For accountants, one of the most important aspects of the job is often one of the most time-consuming: the research process. From conducting complex searches through statutes and regulations, to combing through stacks of client documents for specific details, to pulling it all together into a well-written summary that clients can easily understand, tax research and communication skills can require senior-level experience and can be tough to teach.
Managers spend 8-15% of their time on complex research tasks, according to research conducted by Wolters Kluwer, followed by time spent summarizing the results and drafting messaging to communicate the implications. In fact, 78% of accountants said if research summaries could be easily generated, it would add high value, with many indicating that it could save hours or days of research time.
What practitioners need is an efficient and analytical research assistant. Enter generative artificial intelligence (GenAI). This cutting-edge technology can elevate tax workflows by summarizing technical information and analysis in plain language, helping accountants boost efficiency, increase accuracy, and communicate more clearly – giving precious time back to managers to focus on high-value advising tasks like strategic tax planning and deeper level analysis and reasoning, ultimately benefiting firms and clients alike.
AI-Enabled tax research: streamlined and accessible
Incorporating AI streamlines the tax research process, enhances decision-making capabilities and improves efficiency, allowing higher-level managers to use their experience and skills on the valuable task of deciding how to use the research, rather than on the research process itself. Firms can use AI-powered research tools to empower newer tax professionals and entry-level accountants to approach research tasks with confidence. For example, GenAI can analyze tax laws, regulations, cases, and rulings, extract relevant information, and summarize key points in plain language, which helps professionals deepen understanding of tax law and resolve uncertainties.
Targeting uncompromised AI accuracy
Tax research requires experience and precision with sensitive client information, so it makes sense for accountants to be cautious about the accuracy, privacy, and security of AI-generated results.
To leverage AI safely and effectively, look for software that references a closed AI system, which means it can use only a controlled environment of pre-selected and verified data sources. Rather than training itself on an open array of universally accessible information, a closed AI system can help ensure the accuracy of results, reducing the risk for “hallucinations” (instances when AI presents false information as facts). Industry-specific AI tools can be trained using proprietary data with built-in security controls.
When choosing AI tools, businesses can help safeguard themselves by considering a framework for governance and responsible protections for data security and privacy. Safe, reliable source data in a closed AI system produces trustworthy results, giving researchers confidence that their output is correct.
Practical applications for AI and tax research
AI can transform the ways accountants leverage tax research in many ways, including:
Summarizing insights and drafting customer communications
AI can summarize dense research and present just the highlights, communicating complex findings in simple business terms. Tax practitioners can use AI-enabled research summaries to offer tax strategies or potential options in plain language. AI can generate clearly written, positive and helpful messaging to the customer about specific tax situations in terms that everyone can understand.
Using GenAI to summarize technical tax documents, senior accountants can save time – sometimes hours or days, according to research -- to focus on strategic analysis and delivering value rather than conducting manual research, drafting bulleted summaries, or crafting customer communications.
Bringing tax research directly into the workflow
Instead of stopping in the middle of a client’s tax return to open a browser window and lookup a specific tax question, AI-enabled tax software can seamlessly integrate with research tools. Without having to switch systems, tax pros can stay focused on their tax preparation workflow and find the guidance they need all in one place.
Simplifying search terms with Natural Language Processing (NLP)
Tax concepts can be complex, which makes navigating research a challenge. Less experienced accountants may not know what keywords to search for or what questions to ask. With NLP, researchers can ask questions in plain language instead of laboring over complex search queries. NLP also considers the context of the ongoing work, not just search keywords. Researchers receive targeted results, translated from complex tax or accounting jargon into straightforward guidance that’s easy to apply to each client’s situation. AI simplifies the search experience.
Providing timely prompts for proactive client service
Monitoring the direct impacts of legislative changes on your clients is a time-consuming task that often falls to the bottom of the to-do list. As a result, advisory opportunities are missed, or you find practice being reactive rather than proactive. When integrated with client data, AI-powered solutions, like Wolters Kluwer CCH Axcess iQ, can monitor real-time tax events and cross-reference client data to flag affected. Armed with tax event summaries and client letters written in plain language, tax advisors can proactively reach out to clients to explain changes and set up advisory engagements. Advisory services add value, which improves client relationships, engagement, and retention.
Conclusion
While AI undoubtedly offers an efficient solution to streamline the tax research process, it’s not a magic bullet. But whether you are new to the industry or an experienced researcher, GenAI can lighten the load of tedious searches, data retrieval, and research summarization, allowing you to do more in less time, without sacrificing accuracy. Effective use of AI in tax and accounting frees up your time to focus on higher value tasks like developing strategic plans and giving clients expert advice. With the right application of AI for tax research, forward-thinking accounting firms can maximize the benefits of this time-saving technology.