Ep. 11 | Future-Proof Your Tax Practice with AI
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John Tripolsky:Hey there, tax pros. I know you missed us here on the Mr. R show. We are back in action, obviously, as we promised, and we took a little time out not to go sit on a beach anywhere and enjoy life way more than we should, but there's some new stuff out there. So if you have been living under a rock, you must be under a huge rock.
John Tripolsky:We're gonna talk today about, on a high level, what the future of a tax and accounting practice looks like. But, specifically, we are gonna look a little deeper into AI. So if you haven't heard that term AI, hit the pause button. Go Google it. You will probably take about 5 years to actually, you know, understand everything that's out there because everybody says it differently, but it's artificial intelligence and how that plays a huge role, not just in your practice or your future practice, but also how you're operating today.
John Tripolsky:So we're gonna dive into it as always. We do a very good job here on the Mr. R Show, which, by the way, is brought to you by the Monthly Recurring Revenue Institute, also, if you didn't know that. But we bring on guests because guests know a specific component of everything we talk about very, very well. And and plus, you guys don't wanna listen to me and Chris talk for, you know, almost an hour.
John Tripolsky:So, Chris, what's happening, man? I know I know you're my cohost on this, but what's what's life been like, man? You're a tax guy.
Chris Picciurro:Life's amazing. I I think that, you know, we we talk about in practice. We've talked about it on this podcast that you're from from a work perspective, your practice is going to run exactly how you've engineered it to run. So if you don't if you don't like something going on in your practice, sorry to to be the bearer of bad news. You gotta look in the mirror, and you need to say, how do I retool?
Chris Picciurro:How do I reengineer? You're in complete control of how that occurs. You know, the mister our show is a culmination of me of of of my 20 plus years of experience running a practice, but, also, we firmly, firmly believe in collaboration over competition while we are as we kinda took a a small, I don't wanna say hiatus, but almost like a retreat from from the show, really focusing on the vision and making sure we have the best guests. We had a may we already have had amazing guests, but the best guests in the hottest topics for our industry while providing a continuing education. So, our practice is going great.
Chris Picciurro:I'm I'm thoroughly enjoying it. I feel like I have a healthy balance. Won't dive into my pickleball career as much on this podcast as our Teaching Tax Flow podcast, but, you know, I had to get mentioned. So pickleball, my duper rating continues to increase as I stay healthy, which is good. But more importantly, I am so excited about the topic today because I'll you know, let's be honest.
Chris Picciurro:If you look at the landscape of the CPA profession, it is a more mature aged landscape. When we talk about not just CPAs, but people that that are listening to this podcast, people that are running their own practices are part of typically a small practice, small firm, enrolled agents, CPAs. And technology could be scary, but we have one of the top 25 thought leaders to the accounting profession, CPA, CITP, John Higgins joining us, who is an amazing resource. I had the honor of meeting him, about a year ago through the Michigan Association of CPAs. He was a moderator on a panel that they got desperate and probably needed someone to fill in, so they asked me to be on the panel.
Chris Picciurro:But, and he is a just a voice in our industry. We were able to lasso him in to join us on the podcast. He speaks to tons of different state societies, has been involved in continuing education. He's not only a speaker, he's a coach, he's an author, and an AI strategist. So today, we're gonna talk about the future of our profession as tax professionals, tax and accounting professionals, and how technology plays a role and how AI plays a role.
Chris Picciurro:But, John, thank you so much for joining us.
John Higgins:Oh, well, thanks for having me, Chris. And, John, it's great to be with you guys. Looking forward to the chat. Yes. We are lucky to
Chris Picciurro:have you. And, tell us a little bit more about yourself, maybe a couple personal interest items, and how you journeyed from getting getting to the point of being at the, you know, at the level you're at, in in doing what you're doing. Because typically, you know, when someone says, oh, you're a CPA, they automatically think that we do tax returns, and we all we do our tax returns. So, yeah, can you tell us about your journey a little bit? Alright.
