AI Tax Assist from H&R Block stuffs a chatbot into your tax prep package
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Like a spoonful of mustard or mayonnaise — or perhaps you prefer sriracha? — it seems no software recipe is complete these days without a dollop of generative AI. The groundbreaking technology plays games better than you, writes songs for you … heck, it can even be your girlfriend (to each their own). And now it can help you with life’s most vexing challenge: taxes.
In mid-December, H&R Block quietly announced AI Tax Assist, a generative AI tool powered by Microsoft’s Azure OpenAI Service. The new offering leverages the tax giant’s decades of experience in tax prep and leans on its stable of more than 60,000 tax pros to answer your thorniest questions about U.S. and state tax laws: Can I deduct this new laptop? Is this a personal expense or a business one? How many roads must a man walk down, before travel is officially part of his job?
We see AI as one of the defining technologies of our time.
Sarah Bird, Responsible AI, Microsoft
In a press preview on Thursday, January 25, in New York City, H&R Block announced another new tool designed to simplify importing last year’s tax returns from the competition. And it offered TechRadar the opportunity to try out the new AI assistant software and talk about the future of tax prep.
“We see AI as one of the defining technologies of our time … but only if we do it responsibility,” explained Sarah Bird, who serves as global lead for responsible AI at Microsoft. (Bird was virtual at the event, a result of possible exposure to Covid.) Microsoft’s Azure OpenAI Service lets developers easily build generative AI experiences, using a set of prebuilt and curated models from OpenAI, Meta and beyond. Her team helps companies like H&R Block ensure that their tools use the highest quality training data, guide you with clever prompts, and so on. “It’s really a best practices implementation in terms of responsible AI,” she said.
H&R Block notes that the tech will not file or even fill out your forms; it merely answers questions. But if you’re hesitant to even ask AI for tax advice, you have good reason. The tech is notorious for hallucinations, where it simply invents the answers to questions if it can’t find the right answer. Some experts worry that problem may never be solved. “This isn’t fixable,” Emily Bender, a linguistics professor at UW’s Computational Linguistics Laboratory, told the Associated Press last fall. “It’s inherent in the mismatch between the technology and the proposed use cases.”
One answer to the problem is starting with the right training data. If the AI has reliable, trustworthy sources of data to pore through, it can find the right answer, saving you from hunting through the Kafka-esque bowels of the IRS to find the instruction form for Schedule B or whatever. And off-the-shelf large language models (LLMs) simply don’t have that data, explained Aditya Thadani, VP of Artificial Intelligence Platforms for H&R Block. Ask ChatGPT 4 a question, he noted, and you risk missing out on what’s new: The cut-off date for that LLM’s data sources is April of 2023.
“The IRS has released a number of changes since then,” he told attendees at the H&R Block event. “They’re making changes well into December and January, well into the tax season. We’re making sure you get all that information.”
To try out the new system, TechRadar sat down with some sample data and asked a few test prompts: Am I missing any deductions? Can I deduct a car as a business expense? And so on. The chatbot offered reasonable prompts: A few paragraphs of information culled from H&R Block’s deep catalog of data, links to find more information, and so on. The company says it can answer tax theory questions, clarify tax terms, and give guidance on specific tax rules. And crucial to the entire experience: Live, human beings — CPAs even! — are always just a click away.
“When we are not absolutely sure? Don’t guess. Give a response that we are actually confident in,” Thadani said. And if you don’t get the response you are looking for from the AI, you can get it from the tax pro.”
Privacy matters: Who will see your data?
It’s hard to discuss any emerging technology without touching on privacy, and both Microsoft and H&R Block are very aware of the risks. After all, a person’s tax returns are highly personal and confidential – one reason they became such a hot-button in the US presidential elections. Should a company be allowed to train an LLM on your data?
“We’re sitting on a lot of really personal, private information,” Thadani admitted. “As much as we want to use that to answer questions effectively, we have to continue to find the balance.” So the assistant won’t remember you. It won’t ingest your tax forms to answer the questions you pose. And by design, other people won’t benefit from your questions down the road.
The new software also taps into one of the quirks of our modern software assistants. We don’t necessarily talk to them like adults. We’ve been trained to ask Alexa or the Google Assistant halting half-words and phrases. Meanwhile, chatbots can converse in natural language. H&R Block’s tool works fine in either space, Bird explained.
“It’s incredibly enabling because it allows people to speak in words they’re comfortable with,” she said. There’s the real power of technology in a nutshell: “Make a complex thing more accessible to people because the technology meets them where they’re at.”
Now if it could only help us deduct a few holiday pounds from the waistline.
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