UTILIZATION OF COMPUTERIZED TAX RESEARCH SERVICES IN THE TAX RESEARCH CURRICULUM Developments in Business Simulation & Experiential Exercises, Volume 15, 1988 32 UTILIZATION OF COMPUTERIZED TAX RESEARCH SERVICES IN THE TAX RESEARCH CURRICULUM Doug Laufer, Weber State College Larry Watkins, Northern Arizona University ABSTRACT in general the use of microcomputers, electronic spreadsheet, tax preparation and tax planning software programs are becoming an integral tool in public accounting and industry. For the tax practitioner. skill utilization of a tax database for computer assisted tax research is essential This paper provides an overview of computerized lax research systems and furnishes information which will be helpful in incorporating computerized tux research into the curriculum of a tax research course. General Information on computerized tax research systems, procedures and resources available to instructors are discussed. INTRODUCTION A course in tax research is differed at most institutions which offer a graduate degree in taxation 61. Typically, the course is required early in the graduate tax curriculum. A primary objective of the tax research course is to provide students with knowledge about how to access and evaluate the tax authority which must be utilized for the resolution of tax issues. With the tools developed in the tax research course the students can do successful research in the various specialized areas of taxation, The task of performing competent tax research would be challenging even in a static environment. However. the federal income tax laws are by no means static. The 1986 Tax Reform Act was the most significant change in 50 years but by no means the only change. In fact it was the sixth major tax bill since 976. Fortunately tools are available to the tax researcher which are of great assistance in sorting through the quagmire of tax information. One of the tools available to the tax researcher is the computerized tax service. A recent survey indicates that the use computer assisted tax research by Big Eight CPA films are growing rapidly [8]. Other studies also indicated increasing utilization of computers by business firms [51. In general the use of micro computers, electronic spreadsheet, tax preparation and tax planning software programs are becoming an integral in public accounting arid industry. For the tax practitioner, skill in utilization in a tax database fir computer assisted tax research is essential. Yet a 1985 survey revealed that less 10 percent of the responding institutions were utilizing a tax database [2]. There is an urgent need to integrate computers into accounting programs AA(’SB accreditation standards require “A basic understanding of the concepts and applications of accounting, of quantitative methods and management information systems including computer application”. For accreditation of accounting programs, accounting departments are required to provide information on computer application in accounting course work, beyond those courses included in the business common body of knowledge (e.g. Computer Information Systems) [1]. Additionally, members of the accounting profession have expressed the opinion that accounting programs have a responsibility to provide computer literacy. ‘Accounting curriculums should reflect the premise that the accounting function will increasingly be based upon computerized information systems.” [4] Integration of computerized lax research Into the graduate tax course work can provide students with hands-on computer experience in solving tax problems Research cases can be either hypothetical or drawn from real world experiences. This will further enhance the link between experiential learning in the classroom and practical application in the work place. The knowledge gained and procedures utilized in performing computerized tax research can be directly transferred to practice. The purpose of this paper is to provide an overview of computerized tax research systems and to furnish information which will be helpful in Incorporating computerized tax research into the curriculum of a tax research course. General information on computerized tax research systems, procedures and resources available to instructors will be discussed. BACKGROUND The ability to conduct meaningful, effective tax Fe-se-arch is the cornerstone on which a sound graduate tax education is built. The authority which a tax researcher must consult w answer complex tax law questions can be overwhelming. Computerized Tax Research Services (CTRS) have several features which greatly enhances the speed and efficiency of the tax researcher. The seemingly limitless storage capacity of the computer provides the opportunity for the must comprehensive set of research materials conceivable. The expense and space considerations which may restrict a library from providing extensive tax research material are not as significant of a factor when a computerized data base is utilized. With a CTRS, a screen, keyboard and printer allows almost instantaneous transmittal of any tax authority material to remote terminals