Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (2024)

Tax and accounting professionals face a perfect storm of challenges in today's environment: talent shortage, workload compression, regulatory changes, and technological innovation. How can firms stay competitive, deliver quality services, and achieve work-life balance in the midst of these pressures? The answer lies in tax automation.

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Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (1)The tax environment and the need for efficiency
Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (2) The role of automation, APIs, and AI in enhancing efficiency and accuracy
Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (3) AI: Role and potential
Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (4) The future of tax automation and the opportunities for firms

Tax and accounting professionals face a perfect storm of challenges in today’s environment: talent shortage, workload compression, regulatory changes, and technological innovation. How can firms stay competitive, deliver quality services, and achieve work-life balance amid these pressures? The answer lies in tax automation.

Tax automation is using technology to streamline and optimize the tax preparation process, from gathering source documents to filing returns. By leveraging automation, firms can reduce manual tasks, errors, and costs, while increasing speed, accuracy, and insights. This can lead to improved profitability, client satisfaction, and staff retention.

In this blog post, we will summarize the key insights from our recent webinar with industry experts Allen Stahl and Will Hosek, who discussed the future of tax automation and how to elevate your firm’s efficiency and accuracy.

The tax environment and the need for efficiency

According to the 2023 State of the Tax Professionals Report, driving operational efficiency is the top priority for tax and accounting firms. This is not surprising, considering the challenges that firms are facing. Firms need to find ways to streamline their workflows, reduce errors, and increase productivity while maintaining quality and compliance.

One of the ways to achieve efficiency is to adopt an open ecosystem approach, which allows firms to integrate with the best-of-breed solutions and leverage the data and insights from different sources. An open ecosystem can help firms automate their processes, enhance their collaboration, and improve their decision-making. Thomson Reuters is committed to fostering an open ecosystem and providing firms with the tools and platforms to connect with their preferred solutions.

The role of automation, APIs, and AI in enhancing efficiency and accuracy

Automation, APIs, and AI are three key technologies that can help firms enhance their efficiency and accuracy in the tax prep process.

    • Automation:refers to the use of software or machines to perform tasks that would otherwise require human intervention, such as data entry, verification, indexing, and classification.
    • APIs:or application programming interfaces, are the means by which different software applications can communicate and exchange data.
    • AI:or artificial intelligence, is the ability of machines to perform tasks that require human intelligence, such as natural language processing, optical character recognition, data extraction, and verification.

As Will Hosek explained in the webcast, these technologies can help firms streamline their workflows, reduce errors, enhance the quality of services, and access data and insights to drive decision-making. He also provided some examples of how Thomson Reuters and SurePrep, a leading provider of tax automation solutions that recently joined the Thomson Reuters team, are using automation, APIs, and AI to deliver value to their customers and foster an open ecosystem. Some of these examples are:

    • Generative AI: A form of machine learning that is able to produce text, video, images, and other types of content. Chat GPT is an example of a generative AI application that produces text based on user-given prompts.
    • Project DILLY: A generative AI model that can create natural language summaries of tax returns and provide insights and recommendations for tax professionals and their clients.
    • AutoVerification: A technology that can automatically verify the accuracy of data extracted from source documents and flag any discrepancies or errors.

These technologies are not only improving the efficiency and accuracy of the tax prep process but also transforming the client relationship and the role of the tax professional. As Allen Stahl pointed out, automation, APIs, and AI can help tax professionals move from being data processors to being trusted advisors, who can provide value-added services and insights to their clients.

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AI: Role and potential

AI is already improving the tax prep process in many ways, such as:

    • Natural language processing (NLP): which enables machines to understand and generate natural language, such as Chat GPT.
    • Optical character recognition (OCR): enables machines to read and extract data from images.
    • Data extraction and verification: enables machines to validate and compare data from different sources, such as AutoVerification.

These applications of AI can help firms improve accuracy, speed, and insights, as well as reduce human intervention and errors. However, AI is not a magic bullet that can solve all the problems of the industry. AI also has some limitations and challenges, such as:

    • Managing expectations, as AI is not perfect and may still make mistakes or require human oversight
    • Addressing bias, as AI may reflect the biases of the data or the algorithms that it is trained on
    • Overcoming anxiety, as AI may cause some practitioners to fear for their job security or relevance

Therefore, firms need to be realistic and responsible when using AI, and understand its strengths and weaknesses. AI is not meant to replace human professionals but to augment and support them. AI can help firms automate low-value and repetitive tasks, and free up time and resources for high-value and strategic tasks, such as providing advisory services, building client relationships, and developing new skills.

The future of tax automation and the opportunities for firms

Tax automation is the key to boosting your firm’s efficiency and accuracy and staying ahead of the curve in the tax and accounting industry. By leveraging automation, APIs, and AI, you can streamline your workflows, reduce errors, enhance quality, and increase profitability. Also, you can improve client satisfaction, staff retention, and position your firm as a trusted advisor and a technology leader.

If you want to learn more about the future of tax automation and how to elevate your firm’s efficiency and accuracy, watch the webinar recording below. Also, explore the available automation solutions and embrace the future of tax automation with Thomson Reuters and SurePrep.

