AI Is Coming for Tax Pros, Not TurboTax
Intuit's stock is down 59%. Is AI really going to kill TurboTax?
That’s the story on LinkedIn and on Wall Street right now.
The DIY software that handles 41 million returns a year is supposedly about to be eaten alive by smarter, cheaper AI competitors.
As David Leary and I discussed on Episode 489 of The Accounting Podcast, the real disruption target might be your firm.
What I saw in New York
Recently, I was at the Black Ore AI Tax Summit at the NASDAQ Tower in Manhattan.
Black Ore is an AI tax prep company that's been in stealth since 2022 and has been working with EY, PwC, KPMG, Deloitte, BDO, and others.
Black Ore CEO Eyal Shinar said that their AI agent can complete a complex high-net-worth return with dozens of K-1s in five minutes.
That same return might take a senior associate 40 hours.
Black Ore claims 99%+ accuracy, 98% time savings, and an 80% cost reduction even after accounting for software costs.
Even if you discount those numbers by half, it still reshapes the economics of tax prep.
Another way of looking at it
My co-host pushed back when I suggested TurboTax is in trouble, and his argument is worth taking seriously.
David thinks everyone is looking at the wrong target.
If AI disrupts anyone, it's more likely to target the 90 million returns that tax professionals handle annually. Not Intuit's 41 million DIY customers.
Why? TurboTax is already cheap. At $100 to $150 a return, the price is barely worth competing on.
But paid tax pros? I'm personally paying $1,300 for each of two different returns. That's $2,600 a year.
When AI can handle complex returns with dozens of K-1s as accurately as a human and at a fraction of the cost, how long before I'm looking for an off-ramp?
David's point is that the AI tools will finally do what software couldn't: handle the complex stuff. That's exactly what kept people paying tax professionals instead of using TurboTax in the first place.
What this means for Intuit
If you believe AI won't automate tax prep, Intuit is fine. If you believe AI will automate tax prep, Intuit may actually come out ahead.
They have 40 million TurboTax customers, massive scale, and deep integration across the tax prep ecosystem.
Even a 1% efficiency improvement from AI across that base is worth a lot.
Intuit's stock is down 59%. That might be the market pricing in a real threat. Or it might be the market catastrophizing about the wrong thing.
The real pressure is on the billing model
I've seen firsthand that when efficiency tools genuinely work, the hourly billing model is the first casualty.
When I switched my firm to cloud software, my billable hours dropped 80% almost immediately. I fixed my fees the same month and stopped charging for time.
AI will do the same thing to tax practices, and it'll happen faster.
Becky Munson, who leads the CAAS practice at Eisner Amper, observed at the Black Ore AI Tax Summit that cloud accounting took 15 years to fully transform the profession. She thinks AI will do the same in 15 months.
Tax partners at large firms are already complaining about dropping charge hours. The economics are shifting whether they’re ready or not.
Follow the money, not the headlines
The disruption is real. I just think investors (and a lot of accountants) are looking at the wrong target.
I’m not sure 41 million DIY filers will abandon a product they already rely on in favor of a brand-new AI startup.
But 90 million paid-preparer returns becoming economically obsolete? That’s possible.
If your firm is still billing by the hour for tax prep, your clock is officially ticking.
For more on this, listen to Episode 489 of The Accounting Podcast.
