Much discussion of artificial intelligence's impact on tax preparation remains high-level. What exactly is it going to do for the industry day to day? How will it make tax prep easier or harder, and how, exactly? What do the folks on the front lines think?
"I'm terrified," said John Dundon, enrolled agent and president of Taxpayer Advocacy Services in Englewood, Colorado.
"I look at AI as a tool to enhance my practice," said Manasa Nadig, an EA and owner at MN Tax and Business Services and a partner at Harris Nadig in Canton, Michigan, who's been "phasing it in working with automation, research and so on. I'm not afraid of AI. From a tax prep point of view, I think at this time, even if AI had the capability to prepare tax returns, it wouldn't be able to replace the human element brought in by an advisor with years of experience."
"Whether or not you're afraid of AI, we're going to need it to meet the demand for services," said Scott Kadrlik, managing partner at Meuwissen, Flygare, Kadrlik & Associates, in Eden Prairie, Minnesota. "Anything that will reduce the repetitive nontechnical tasks will be greatly appreciated."
How it could help
Wolters Kluwer, reporting recently on a presentation at its CCH Connections User Conference, reported that AI's help for accounting and advisory firms could include:
- Growing client relationships "beyond the simple once-a-year engagement;"
- More efficient communication with clients;
- Automating tasks to free up time and work with large data sets; and,
- An overall ability to focus more on face-to-face time with clients than on simply getting the work done.
"It's evolutionary and yes, it will make a difference in how many firms do business. But they have to embrace the technology and make it work for them," said Morris Armstrong, an EA and registered investment advisor at Armstrong Financial Strategies in Cheshire, Connecticut. "You need to realize the limitations of the answer, but the points that are raised can lead to further probing. I also talked to some brilliant practitioners who utilize AI and Microsoft products to streamline their data collecting."
"The goal is to increase efficiency and [improve] the bottom line," Armstrong said. "People will need to be trained to utilize the process properly."
AI is expected to have an immediate impact on freeing up time for value-added client advisory services, just as it's
- Business owners are
willing to pay as much as 10% to 20% more for financial and people advisory services. - More than half of CEOs globally (58%) believe it will improve the quality of their products or services, 44% say it will increase profits, and 35% think it will increase revenues.
- But many in businesses still don't mention AI without also mentioning fear: CEOs identified a cybersecurity breach as the primary pitfall at 77%, followed by the spread of misinformation in their company (63%) and legal or reputational damage (55%).
Adopting, adapting
Whether a practitioner is embracing AI or eyeing it warily right now seems to depend on many factors. One is field of practice.
"[I'm] not so afraid of AI in the wealth management business," said Bruce Primeau, a CPA and financial planning consultant with Summit Wealth Advocates in Prior Lake, Minnesota. "Clients will need to realize the limitations of AI in terms of client-specific advice and implementation. I can see a lot of folks blindly trusting the advice AI has to offer and being led astray in some cases."
"No, not afraid," said Dan Henn, a CPA in Rockledge, Florida. "I'm adding value to the prep as well as adding additional services that are less likely to be overrun by AI."
"What I am worried about [regarding] AI," Nadig said, "is the access that it may have to confidential information and what procedures and safeguards will be put in place to monitor misuse."
"In an industry where an unlicensed person can comport themselves as a tax practice professional," Dundon said, "we now must contend with AI programs that collectively have, as of yet, demonstrated an inability to stay current with the velocity of federal and state tax law changes. [This causes] me to speculate that there will be a lot more incorrect or perhaps incompetent tax guidance circulating in the echo chamber of the internet."