John Higgins:Well, we'll start with the personal interest and get that out of the way. So, I also play pickleball. It's one of the few, athletic things that my wife and I could do together, and she she's enjoying us. So, it's a lot of fun. As you know, Chris, it sounds like you play quite a bit.
John Higgins:I also play a lot on ice hockey. That's kinda my real passion. Oh. I play all year round. I play 2 or 3 times a week, and, you know, whenever I get on the ice with some hockey sticks, that that's fun.
John Higgins:And then, I like to golf. So those are my kind of 3 passes that, you know, keep me when I need to get away from the office, so to speak. So, you know, my journey is I think it's been an interesting one. I, you know, have really enjoyed it myself. I'll I'll I'll just give you a real high level kinda history because I've been around for a while.
John Higgins:I started my career in a in a local firm here. I'm in Rochester, Michigan, about 30 miles north of Detroit. I know, Chris, you have roots in Michigan. Right?
Chris Picciurro:Yes. Yes. I spent about 40 years there.
John Higgins:Okay. So you got the roots. Yeah. So I started with a local firm here in the Detroit area, and that was back in the early eighties. And interestingly enough, this is when the first, personal computers came on the sea.
John Higgins:So I worked for a 50 person firm, and back then, you know, the leverage was a little different. I think they had 12 partners and, you know, staff of 50. And they got the 1st, IBM PC, one for the whole firm. Wow. And they said, what are you gonna do with it?
John Higgins:And somebody said, well, let's give it to Higgins because he's running up too much work in process on our taxing agencies. So let's get him off in the corner. And, you know, that's kind of the rest of his history. So I gravitated towards the technology side of the profession, ever since then. And, and, you know, I do a lot on AI, which we'll get to that, but, you know, one of the points I make about AI today, it is, you know, it is as revolutionary as spreadsheets were when they came on the scene, electronic spreadsheets.
John Higgins:Now for you guys, I mean, I'm not selling what was he talking about? I mean, spreadsheets have been around forever. But, you know, when I came in, there were no electronic spreadsheets. So you can imagine, think about all the things you do in a spreadsheet today, tax schedules, carryover schedules, all that stuff. Well, you know, that all used to all be done by pencil and paper, so that was very transformative.
John Higgins:And, so I left that firm once I got my certificate. I was there about 2 years. I got my CPA certificate. And then I started a business. 1 of the other guys that worked at the firm with me, he said, you know, this is where everything's going.
John Higgins:Let's go and start our own thing. And, you know, I wasn't married at that time, so I really was in a good spot to take some risk. We started the business with virtually nothing. I actually started out of my basement. And, you know, what we did at that business called CompuTools, we sold, accounting systems and the local area network systems to support them, and I did CP, you know, help CPAs learn how to use spreadsheets, how to use word processing, how to use database management, and so forth.
John Higgins:And, so I did that for about 15 years and then I, got a little burned out, frankly, so we could talk about that. And I sold the practice into BDO in the Detroit office. And so I went from my own start up you know, I had a partner. He he left about 4 years into it. So I started that and then, sold it to BDO.
John Higgins:And so I went from that culture of my own business to now being a national partner in a national firm. So that was a really culture shift as you can imagine. And, it was a good experience. You know, it just reminded me that I really like small business. Mhmm.
John Higgins:Nothing against BDO. We just just, you know, you got you got people that are 3 states away making decisions about your day to day stuff, and it's like, you know, okay. You really don't understand what's going on. Right. But it was a great experience to get that national exposure.
John Higgins:I had, you know, some staff around the country, and, and then after that, it was rated y 2 k. So after y 2k, believe it or not, still amazes me to this day, the firm decided at that point they wanted to kinda get out of technology. And I've always been a big advocate that this profession needs to be more into technology, not less. Now since then, BDO has come way back into technology. But at that particular point in time, it was frankly all about tax, which you all appreciate, your audience appreciate.
