If I had a dime for every time a new technological breakthrough was supposed to eliminate my livelihood, I’d have, well, a lot of dimes. Professional tax preparation services are often viewed as a necessary evil each Spring, and technology is often looked at as a way to eliminate the need for the added cost of engaging a professional.
We’ve been through the introduction of the PC, canned preparation software, the internet explosion, right up through e-filing and the proliferation of various online “free” preparation and filing services. Some may even say it dates back to the popularization of the handheld calculator. Now, AI (Artificial Intelligence, of course) is all the rage, and we are once again facing the threat of elimination and replacement. The thought is that with little effort and low cost, one will be able to compile, process, and file an accurate tax return in short order. And not only that, but planning ideas, advice, and consulting services will also be built into the whole process.
My firm has invested in and begun implementing forms of AI assistance across our overall technological platform. One example is a scanning add-on to our preparation software that can read, organize data, and populate the input screens normally requiring manual input. Also, the research services that we use draw on AI to answer questions posed to it, then offer suggestions, alternatives, and even deliverables such as letters and memos. Copilot is also a powerful tool for organizing and summarizing data. Some of the processes that it can perform, and perform quickly, are hard to believe. This level of technological advancement would have been hard to envision just a decade or two ago.
There is a reason the accounting profession has earned its reputation for being boring and undynamic for generations. That is because a good deal of the tasks are just that, necessary but mundane. The old joke is that CPA stands for “cut, paste, and assemble.” AI certainly has a place in changing the way these basic tasks are performed. There is no doubt that AI will increasingly replace lower-level accounting functions to a great extent. The real question is, apart from streamlining and eliminating the mundane tasks, can it also become your trusted advisor? That trusted advisor will know you, not just what your data tells about you.
Scanning software programs, designed to accurately read documents fed into them, are amazingly adept at recognizing particular fields associated with specific lines on a tax return. However, without the full picture of that person’s financial life, can it really ensure completeness and tie a multiplicity of disparate items together in a meaningful manner? Will it clutter up and confuse the input by scanning and including duplicitous, frivolous, and totally unnecessary items, and attempt to include them in the tax return? A tax professional, even at the lowest level, can discern the proper items to include and exclude.
Remember, ultimately, the tax return is a product that is being presented to the IRS, a state revenue department, or other government jurisdiction. Historically, the CPA or other professional tax preparer has always played the important role of gatekeeper for this information transfer between the taxpayer and the taxing authorities, regardless of the form of delivery.
Increasingly, I have used the AI function within our research service, for which we subscribe, to help find planning ideas and solutions for more complex tax issues. That technology differs from the random AI searches through Google Gemini, ChatGPT, and other widely used AI platforms in that it draws on limited, vetted, and finite sources of data and information to research questions and formulate recommendations. As a professionally trained tax consultant, I find that the trust built into the known (and paid-for) systems provides a certain level of comfort with the output. However, knowing that it is limited also shuts off a whole world of resources and potential creativity, which can reduce the value of the research. Here is where the professional, be it a CPA or another qualified individual, with years of training, experience, and, most of all, human interaction, can provide value to the whole process.
How you frame the question you pose to the research service or AI platform will yield vastly different outcomes. I have found that asking AI the” correct,” targeted question coming from a place of experience will produce the best and most accurate answers and suggestions. The inclusion of the right buzzwords and technical terms, and perhaps more importantly, the exclusion of others, produces vastly superior outcomes and avoids mistakes and flat-out wrong or misleading advice.
So, the question remains: will AI sound the death knell for the need of a trained professional to assist with tax planning and return preparation? Perhaps future AI advancements can add the human touch, acquired wisdom, and the necessary tact to make the client/customer feel comfortable with what is being reported to the government. In the meantime, I’ll be ramping up for the next busy season.
