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Artificial intelligence and the risk of inflation expectations

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The arrival of artificial intelligence promises game-changers in all industries. But what if the rise of AI created new ways to simplify things — as well as a whole new set of complex client expectations for accountants? 

As businesses expect AI-driven solutions, accountants could find that what initially were accepted as benefits in cost-efficiency, speed, and enhanced service could be the most unexpected complications. Let us explore how AI’s promise to transform the accounting profession might go the unexpected way. 1. Faster service: When speed feels too fast for comfort. Where AI can automate repetitive tasks, accountants will process data faster than ever. This presumes that clients value that speed. 

Increased speed might mean that clients will demand information even faster than the speed at which it is created, without stopping to think about any deep analysis or nuanced judgment. 

The new challenge? Keeping up with unrealistic demands.

2. Value for money: The hidden cost of always expecting more for less. AI’s ability to perform tasks with minimum human intervention promises cost savings. However, the drive toward cost efficiency can be detrimental because it can feed into clients’ mindset that the value of professional accountants’ services would continue to drop. 

What is often left unsaid is that AI tools are costly in terms of investments in technology, learning, training, and keeping up with constant updates, and hence AI tools are not cost-neutral. Accountants will likely not sell any AI tool independently — so by itself, any AI tool won’t be a profit center. 

What is the paradox? Clients expect more for less, while accountants have to deal with higher costs to operate their practices. 

3. Better service: When AI lacks the human touch. Clients may also expect that AI will enhance service quality. After all, AI will be able to recognize patterns, predict trends, and perform complex calculations. 

In businesses where AI-driven processes take precedence over traditional ways of doing things, clients may miss the personal counsel, insight, and display of empathy accompanying human contact. AI, for all its power, cannot establish relationships and provide specific advice relevant to a client’s particular circumstances. 

The paradox arises: Better service in terms of raw data analysis does not equate to better service as perceived by the client.

4. Greater privacy: AI’s paradox of data security. Where there is AI, there is the ability to sift through enormous amounts of data at unbelievably fast speeds. This can open up a broad avenue for breach of privacy. At the same time — and quite rightly — all clients will expect AI to handle their sensitive financial data with more security than ever. 

AI knowledge

Катерина Євтехова – stock.adobe.com

Yet the same AI systems that make accounting tasks quicker and more efficient are those prone to cyber-attacks, breaches, and intentional or unintentional mismanagement of sensitive information. It is an expectation, but the reality is that AI systems may not have perfect security, especially when it comes to human use of AI tools. Hence, it is essential to have an “AI use policy.

5. More predictability: When clients expect crystal-ball forecasting. AI’s predictive powers promise more accurate financial forecasting, and clients may believe that AI will provide flawless predictions about future market trends, tax burdens, and revenue streams. 

However, AI is not perfect, and AI predictions are based on historical data that cannot predict unforeseeable events such as crashes, regulatory shifts, or political upheaval. 

As clients become more reliant on AI predictions, the likelihood increases that expectations will be set unrealistically high, and frustration will mount when predictions inevitably prove imperfect.

Navigating the AI-fueled expectations

With the rise of AI comes a whirlwind of expectations — faster service at lower costs, superior quality, greater privacy, and predictive accuracy. While AI can deliver on many of these promises, accountants should be aware of the new pressures created by such expectations. 

The future in accounting will be about mastering AI tools and managing the evolving and sometimes unrealistic demands coming hand in hand with those tools. As client expectations continue to grow, so must accountants balance the capabilities of AI with the irreplaceable value of human insight, judgment, and relationship-building.

It’s simple: Although AI may enhance processes, it cannot replace accountants’ multifaceted expertise. Accountants will need to communicate that to their clients effectively to be in a better position to turn these challenges of AI into opportunities for more profound, more impactful, more value-added services.

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Accounting

In the blogs: Just in time

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BOI is back; phantom stocks; continuous compliance; and other highlights from our favorite tax bloggers.

Just in time

  • Tax Vox (https://www.taxpolicycenter.org/taxvox): Who benefits and who loses from extending major provisions of the Tax Cuts and Jobs Act?
  • Taxing Subjects (https://www.drakesoftware.com/blog): The Republican party can shape legislative priorities for the next two years, setting the stage for long-term policy changes. A downloadable resource offers a breakdown of key policy areas and action steps for tax pros and small businesses. 
  • AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): How the IRS and tax pros can both start prepping for any government shutdown.
  • Eide Bailly (https://www.eidebailly.com/taxblog): “Just in time for the holidays,” a federal appeals court has restored the Corporate Transparency Act requirement for businesses to disclose their beneficial owners.
  • Taxable Talk (http://www.taxabletalk.com/): And just like that, yet again, with an injunction’s stay, course is reversed.
  • Current Federal Tax Developments (https://www.currentfederaltaxdevelopments.com/): At least they extended the deadlines a whisker.
  • The Tax Times (https://www.thetaxtimes.com): The IRS continues to claw back from non-filers, to the tune of 10 figures and counting.
  • The National Association of Tax Professionals (https://blog.natptax.com/): Favorite headline of the week: “The best gifts for the tax pro in your life this holiday season.”
  • National Taxpayer Advocate (https://www.taxpayeradvocate.irs.gov/taxnews-information/blogs-nta/): “‘Twas the night before tax season, and all through the land; Tax professionals were working, each with pen in hand; The forms were all sorted with numbers just right; who says tax accounting can’t thrill and excite?”

2025

Continuity

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Accounting

H&R Block releases Santa Claus’s tax return

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That doesn’t look like a 1040 … .

H&R Block has given the world just what it wants to see this holiday season: Santa Claus’s tax return.

Santa has a lot of itemizations to consider. Eight tiny reindeer depend on him for food and shelter, for instance, but are they dependents? How much can you give to one person before reporting it? Does Santa keep good mileage records for his 41.5 million miles? Santa isn’t an employee, so compensation (even in cookie form) over the threshold may create a 1099-NEC.

Old St. Nick, who files MFJ with Mrs. Claus, did all right on 1040 Line 34, but some of his numbers do bear examination: 6.3 million cookies and 2 million gallons of milk means a third of a gallon of milk per cookie. Will the deduction of coal, magic dust and sleighbells stand up to audit? At least Santa has plenty of time on his hands between January and April to find a good preparer.

Santa's tax return

“Even the jolly man in red takes time to report taxes,” reads the announcement from the tax prep giant. “He’s probably the world’s most famous small-business owner, running a gift-giving workshop and distribution network across the globe … Santa is giving us the first ever peek at his tax return and showing us how he used H&R Block Online and AI Tax Assist to get his maximum refund.”

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Accounting

5 changes coming to IRAs and 401(k)s in 2025

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The SECURE 2.0 Act contained several changes to traditional and Roth individual retirement accounts and 401(k) plans that are being phased in over the coming years, with several notable changes coming in 2025. The Illinois CPA Society highlighted five changes coming to IRAs and 401(k)s in 2025:

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