🚩 Red Flag | Does Your Firm Need AI? | TaxGPT's Newsletter

Is AI Becoming Necessary for Tax Professionals?

With the proliferation of artificial intelligence making its way into the public mainstream, we’re seeing the landscape of many professions being altered irreversibly. Historically, the tax profession has a wait-and-see approach to adopting novel technology for a myriad of reasons: cost, operational downtime, security concerns, decision paralysis - and the scariest - “this is how it’s always been done”, just to name a few.

As a tax professional who has now been thrust into the world of AI, I want to explore this question with you: is AI becoming necessary for tax professionals?

An Industry in Need

The tax profession faces significant headwinds, especially in the United States.

• Ever-increasing complexity and globalization of tax law & regulations
• Rapidly expanding volume of data to process, analyze, and input
• Rising expectation from clients for speed and accuracy
• According to the AICPA, 75% of CPAs reached retirement age in 2020
• Shortage of 200,000 accountants projected by the Bureau of Labor and Statistics

The industry has reached the point where it is absolutely necessary to do more with less. Firms can’t handle additional client workload, and often have trouble adequately staffing around busy seasons. If only we had a breakthrough technology that has the potential to automate data processing and communications, significantly enhance research speed and effectiveness, reduce human errors, and most importantly: make accounting fun again!

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What Benefits AI Brings for Tax Professionals

Because of the pressure the industry faces, and the solutions AI can offer, integration cannot be overlooked. Firms that fail to explore these early days face being left behind. Here’s a small glimpse at what AI, even in its infancy, is capable of:

Data Processing and Analysis

• Automated data extraction from various sources
• Quick processing of large volumes of financial information

Tax Compliance

• AI-powered research
• Automated error detection and consistency checks

Tax Planning and Advisory

• Automated correspondence generation
• AI-assisted scenario modeling for tax optimization

Overall, we’ll see the entire industry level up. Bookkeepers become accountants; tax preparers become tax managers. Firms will be able to focus their efforts on high-value and value-add activity. They can provide more personalized services to more clients. They might actually achieve the work-life balance that is so elusive in our industry.

The Answer is Obvious

Adopting AI at any level is critical. Start with an exploratory demonstration of what’s out there or attend a Continuing Education class. Assess your AI readiness, identify which workflows are candidates for AI integration, evaluate your budget, and find a solution!

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