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Transcript (Note: There may be typos due to automated transcription errors.)

Brian F. Tankersley, CPA.CITP, CGMA  00:00

Welcome to the accounting Technology Lab sponsored by CPA practice advisor. With your hosts, Randy Johnston, and Brian Tankersley. 

Randy Johnston  00:10

Today, welcome to the accounting Technology Lab. I’m your host, Randy Johnston with co host, Brian Tankersley. And this is a big AI year for products. The AICPA accelerator program brought in a variety of tools this year. And we have got different episodes on these tools. But one of those tools is a product called Black ore tax autopilot. Now I’ve been around the black or folks since before release into the market. And the product conceptionally does some very important things, was released officially November 7 of 2023. And at the time that they were released, they announced that they had received $60 million in funding to extend the product. So they’ve got some dollar money to go a long way here. But you know, in terms of my CPA firms that are on the platform, the reports and the actual results are pretty stunning. So conceptually, just lay it out for you, Brian and I and other accounting Technology Lab, podcasts have talked to you about the likes of the 1040 workpaper products. Cch scan with auto flow, companion grunt works Pro, the sure prep product, we like them all very well. Most of them started in about the 2006 timeframe, black or a lot. And let’s identify issue too many of you are still labor constraints. So you’ve turned to outsourcing. Now in another technology lab will talk to you about some of the constraints that are around the regulations around outsourcing. And we have recorded sessions on outsourcing with back or tax autopilot. The concept is that you can get in all the 1040 workpaper documentation, it will do all of the prep to partner review level. So in other words, it takes it into end through a I automations with no labor to get a partner reviewable return. So that makes me stop and say, Whoa, timeout. Did Randy just say none of the 1040 workpaper products needed no labor needed. And I got a partner reviewable turn, be turned. That’s pretty much where it’s at. So that’s a maybe sounds like a little bit of an overstatement. But before we began speaking with you today, Brian and I reviewed a client’s actual use of this product this year, the number of hours involved, the charges involved, and so forth, and what they billed the clients, it was pretty steady. So that’s kind of a long rant to set this up. Brian, what would you want our listeners to know and think about on this particular platform?

Brian F. Tankersley, CPA.CITP, CGMA  03:03

Well, the first thing I would say is that is that I want you to remember that this is an early year for this, okay, so I don’t think you should set I don’t think you should level set that this is something that you’re going to put your most complex and most challenging and most difficult returns into initially, the way the product is built is based on the schedules that you use. And so there’s a price for each schedule, almost like an h&r block. And it goes in and takes those. So this is a way, the way I would think about this is this is a way to kind of cherry pick some of the easier returns that have a lot of data entry. Or you could you could let let this do the work for you, as opposed to letting a staff person do the work or as opposed to sending it offshore. So the idea here is that this is another AI tool you have in your toolbox, and maybe you’re not going to run everything through it, but you’re going to run some of the stuff through it. And, and again, this, you know, again, just like everything else, you’re going to exploit the things it’s good at, as opposed to running everything at it. And then what you know, again, because you start thinking about doing, you know, 30 different states in here for somebody, and you can see how the AI can break down just because it might not have had enough instances to do the training. But it’s a very interesting concept. And I think it’s indicative of what we’re going to see in the future. You know, I think the thing we have to remember here is that our friends, the Internal Revenue Service thus far, have not had the funding or not used the funding they needed to do some of the advanced analytics that we’re that we’re talking about that are getting done here. And you know if I think I think honestly, some of the tools that like this that are getting created Maybe used in the future by audits where they take the source documents and the input information, they prepare the AI prepares a draft of what it thinks the returns should be. And then the auditor focuses on the differences and figures out whether they’re reasonable or not. So, you know, as we as we look at this, even if the practitioners don’t adopt this, there’s a real opportunity for the government side of tax administration to latch on to something like this, to really make make it easier for auditors who have history degrees instead of masters in tax to be much more effective at their work.

Randy Johnston  05:41

Yeah, so Brian, uh, you know, as I think about the platform, another couple of items that I thought are important is everything is on shore. So some of the disclosures that typically would be required for any outsourcing offshoring, but you know, they’re minimized here. And so everything is done through the AI systems. And if you think about the bandwidth, problem, bandwidth constraints that you might have with your, you know, senior tax people, that is certainly something that this product can do. The other, I’ll say attitudinal thing that I’ve been on this year, is, if we can get the automation, right, so many firms are walking away from 1040 work because they consider it low value. But so much of the opportunities for advisory and other business work is tied to the tax returns, that I think firms are unwisely yielding 1040 business if they could do it profitably. And we don’t want to

Brian F. Tankersley, CPA.CITP, CGMA  06:48

agree with you, Randy, I think the Tim 40 is a relationship a relationship engagement as opposed to necessarily a natively profitable or interesting engagement, because that’s the thing that affects what somebody actually keeps, you know, the DTB dollars to Brian. And so if we’re, if we’re thinking about this now, you know, I think it’s going to be hard to maintain some of those advisory relationships. If you’re not also taking care of somebody’s personal needs. You’re really giving somebody an opening to come in and steal your client. Yeah,

