Expertise matters in AI-powered tax and accounting solutions

Not all AI is created equal — what data is your tax and accounting solution learning from?

Despite all the recent media attention on artificial intelligence, AI has been around for a long time. Like many overnight success stories, the origins of AI began years ago. It was during World War II that the theory of combining mathematical theory, electronics, and automation described as “a whole theory of control and communication, both in animals and machines" came to be.

What began as an experiment in the 1940s has evolved into a fully functioning, accessible technology that bridges technological and analytical applications that are now applied to a range of applications.

Whenever we arrive at technological milestones, we collectively assess our progress and predict how the technology will impact industries and workers. Tax professionals have historically considered themselves insulated from the threat of replacement by technology. However, the modern reality is that traditional roles of tax professionals are being increasingly automated, and clients are requesting different types of more data-driven services and information from their accounting teams.

While it may feel like AI is taking over, tax professionals should explore the power of harnessing AI and consider the value of introducing AI into their practice as a powerful tool that will enable them to quickly adapt and service their client base with more value-added services that can meet new demands and diversify revenue. However, discretion should be exercised in selecting AI tools, as not all are created equal.

Artificial intelligence is created and influenced by multiple factors, each of which should be considered when evaluating AI solutions. Ask yourself — and your potential AI technology provider — the right questions to ensure the AI technology you leverage is as intelligent as it should be and informed from quality sources and inputs.

AI’s role in tax

Just as AI technology has infiltrated everyday personal lives, it is quickly becoming a necessity in work environments. Initially, AI introduced subtle, intuitive benefits that made accounting work incrementally more efficient. But at its core, AI is the engine of the most powerful software, making it possible to overcome previous seemingly impossible tasks with ease.

Accounting software based on AI is designed to support and empower human tax professionals, to be more efficient, and minimize tedious and time-consuming tasks, so more focus can be concentrated on strategic, higher-value work.

AI technology can help tax professionals conduct research, analyze large data sets, monitor for risks and compliance obligations, and find answers in mountains of data faster than traditional methods. It helps tax professionals do the work they already do faster and more efficiently. This efficiency ultimately makes more time available for developing client relationships and increasing service offerings.

AI’s big brother

Big data is still growing

When the term “big data” was coined, we were talking about gigabytes of data. Now, we’re talking about terabytes, petabytes, and even zettabytes of data.

The amount of data we generate in our ordinary personal and business processes is astounding. It is reported that in 2023, we generated 3.5 quintillion bytes of data every day. That is 10 million blue ray discs or “as giant as two Eiffel towers.” 

The answer to meeting the demands of ever-increasing volumes of data is advanced technology that’s capable of processing the data to help tax professionals find answers quickly. By its nature, tax work involves reviewing and processing hundreds or thousands of documents, providing analysis on high-volume data sets, or finding connections and answers in disparate documents across various sources.

Just as online tax research has become standard in the industry, the AI technologies powering those solutions are here to stay.

How AI is helping tax professionals with big data

Tax professionals are inherently cautious and risk-averse, placing high value on historical precedent and proven practices. Therefore, it’s understandable when tax professionals are slow to adopt new technology, such as AI. Especially when that technology is coming from groups that do not have accounting background or experience.

Software startups, running on shoestring budgets and bravado, are going to find tax professionals a tough audience and not particularly impressed by bells and whistles with large price tags that are largely unproven or have short histories

That’s not to say that tax professionals aren’t interested in adopting new technologies, just that they will do it when it makes sense and clearly benefits their day-to-day operations, their business, and their clients. Economic changes, more competitive global and local markets, continuous updates to tax laws, and the introduction of more regulations and processes have altered the market for tax and accounting work. Tax professionals are having to disseminate larger data sets, pulled from bigger and broader geographies. It’s time for big data to become a much bigger help.

AI-based software bridges the gap between big data usability and AI functionality. Tax professionals who incorporate AI into their workflows have a more optimistic view of how to survive and prosper in the new economy and are taking a practical approach to harnessing the power of big data through AI. Those who cling to the mantra, “If it isn’t broke, don’t fix it” may want to audit and review their offerings and the requests being made by their clients.

