Do Not ‘Solely Rely’ on AI Tax Advice, Says Taxpayer Advocate; Industry Responds

Customers of major tax preparation companies should take tax advice from artificial intelligence chatbots with a grain of salt due to inconsistencies with sourcing accurate information involving complex tax situations, according to National Taxpayer Advocate Erin Collins.

In a June 11 Tax Tips post on the Taxpayer Advocate website, Collins cautioned that AI “is a rapidly evolving new technology” and that chatbots using generative AI based on user input can produce incorrect or unhelpful answers to tax questions.

Customer-facing AI tools pull their answers from publicly available primary sources like the Tax Code, regs, and IRS guidance, Collins said, but are also trained by in-house experts. “Despite efforts to ensure accuracy, these AI assistants may encounter difficulties interpreting complex tax laws correctly or considering unique circumstances that could impact a taxpayer’s return,” read the post. “As a result, taxpayers should not solely rely on AI-generated tax advice.”

Collins said AI “can be a useful tool” for filing taxes, and virtual assistance bots powered by AI are becoming more commonplace. The IRS utilizes chat and voice bots to provide taxpayers quick answers relating to certain topics (like how to set up a payment plan), but as Collins noted, IRS bots are limited to predetermined responses that are not generated by AI.

She cited a test conducted by the Washington Post where AI-generated responses by TurboTax and H&R Block bots were reviewed by a human tax professional. For example, one of the test questions involved a hypothetical taxpayer and their family who live in California. The taxpayer has a daughter who will be attending college in Arizona.

The bots were asked which state the daughter should file returns for. H&R Block’s AI said a college student from California attending school in Arizona would need to file tax returns in both states. TurboTax’s AI, meanwhile, supplied general resources about state renters credits, filing for an extension, and who is considered a full-time student.

A spokesperson for Intuit, the parent company of TurboTax, told Checkpoint improvements have been made on the back end since the Washington Post’s testing to improve the quality of chatbot responses. It was also stressed that the company’s AI features extend beyond the chatbots. Reuters News reported last September that a new generative AI feature, “Intuit Assist,” is integrated throughout its products as part of the filing process.

Intuit Assist “is designed to intuitively show, guide, and help our TurboTax customers, and do more of the hard work for them,” read a statement from Intuit provided to Checkpoint. “This includes accuracy checks, deep explanations, and Spanish translation. If customers need additional assistance, they are able to connect directly to TurboTax tax experts.”

H&R Block Senior Vice President of Consumer Tax Products told Checkpoint in a statement that H&R Block’s generative AI tool, “AI Tax Assist,” is “designed to supplement the tax preparation process for individuals, the self-employed and small business owners. It combines data from H&R Block’s The Tax Institute with the power and efficiency of artificial intelligence to provide 24/7 tax filing assistance — and is backed by H&R Block’s guarantees, including audit support, maximum refund and 100% accuracy. Our [do-it-yourself] paid editions also include access to live expert help from an H&R Block tax professional at no additional charge.”

The statement continued in clarifying that staff monitor questions and feedback daily. While the tool can more accurately provide detailed and contextually relevant responses depending on user input, “evaluation of customer interactions with AI Tax Assist does not suggest a significant number of incorrect or irrelevant answers,” H&R Block claimed.