John Higgins:They really we're doing really well with tax services. And, so they did offer me the position at that point to become an audit partner, and that was like a real quick thanks, but but no thanks. You know, I'm not an auditor. So, I had a another person who worked with me there, he and I struck out on our own and created a company called CPA Crossings, and the name was to really focus on helping CPAs like your audience to transition from doing business the more, I would just call it manual way to a digital way. Now this is back in the early 2000, so what that meant is showing them how to use, you know, turn their paper documents into digital documents, PDFs.
John Higgins:Right? That was a big trans transition for a lot of practitioners, and, frankly, it still is for some today, but most of them have done a pretty good job at getting to digital. And, so then from there, it was about helping them get to the cloud, and that's still an ongoing journey, of course. And, you know, now today, of course, all the rage is about AI. So so I sold that so that business, that was called CPA Crosses and that, you know, grew into, again, about a 15 person firm.
John Higgins:And and it really, what it was is we started out as my partner Brian Smith and I, we started out as consultants to CPA firms, and, then it evolved into more of a CP business. Not really where we had intended it to go, but, we developed a lot of CP programs like this podcast, for CPAs on technology, and that was right, we got into a right about the time when it was the the profession was first going to online education. And so we built this webinar model, and we said gosh we've got the model let's get other instructors. So we we built a consortium I'll call it of tax instructors, audit instructors, you know we probably at one point had up to 30, 40 instructors, they all worked as independent contractors and they would develop webinars and then we would distribute them through the state CPA associations. That was a really good market for us.
John Higgins:It's always been, you know, really good market for us. And, so back in 2020, our largest customer was the Pennsylvania Institute of CPAs. They want to acquire CPA Crosses. So, yeah, sounds good to me. We negotiated and, sold the business in 2020, and then, lap I had to work continue on for, like, 3 years to help with the transition.
John Higgins:In the September of last year, 23, I started Higgins advisory, and I'm really enjoying it. What I'm doing is just me and I have one of the person else with, like, business development and, client relationships. But I'm, you know, just doing a lot of presentations on technology, both virtual and, and in person. And, so right about that time is when, you know, things were starting to heat up with CHaD GPT, and I've always kinda prided myself on, hey. When there's an emerging technology, learn about it.
John Higgins:It helped the profession move forward with it. So I've spent a lot of last, you know, like 16 months really trying to immerse myself in AI technology as much as possible. And I could tell you one thing, it's like of all the different technologies I've gotten involved in, this is the one that's, like, the most challenging because it's just moving so fast. It's It's really hard to keep up with where it's going, but, but I'm enjoying it. So that's gonna that's my, tour of my career.
Chris Picciurro:Wow. Well, I wanted to point out something that, John, we've we've done over almost 90 podcasts for the teaching tax flow podcast, which is our weekly one. We've done several a lot of these podcasts. For the first time, John, you have another hockey player.
John Tripolsky:I know. And his name's John. I knew I like this, John.
Chris Picciurro:It's a minor miracle. Usually, we've got talking pickleball, travel baseball, volleyball, football, but, so
John Higgins:He's the hockey player. Is everyone
John Tripolsky:telling me? So I so, John, I I live in Michigan too.
John Higgins:Best. No. You're the best.
Chris Picciurro:No. I I
John Tripolsky:was a ice hockey goalie for 18, really 18 years, so that's why I got some screws loose. You know, I intentionally took frozen rubber pucks to the dome. But, you know, it takes it takes a crazy person to hang out with Chris all day. So, you know, it is what it is.
Chris Picciurro:It works out well.
John Higgins:And and
John Tripolsky:and, John, also too, you know, we're we're, obviously, this podcast is very focused on tax practices, right, and and accounting. But, I mean, even if somebody happens to stumble across this and they have nothing to do with the tax world, almost every single person is we call it affected. Not in a pause you know, not in a negative way. Just with AI. Right?
