How to practice ethical use of AI in tax

The future of AI in tax: navigating ethics to unlock productivity

A recent report from Tolley explored how generative AI could impact the tax profession. With advanced AI on the horizon, tax professionals have an opportunity to implement these tools ethically and responsibly, unlocking a new level of efficiency.

Awareness of AI is already high among tax practitioners. The Tolley report found 64% are using generative AI or have plans to in the near future. But with great power comes great responsibility.  79% also expressed concerns about potential negative impacts, especially around bias, transparency, and misinformation.

By proactively addressing these ethical pitfalls, tax practitioners can tap into AI's benefits while avoiding the risks. The key is active human oversight throughout the AI model development and deployment process.

Sign up to the Tolley+ AI™ Insider Programme

Mitigating bias

Left unchecked, AI systems can easily reinforce existing biases. According to MIT Technology Review, "Bias can creep in at many stages...and the standard practices in computer science aren’t designed to detect it." However, with vigilant human oversight, bias can be minimised by carefully vetting data sources, monitoring for statistical anomalies, and continually tweaking systems to course-correct issues.

The ideal AI solutions make ethical considerations a priority from the start. Overreliance on public access AI tools can be particularly problematic for tax research. MacKay from Crowe says the current AI tools for the tax market are limited by the quality of information, context, and appropriateness of research terms.

"The quality of information isn’t currently reliable enough, which can lead to ludicrous or inconsistent results if you don’t already know what answer you are expecting."

We asked respondents how confident they would be using a generative AI tool that was grounded on tax content sources, with linked citations to the verifiable authority used to generate the response.

Almost three-quarters (71%) of respondents said they would be somewhat or completely confident using AI-powered tools grounded on tax research and guidance content, such as Tolley tax intelligence. This rose to three-quarters (75%) when looking at responses from in-house teams.

With responsible oversight and trusted platforms, the risk of bias diminishes considerably, allowing the focus to shift to AI's benefits.

Ensuring accountability and transparency

Transparency and accountability are also crucial for the ethical application of AI.  At a minimum, platforms should explain to users how solutions were developed, what data was used, and how the systems work.  The right level of transparency establishes trust in the technology.

Equally important is maintaining clear accountability through human oversight over the AI.  Tax practitioners should only use tools where they can confirm trained professionals were involved in the model building and deployment.  When humans stay actively engaged, it not only reduces bias but also provides recourse if issues emerge.

Preventing the Spread of Misinformation

Finally, tax practitioners must consider the real-world impact of AI, including its potential to spread misinformation. This can happen when biased or false data is used to train systems, or when AI generates fictional information to fill gaps, known as hallucinations.

Advisors need to maintain a high level of technical ability to spot instances of hallucinations or the use of incorrect or outdated legislation, says Shields from MKS.

"To get the most out of generative AI, tax professionals need to provide as much context as possible," she says.

"Training your advisors to ask the right questions is critical, as is ensuring appropriate review procedures are in place to omit hallucinations."

The future of tax is ethical AI

With responsible development and deployment, AI can revolutionise efficiency for firms without compromising ethics.  By choosing transparent platforms focused on eliminating bias through human oversight, tax professionals can tap into accurate, accountable AI systems.

The tax profession stands at an exciting inflection point, where generative AI promises to automate rote tasks and unlock new levels of productivity.  But realising this future relies on tax professionals proactively addressing ethical considerations around bias, transparency, and misinformation.

By keeping humans in the loop and selecting responsible, trusted platforms, firms can safely integrate AI and prepare for the next evolution in tax technology. With ethical AI, tax professionals can work smarter, deliver better service, and focus on higher-value work – ultimately strengthening the profession.

Get the latest AI insights for tax by signing up to the Tolley+ AI™ Insider Programme