Key takeaways
- AI’s role in tax compliance and efficiency: AI tax software, like Bloomberg Tax, helps professionals manage complex regulations, automate language-based tasks, and synthesize intricate tax information, boosting efficiency by up to 30% and freeing resources for strategic activities.
- Key features of advanced AI tools: Reliable AI tax tools ensure accuracy through vetted data, traceability, and clear citations. Bloomberg Tax’s specialized solutions, such as Deep Thinking and AI Expression Generator, tackle complex tax problems and automate formula creation with precision.
- Limitations and human oversight: While AI enhances productivity, it has limitations, such as dependency on available data and inability to provide personalized advice. Human oversight remains critical for nuanced decision-making in the tax profession.
The tax profession is at a moment of transition. Regulatory shifts, such as Pillar Two, are creating complex new requirements, yet few professionals feel prepared to comply. Meanwhile, clients demand deeper strategic insights, but talent gaps and resource constraints are pushing teams to do more with less.
As pressure mounts, AI has become a top business priority for tax and finance leaders. Although widespread implementation is still underway, the right AI tax software can empower professionals to handle increasing complexity, meet tight deadlines, and deliver strategic value. However, success hinges on implementing and scaling trustworthy AI.
This article reviews the core capabilities of AI tax software, highlights key limitations, and shows how advanced solutions, including Bloomberg Tax’s Deep Thinking and AI Expression Generator, embolden teams to deliver higher-impact work.
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How AI tax software delivers reliable answers
Because tax departments must deliver precise results for compliance, it may seem that deterministic AI – which provides consistent output for a given input (e.g., input X always produces output Y) – would be ideal to use. This is not necessarily the case.
Generative and agentic AI models, in contrast, are probabilistic, meaning they produce different outputs for the same input (e.g., input X might yield Y or Z). At first glance, using GenAI or agentic AI may seem to pose risk for an industry reliant on precision. However, these technologies are invaluable for tax professionals.
A good portion of a tax professional’s time is spent on language-based tasks, instead of simply crunching numbers. This is where large language models (LLMs) prove their worth. Some of the best AI tax tools leverage GenAI or agentic AI to handle nuanced, text-heavy responsibilities, including interpreting ambiguous regulations, drafting structured memos, and articulating complex concepts for client communications.
By automating these labor-intensive tasks, generative AI helps reduce the administrative burden on tax professionals. According to a recent Bloomberg Tax news article, AI tax software is expected to boost the effectiveness of tax and finance functions by up to 30% while freeing up 23% more budget for high-value activities.
[Download our customer ROI report to see how nearly 300 senior tax professionals gained greater productivity, efficiency, and growth opportunities with Bloomberg Tax.]
Fact-checking and vetting data sets
When evaluating AI tax software, it’s important to focus on tools with capabilities that enhance accuracy. While risks exist, reliable answers begin with a foundation of well-vetted, trustworthy data. If the underlying information in tax software is flawed, the AI’s output will inevitably be unreliable. The best AI tax tools extract relevant content from authoritative tax documents and trusted databases.
An ideal system will go a step further by rigorously cross-referencing data points to ensure every piece of information used in its output is both accurate and up-to-date, while also citing sources for easy follow-up. This process significantly reduces human error in data gathering. In fact, nearly 80% of respondents in a recent survey noted that Bloomberg Tax’s AI tools help them work more efficiently and accurately.
Synthesizing complex information
Tax questions are rarely straightforward or resolved with a single, one-line answer. Instead, they often involve piecing together information from multiple jurisdictions, filing years, and sections of the tax code. Generally speaking, AI tax software is good at synthesizing these various elements into a unified, cohesive response presented in clear, plain language.
According to a Bloomberg Tax survey 84% of respondents stated that AI technology has sped up their ability to find answers by summarizing key provisions, highlighting deadlines, and clearly defining technical terms.