John Tripolsky:I mean, even in in my world. So you need the marketing space. My father absolutely despises anything to do with AI because he was a very traditional corporate communications guy for General Motors. So he just looks at him and he's like, what do you mean? This is this is this isn't right?
John Tripolsky:Like, it's just crazy that it knows this because, you know, he was back I mean, he had a traveling typewriter. I think he used to be an editor for a magazine back
John Higgins:in the day.
John Tripolsky:Yeah. You know, it's a different thing, and you're right. I mean, you mentioned chat g p t. Right? So that obviously is is kind of the the most well known.
John Tripolsky:Right? But it's it's the basis for an endless amount of subscriptions, we'll call them, that people can subscribe to. They can utilize all these tools. And in theory, right, it's I was just talking to a a group of high school students the other day, and they were asking a lot of AI questions. And, you know, of course, I asked them, I said, well, how much do you use it in your classrooms?
John Tripolsky:And, surprisingly, they said a lot.
John Higgins:Uh-huh. I don't know if they were telling
John Tripolsky:me the truth on how they were using it, to be honest. But, a lot of it too, it's us all the way down to that level where they're using it just to digest notes and, you know, repurpose content that's out there and and just kinda tweak it a little bit, which is good. And I got into a spin off conversation, which I'm sure you can talk a lot more too about just specifically where you see it going with tax practices is I guess, instead of even saying the answer, I almost asked you the question. Do you think that AI being such a powerful content creation tool say we're looking at social media, for example. Right?
John Tripolsky:Like, now one person can create social content for weeks at a time. Do you, in a sense, see that as almost creating too much noise in the in the world now, or do you see it as an opportunity where people can stand out more?
John Higgins:Yeah. I think too much noise for sure. I mean, one of the things I was researching is somebody talked about, you know, today's kinda like a really a good time for AI in the sense that the for the generative AI, if you understand how it works, the base of information that it's working off of is all, for the most part, human generated content. But over the next few years, that's gonna flip, and the majority of the content's gonna be AI generated content. So it's gonna be like somebody said it's gonna ultimately be blah blah blah blah blah.
John Higgins:Right? It's a so so I I do, you know, worry about that. If you ask me what my biggest business person, we get intellectually lazy. You know? We business person, we get intellectually lazy.
John Higgins:You know? We just it just generates the content for us. We take it for granted. I mean, people do that with spreadsheets today. They just don't audit their spreadsheets a lot of times.
John Higgins:But this I can see just be multiple you know, exponentially a worst case situation in that regard. Absolutely. Absolutely.
John Tripolsky:And I mean and as far and, again, you can take this off as deep as you want to, but as far as for, you know, ethics play a part in this. I know some people are really standoffish with anything AI just from a sense of you're almost letting a, and I'm I'm trying to, like, dummy this down for myself a little bit too without making it sound ridiculous. But I I know just from being around a lot of tax pros, some of them look at technology as like, nope. We we really don't want anything beyond spreadsheets and and QuickBooks online because we don't really want any fingers, you know, or hands in our systems on our client information, any of this stuff. I mean, how do you how do you perceive that or or kind of present on that?
John Higgins:Yeah. You know what? Things I've learned over the years because I've helped a lot of, you know, CPAs, small firms, small practitioners, sole practitioners with technology. For whatever reason, what I've evolved to is a lot of those folks like to work. They like doing the work, And so I think there's you know, they take pride in the work, which is just like any craftsman.
John Higgins:Right? You you take pride in your work. So, for them, a lot of times it's hard to because you do have to set your ego aside when you start using this stuff. I swear. I'm telling you.
John Higgins:I developed courses, and I I use it all the time. I think, gosh. That that did it better than I did, and I've been doing this for a long time. You know, it can really compose not just the way it writes it, but just the ability to have access to all the information and to create that that content. You know?
