Beyond the hype: AI is changing the game for tax

Accounting has been at the centre of AI hype for over a decade. It has since evolved at a pace that the most ambitious researchers would have found difficult to imagine even five years ago. Elisabeth Beastrom, president – tax, audit and accounting professionals at Thomson Reuters, writes

It was all the way back in 2013 that researchers at Oxford University first introduced the AI fear factor with their prediction that 95% of accounting and auditing jobs were at risk of being automated in the coming decade.

Instead, we have seen a massive surge in demand, rising pay and a historic talent shortage as the industry struggled to keep pace with increased complexity, economic volatility and constantly changing tax codes.

With new advances in generative and agentic AI solutions suddenly making it possible for accountants to truly transform the way they work, real-world AI adoption is surging and the perception of what this technology means to the profession has shifted from hype to opportunity.

The fact is, AI is not replacing accountants: it is removing the constraints that kept accountants from reaching their full potential.

A 1:1 ratio of talent and tech

I have been fortunate to have a front-row seat for this transformation as I have worked with many of the world’s leading accounting firms to integrate AI-powered technologies into their practices. While no two cases have been identical, there are some common bonds and best practices emerging among the most progressive firms that help us break through the hype once and for all and start focusing on how AI is really changing the game for tax professionals.

The first and most important thing we are seeing is the widespread adoption of AI agents to automate some of the most labour-intensive and monotonous aspects of the accounting workflow. These include things like processing source documents from prior-year tax returns, extracting and categorising data and generating returns for professional review. Firms are also deploying agentic AI solutions to dynamically trace accounting transactions to corresponding banking activity, allowing them to quickly confirm that recorded transactions have occurred.

These types of cross-checks and due diligence exercises used to create time-consuming administrative hurdles for accountants, especially during peak season, but they are easily avoided with better, faster record analysis.

The phenomenon is not one in which professionals are being replaced by technology; it is an example of AI agents augment and improving the work that humans do. It is what led me to make the prediction that every accounting firm will soon employ at least one virtual agent for every accounting professional on staff.

Throughout the industry, we are seeing countless examples where firms are finding creative ways to use machines for what machines do best, and people for what people do best. By putting those two things together, they are crushing the constraints of time, talent and burnout that have plagued the industry for far too long.

Rise of the strategic advisor

An important outgrowth of this evolution is the blurring of the lines between traditional tax work and broader financial and business advisory services. With less time spent chasing paper, manually logging information into templated forms, and hunting for tax code updates, accountants are able to get back to the basics of what drew them to the field in the first place: advising clients on the best way to navigate complex situations.

This is bigger than just freeing up more time. New technologies are making it possible to spot correlations, relationships and anomalies that would have been impossible to see in the world before AI. For example, an accountant working with a small business owner is now able to reconcile business and personal tax returns against longer-term business growth trends, depreciation schedules and personal life goals to start offering a level of holistic, strategic guidance that business owner simply cannot get from a traditional financial advisor or business consultant. AI is helping accountants unlock new value in the unique role they occupy in their clients’ financial lives.

Scaling for the future

Perhaps most important, though, we are seeing accountants leverage new AI-powered technologies to not only make their day-to-day work lives more fulfilling, but to help pass the torch to the next generation. In one recent example, the owner of a mid-sized firm that had recently acquired a smaller firm started leveraging the power of AI to train junior staff and bring her unique brand of highly personalised service to all employees.

The firm deployed AI agents to scour client data and source areas where the firm could find opportunities for savings. These flags were then fed to junior staffers, along with detailed instructions on how to introduce the topic to clients. Throughout, prompts helped guide staffers through the client discussion and administrative processes, ultimately creating a new way to standardise and scale great customer service.

These are the types of examples the accounting industry should be latching onto when they start thinking about the future and the role that AI will play in transforming the profession. It has taken years, but the hype has finally given way to real-world results, and these examples should be encouraging for anyone who has ever felt the pressure of a crushing tax season or the frustration of not being able to do more to help clients. We are entering a new era of AI-empowered accounting where the constraints are gone, and the opportunities are truly limitless.