Traceability for better accuracy
The most effective AI-powered tax solutions provide clear traceability, with every AI-generated output supported by proper document references and direct citations to source material.
This transparency allows tax professionals to maintain full oversight, ensuring that if a specific claim needs verification, the exact document reference is readily accessible. By reducing risks in daily workflows, this functionality enables teams to confidently defend their tax positions to auditors or stakeholders.
Risks and limitations of AI in tax
Although AI offers much potential, tax professionals must remain mindful of its limitations. General AI tools, trained on broad internet datasets, are not designed to address the nuanced complexities of tax laws or industry practices.
Even specialized AI has its constraints. Its responses depend entirely on the information available in its referenced materials. If critical data is missing, the AI may fail to provide a complete answer. AI tools also cannot offer personalized legal and tax advice tailored to an individual’s unique circumstances. Human oversight remains an essential component of critical decision-making in the tax profession.
[Download our complimentary AI Guide for Corporate Tax Teams to mitigate risks, adopt reliable AI, and explore top tools for efficiency and compliance.]
Advanced AI capabilities from Bloomberg Tax
As mentioned previously, general AI tools, such as ChatGPT, are not equipped to handle the complexities of professional tax work. Tax professionals require purpose-built technology designed to navigate the intricacies of the tax code – addressing everything from changes in bonus depreciation to Amount A of Pillar One – with precision.
Bloomberg Tax’s advanced AI technology is purpose-built through its unmatched database of industry-leading tax resources, including:
- Comprehensive primary and secondary sources, such as tax treaties, agency guidance, and determination documents
- Award-winning, unbiased news
- Expert analysis
- Practitioner-authored Tax Management Portfolios
Built on this specialized content, Bloomberg Tax’s AI delivers responses sourced from expert-vetted materials. This ensures reliable, actionable insights that not only address immediate tax questions, but also provide the context needed to anticipate changes and refine tax strategies effectively.
Deep Thinking for complex tax problems
Tax questions often involve overlapping Internal Revenue Code sections, Treasury Regulations, and specific court decisions. Bloomberg Tax’s Deep Thinking is designed for tackling intricate, research-intensive questions that demand layered reasoning rather than simple lookups.
Unlike tools that provide surface-level summaries, Deep Thinking takes a methodical approach to complex challenges. It engages practitioners with clarifying follow-up questions to fully understand the context of their inquiry. From there, it develops and executes a comprehensive research plan, drawing from multiple authoritative sources. By actively connecting relevant authorities, the system delivers a well-reasoned answer, complete with clear citations and a step-by-step explanation of its logic.
Designed for complex, research-intensive queries, Bloomberg Tax’s Deep Thinking focuses on layered reasoning over simple lookups.
AI-generated tax formulas
Writing tax formulas can often be tedious and prone to errors. Bloomberg Tax’s AI Expression Generator simplifies the process by leveraging generative AI for tax calculations. Based on a description of the desired outcome in plain language, the tool generates accurate, compliant formulas in seconds. For instance, describing a formula as “take the lesser of amount and total” prompts the AI model to create and apply a working formula to the data.
This advanced feature removes uncertainty, enhances accuracy, and saves time, making it an indispensable resource for corporate tax departments and accounting firms aiming to boost productivity and precision with AI.
Instantly create tax formulas using simple language in Bloomberg Tax Workpapers.
Elevate your tax practice with Bloomberg Tax
Tax automation software is revolutionizing the way corporate tax teams work, enabling them to prioritize strategic planning and streamlined processes with enhanced precision and reliability. By integrating AI for tax professionals, tax departments can leverage advanced technology to minimize time spent on cumbersome manual tasks such as tax research while maintaining accuracy.
Access our free Corporate Tax Guide for Implementing AI to explore potential challenges, attributes of trustworthy AI, and recommended tools. Take the next step toward optimized workflows with confidence by requesting a demo to uncover how Bloomberg Tax’s AI-powered solutions can revolutionize tax processes.