Staying Agile in the Wake of a (Literal) Tax Code Rewrite

Every year, tax prep software developers face pressure as the clock winds down to January. How did they cope with the most sweeping tax reform in 30 years?

For most agile shops, the development process entails regular moments of maximum stress. Planning, review, sprint: The cycle repeats itself and ultimately results in improved—and constantly evolving—products.

But what if your business only got its final product specs at the end of each year, and what if every year you had a hard deadline—January 2—by which you had to deliver a fully-functional product, no matter what?

Such is the case in the world of tax preparation software, a complex and unique industry where traditional rules of development don't apply. In late 2017, the challenges became even greater after President Donald Trump signed into law the biggest change in the federal tax code in the last 30 years.


A Race Against the Clock

Even under normal circumstances, building a development strategy is hard, admits Jack Gibson, Vice President of Tax Development for Drake Software, a developer of high-end software used by professional tax preparers. “To be honest, we struggled to find the appropriate software development model,” Gibson says. “There are a lot of approaches to development, and none of them is a perfect fit for us.”

Every year, time is invariably a dwindling resource in the tax prep software industry. “Summers are great,” says Gibson. This is when Drake has lots of downtime to work on product enhancements and new features for its core software suite.

By September 1, things start to heat up. That’s typically when legislators begin dropping tax code changes that will take effect in the new year, and those changes can arrive late in December—or even into January, after Drake’s product for that year has already shipped.

“We operate on a modified agile approach,” says Gibson, “with a scrum mentality and one-week sprints. The problem is that there’s no such thing as a minimum viable product when it comes to tax software. Either the tax is calculated correctly or it’s not.”

Making a tax calculation mistake is such a concern that the company devotes at least 60% of its time to testing. “The biggest piece of our cycle is automated testing and regression testing, because the tax calculation has to be right no matter what,” he explains.

Tackling the Tax Code Shakeup

Tax code changes always pose headaches. Simply understanding those changes is a job unto itself: Half of Drake’s development team is composed of tax professionals, not coders, who read the law and synthesize it into changes that the developers can implement.

And in late 2017, the Tax Cuts and Jobs Act, a massive piece of legislation that effectively reshaped the tax code for both individuals and corporations across the United States, compounded those headaches. President Trump signed the bill into law on December 22, 2017, a mere 11 days before Drake’s 2018 software products had to be finalized.

“The majority of the impact related to the Tax Cuts and Jobs Act has been in our Tax Planner, which is used by tax professionals to give their customers a sense of what their tax implications will be in filing year 2019,” says Gibson.

For Drake’s developers, the steepest obstacle posed by the new law was understanding and synthesizing the sheer number of details. “Our challenge was mainly the volume of changes, and getting that in front of our customers in a timely manner,” Gibson says.

But there’s a silver lining to the changes, too, he adds, noting that many of the changes have actually simplified the way taxes will be calculated in 2019.

Crunch Time for Christmas

Even though the December passage of the tax bill was singularly stressful, it fit into the familiar pattern that faces Drake every winter: crunch time.

Because tax prep software firms often get tax code updates so late in the game, Gibson says Drake’s recourse is decidedly low-tech: extend the working day during the last four months of the year.

“If a state drops a significant number of changes on December 15 and we have to deliver product on January 2, we just have to work longer hours. I don’t think there's any way around it. We don’t take a lot of time off for Christmas and Thanksgiving. It can be tough, and it takes a certain special person to remain committed during that time of year,” Gibson says. “We’re still working on a perfect solution, but it gets better every year.”

Christopher Null
By Christopher Null | February 22, 2018