How Tax Automation and Advisory Solutions Can Transform a Firm

By Eyal Shinar.

In the 2000s and 2010s, CPAs witnessed technology advancements that largely accrued to accounting-centric workflows. Vendors streamlined tasks like bookkeeping which unblocked time for higher-value opportunities, namely client accounting services (CAS). CAS created significant value for staff and clients of accounting departments, evidenced by reports of double-digit annual growth and clients’ willingness to pay up to 20% more for these services.

Unfortunately, tax professionals and their clients did not see the same benefits. Many staff are still reliant on the exact same technology and processes they leveraged at the turn of the century. This, however, is set to change.

Artificial intelligence will have an even more profound impact on the profession than the first wave of automation, and this time, tax professionals will be the biggest winners. Solutions will emerge and combine AI with automation to significantly free up tax professionals to focus on tax advisory services. Black Ore defines such technology as Tax Automation & Advisory Solutions (TAAS), and we’re excited to introduce the era of TAAS alongside firms that are eager to shape the future of the tax profession.

Headwinds impacting the tax profession
The tax profession has been plagued with legacy technology and burdens, further heightened by industry headwinds, including:

• Labor: Accounting has long suffered from a staffing shortage – turnover hit 20% in recent years – driven by accountants retiring in unprecedented numbers and a dwindling pipeline of accounting majors and students.
• 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.
• Unhappy clients: Clients want faster turnaround times, technology-forward experiences, and more real-time guidance from their advisors.

These issues are often exacerbated during the busy season. Tax professionals have long searched for resources that enable them to act as trusted advisors, not just preparers – thanks to artificial intelligence, Tax Automation & Advisory Solutions (TAAS) have emerged to heed these calls.

Supercharging firms with Tax Automation and Advisory Solutions (TAAS)

Firms that embraced automation & CAS saw faster growth and better client satisfaction for their accounting business. Similarly, tax practices for firms who embrace AI & TAAS will outperform firms that do not adapt to the coming innovation. Here are some examples of how this will manifest:

• 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.

Introducing TAAS in your firm
TAAS can accelerate revenue growth and improve employee and client satisfaction, but requires practical steps, including:

• 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 providers achieve your compliance thresholds (e.g., SOC-II, 7216, etc.). For example, Enterprise AI products are reported to have more robust data and security protection.
• 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.

2024 and beyond
2023 was rife with uncertainty about how artificial intelligence could impact the tax profession, but 2024 marks the beginning of the era of Tax Automation & Advisory Solutions (TAS). 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 can also be bumpy. Clients will need trusted advisors to ensure their prosperity during this time. CPAs will also need trusted technology partners that can secure their clients and enable their firm to scale. Fortunately, many such technology partners are already emerging, which we expect will have a profoundly positive impact on the tax profession.

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Eyal Shinar is CEO of Black Ore AI, an advanced AI tax platform for CPAs.