Accounting
Tax pros embrace AI as fears of job losses are replaced by fear of missing out
It wasn’t that long ago that tax professionals were wringing their hands over a hypothetical future where
According to a
What’s more, the percentage of tax firms already implementing gen AI technology has nearly tripled year-over-year, jumping from 8% in 2024 to 21% in 2025.
Gradual acceptance
The trend is a transformation in how professionals view AI technology, both internally and from a client perspective. Overall, 13% of firms indicate that gen AI is already central to their organization’s workflow, and 32% are expecting full integration within one year. A staggering 79% of tax and accounting firms expect significant gen AI integration by 2027, making the accounting profession one of the fastest-growing industries for gen AI acceptance in the professional services sector.
It’s clear that initial skepticism has rapidly given way to the recognition of gen AI’s potential to enhance productivity and client service delivery. That’s largely due to a number of market factors. For starters, early movers on the technology have already started to find their job roles have been optimized, not replaced. Meanwhile, firms that aren’t making use of gen AI for their tax and accounting work are increasingly being perceived by clients as behind their peers in terms of efficiency.
In fact, more than any other industry, clients want to work with firms that they perceive to be harnessing cutting-edge technology to improve their tax processes. Overall, 77% of clients from corporate businesses are looking to the tax firms working for them to use gen AI. Additionally, 14% have also instructed tax firms to use gen AI in their official tendering document compared to 8% of those who have instructed law firms to do the same.
Job security concerns fade
This huge uptick in adoption is largely due to tax professionals’ fading concerns about their job security. Of the firms using gen AI in their work, almost half (44%) are using the tools either multiple times a day, or daily, the most common uses being tax research (77%), tax return preparation (63%) and tax advisory (62%).
While it may have been trendy to predict a dystopian landscape, pragmatists realized years ago what tax professionals now understand: Artificial intelligence is a powerful augment, not a suitable replacement, for human ingenuity. Now, only 9% of tax, accounting and audit professionals view gen AI as a threat to industry jobs. A majority (54%) see minimal or no threat to employment.
The undefined future
While it certainly seems on the surface that the tax landscape has only been enhanced by the emergence of AI, organizations need to be prepared for the unexpected. According to a
So, for all the justifiable excitement over the prospects of less stressful tax seasons and time saved, tax professionals still need to treat AI like a work in progress. Without question, the days of fear and doomsday prophecies are in the past, and organizations are now embracing the transformative journey of AI integration. As AI continues to evolve, it has the potential to revolutionize tax and accounting practices. Firms that can remain fluid and nimble in their approach will not only find the easiest path forward, but will reap the rewards: cue increased efficiency, reduced human error, enhanced client service, and the ability for professionals to focus on higher-value strategic work.
If financial advisors ask clients the rate of return for their rental real estate investment property, they should expect to hear a number at least 5 percentage points higher than the actual one, according to the founder of The Real Estate Whisperer Financial Planning.
That’s because of calculations based on “optimistic assumptions, untracked costs and the absence of formal benchmarking” among many owners, said
“It’s where ownership bias meets the reality of returns,” Arzaga added. “Whatever they say, knock out at least 5%.”
Despite the substantial role of
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A void in the profession?
Instead, more planners should maximize their value to clients by taking them through a realistic cash-flow estimate incorporating every expense that they can then apply to a long-term forecast of their assets in retirement, Arzaga said. Even for high net worth clients in particular who generate tens of thousands of dollars in rental income each year, the risks and costs of a property that isn’t meeting their investment expectations can eat up their holdings over time.
“I want to propose that this is an idea that you can use that will expand your thinking about the way we approach this business,” Arzaga said. “I think the way we approach it now is great, but I still don’t see it in any of the curriculum — whether it be the licensing certifications, none of the designations — none of them focus directly on real estate investments.”
Arzaga shared the case study of two 58-year-old clients from San Francisco he called Kevin and Lynn who had a net worth of $3.6 million and rental income of $75,000 per year through a property that was separate from their residence. Through debt service payments and other expenses, however, their costs on the property amounted to $76,000. If the couple followed through on their plan to retire when they turned 65 while keeping the same quality of life that cost them $312,000 a year, they would run out of their assets by age 84, Arzaga estimated.
“Somebody with a $3.6 million net worth, this is kind of not what they expect, right?” he said. “So that’s why they come to us. And luckily, they came to us.”
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A better course of action
If the couple were to sell the property in a tax-advantaged 1031 exchange for a better-performing asset or simply spin off their rental holding, absorb the taxes and reinvest the holdings into their long-term portfolio strategy, their assets could amass value hundreds of thousands of dollars or even millions higher than their current scenario.
One of the main misunderstandings stems from the cost of maintaining rental properties, according to Arzaga. In his example, the clients mentioned their amount of income and told him that the number included their expenses. He saw that they had miscalculated when he examined their itemized deductions on Schedule A of their tax returns.
Operating expenses include taxes and the preparation of them, insurance premiums, legal fees related to entity filings and other matters and two major areas — maintenance reserves and property management. In terms of maintenance, the owners should build in costs of about $30,000 to $40,000 every decade for concrete, foundation work, a roof replacement or similar upkeep, Arzaga said. Property management poses difficulty as well.
“Most people like to do that on their own. Most people aren’t capable of that,” he said. “It’s important, and it’s a big asset. And some decisions they’re making are because they’re not professionals in this area.”
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Providing value outside investment portfolios
These realities may be tough for the clients to hear, but they usually come around after planners lay out the cold calculation of the costs and risks involved with a lot of small-scale rental properties. Assisting clients in making smarter choices about their real estate is “more significant than beating the S&P 500” and a “much more noble cause,” Arzaga said.
“Understanding how real estate can impact a family’s finances, I think, is essential to being a comprehensive advisor,” he said. “You’ve got to be comfortable talking about these things. You don’t have to be an expert, but addressing them, to do a service for your clients.
Joel Cooperman, cofounder and former CEO of Citrin Cooperman, left the firm on March 31 after over 40 years.
Cooperman founded the firm, alongside Niles Citrin, in 1979 when two English rock bands provided the seed money needed to open shop in a small New York apartment. Now, the Top 25 Firm reports over $870 million in revenue, with 27 offices, 455 partners and 3,190 employees.
“I can assure you that Niles Citrin and I never had any plans to build a firm larger than the two of us and maybe a couple of others,” Cooperman said in a statement. “In the early years, accounting was still viewed primarily as a profession and not as a full business – this never really made sense to me. We felt that for long-term success it was critical to create a culture and environment that our partners and employees would enjoy as we all worked to build a thriving sustainable business.”
Citrin Cooperman
Citrin Cooperman was one of the first instances of a major accounting firm
Cooperman offered advice to those early in their career: “I have always been surprised that so many people do not really understand how much they have to offer, how much potential they have. If I could offer any advice, it would be to figure out what you are good at and what you love to do, make a plan, write it down, and then go after it every day.”
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