Technology is altering every sector, and taxes are no exception. Big strides are being made to revolutionize the field, and more changes are on the horizon
Tax professionals are tasked with updating their practices to meet changing technologies. As a taxpayer, what does this mean for your taxes? What’s already changed, and what can you expect soon?
Here are some of the ways that technology is impacting the tax industry right now, and a look at what might be on the horizon:
Digitization has drastically changed both business and accounting. A McKinsey Global Survey revealed that more than 8 in 10 respondents said their organizations have made large-scale efforts to take advantage of digital technologies over the last five years.
Offices around the world are committing to a paperless workplace and processes, with almost all documents being stored, created, and transferred online. Tax professionals are also making the move to paperless. What does this mean for taxpayers?
- Access to important documents from anywhere with an internet connection
- Ease of document sharing
- All documents stored securely in one place
- Tasks can be done quicker and easier
Part of going paperless is embracing cloud computing through common tools like Dropbox, Google Docs, or iCloud. The key benefit of the cloud—beyond easier file sharing—is that vital tax information is automatically backed up.
Technologies are updated and introduced all the time, and taxpayers expect their accountants and tax professionals to adapt. This includes having the option to conduct video conferences and greater communication online or via text message. Features like chatbots and virtual assistants will likely make their way into common use in the tax industry as well, spurring more efficient and timely answers to key taxpayer questions.
Online dashboards are becoming more and more popular, where clients can view their data and important information in an easy-to-use format that’s created after data analysis. These data visualization tools give taxpayers transparency about their tax information and fees, as well as various compliance requirements.
One big factor in the changing technology used in accounting is online security and safety. Tax season continues to be a major opportunity for cybercriminals to get their hands on personal and financial information. Unfortunately, hackers are continually altering their approaches to get around new safeguards.
The IRS recommends that taxpayers employ security software on their devices, such as firewalls and anti-virus protection, ensuring that it automatically updates and is always running. It’s also smart to encrypt tax documents that are stored on computers and to use strong passwords for accounts.
The IRS also advises taxpayers not to share personal information unless it’s being sent to a trusted source, to learn how to detect “phishing” emails and scam “vishing” calls, and to avoid downloading attachments when they’re sent from an unknown source.
Artificial intelligence and data analytics
Artificial intelligence (AI) is revolutionizing all industries on a global level. In the realm of taxes, the ability to sift through big data to provide detailed reports and analytics is a potentially huge benefit for taxpayers and tax professionals alike.
AI can ensure that necessary compliance requirements and any rules and regulations are being met, plus ensure that security procedures are in place. Errors or misstatements, whether they’re related to mistakes or malicious activity, can be detected and corrected with automation.
Machine learning detects patterns in large amounts of data which can be analyzed faster and speed up informed decision-making. As with many industries, AI has the potential to make tax preparation more efficient, and substantial cost savings will be seen once certain complex processes become simpler and faster.
According to the Journal of Accountancy, organizations should implement processes that document and capture more granular data to prepare for the coming changes that AI will bring to the tax industry. This will enable the technology to quickly take over existing uniform processes that currently take quite a bit of time. The SVP & CDO for Intuit, Ashok N. Srivastava has posited that machine learning and AI will provide key information that will vastly help those on both sides of tax preparation.
You should work with tax professionals who are aware of new technologies and how they impact the tax industry. From the latest communication methods to simple, secure document sharing and data collection, digital transformation is improving tax-preparation techniques—and it will continue to do so in the future.
To discuss your options with a tax professional, contact the team at Provident CPA & Business Advisors today.