In addition to the speed with which material can be gathered, CTRS also allows the individual tax researcher to tailor queries based on key words selected by the researcher, that is the researcher creates the indices and is not limited by the topical index or citator of a manual tax service. There are three computerized tax research services. LEXIS, a product of Mead Data Central, PHINet, a product of Prentice hall and WESTLAW, a product of West Publishing Company. LEXIS is the dominant service among CPA Firms, although the PHINet market is growing I [8], The three services differ to some extent in terms of their data bases, Format and the mechanics conducting a data base search, All Developments in Business Simulation & Experiential Exercises, Volume 15, 1988 33 three services provide most all the primary 18% authorities; Internal Revenue Code, Legislative Histories, Regulations, Revenue Rulings and Judicial decisions LEXIS and WESTLAW also contain many non-tax legal libraries while PHINet includes the full Prentice-Hall Federal Tax Service. All three services function in similar manner and produce essentially the same results The tax data bases the CTRS can be accessed via microcomputers for special-use terminals Once online the data base information can be retrieved ii a number of ways. Access to tax authority and related information is most commonly achieved through a keyword or key phrase approach Other options are available such as citation of a particular code sec lion, court case or other authority. Regardless of the search command approach utilized once the query is transmitted it wilt be processed, with the appropriate libraries searched for the requested information. Documents satisfying the search request are transmitted U the researcher fur display on the terminal The researcher can review and evaluate the information selecting documents to be printed or retailed for future reference. CLASSROOM APPLICATION OF CTRS Incorporation of a CTRS into the curriculum of a graduate tax research course can be structured in various ways Tax practitioners typically avail themselves of CTRS as a supplement in traditional research methods [8]. Following the practitioner approach a lows the instructor to utilize research cases already proven to achieve desired objectives. Previously created case designed to lead students to explore some specific tax authority relevant to their tax studies can be utilized in the completion of a computerized tax research project. Regardless of how use of CTRS is structured into a tax research course or which of the three computer services is utilized, supplemental materials exists which will facilitate integration of CTRS into the curriculum. Under a grant from the National Center for Automated Information Retrieval, Professor Kevin Murphy of Oklahoma State University has developed a series of tax research training materials which supplements the LEXIS CTRS. The materials consist of both manual arid computer assisted research exercises. An instructor’s guide, intended to assist both the instructor and student learning in utilization of PHINet for computer assisted tax research, is available to those selecting that service The guide includes example research exercises. The tax research text published by West Publishing Company offers a comprehensive illustration of how to conduct tax research utilizing the WESTLAW computerized tax service [9]. The text also offers indepth discussion of the other services Procedural Information The basic search strategic utilized in the implementation of computerized tax research is quite similar for all three CTRS (LEXIS, PHINet and WESTLAW). The fact situation presented W the students can be hypothetical or based on real experiences As with the manual approach to tax research, the researcher must identify the issue(s) or question(s) to be investigated, Next the riles w be searched must be selected from the library menu if tiles. The appendix provides a partial listing of the files contained in the PHINet Research data base with a brief description of each File The researcher should attempt 10 select the narrowest file possible which is likely to contain the desired tax authority. To access the pertinent tax authority from the selected file the researcher should generate a list of key words. Select words that are most likely to appear in the documents being searched. The words selected should he significant terms which capture the essence of the issue being investigated. The narrower the term used, the more direct and restricted the search will be. Key words or phrases can be structured in a number of ways. use if search statements (connectors) can Link key words and add flexibility w the search. This skill will become refined through experience. The researcher should perform the tasks of selecting the appropriate file, keywords and connectors before being on-line with the CTRS When the researcher is fully prepared, the CTRS should be accessed and the desired search requested. When the documents have been retrieved by the CTRS they can be listed, displayed printed Typically, it is