Should we be worried that AI will take over preparing tax returns?
The truth of it is, AI has been preparing tax returns for IRS for a long time. The computers at IRS use the basic set up for your taxes, give you the minimum deductions you would likely have, and prepare a tax return each year for you using the data that they have received from various sources under your identification/social security number.
This is how CP2000 notices are generated from IRS to notify taxpayers they have missed something on their taxes and owe more taxes. Annually IRS computers compare the return you file with their dummy return and the computer sends a letter if something they have record of is not on your return. No human reviews the discrepancy, the computer says something is missing, resulting in a balance due of tax and the letter is then out.
These notices historically are incorrect and in many cases assess more tax then may be due. When there is a mismatch, and a notice sent, you have 30 days to respond with changes, corrections, or an explanation for the missing items. If you do not respond the new tax liability is assessed and can be collected from you. If you fail to pay the balance or make a payment plan your bank or wages can be levied to collect the debt.
Notably, non-taxable sales of principle residence’s, or stock sale transactions are often a “missed’ items that result in a large erroneous tax liability. If you ever get one of these CP2000 notices, review it with your tax professional before responding or paying it. They can be wrong and you could pay tax you do not owe.
To answer the question, can AI take over tax preparation, no, AI can not accurately navigate the complex tax code or resolve discrepancies equitably. They have a bias built into their code that does not result in accurate tax liability.