on this and other software prices.
  • Lower banking charges. If you expect to participate in banking services that give your clients early refunds (Refund Authorization Loans) or automatically take your fee out of their refunds, you’ll be pleased with the prices provided by NTS’s banking partner. Their prices are well below Nelco’s, allowing for generous commissions to you, the tax preparer.

It should be clear from the above list why we’re excited and can look forward to a better e-filing season ahead. We hope you can join us by adding e-file to your practice if you haven’t done so already.


IRS clarifies retroactive changes

The timing of the rules for the new special depreciation allowance and the newly extended period for NOL carrybacks has caused a great deal of confusion. The IRS has therefore issued two new documents:

  • Rev. Proc. 2002-33. This document explains what to do for returns filed before you were aware of the new first-year 30% depreciation allowance. The law requires you to take the allowance unless you specifically elect out of it. However, this new IRS ruling allows you to do nothing if you filed a return before June 1, 2002 without claiming the allowance and without electing out of it. However, for returns you filed later, if you failed to take the allowance and did not elect out of it, you must use a lower basis for depreciation in future years as if you had taken the allowance!
  • Rev. Proc. 2002-40. This document explains how to handle the carryback of NOL (Net Operating Losses) under the new rules that require you to use a 5-year carryback (instead of the former 2-year rule) unless you elect out of it. In this case the critical date is Oct. 31, 2002. You must communicate your wishes with the IRS by then or else you must follow the rules for the 5-year carryback.

You can get the full text of these notices, plus a copy of a complete review of the new law (IRS Pub. 3991) through our link to the IRS’s web site. Just go to our home page at, click on "IRS home page" near the bottom of our home page, then click on "New Law May Cut Your 2001 Tax" near the middle and bottom of the IRS home page. You’ll be taken to a page that gives you links to these and other documents related to the Job Creation and Workers Assistance Act of 2002, which is responsible for the troublesome mid-season law changes.



Beware forms software sheep’s clothing

Is it too good to be true? We’ve seen some new entries in the tax software business lately. The packages usually include all 1040-related IRS forms and all the forms from one state plus professional e-file -- all for one low price. But there are two caveats that are not always obvious:

l The tax software part is a glorified forms library.

l The e-file part carries a hefty per return charge.

Is it tax preparation software or forms software? The tax software in these packages provides on-screen forms, usually in PDF format, that let you make entries directly on the forms, and can often post results from one form to another. But their transfers among forms number in the tens, not the hundreds like Tax Preparer, and they provide no help with complex computations not explicitly shown on the IRS form. This makes the tax software little more helpful than the forms you can download for FREE from the IRS. The addition of fill-in capabilities to IRS forms is certainly no substitute for completely automated tax preparation software like Tax Preparer, in which critical information not appearing on the IRS forms is collected and used in the most subtle computations found deep in IRS publications.

Per return charges add up. Compare $2.00 per return from HowardSoft with $6.95 per return from others. That’s a $495 savings on 100 returns!




Good News

for your 2003

tax season!


Improved Professional e-file ... and greatly reduced prices!

Improved Graphic Printing ... and no 1040 tab hassles!


Early Bird Special: Professional e-file for just $155 with a $2 per return transmission fee or $355 with NO transmission fee! (Offer expires July 30, 2002.)




Complete the Order Form on back of this page, including your name, address, and lifetime serial number.

We accept VISA, MasterCard, Discover/NOVUS, and American Express for all orders,

and personal or company checks for mailed orders.

mail: HowardSoft ¬ P.O.Box 8432 ¬ La Jolla, CA 92038-8432

fax: 1-800-24-TAXES (toll-free)

phone: 1-858-454-0121