Modest investments in specific AI use cases can generate up to 6% more revenue, and with rising investments, the revenue impact from AI triples to 20% or more.

What to look for in AI technology

When considering an AI tax solution, you must look beyond the tool itself. Was it created by a software developer that might lack tax domain expertise? Is the technology retrofitted for the tax industry, or was it made to excel for very specific tax purposes? An effective AI solution should be built by an organization with an extensive history in the domain that has had time to evolve and refine its technological solutions. 

Another important consideration when choosing an AI tool is to stay informed about software solutions that have initially been introduced as minimally viable products (MVPs). These products have the potential to evolve into robust, competitive solutions over time, but this transformation usually requires a period of refinement and may involve some trial and error. It’s worth noting that the field of tax research is unforgiving when it comes to errors, given the significant fines, penalties, and associated costs that can result. 

In an increasingly competitive landscape, tax professionals are actively seeking avenues to enhance their value proposition, broaden their service offerings, and cultivate trust among their clients. Choosing an AI solution that you have confidence in can bring peace of mind, efficiency, and competitive advantages to your tax practice, ultimately benefiting both you and your clients. 

The three essential components that are the foundation of a solid AI solution 

1. Domain expertise refers to the specialized knowledge, experience, and input of people in a particular industry, subject matter, or domain. These domain experts know what data is important. They know why, and how, people in this industry work.
2. Quality data includes vetted and relevant substantive data from trusted sources, metadata provided by experienced tax editors, and data on how users interact with the data. Anyone can provide a large quantity of data, but quality is what matters most.
3. AI expertise refers to the technical expertise and experience of working with AI and its many principles and techniques. This work requires robust technology stacks, expertise in relevant and emerging cognitive technologies, and the practical ability to apply the technology and AI techniques to quality data and domain expertise.

To increase precision, effectiveness, and decision-making in accounting, artificial intelligence (AI) is increasingly being employed.

What makes Thomson Reuters data better? 

For more than a century, Thomson Reuters has been the leading source of trusted tax content for professionals. Our editorial teams meticulously review, organize, and enhance tax materials — providing not just primary sources and citations, but also expert analysis, content markers, and practical insights that add invaluable human perspective and quality.

This expertise is woven into every layer of our content, supporting the latest advancements in AI-powered research tools. By collaborating closely with product developers, our editorial teams help refine features and deliver enhancements that maximize efficiency and clarity for users.

All these elements are brought together to create a clean user interface that ensures maximum efficiency for tax researchers using CoCounsel Tax. 

Domain expertise collaboration creates well-rounded solutions

Those involved in educating AI solutions hold a paramount, crucial role. One of the biggest advantages Thomson Reuters brings to its AI technology is a depth of knowledge and experience in critical disciplines that make it work.

Tax editors and subject matter experts might know what data is most relevant to certain practice areas or tax issues, and what complete and thorough tax research looks like upon completion. But they might not know how different end users start their research or the different paths they’ll take to complete their research.

Specialization and accumulated experience are very important to AI technology and software development. Using a general one-size-fits-all solution for specific, complex matters often results in generally poor outcomes that can lead to real-life costly consequences for clients. Consequently, tax professionals should take great care in selecting the best AI tax tool for their firm. 

In choosing an AI tool for tax professionals, the quality of domain expertise incorporated into the development of the AI solution should be given a lot of weight in the decision-making process. The tool should be developed with a keen focus on the right end-users in mind. In the tax world, this domain expertise is imparted by tax professionals. They integrate real-world subject matter experience and nuanced, peer-reviewed perspectives directly into the software. This is complemented by carefully tailored, human-created metadata, tags, editorial markup, and additional data, all of which provide the essential context and connections for AI to become a valuable resource and tool.

Engaging tax experts, specialists, and professionals should be at the core of a quality AI solution for tax professionals. With the addition of data scientists, AI scientists, software developers, and designers, a well-built AI tool will use teams of multiple disciplines collaborating to transform data, find connections, and deliver the answers end users need. 

