Artificial intelligence presents the most exciting opportunity for CPAs since the personal computer, offering superpowers to tax professionals that will dramatically improve life for them and their clients.
Although 2023 was rife with uncertainty about how artificial intelligence could impact the tax profession, 2024 marks the beginning of a new era. With new AI applications, tax professionals will have more time to focus on serving clients, staff will uplevel their skills more quickly, solo practitioners will scale more easily, and professionals will increase earnings with lower billable hours and higher value advisory work.
While innovation is exciting, it is also bumpy. CPAs will need to partner with secure, purpose-built technology that ensures the safety and prosperity of their clients.
Tax Accounting 1.0
Tax is facing many challenges today, including:
• Labor: Accounting has long suffered from a staffing shortage — turnover hit 20% in recent years, according to the
• Risks: Tax compliance is a petri dish for risk, especially with new and evolving IRS guidance on cryptocurrency and other cutting-edge matters.
• Trapped in lower margins: Compliance often pays less than other activities, leaving fewer hours to pursue higher-margin advisory services, according to a
• Unhappy clients: Clients want faster turnaround times, a technology-forward experience, and more real-time guidance from their advisors.
These issues are center stage as we enter the busy season. Tax professionals want resources that enable them to act as trusted advisors, not just preparers. AI will drive it, similar to how automation drove client accounting services.
How AI will unlock Tax Automation and Advisory Solutions (TAAS)
In the 2000s and 2010s, accounting automation streamlined repetitive tasks like bookkeeping or accounts payable, unlocking time for higher-value opportunities known as client accounting services. Firms that adopted CAS report consistent double-digit annual growth, according to CPA.com's
Tax Automation and Advisory Solutions is an advanced technology that combines artificial intelligence and automation to significantly free up tax professionals to focus on tax advisory services. Here are some examples of how TAAS his will manifest in 2024 and beyond:
• Accelerating tax preparation: AI is a powerful tool for automating data entry. Advanced tax preparation automation will transform preparers into reviewers and free up staff to focus on client service.
• Analyzing large datasets to identify trends: AI sifts data quickly, from scanning the latest tax regulations to reviewing a client's financial records. It will help identify savings opportunities and enable real-time tax forecasting to better serve clients who request tax planning support.
• Streamline client communication: AI-powered virtual assistants can field inquiries and organize requests, automating low-value client tasks.
• Preliminary research and recommendations: AI excels at research, presenting droves of relevant information faster than a human could. This will allow tax pros to get smart on complex issues and improve the speed and accuracy of their strategic decisions.
Right now, all these and many other tasks consume resources and human attention. With TAAS, they won't. This will open the door to new service areas that are now too time-consuming for many firms to address.
Another recent example is the Beneficial Ownership Information reporting requirement of the Corporate Transparency Act and the Financial Crimes Enforcement Network of the U.S. Treasury. Business clients are largely unready for this staggering new mandate. AI could provide a competitive edge in firms' getting up to speed and ready to serve their clients far ahead of the competition in this lucrative niche.
Navigating AI responsibly
Technology innovations often incite fears of job losses. AI's impact on the broader labor market, of course, remains unknown. But given the shortage of accountants, we think it will strengthen existing tax professionals rather than replace them (some argue it may even increase job growth in tax and accounting.)
Security is another important consideration. Entry-level AI chatbots do not enforce multifactor authentication and are better for non-sensitive data8. For more sensitive work, firms should seek protection. For example, SOC 2 compliance isn't a requirement for U.S. accountants but is a wise security measure. Enterprise versions of AI also offer more robust data protection.
How firms can capitalize on TAAS
• Involve your staff early in AI: Many in the workforce, especially younger staff, already use AI for daily tasks. Firms should lean on their staff and seek their suggestions for incorporating AI.
• Partner with responsible AI vendors: Ensure all technology providers achieve your compliance thresholds (e.g., SOC 2, 7216, etc.) and have in-place security controls before implementing their products.
• Expand into tax advisory services: Scale beyond prep with tax guidance, quarterly reviews and estimates, tax planning sessions and more to support clients year-round — affirming your firm as a recurring, trusted advisor.
• Move to recurring or subscription billing: Stop simply pursuing tax returns only. Tax advisory services warrant charging on a monthly recurring or subscription basis, enabling higher, more predictable revenues and a better client experience.
TAAS will spark drastic improvements in employee and client satisfaction, supercharge firms' financial success and cement tax professionals' role as trusted advisors to their clients.