John Higgins:Now for the tax practitioners, where I think there's a really big opportunity is really for all CPAs. You know, for I can't tell you for how long I go to conferences and they they talk always have sessions about you gotta become more of a client adviser. Client adviser. Client adviser. It's all been about advisory.
John Higgins:I've been hearing that for at least 20 years and probably even longer. Now so then the challenge was if you're a tax practitioner well, first of all, I'm really busy. I don't have time to evolve to become an advisory practice. And then the second thing is, well, how do I do that? And so what I think really up a lot of, opportunity in the area of AI is it can be your a your your advisory assistant.
John Higgins:It can really make it easier for you to be more advisory with your clients when you deliver that tax return. Use the AI to pull information out and and, like I say, you gotta let your ego to the side a little bit, but you but you have to understand as as when I go to Microsoft's events, they say, you know, it's it's copilot they call it copilot, not autopilot. It augments you. It doesn't replace you, but, you know, there there's lots of opportunities to to use it to help you just, you know I mean, literally, if you understand how to deal with this privacy issues, upload a tax return. I know this can be really sound like really risky to some folks, but you could upload a tax return and say, you know, identify 3 to 5 things that I could recommend to my client for next year as part of the tax planning process.
John Higgins:And it will come up back with some really good, points. So that's just an example there.
Chris Picciurro:No. That is really that is a good I mean, that's great advice, and I think that, you know, I I John, for I had a flash. I could see your dad with the breaking open Lotus 123 and and and and thinking that's the end of the world back in the day. But, that that's real I mean, I I don't know. I feel like this We do need to embrace, and I like what you're saying is that you had to put your ego to the side.
Chris Picciurro:And and I never, John, I never thought that some people like they like to complain about how much work they do, but then they secretly like it. You know? I love helping people out, but there's other things I like to do more. Well, I
John Higgins:think yeah. It's a little more generational too for sure. You know? The younger generations is more about a balanced lifestyle for sure.
Chris Picciurro:That's a great application just, you know, when you're talking about transitioning tax return for AI looking and and we know we know that we know that the software companies right now are working towards creating a you know, they've already done it. Right? And say recommending certain tax strategies for people. And I think that with AI, it can be really powerful with creating ideas. I was talking to a prospective client today, and it hit me, and then I wrote it down on my whiteboard.
Chris Picciurro:I'm like, with TikTok and with with with Instagram and all the stuff, tax planning ideas are cheap, but implementation is valuable. So if we if we think about that Copilot with Microsoft and say, our push your push your time over to the implementation part with your clients and find the most value in in the that bring that maybe that idea part or the the data entry part that we can shift over to AI will free us up to do more valuable activities too. You know, as far as yeah. I I think that one of the concerns, I mean, you could speak on it a little bit, is is that from tax professionals, is that AI is gonna take over tax preparation, and and it's I'm interested to get your thoughts because I you know, to an extent, yes. I mean, we already have, you know, OCR technology, and you could import your w two, but what do you how is it going to do a schedule c or a schedule e with you know?
Chris Picciurro:How's it gonna weed through source documents? But is are are you seeing any practitioners use AI to on the tax prep side? That's that should've been the that's a better question.
John Higgins:Yeah. So it's it's early. I mean, across the board for the professionals, it's it's still very early. People are trying to figure it out. It needs to be just demystified for them.
John Higgins:The software vendors, you know, are working hard to incorporate it, embedding it into their into this technology. And, you know, when I when I made the point about you gotta set your ego aside, what you don't wanna set aside is your knowledge, your experience, and your client relationship abilities. I I firmly believe that as this evolves, there's gonna be a lot more value based upon that personal relationship because your clients aren't gonna know what's real, what's you know, hey, Chris. How do I know that this is a legitimate tax return? Well, it's because I, Chris, my firm, put this tax return together for you.