End users and customers can provide insight on the strategies they’re considering as they conduct their research, or the practical realities and personal preferences that affect their research. However, they will rely on the expertise of data scientists to identify and manage the data that best suits their end-use requirements. Designers and developers will take that data and ensure the user experience is streamlined and intuitive. 

Data quality is more important than quantity

The principle of “garbage in, garbage out” applies to computer science in the sense that sloppy and incorrect data inputs will result in poor-quality data outputs, or worse, cause AI to hallucinate an answer. The most powerful AI-enabled tool will not provide any value if it is loaded with data that is incomplete, limited, irrelevant, inaccurate, or otherwise flawed. 

Data quality is therefore on the list of primary considerations by tax professionals when evaluating AI solutions. 

Open-source data can provide a plethora of material. That data needs to be encased in multiple additional layers of data that add value and substantive content. Data specialists are required for metadata analysis, tagging, and information organization while tax experts provide a level of quality assurance. It is blending the raw data with multilayered contextual data that gives AI the power to provide valuable information to end users.

As the AI software is used for tax research, it is essentially being trained by its users. AI tools continuously evolve by synthesizing the queries that are inputted to generate faster responses based on the user’s needs and requests. Factoring the users into the equation and ensuring who and how the data was originally organized, and the importance of the quality gains a spot in the primary considerations category. 

The Thomson Reuters advantage 

Thomson Reuters combines the human intelligence of our staff of thousands of subject matter experts with industry-leading rich data content and the AI technology and expertise of data scientists, AI experts, and developers working in our in-house Center for AI and Cognitive Computing to provide innovative AI solutions that make tax professionals using Thomson Reuters solutions more effective

CoCounsel Tax: powered by trusted expertise

CoCounsel Tax represents the next evolution in AI-powered tax research and workflow automation for today’s tax professionals. It blends agentic AI with Thomson Reuters trusted expertise and industry-leading tax content, delivering clear, actionable answers and streamlining complex research with an intuitive, modern experience. Here are just a few of the benefits users enjoy on the platform:

• Curated, not harvested. CoCounsel Tax is powered by the trusted Checkpoint content curated by Thomson Reuters tax professionals. Every piece of information is reviewed, annotated, and organized by experts, ensuring you always access the most up-to-date, accurate, and relevant tax guidance.
• Analyze documents with ease. CoCounsel Tax leverages AI-powered document analysis to process high volumes of information quickly and accurately, so you can ensure efficiency without sacrificing precision.
• Automated for efficiency. CoCounsel Tax leverages advanced AI to intelligently automate time-consuming research and routine tasks. By processing and analyzing high volumes of information quickly and accurately, the platform helps standardize workflows, minimize manual effort, and ensure your team can focus on higher-value client service.

The future of tax technology

As tax professionals consider how AI can transform their organization’s workflow and client service, Thomson Reuters is here to help meet the demands of working with large data sets and big client demands. With continual updates and additions to tax laws and new compliance frameworks being introduced, keeping up with the changes is increasingly difficult to do without some sort of technology. The increased workload also requires tools to keep the workflow efficient. AI has moved to the forefront as a viable solution to these, and other, challenges. 

Take care and consideration when evaluating the best AI-based tax software. It is important to weigh the three essential components. Exercise domain expertise to ensure industry professionals have weighed in, evaluated, and approved the data that is available to AI programming. These experts could include tax professionals, accountants, and auditors. Since AI is continually learning from human inputs in the form of queries, searches, and content, considering who the end user will be and how they will utilize the solution is also important. Of course, the qualitative profile of the data and metadata that is informing AI. 

As the landscape of tax and compliance evolves with ever-increasing complexity, AI stands as a beacon of hope to navigate these challenges. With the right considerations in mind, AI can be your trusted ally in shaping the future of your tax practice.

Unlock the transformative power of generative AI in the accounting industry

In a rapidly evolving landscape, professionals are seeking innovative solutions to navigate complexities and ensure efficiency.

Ready to put these insights into action? Explore the powerful tools and resources available through CoCounsel Tax to elevate your tax practice to new heights.