No Pc Required

Art Larson is no Luddite. He keeps an IBM laptop in his home office and a late-model Dell desktop in a nook upstairs. Larson, a tax preparer in Stow, Mass., e-mails his clients, surfs the Web and uses CD-ROMs to find answers to technical tax questions. But when it's time to prepare his clients' 1040s each spring, Larson turns to a different technology: a Pentel 0.5 Twist-Erase graphite pencil and an old-school Texas Instruments calculator. In the age of TurboTax, he powers through 200 or so tax returns each year by hand. Larson, 59, has looked at tax software, but he's not convinced they'd make him more efficient. By doing returns the old-fashioned way, he believes he's paying closer attention. "I feel I'm giving clients more of their money's worth," Larson says.

Every small business has to decide how much to rely on technology to streamline operations. Many tax preparers began computerizing their number-crunching and form-printing operations two decades ago. But the holdouts' aversion to computerizing shows how some businesses try to find competitive advantages in being low-tech. Examining their anti-PC attitudes also illustrates the challenges facing the IRS, which has been instructed by Congress to persuade taxpayers to file 80 percent of returns online by 2007, up from 36 percent in 2002.

By all accounts, few tax professionals are still preparing returns without a PC. Most of the throwbacks are older preparers who simply never learned to use computers. Etta M. Wolfersberger, 72, of Harrisburg, Pa., says she works 12-hour days, six days a week, during tax season to complete 350 returns by hand. She says that without a PC or high-cost software she keeps overhead down and can charge far less. "I'm very professional," she says. "I've got my copy machine, my calculator." Even some high-tech pros find reasons to unplug at times. Salt Lake City attorney Michael Blackburn has used tax software since 1979. But he still prepares simple returns (like 1040EZs for clients' kids) by hand, and he still does his own taxes using pencil and paper. The reason: he wants to keep his personal finances out of the office computers, where colleagues could see them.

The IRS understands those concerns. Nina E. Olson, the agency's national taxpayer advocate, ran her own tax-prep business for 16 years. She was a reluctant convert to tax software; even after she began using the programs in the mid-1990s, she worried. "It was always a question: 'Did I miss something? Am I taking something for granted I shouldn't?' " Her colleague Terry Lutes leads the IRS effort to get the country to go one step beyond computerizing and embrace electronic filing. Even if it seems unlikely he'll meet Congress's 80-percent-by-2007 goal, he says the IRS is getting people to switch faster than online banks or brokerages. Lutes touts the advantages of e-filing: mathematical accuracy, quicker refunds, no more post-office lines. Online or off, other pros say computers reduce your chances of an audit. Even for an individual taxpayer, "to do it by hand is just outright stupid... and any accountant that does it by hand is even nuttier," says tax attorney Sandy Botkin, author of "Lower Your Taxes--Big Time!"

For his part, Larson can see why some people like their tax software. He pulls out one client's 21-page return. The client tried using software to do the return himself before bringing it to Larson. The program helped the client get in the ballpark, Larson says (he was off $200 on the federal return and $2,000 on the state). "I'd have probably made the same oversights if I hadn't worked it out [by hand]," says Larson, whose wife uses software to laser-print the tax forms after he's manually crunched the numbers. Perhaps the biggest downside of Larson's approach is when he dines with colleagues. Inevitably talk turns to tax software, and someone asks Larson which brand he's using. In this situation, Larson resorts to that time-honored technique many taxpayers will use as April 15 approaches: he makes something up and hopes nobody asks questions.