John Higgins:We didn't just have a ai go off and do it, You know, may have helped us to generate it, of course. Right? Right. So it's gonna take care of a lot of that busy work, but at the end of the day, I'm the one that's gotta understand your business, your situation as a client, and my expertise in tax and business overall, and yet we have this tool here that's doing a lot more of the grunt work, for us. So I, you know, I think that's how it's gonna evolve, but it's it's still very early.
John Higgins:I'm working with a company. I don't know if you heard of Stanford tax. They have a new, software application that, you know, really helps to organize client documents and, you know, I've seen a little bit with them. I'm actually gonna be doing a a presentation for them, in a few months down the road here, and it just that's a classic AI application where they're building it from the ground up, to, you know, fully leverage the the capabilities of AI to just handle a lot of that busy work with getting, you know, client documents. And I don't have to tell you guys.
John Higgins:I mean, you know what that challenge is all about.
Chris Picciurro:Oh, gosh. I mean, the hardest part about I say all I feel like I say it all the time. The hardest part about about the tax preparation process is is obtaining documents. Right? That's that's the challenge.
Chris Picciurro:I mean, the tax return preparation process is is if you have everything, is relatively straightforward. You know? Yeah. So for someone listening today, they own a tax practice. They're maybe a manager.
Chris Picciurro:They work at a tax practice. Or maybe they're maybe they're working in big firm, frustrated, like John, you all 3 of us have, you know, left corporate America at some point. What are some of the the dip your toes in in the water things that are that are practitioner could do to get started with the AI to get comfortable, and maybe eliminate one daily task or weekly task? What are some of the things they could do just just to start?
John Higgins:Yeah. Well, I think the first place to start is just learn about it. You know, find there's there's plenty of information of it's open. It's too much, actually. So it's it's like finding the right information, but there's you know, like, the the CPA Association and such, they have a lot of good introductory AI courses.
John Higgins:I think that, you know, as a CPA professional, you know, of course, you have to get the 40 hours of education every year that, you know, at least 10% or 20 percent should be devoted to AI AI and, if you're tax, AI and tax because you you don't wanna get left behind. And I'm not one who's like I don't like to be a scaremonger. Right? And you gotta do this or you're gonna go out of business. Now I don't believe that, but as time rolls on here, the classic statement that is used a lot in this in this AI area is, is will AI let's just use it for tax practitioners.
John Higgins:Is AI gonna replace tax practitioners? No. But tax practitioners who use AI will replace tax practitioners who don't. And so, you know, so you wanna just, you know, start to build that foundation of knowledge and don't feel you have to know everything about it because that's that's just not possible. And, Sam Altman, who's one of the founders of, OpenAI, who makes the chat GPT.
John Higgins:I was watching a video, of his the other day, and a couple of things he said was really interesting. He said, you know, chat GPT is, like, embarrassed embarrass embarrassingly a crummy product. Okay. Well, anybody who use it would say that's not what it is. Right.
John Higgins:But he knows he knows what Chatcpd 5 and 6 and 7 are gonna look like, but he made the point. He says we didn't wanna wait till we could get to, you know, a more optimal model for this AI because we wanted to get it on the marketplace. We wanted to see how humanity started to adapt to this. And, you know, I don't think it was just a punch of punk. I think it really made sense what he's saying.
John Higgins:So they want, you know, society to come along with them and just kind of incrementally build their knowledge. So I think that's important to have that foundational knowledge. And then just you gotta pay attention to what your software vendors are doing because they're all investing in it. And, you know, they're gonna make the products easier. A lot of times, you know, they'll say it's AI because it you gotta right?
John Higgins:You gotta have AI in your marketing today, but you may not even really realize it's AI. Who cares? Would it you know, if it's AI or not. If the product's better, it gets the work done better, then that's what you want.
