How much of a threat is AI to tax professionals? And what to do about it?
Chatbots like ChatGPT confidently maintain the sense of talking to an intelligent being and can do an intimidatingly large number of tricks: write any essay on any topic in seconds, suggest detailed travel itineraries based on your preferences and constraints, propose a recipe for a dish that hasn’t yet been invented, and yes—give tax advice.
Can ChatGPT really do taxes?
The skills of ChatGPT—and of other LLMs from Google, Amazon, and a number of specialty firms—are growing by the day. For example, as of this writing, there are at least 15 “custom” GPTs in openAI’s store, most of which are directly focused on helping users with their taxes. This number will continue to grow, and large existing players in the tax services industry are rapidly working on training proprietary AI models that will take over—from humans—most of the tasks related to tax planning, compliance and preparation.
A watershed moment for the tax prep industry
True for many other industries, as well, the LLMs seem to be increasingly capable in exactly the tasks that used to take us humans years of study and many more years of hard work to gain experience. These models can analyze hundreds of pages of complex text almost instantaneously and apply the “learned” insights from that text to the specific needs of the requester.
All it takes for anyone to understand the impact of a new tax code provision on their tax planning is to paste the text of the provision into a chatbot request and describe their situation. They get an intelligent answer in seconds. Or so it seems. Let’s consider the uncomfortable possibility of an existential threat to tax practice owners and operators.
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Can AI replace you?
The first, understandable reaction to ChatGPT and its ilk from many of us, whose bread and butter is expert knowledge work, is fear. Tax practice owners are asking themselves throughout the country: Is this technology coming for my clients? Will my clients and my business disappear in the next year or two? Is there anything I can do to stop this, to protect the growth of my business?
The answers have begun to appear this year, and they will continue to develop rapidly. Yes, this technology is coming for some of your clients. Some of your clients will disappear. And yes, there are concrete steps you can take to protect your tax practice and ensure that it continues to thrive in this turbulent environment, as we discuss in another post.
What can you do?
To understand what it takes to plan your response to this threat—admittedly, existential to some!—we need to understand what kind of disruption Large Language Models are bringing to the industry. This will help us understand who will be affected by these changes and why. That, in turn, will help each tax practice to plan a response that will increase its chances of survival in the market and boost the likelihood of robust growth.
Simply put, you need to understand the terrain of the industry and the likely path of the incoming storm, to be able to come up with a strategy to survive and grow.
Knowledge is power
In this series of articles, we will discuss who will be affected by the AI disruption the most and why. We will see that there is a way to choose a better strategy, once your practice is armed with an understanding of what is happening in your local market, in your state, and with similar tax practices nationwide.
And will will discuss specific building blocks that are available to businesses whose markets are disrupted:
- building trust and visibility with your clients
- specialization and segmentation
- value chain analysis and expansion of your offerings
- credentialing and recruitment
- careful deployment of your own AI tools
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