Corporate tax professionals feel more positively about generative AI’s use in the profession, but it’s tax & accounting firms that are adopting the technology more quickly
As applications of generative artificial intelligence (AI) such as ChatGPT and Microsoft Copilot have evolved, tax professionals have begun to explore how the technology can be applied to their own work. Yet even within the tax profession, there are some differences in how corporate tax departments and outside tax & accounting firms are approaching generative AI.
Although corporate tax departments may be more bullish on the technology, outside firms’ agility has allowed them to adopt generative AI more quickly.
Positive feelings from corporate tax
A recent survey report from the Thomson Reuters Institute of 771 tax professionals analyzed attitudes, adoption, and risks surrounding generative AI’s entrance into the tax industry. Generally speaking, the tax industry feels largely positively about generative AI, with 88% of respondents aware of the technology and more than half saying it should be used in tax work.
But on the whole, corporate tax departments feel a bit more positive about generative AI’s long-term prospects compared to outside tax & accounting firms. When asked whether generative AI can be applied to tax work, 78% of corporate tax departments said yes, compared to just 68% of tax & accounting firms. That discrepancy was even higher among the 89 Canadian respondents, where the difference was 86% and 66%, respectively.
Similarly, when asked whether generative AI should be applied to tax work, 53% of corporate tax respondents said yes, compared with 49% of tax & accounting firm respondents. There was a similar spread when respondents were asked whether generative AI should be applied to non-tax work as well: 59% of corporate tax respondents said yes, compared to 54% of tax & accounting firm respondents.
Corporate tax departments feel a bit more positive about generative AI’s long-term prospects compared to outside tax & accounting firms.
In both groups, there is the belief that there is some risk to generative AI tools — indeed, about two-thirds (67%) of tax professionals said their firms or departments had some risk concerns around generative AI, while an additional 23% said they did not know. Some corporate tax professionals told survey researchers that they thought the benefits would outweigh the concerns.
“What will ChatGPT do to our jobs? I’ve thought about it, and I think there’s a little bit of risk, but the risk is not big,” said Desmond Kwan, director of taxation at KIK Consumer Products. “I think it will help our jobs rather than replace them, because you still need to be a tax professional to understand whether the advice [that ChatGPT] is providing is good or not.”
This extends to how corporate tax departments want their outside tax & accounting firms to be utilizing the technology — 54% of corporate tax respondents said their outside vendor firms should be using generative AI for tax & accounting work, while just 18% said they should not, and the remaining 28% were unsure. But if their vendor firms are using generative AI, those corporate tax professionals explained, it should be as a value-add rather than the whole of their work.
“We are paying for accounting/tax services from qualified professional accountants,” one corporate tax professional told researchers. “If they are going to use ChatGPT or generative AI, there is no reason for us to engage them in the first place as we could just use ChatGPT or generative AI ourselves.”
Firms quicker to adoption
It’s interesting then, that in spite of these positive feelings on generative AI from corporate tax professionals, it’s outside tax & accounting firms that are more quickly implementing generative AI technologies. Notably, 15% of tax, accounting & audit firm respondents said they are already using or have active plans to use generative AI in day-to-day operations, compared to just 6% of corporate tax department respondents. And an additional 29% of firm respondents said they were in the consideration phase of whether or not to use generative AI, compared to just 21% of corporate tax respondents.
Outside tax & accounting firms also expect generative AI technology to roll out more quickly: 69% of firms that are planning to use generative AI expect to do so within the next 12 months, while just 39% of corporate tax departments planning to use generative AI expect the same quick turnaround. More than one-quarter (28%) of corporate tax departments respondents who say they are planning to use generative AI, on the other hand, have no set timeline for that roll-out at all.
In spite of these positive feelings on generative AI from corporate tax professionals, it’s outside tax & accounting firms that are more quickly implementing generative AI technologies.
Part of the reason may be increased nimbleness of outside tax & accounting firms compared to a corporate setting with deeper hierarchy and more red tape. Other respondents who did not believe generative AI should be applied to tax work cited ethical boundaries — and particularly in a corporate setting, whether the technology can abide by the company’s larger ethical codes.
“It doesn’t have the ability to cognitively process — according to my understanding, all it can do is to compile information. This is not enough to adequately evaluate the nuances of tax code or corporate ethics, much less does it possess the ability to function morally or with character,” replied one survey respondent. “This remains solely within the capacity of created humanity.”
Indeed, many respondents on both the corporate tax and tax & accounting firm side of the industry are anticipating a future not where generative AI replaces professionals, but potentially augments low-level work. Even if the corporate and firm sides have some slight differences concerning use cases and adoption rates, they by and large agree that the technology still has some growing to do before it becomes more widespread.
“A college professor teaching a tax course said, ‘The answer to every tax question begins with, It depends.’ After working 26 years I can attest to the accuracy of that quote,” one survey respondent said. “There is a lot of reasoning needed to respond to each question.”