AI predictions are in, is tax being replaced?
A common trend with the AI prognosticators is that certain jobs are primed for robot replacement…and all things tax tend to be high on that list. So the question is, should people involved in tax be scared?
My answer is an emphatic NO!
Tax preparation is based on a lot of data entry which certainly can be done much more efficiently by software, which I will gladly celebrate. Tools still need operators, and with the shortage of accountants and tax professionals, having a more powerful tool sounds like great news.
Tax planning, in theory, should all be math and could be at risk for AI encroachment, but I’m still not scared, and I can give you a great example of why not: information alone does not a tax plan make. Yes, AI can seamlessly comb through the 80,000+ pages of the tax code and give you an answer. But, AI has not reviewed 1,000+ returns with real people and seen what opportunities, explanations, objections, and value can be delivered in real life.
When I work with top advisors to create something like the 37 Point Checklist for reviewing tax returns, it is based on that in-the-trenches experience, and that’s what makes all the difference. On a whim, after the most recent round of AI predictions were forwarded to me, I asked AI to create a checklist to see how it would stack up.
I tried to set it up for success, gave specific parameters, told it to approach the list from the perspective of a financial advisor trying to make sure their planning was reported correctly, and help identify opportunities for tax savings. Ironically, the first reference the AI tool used was the RTS website, but even still, it came up with a 50% quality list at best. It was very factual but incredibly broad. It felt like more of a study guide for the ultimate nerd CPA bar trivia than something that would help a client.
The biggest difference between our list and the AI list? The answer to the question you should ask about any resource or recommendation: how do you know this works in the real world? The AI doesn’t know the answer to that. We know the answer because we use it with real clients on real tax returns all the time. We know the answer because we consistently hear from advisors who use the resource and see results for their clients.
I have every intention of using AI to make my job easier, just like I would any other tool, but nothing replaces the real-life at-bats that only come from getting your hands on a tax return and working directly with clients.
Whether you use our resources, someone else’s, or your own, remember there are things only you can do, and that’s where you need to spend your time.
Happy Tax Planning!
P.S. If you’re looking for more things AI can’t do, sign up for our next webinar on May 7th and learn from real people with real experience working with real clients. See every “threat” to take over one of your roles as an opportunity to get better at the things only you can do.