most efficient, and least costly, to have a list of “documents retrieved” printed Using the list, the documents should he perused, noting the documents which merit additional review. If the documents are nut available in the tax library, a print command should be submitted. Otherwise, an appropriate notation can be made on the printed list of documents At this point, the remaining steps in the research process can be completed in the traditional manner If additional issues arise, the researcher should re- access the CTRS and repeat the above scenario. SUMMARY Computerized tax research services are utilized in tax practice as one of the tools for conducting tax research. It provides efficiency and flexibility in accessing primary and secondary tax authority. Over time, tax practitioners will increasingly rely on CTRS as the primary resource for providing tax service to clients. Accordingly, the curriculum of Developments in Business Simulation & Experiential Exercises, Volume 15, 1988 34 graduate tax programs should be structured to adequately prepare students fir careers as tax professionals. Additionally, the use of computerized tax packages enhances the students’ learning process Ninety-five percent of the- students responding to a survey conducted at St Bonaventure University slated that use of tax computer exercises increased their ability to understand tax concepts and procedures [7]. There are difficulties to overcome in selection and implementation of a CTRS. A significant consideration is the cost of a CTRS. Resources are required for both hardware needs (PC, modem and printer) and the computer data base service. Presently the competition for the university market is quite Strong between the three CTRS. Each offers significant educational discounts. The American Taxation Association Computer Usage Committee annually curriculum a survey of the cost components of each service [3]. If it is not possible to secure funding for a CTRS through institutional channels then consideration should be given to seeking outside funding. Certified Public Accounting firms traditionally have provided funds for development of such resources. The CPA firms are aware that it graduate tax programs ate o provide students with state of a are background and training it is necessary to provide the opportunity for learning how to conduct computer assisted tax research. APPENDIX PHINET RESEARCH DATA BASE - MAIN MENU FED1 Prentice Hall’s Federal Taxes loose-leaf library, Volumes 2-10 (current edition) FED2 The Federal Taxes Library with the index. INDX Index only hr the Federal Taxes Library. CAS1 Federal tax cases CAS2 Federal lax cases as above. from 1924 through 1953. CASE All federal tax cases from 1924 to date. PLRS Private letter rulings (1977 to date); general counsel memoranda: technical advice memoranda: actions on decisions. RULE Cumulative (Current) Bulletin Material: revenue rulings and procedures: IRS news releases announcements and other materials contained in the bulletin. FULL A contribution, in one file, of CASE PLRS and RULE; takes no longer to search and is no more costly than any other file. TOTL The “global” search file, combining CASE PLRS, RULE, and FED1 CITE The prentice Hall Citator, which takes the history of cases and rulings TXRF A comprehensive file of current and historical material on tax reform, including the Tax Refund Act of 1986 and committee reports. IRML The internal Revenue Manual. PBS4 IRS Publications for use with 1984 returns. PBS5 IRS Publications for use with 1985 returns. PB86 IRS Publications for use with 1986 returns, 1984 1984 edition of Prentice Hall’s Federal Taxes loose-leaf’ library 1985 The 1985 edition Prentice Hall’s Federal Taxes loose-leaf library, 1986 1986 edition of Prentice Hall's Federal Taxes loose-leaf library, SHEL A special file on tux shelters: includes relevant cases, rulings, and Chide sect ions. as well as news releases and in injunctions of fraudulent, shelters (issued by the Department of .Justice). ASTG Prentice Hall's All States Tax Guide loose-leaf service TXTR Prentice Hall’s Pension and Profit Sharing loose- leaf service TNTD Tax Notes Today (daily) – the current (today’s edition.) FNTH Tax Notes Today (history) -- a compilation of previous editions Tax Notes Today, dating back of May 3. 1986. PHINet’s Research database files are updated every night to reflect the Latest tax developments. REFERENCES [1] AACSB Accreditation Council Policies Procedures, and Standards, 1986. [2] American can Taxation Association, “Tax Educators Use of the Computer,” ATA Computer Usage Committee Report. 1985 [3] American Taxation Association “Tax Educators Use of the Computer.” ATA Computer Usage Committee Report 1986 [4] Cohen Lisa and Pamela Pfau. “Cooper & Lybrand: Computers. Education, and Curriculum Development” Kent/Bentley Review, 1986. [5] Conners, Suzanne, “NAA Research,” Management Accounting, November. 