On-Demand Webcast

The Future of Tax Automation: How to Elevate Your Firm’s Efficiency and Accuracy

In today’s competitive and complex tax environment, efficiency and accuracy is more important for a firm than ever.

Discover how to elevate your tax firm’s efficiency and accuracy with the latest automation technologies.

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Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy (2024)

FAQs

Exploring the future of tax automation: How to elevate your firm's efficiency and accuracy? ›

Automation, APIs, and AI are three key technologies that can help firms enhance their efficiency and accuracy in the tax prep process. Automation: refers to the use of software or machines to perform tasks that would otherwise require human intervention, such as data entry, verification, indexing, and classification.

What is the automation of tax processes? ›

For example, tax automation can reduce the errors in tax accounting and therefore reduce the resources allocated to identify and correct those errors. More accurate audits are possible. Not to mention decreasing the workforce resources allocated to preparing for audits, returns, and accounting reconciliation.

How can AI help my tax business? ›

By identifying which clients are impacted by triggered tax events, AI can help firms proactively reach out to clients and secure additional opportunities to provide value and boost revenue for the firm.

Can I use AI to file my taxes? ›

AI isn't replacing your human tax expert

In fall 2023, Intuit, which produces the popular TurboTax do-it-yourself software, announced a generative AI financial assistant called Intuit Assist. It works across the company's product lines, including TurboTax software and TurboTax Live.

What is RPA in taxation? ›

Automated Data Upload to Tax Software: RPA facilitates efficient data transfer and management within tax software systems. Tax Returns Filing Status Updates: Bots can monitor and report the status of tax returns, enhancing efficiency and client communication.

What are the four 4 types of automation? ›

Let's take a closer look at the four primary types of automation: programmable, fixed, flexible, and integrated. Picture a bustling factory floor, where robots move with precision and efficiency, assembling products seamlessly. This scene is a testament to programmable automation's power.

What are the 4 elements of automation? ›

4 Components of Automation
  • Trigger.
  • Actions.
  • Conditions.
  • Timing.
Apr 18, 2023

How does AI improve productivity and revenue? ›

AI Helps Cut Costs

Automation — Automation in tasks like data analysis, recruitment, customer support, etc., can help employees focus on tasks that are more pressing and require human acumen.

Which tax companies are using AI? ›

This year, TurboTax and H&R Block added artificial intelligence to the tax-prep software used by millions of us. Now while you're doing your taxes online, there are AI chatbots on the right side of the screen to answer your burning questions.

How to use AI to generate revenue? ›

How to make money using AI
  1. AI software development.
  2. AI data analytics.
  3. AI-powered chatbots and virtual assistants.
  4. AI written content.
  5. AI graphic design.
  6. AI website creation.
  7. AI video editing.
  8. AI digital marketing.
Mar 11, 2024

Will AI replace tax professionals? ›

Despite its advantages and giant strides in recent years, AI will not replace accountants. Here's why: Artificial intelligence lacks the human judgment, communication skills, and critical thinking that accounting professionals like you possess.

Does the IRS use AI? ›

(CBS DETROIT) — Your 2023 taxes are due in a few weeks, and now the Internal Revenue Service is using a new artificial intelligence tool to make sure people aren't playing the system.

Can AI replace Cpas? ›

The Big Four accounting firms are investing heavily in generative artificialintelligence (AI), but the technology will not replace accountants, Accounting Today reported.

How does RPA increase revenue? ›

By automating repetitive tasks, RPA eliminates the need for additional staff or outsourcing, resulting in reduced labor costs. Furthermore, the improved accuracy and efficiency of RPA reduce the risk of errors, minimizing associated costs such as rework, penalties, and customer compensation.

What is RPA in layman's terms? ›

5 ways to define RPA in plain English

“In layman's terms, RPA is the process by which a software bot uses a combination of automation, computer vision, and machine learning to automate repetitive, high-volume tasks that are rule-based and trigger-driven.” –David Landreman,, CPO of Olive.

How does RPA help accountants? ›

Higher efficiency and accuracy: The use of RPA in accounting increases the efficiency and accuracy of financial processes. By automating repetitive tasks, accountants can focus more on tasks that require human intelligence and expertise, leading to more accurate outcomes and improved productivity.

What is an example of process automation? ›

Here are some business examples of process automation: Customer support tickets integrated with your purchase management software. Automated employee onboarding. Job application submissions through an applicant management system.

What is automation and process? ›

Process automation is defined as the use of software and technologies to automate business processes and functions in order to accomplish defined organisational goals, such as producing a product, hiring and onboarding an employee, or providing customer service.

Does the IRS have an automated system? ›

Use Where's My Refund, call us at 800-829-1954 and use the automated system, or speak with an agent by calling 800-829-1040 (see telephone assistance for hours of operation). However, if you filed a married filing jointly return, you can't initiate a trace using the automated systems.

What is meant by automation of accounting process? ›

Accounting Automation is the process of using software to automate the processes and procedures of accounting. It is a way of improving efficiency and accuracy, while making sure that all aspects of the business are being looked after. Accounting automation can be used for: Records storage. Invoice creation.

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