Generative AI may let tax pros charge more

A significant portion of tax professionals believe the use of generative AI will increase their rates for clients, at least somewhat.

A recent survey from Thomson Reuters of 1,128 professional service workers, conducted in January and February 2024, found that 40% of tax professionals believe the rise of generative AI will allow them to charge their clients higher rates, with 2% saying it would do so significantly. A slightly higher number, 42%, predicted their rates would stay largely the same, with or without generative AI. Only 6% thought the technology would lead to them charging clients less, with only 2% saying it would be significantly so.

The tax firms' responses stand in stark contrast with law firms, where only 13% of their respondents believe their rates will go up at all as a result of generative AI; absolutely none thought it would do so significantly. They were also more likely, at 11%, to believe it would let them charge lower rates.

Thomson Reuters theorized this might have to do with differences in attitudes on how they will handle AI investments. Tax professionals are much more likely to pass on the costs to their customers, either across the board (29%) or on a case-by-case basis (27%). In contrast, 51% of legal professionals said they would just absorb the cost as overhead. In contrast, only 27% of tax professionals said the same thing.

The poll also showed tax professionals are warming up to generative AI, at least compared to their legal counterparts. When asked if generative AI should be applied to industry work, 49% of accounting professionals last year said yes; since then, this proportion has grown slightly to 52%. Corporate accounting professionals have seen even bigger changes, going from 53% to 60% in the same time. In contrast, 51% of legal professionals said generative AI should be applied to their work last year, and 51% said the same thing this year.

Similarly, accounting professionals — while definitely still having concerns about the technology — are a little less likely to view generative AI as a threat. While 85% of accounting professionals thought generative AI presented at least some threat to jobs, 94% of legal professionals thought the same thing. Similarly, while 84% of accountants were afraid generative AI meant less need for their own services, 92% of legal professionals shared this view.

Yet, more law firms are using generative AI already than tax firms, 14% versus 8%. Further, while 40% of law firms have no plans to use AI, 49% of tax firms said the same thing.

Thomson Reuters said that, as time goes on, more professionals will use AI which, in turn, may change how they feel about its use in their firms.

"There will also likely be even more momentum toward GenAI in coming years. A high number of professionals say their organizations are still considering GenAI use within the workplace and its impact — and while some may determine that GenAI is not for them, it's likely that an even higher percentage will become GenAI users," the study concluded. "Many professionals will receive even more education around GenAI and its usage as well, especially among those organizations at which opinions are not yet fully formed."