1984. [6] Fowler, Anna C., “An Approach to Designing Tax Research Cases to Accomplish Various Objectives,” American Accounting Association 1987 [7] King, Darwin L, Using A Computerized Tax Package as a supplement in teaching Taxation,’ American Accounting Association Mid-Atlantic Regional Proceedings, I 9S 7 [8] Marshall, Don C., Richard D. Boley and Kevin M. Mislewicz, “Use of Computer Assisted Tax Research by Large Public Accounting Firms,” American Accounting Association Mid-Atlantic Regional Proceedings, 1987. [91 Raabe, William A., Gerald E. Whittenburg and John C. Bost, West’s Federal Tax Research, (New York: West Publishing, 1987). Table of Contents Volume 15, 1988 The Role of Experiential Knowledge and Human Information Processing in Decision Making A Semantic Differential Instrument to Evaluate Experiential Teaching Methods A Comparison of Two Approaches to Management Skill-Building in an Organizational Behavior Course: A Replication Integrating Simulations: A Model for Business Policy Success Capstone Renaissance = Simulation + Interaction + DSS A Hybrid Method of Executing a Management Simulation: Combining the Best of Mainframes and Microcomputers Providing an Experiential Dimension to Cost/Managerial Accounting Courses Utilization of Computerized Tax Research Services in the Tax Research Curriculum Using and Expert System Based Decision Aid in Accounting Information Systems Event-Extended Entity-Relationship Diagrams for Understanding Simulation Model Structure and Function Multiple Objectives in the Development of the Gordon Macro Game A Comparative Study of Strategic Performance Factors in Actual and Simulated Business Environments An Empirical Investigation of Integrated Spatial-Proximity MCDM-Behavioral Problem Solving Technology Group Decision models Computer Simulation of Human Interaction The Role of Experiential Learning and Simulation in Teaching Management Skills Expert Systems - The New Business Simulation Tool Integrating Prolog into and Undergraduate Logistics Course Simulating Material Requirements Planning on Lotus 1-2-3 Innovation in Management Education: The Impact of the AACSB Experiential Learning in the International Environment Educational Testing with the Microcomputer A Simulation of Investment Analysis, Portfolio Management and Reporting Using Lotus 1-2-3 The Use of an Expert System to Develop Strategic Scenarios Two Exercises for Teaching about Motivation Sex Roles and the Good Manager A Form and Process for Nonconfidential Peer Evaluations Simulation and the Recalcitrant Student Employee Rights-Student Rights: A Classroom Exercise Computer Simulated Competition: An Alternative to Team Play Management Simulation The Relationship of Locus of Control and Vividness of Imagination Measures to Simulation Performance Formal Planning, Simulation Team Performance, and Satisfaction: A Replication Experimental Analysis of Magnitude and Source of Students' Inequitable Classroom Perceptions in Three Reward Conditions Strategy Design, Process and Implementation in a Stable/Complex Environment: An Exploratory Study Matching a Strategy Simulation to the Business Policy Literature: A Black Box Approach to Simulation Development An Evolutionary Classroom Experiential and Computer Simulation Model of a Corporate Strategic Planning System Collective Bargaining in the City of Elson: A Public Sector Experience Should Students Play Games in Labor Relations? Applying Cognitive Educational Objectives to Business Management Cases Grading as a Teaching and Feedback Mechanism: Involving Students in the Grading Process Teaching Controversies: A New Approach to Computer-Assisted Instruction and Simulation Packages Simulating Demand in and Independent-Across-Firm Management Game Advertising Response in the Gold and Pray Algorithm: A Critical Assessment A Model for Pricing Decisions in First Period Marketing Simulation Games Jog Your Right Brain: An Exercise for the Classroom and for Research Six Thinking Hats: An Exercise to Combat Confusion and Develop Thinking Skills Communicating in Context: A Simulation for Learning Business Communication A Simulated Consulting Service for the Compete Marketing Simulation Game Action Exams in the Consumer Behavior Class Using Focus Groups to Teach Problem Definition in Basic Marketing Research The Use of Journals in Management Simulations: A Literature Review and an ABSEL Response An Initial Step Towards Developing and Using an Expert System with a Business Simulation Self-Managed Learning: An Experiential Course Design Using the QWL Paradigm A Review of Current Developments in Experiential Learning Bring the Real World into the Classroom Assessing Student Performance on a Business Simulation Experience Minimizing Startup Anxiety: Case Studies of Simulation Experiences A Tale of Two Shepards Or Using Simulation in a Class Without Walls Enhancing Business Simulations Through the Utilization of Experiential Activities Involving Local Community Executives Simulation with Integrated Spreadsheets: The Design and Development of a Conversational Marketing Concepts Decision Game Introducing INMART: An International Marketing Simulation Using a Computer-Based Business Plan Assistant in Conjunction with a Marketing Simulation Game Overview of the ABSEL Guide to Experiential Learning and Simulation Learning