The Future of AI Is Now. Is Tax Ready?

The Impact on Talent

AI can also deliver a tangible impact to talent acquisition and retention. New technology requires new skill sets, and while existing tax professionals will work to build their proficiency with AI, the door is also open for new tax professionals who already possess knowledge of AI tools to establish themselves in an evolving role. AI can act as a learning assistant to new employees, helping them bridge knowledge gaps and get up to speed in their new positions. It can also assist tax professionals of all experience levels in gaining specialty tax knowledge, such as in areas of estate, partnership, international, etc. As organizations seek to update staffing models, the long-term benefit to tax departments will be a team of professionals able to perform their roles with greater proficiency built from a diverse array of skill sets and experience.

How to Bring in AI

Even with a sound strategy in place, integrating AI into established processes can present challenges to users and IT teams. Taking small steps by identifying innocuous applications of AI is one way to help offset some of those growing pains, providing an organization with a firsthand view of the technology’s capabilities. It also lets tax professionals become comfortable with AI without becoming overwhelmed so they can adapt at their own pace. As an added benefit, IT teams responsible for AI rollout can address any issues that arises at a more even keel than if a full technology suite were rolled out at once.

AI within tax doesn’t exist in isolation; it’s part of a larger, enterprise-wide objective and strategic vision that requires high-level planning at the leadership, technology, and data levels — something that can only be achieved from the top down. Tax departments are well positioned to take a lead role in piloting these enterprise-wide AI standards. By gradually applying AI to small challenges and investing time to understand the technology, tax teams can set themselves — and their organizations — on a path to successful implementation.

Assessing AI Readiness

To make the most of AI within tax, an organization must understand its tax maturity level. Doing so helps paint a clear picture of where the organization stands and, subsequently, what it needs the new technology to deliver.

For instance, before bringing AI into the equation, an organization may determine that it requires a more detailed data-governance policy than the one it currently has — or it may recognize that it doesn’t have one in place at all. In another instance, an assessment may reveal that data governance policies do exist, but there are shortcomings in data organization. Through that assessment, the organization may identify an opportunity to leverage automation to complete tasks with greater efficiency before bringing AI to the table.

It’s important to note that automation and AI are not one and the same. Although AI often works with automated processes, automation is a system that exists by following and applying predefined rules, whereas AI can learn and mimic human decision-making based upon the data it’s working with. Regardless of whether an organization is ready to begin AI implementation or is still at the automation stage, high-quality data is vital for generating accurate results and avoiding discrepancies caused by data bias.

Because AI doesn’t function in a vacuum, it often works in tandem with, or is integrated into, existing technology an organization uses. By understanding what its current technology profile is, an organization can then place AI into its overall technology strategy and get the most out of it. Furthermore, if existing technology tools are already accounted for as part of an overarching data governance strategy, AI can act as an enhancement to those tools.

Data Security Concerns

Bringing AI into an organization requires another key consideration regarding data governance: security. By taking a holistic view of AI at an enterprise level, organizations and their IT teams have the chance to address potential data security concerns before they become major sticking points. Steady integration also makes it easier to show key stakeholders that AI is being introduced responsibly, with its overarching impact accounted for.

It's also important to establish processes that show transparency in decision-making when using AI. Developing those processes from the beginning can help make any audits or clarification of AI-driven results easier to explain and analyze.

What the Future Holds for Tax and AI

Generative AI isn’t going away, and the sooner organizations and their tax departments begin implementing it, the faster they can reap its rewards. At a minimum, not incorporating AI is going to mean getting left behind by competitors who embrace its potential. But no one has to go it alone — a trusted advisor can help organizations understand where they have opportunities to leverage AI and avoid common pitfalls in its implementation, both now and as the technology’s capabilities expand.

How BDO Can Help

BDO works with companies to design and document processes; extract, transform, and load source data; automate tax calculations; and streamline tax reporting. We provide a process and technology roadmap — paired with robust training and ongoing guidance — to help your team manage complexity and avoid adverse outcomes like noncompliance or missed tax benefits.

BDO Tax and BDO Digital work together to offer a comprehensive suite of AI services designed to assist organizations at every stage of their AI journey, providing end-to-end support for successful AI implementation and adoption. Whether organizations are just beginning to explore the possibilities of AI or are already leveraging it for business transformation, we provide tailored assistance and help them mature their AI adoption over time.