Question

1-why the use of AI ( artificial intelligence) in tax return auditing is three times more efficient and better that humans?

2- why the AI is changing the tax and auditing business?

3-what are some of the key trends for AI in tax?

4-Can AI be successfully implemented in IRS audit?

Answer 1

1)

Artificial intelligence has always been a great element in science fiction, involving machines a lot smarter than human beings.

Referred to as “predictive modeling,” machine learning applications are now being used by tax agencies to identify cases having characteristics that could indicate potential fraud. It often helps find subtle clues hidden in mounds of data that are sometimes missed or overlooked by auditors.

2)

The enormity of the Internal Revenue Code (the “tax code”) and the complexity of the rules themselves make it a challenge for any organization to stay compliant, much less reduce their tax liabilities. Therefore, artificial intelligence is well suited for tasks that require a deep analysis of the code. H&R Block uses IBM’s Watson AI system to power its tax questionnaire. Using years of previous tax documentation as a foundation for learning, this AI application also has an in-depth understanding of the tax code and stays on top of yearly changes. As a result, it’s easier for tax practitioners to identify key areas for possible savings.

3)

the major AI trends for tax and accounting fall into two areas: aiding staff to do their existing work more efficiently and allowing them to explore new services they can provide to clients. AI-enabled programs allow staff to process more returns in less time as it can help to answer questions on complex topics faster. When staff have this extra time to spend with clients alongside artificial intelligence, they can uncover new ways to serve clients thus helping to maximize both the firm’s top and bottom line.

4)

The AI we use is machine learning where the machine has built-in algorithms that help it learn based on transactions it is fed. This software platform uses AI and various control points (benchmarks) to analyze the transactions in the general ledger and then puts those transactions into buckets: high risk, medium risk, or low risk. AI is absolutely more comprehensive; it alerts us when things don't look right and tells us where to start and where our risk is going to be. It shows the risk at the transaction level.