Randy Johnston  07:25

and as I’ve consulted in CPA firms this year, you know, there’s a lot of this we have staffing concerns are a little less than they were but there’s been this concern about turning away clients. And you know, I look at a other consultants in the profession that I respect very much where they’re, you know, continuing to have their fire there your clients days, and you know, clipping off, I understand clipping off bad clients. But clipping off just 1040 clients may not be a wise thing. Of course, we also have a lot of temporary staffing or outsourcing or offshoring that we might do. But if you think about outsourced out outsourcing, whether it’s offshore onshore, and the contractors that you might have to use in this setup, have OCR and data entry staff with 1040, workpaper products, this type of product that has the AI is interesting to me. Now, we’re not going to talk about this one today. But you should be aware that I’m also following AI that does business returns as much. So you know, when I look at the capabilities of the product, the platform is pretty useful. So Brian, I know you’re kind of looking through how everything works here, but it truly is dragging the documentation and let it go. So what might you describe for our practitioners on this one?

Brian F. Tankersley, CPA.CITP, CGMA  08:50

Well, it’s really it really goes in and takes the documents and then classifies, organizes and processes them. And then it can push information back out into your tax software application and actually interact with your tax software application. But the the thing about it is that it goes in, and again, it creates something that is literally ready for a partner review, including a tie out of all the information so you can see where the numbers came from and where they went. And, you know, honestly, I think I think this is something we’ve been looking for. You know, the thing that I would just suggest to you is that the staffing problem in our profession is maybe not as much about, you know, I think that I think AI is going to have an impact on staffing in our profession. But I think it’s going to have more of an impact on the use of outsourcing services and less of an impact on the onshore services. Okay, because let’s be honest here with some of our outsource providers, we may not feel very comfortable having them contact our clients directly but just about everybody staff, they feel comfortable and contact clients directly. So you can delegate tasks to them, that maybe you can’t to the others. And so the beauty of the beauty of this tool is that it creates more time for that, for that relationship handling, and it gives you a better tool to show, you know, to give you a to show you how they, you know how the AI would present this particular return. You know, if it’s a prior year return for somebody, you can go through and run, run it through this, and see pretty quickly at a fairly reasonable price, what the what, what the AI would have done for that return last year.

Randy Johnston  10:41

So, you know, a big picture view on this is if in fact, we can get a portal, gathering these documents together for us. And we can drop the documentation into the prep software. And we can identify any missing documentation, if you will, through our portal gathering process and have a delivery, what I’m trying to get you to think about is, maybe we can have an end to end process that’s almost completely automated. And that perhaps you could cost effectively compete against some of the retail tax operations in your city. And maintain that relationship with the individuals that might lead to other business work, other advisory work and so forth. So, you know, I’m I’m actually quite excited and quite impressed with the capabilities, the platform to date. If you have not reviewed this, and you’re thinking about, you know what you do with your Individual Tax Practice, before you saying we’re gonna abandon it and just fire our 1040 clients, I’d ask you to consider looking at a tool like this, which may be your a path forward. And a, an AI platform that actually is servicing the profession. I continue to watch for these. I think this one may be there. So Brian, closing thoughts on black or tax autopilot? Yeah,

Brian F. Tankersley, CPA.CITP, CGMA  12:15

I think I think the point about the relationship, again, is key. Because this, you know, with with AI tools like this, what’s to stop somebody like to intuit or, you know, a, a, an investment bank, or even a commercial banker, going out and using this to offer, offer these prep services to folks that have certain limited risk situations. And suddenly, now they’re in the catbird seat for advisory as opposed to you. So I think it’s, I think this is a long term survival tool that that you need to be considering. You don’t have to adopt it today. But I think you should at least try it. And and, you know, or try try one of the competitors to, to give yourself a feel for how you can use this to creatively solve the problem of how can I create more, more productivity, you know, in the during the peak seasons of the year?

Randy Johnston  13:17

Yeah. So you know, the claims on the website, and you can look at how the automation works on their website. But you know, their claim is that you can free up billable hours, that you can ignite growth and that the product works effectively. They’re claiming 90% of the time savings. And I think the clients that I have this working in are seeing more than 90%. They’re claiming of five times annual ROI. And every calculation that I’ve done with the client is more than 5x. And, you know, so it’s a wonderful start, we’re anxious to see how this company does over a period of time. So Brian, and I always are looking for the best of the best for your practice. And we think black or tax autopilot may be one of those type of tools. We look forward to working with you again in a future technology lab.

Brian F. Tankersley, CPA.CITP, CGMA  14:17 Thank you for sharing your time with us. We’ll be back next Saturday with a new episode of the technology lab, from CPA practice advisor. Have a g