7 predictions for tax automations in 2024

The trend toward automation in the tax and accounting profession has been growing over the last 10 years, and 2024 is poised to be a big year in the tax automation journey. Hot topics in 2024 will revolve around artificial intelligence (AI), e-sign to e-file, vendor relations, and an increased focus on the firm-client relationship through remote experiences.

AI will continue to be woven throughout the tax workflow. Tech silos will be addressed as firms work toward consolidating multiple products into a single, manageable platform with a focus on specialization and precision within the tax and accounting profession. This precision in the tax workflow relieves both staff and clients from unnecessary steps and multiple logins. Firms will invest in partnerships and integrations as they strive to provide the intuitive remote taxpayer experience that is in demand.

The year ahead will see firms and vendors looking for ways to leverage AI, particularly in the tax document gathering process. In this list of predictions, you’ll notice that more firms will be opting for specialized automation partners and more vendors will be concentrating on using AI and automation.

Prediction 1: AI will be the hot education topic in 2024. It will be adopted, embedded, and extended throughout the tax workflow.

The introduction of ChatGPT, paired with new products and companies entering the market, created a lot of noise. All that commotion around AI can be intimidating. In reality, when a firm uses tax and accounting software, AI is likely already at play—even if it doesn’t take on the form of ChatGPT or a copilot bot.

Too often accounting firms fall into the trap of paying for implementation services to turn on more siloed technology which increases workflow problems. Firms struggling with hundreds of manual data entry tasks, printing tax forms, assembling binders, and endless phone calls to clients should not be burdened with tax automation software that creates yet another workflow, AI should be embedded within the tax and accounting software firms are already using.

Firms invested in tax software to alleviate the additional manual responsibilities. We’re going to see vendors looking at the tax document gathering process and using AI and tax automation to provide f irms the streamlined tools they need for tax gathering activities. AI will be core to the tax document gathering process. AI technology will ultimately enable firms to provide clients with a more intuitive, straightforward experience.

This is a space to watch in 2024, we’ll see a lot of players entering this market but only a few with the natural ability to extend their current automation expertise will jump to the front. Vendors already excelling in tax automation will quickly stand out as leaders to extend AI into the tax gathering and document collection process.

Prediction 2: Firms will strengthen their tech stacks and lean on industry players who have a deep understanding of the needs of both firm staff and their clients.

Generic tech will no longer be fit-for-purpose to try and meet the specialization and precision of the tax and accounting profession. The general-purpose e-signature and file-sharing solutions aren’t keeping pace with the needs of accounting firms or the expectations of their clients.

Heavily due to the pandemic, there was a massive wave of technology adoption to enable virtual tasks that were previously done in person. But common tech products don’t meet the specialization of the tax and accounting profession. The heyday of generalized tech vendors pitching to accounting firms will soon see the limits of scale in the tax and accounting profession.

Fast forward to the present and we’re in the second wave of inefficiencies due to siloed technology and a piecemeal approach to a tech stack. Firms are losing trust in—and expressing frustration with— generic solutions that simply don’t meet their specialized needs. They require tax automation solutions built with tax and accounting expertise.

As a result, we are seeing tax and accounting software partners and vendors digging deeper into customer journeys, tackling customer pain points, and setting product roadmaps accordingly. A trend which will continue to gain traction in 2024 and beyond.

Prediction 3: E-sign to e-file will happen before the end of 2024.

The digital journey from e-sign to e-file will be completed before the end of 2024, marking a significant milestone in the evolution of tax automation. Getting e-signed 8879s back is a huge pain point for firms. They often have tax returns that have been completed for weeks but the signed 8879s haven’t been received. This waiting game that f irms have had to play will be reduced or replaced by automated e-filing with the help of APIs triggering e-file upon receipt of e-signed 8879s.

Prediction 4: The value-add of integrations and APIs will drive closer relationships between trusted vendors, marketplaces, and partnerships.

Data identification and accuracy will be integrated into tax software, along with real-time status tracking, enhancing the efficiency and reliability of tax automation processes. Vendors should not be attempting to scrape or manipulate tax documents and information through screen shots, data set or PDFs in their own internal workflows. Instead, integrations and APIs with specialized industry vendors will be the go-to approach. As a result, open relationships with selected and trusted vendors, marketplaces, and partnerships will be the norm.

Prediction 5: A handful of leaders will rise up to the top, validated by their relationships with household names in tax software.

In the natural journey to digitization and automation, household brands in accounting practice management software are considering their own build, buy, or partner strategy around tax software automation. Major players such as Thomson Reuters, Wolters Kluwer, and Intuit will select the best-of-breed vendors to add to their marketplaces or strategic partnership programs.

Informed, assessed, and strategic choices are established similar to a merger and acquisition strategy, and only a handful of vendors will rise as the market leaders. Inclusion in their marketplaces is an important signal to the market—especially to accounting firms. It signifies that these brands are not only putting a stamp of approval on these vendors for their customers, but also collaborating with them to innovate on deeper value for firms and their clients. We will see these vendors begin to stand out prominently throughout 2024.

Prediction 6: Enterprise firms will kick off initial scope and requests for proposals (RFPs) for ‘single-pane-of-glass’ projects.

We’ve heard from both our enterprise firms and the market buzz on the rising need for a SPOG or ‘single-pane-of-glass’ in the tax and accounting profession. SPOG is defined by TechTarget as, “A management console that presents data from multiple sources in a unified display. The glass, in this case, is a computer monitor or mobile device screen.” In laymen’s terms, a SPOG means bringing all your vendor tech and data into one manageable dashboard or unified console.

Prediction 7: Firms will invest in a remote taxpayer experience or risk losing clients.

In the wake of the pandemic, we’ve seen a huge rise in the client demand for a remote experience. Our population has been exposed to digital experiences as the new normal for most consumer behavior. All generations were forced to a level of digital savviness through online banking, travel bookings, appointment requests, grocery ordering and essentially most components of our daily lives. Older generations accelerated their digital abilities—and expectations—throughout the pandemic. Additionally, we have younger generations of digital natives who are aging into the taxpayer bracket and expect an experience on par with their daily lives. The demand for an easy-to-use remote client taxpayer experience is growing.

Firms will have frustrated clients—and will lose customers—if they do not adopt digital client experiences which require zero client education to meet the ease-of-use expectations. Firms historically invested in binders, branding, and imagery so their customers had a good brand experience. This elevated digital experience is the next phase in customer brand connection and tax automation is at the forefront of meeting this demand. In fact, a firm’s brand will suffer if they do not redirect their energy from in-person quality brand experiences to the remote-first client experience.

Editor’s note: SafeSend Returns is now available and integrates with Intuit® Lacerte® Tax, making it easy to automate tasks across your tax process including package assembly, delivery, and e-signing. This article was published with the permission of SafeSend.