The “Why” of Tax Doc Hub

The system is based on the following premises:

MANUAL DATA ENTRY IS TEDIOUS, ERROR-PRONE, AND UNNECESSARY
It makes no sense for issuers of tax information documents to have data in electronic form — only to print it to paper and require manual data entry by taxpayers or tax preparers to get the data back into electronic form in tax software. Manual data entry should be replaced with one or more of the following:

API

Industry standard file export/import

QR code scan

WHEN SCANNING PRINTED TAX FORMS: QR IS BETTER THAN OCR
Some use optical character recognition (OCR) software to get printed tax form data into tax software. We believe that OCR software is too costly and is not sufficiently reliable. A better technology for this purpose is two-dimensional bar codes such as QR codes.

WHEN DOWNLOADING TAX FORMS FROM A WEBSITE: Industry-standard files are better than generic PDF
“Paperless” delivery of tax information documents in Portable Document Format (PDF) via email and web download speeds delivery and saves paper. But PDF can still require manual data entry. Issuers should make document data downloadable in a standard digital format. And tax software should accept digital data files via “drag and drop”. Additionally, the older Tax Exchange Format (TXF) should be replaced with a modern, well-supported, standard.

DIRECT ELECTRONIC IMPORT INTO TAX SOFTWARE VIA API SHOULD BE EXPANDED AND IMPROVED
Use of Open Financial Exchange (OFX) server technology makes end-to-end electronic delivery of tax data possible.
However:

Medium and smaller sized companies shouldn’t have to incur the cost and headache of developing and operating their own OFX server.

More tax information documents (especially Schedules K-1 and other documents with multiple data items) should be commonly importable by tax software programs.

The credentials used to retrieve tax documents should not be the same as those to log on to a financial instituion web site.

Ideally, tax software users should not have to authorize the application to retrieve their tax document data each year. An “until-revoked” authorization should be available.