AI Chatbots Are Here to Help With Filing Your Taxes, but How Reliable Are They?
With the tax deadline approaching, many people are resorting to AI-powered Large language models (LLM) to file their returns, per a new survey by CardRates.com. Nearly 1 in 5 Americans would trust ChatGPT, the AI Chatbot by OpenAI, to review taxes with 14% of the respondents saying that they have used it already, the survey said.
Another survey found that 17% respondents have already used LLMs in tax filings and 45% were open for future use. Taxpayers can get guidance from tailor-made chatbots like the one launched by the IRS. Since the launch of its chatbot back in 2022, the agency looked to expand the AI-driven technology. Currently, the IRS chatbot helps more than 13 million taxpayers which helps set up about $151 million in payments agreements.
This chatbot was made possible with part of the funding that the IRS received from the Biden administration. Before that the IRS, which you may already know is underfunded to a certain extent, had often faced criticism for its slow response to filer queries. Finally, in 2022, President Biden granted the IRS $80 billion over 10 years as part of the Inflation Reduction Act, which eventually led to a better filing experience.
Part of this funding has gone into the development of these chatbots as well as voice bots, according to TIME. However, experts urge filers to "proceed with caution," when using the software to file returns. A spokesperson from OpenAI cautioned users who rely on ChatGPT for financial advice and recommended seeking professional help instead.
The IRS's chatbot is "not great yet", according to Subodha Kumar, a professor at the Fox School of Business at Temple University. They’re still working on it; AI chatbots “aren’t ready for prime time," he adds.
Kumar has so far tested AI chatbots with his students and found that the software works for general tax questions but often provides vague and incorrect answers for specific prompts. He also sheds light on how there's still work to do when it comes to data. Having said that, Kumar is generally optimistic about AI and hopes to see a "big leap" next tax season.
Turbotax, on the other hand, has unveiled their new AI-powered assistive chatbot which is said to be powered by "Intuit Assist." According to Karen Nolan, senior communications manager at Intuit TurboTax, they are using AI for "simplified filing" and more accurate returns. However, she also mentions how "AI is not completing or filing a tax return in TurboTax."
H&R Block, on the other hand, introduced their freshly re-imagined chatbot with "AI Tax Assist" this season. This tool aims to help DIY filers. "We also have a team of human testers reviewing questions and feedback daily to identify what to add and improve," a company spokesperson told CNBC.
With so many AI-powered chatbots, the future of taxes looks bright. However, experts talk about how one should always ensure that their personal information is protected. "There could be multiple types of [data] leakage," said Spencer Lourens, managing principal of data science, machine learning and artificial intelligence at CliftonLarsonAllen.
