How Is Artificial Intelligence Improving Tax Preparation and Research? – Maria Phipps, CPA, Senior Tax Accountant
How Is Artificial Intelligence Improving Tax Preparation and Research?
Today, you can read many articles saying that Artificial Intelligence (AI) is replacing jobs, and fear starts to settle in… Maybe AI will replace me? While this thought is frightening, the better question to ask is, how can AI help me?
State and local developments, IRS rulings, and guidance on federal laws are more than enough to make the busy season even busier. This is exactly where artificial intelligence, or more specifically, AI-enhanced research tools, can help.
Where AI Makes a Real Difference:
- Turning Hours of Research into Minutes
What used to be pulling out the newest edition of the tax code, flipping through pages to find an IRC subsection, cross-referencing court case rulings, and other articles is now one step. A quick prompt can surface the most relevant answers in a matter of seconds. Saving time and energy compared to traditional search methods.
- Improving Accuracy and Consistency
Accountants and tax preparers alike fall into the “SALY” or Same-As-Last-Year method when preparing financial statements and returns. This happens when rules are remembered instead of researched, and if someone isn’t up-to-date on changes, this could be costly. AI-enabled search tools provide current laws and guidance, ensuring consistent application across clients with similar structures.
- Making Complexity More Understandable
Questions over payroll, tax advisory strategies, or new legislation from clients can be daunting to reply to. AI research tools can break down these complex topics into clear, understandable explanations for both the client and the tax preparer.
- Stronger Due Diligence and Documentation
Regulators and clients expect the highest level of quality in research, preparation, and final product, i.e., the issued tax return. AI-supported research can confirm and document a research trail for workpapers, listing all sources from which the information was pulled. In areas where a missed detail means penalties or an amended return, that paper trail matters.
One Risk Worth Taking Seriously:
Security. It is now more important than ever to keep sensitive data away from AI platforms. They remember every letter, phrase, and number once the “send” button is hit. Firm policies should clearly define safeguards for data security as well as consequences for misuse. You must be diligent in removing sensitive data every time. This provides a reminder to us all that the internet is forever, so please use it with caution.
Bottom line: AI-powered research tools are becoming a necessity for the busy tax preparer. Staying up-to-date, providing high-quality responses, and delivering more to clients in less time shows that AI is not a replacement for our role but an enhancement. Lastly, we must adapt to the fast-changing online world instead of fearing it.