Chris Picciurro:When you mentioned the Microsoft Copilot and, got a good friend that that works at Microsoft, so I've got a lot of information about it just just by chance. But, I feel like he as a practitioner well, there are a lot of issues with practitioners not time blocking and and keeping their email open all day and sucking them into the conversations? That being said, I, you know, I think as a practitioner that that can you talk do are you working with anyone that's started using Copilot or starting use started using AI to help them with common email replies or anything from from that perspective?
John Higgins:Yeah. There's a lot of people talk about, but I again, I would because I'm been doing a lot of presentation with this to CPA groups, and it's it's again, it's still very early. There's there's a lot of people that so so one of the things I do, I do a chat gpt boot camp course. It's like a for credit course.
Chris Picciurro:Okay.
John Higgins:And I ask the question very early on is, okay, what is your experience with chat GPT? And, typically what it is is about 50 to 60% will say I've heard of it, but I haven't done anything with it. And then you'll get another 30% say I've tried the free version. I'm just kinda playing around with it. You might get 5% to say I'm actually using this tool on a day to day basis.
John Higgins:Okay? So that's Chat GPT. Well and then if you understand the background, Microsoft owns 49% of Chat GPT. So clip pilot is Chat GPT inside of the Microsoft 365. So I've been spending a lot of time to learn about it and, using it myself.
John Higgins:I've kinda, you know, I don't know how long this is gonna last, but I've kinda set a little, rule for myself that I don't want to use it to generate an email. Because me, the email should be personal. Mhmm. And, you know, it's pretty easy for me to tell when something's generated by AI these days because you you just kinda tell by the the language. Certainly, if I do it for myself, I know that's not me.
John Higgins:Right. That's something else speaking. So so I for the email, I kinda stay away from that. But, gosh, for for analyzing documents or if I have to, like, sometimes I get asked to write an article, or to develop a new presentation, a new CPE course, I'll go right to chat GPT or Copilot. It doesn't matter.
John Higgins:No. I'm just I'm I'm both sides because of what I do. I I have both of them. That's it. And I'll just say, you know, write me an outline for a chat GPT boot camp course and give me timing.
John Higgins:I want a 4 you know, 200 minutes course. Give me the timing. Give me the topics. It'll give me a nice outline, and then I can say drill in on this. I mean, it can it can literally create the whole course for me.
John Higgins:That's that only intellectually lazy thing again that, but on the other hand, it just saves me a lot of time, and I do believe my presentations have gotten better, by using it.
Chris Picciurro:I've used it for for it's at least I probably haven't used it as much as I could, but I've used it a lot of times, especially when you're developing content from scratch and doing presentations for state societies and and, you know, national organizations. The for me, the hardest thing is going from, hey. Great news. They want you to you want they want you to present this topic, and it's all in my mind. Right?
Chris Picciurro:Because I've been doing this for a long time. And, but I look down on a blank piece of paper and say, oh, gosh. How do I structure this? So even though even if if if ChatGPT doesn't what they give me is not what I ultimately use, it at least gets me started of, like, here here's an outline. Spend about 5 minutes here, 10 minutes here, 15 minutes here, and I might tweak it.
Chris Picciurro:I'm gonna run my own case studies through our tax preparation. So, you know, I've used my tax projection software. But but, again, it's just it's, it was helped me kind of get the ball rolling from that blank piece of paper to something moving forward at
John Higgins:least. Yeah. For sure.
John Tripolsky:And, John, so and that's actually a really good segue into something too, and I'm glad we didn't talk about it early on or earlier on in the show. But if you can actually give us a little bit more of a deeper dive into, you know, what exactly AI is. So in case somebody's listening to this, they say, I've heard of this. I've heard jet chat g p t. I like it as much as I do my 5th cousin that drives me nuts on Thanksgiving.
John Tripolsky:You know, it's I think some people may know and they may know about it, so the awareness is there. In fact, they may even use it a little bit, but they really don't I shouldn't say they don't understand. They don't have an understanding of exactly what's happening, based on the inputs and the outputs and really how someone can drive the parameters of, of an AI generated piece of content, which would be great.
John Higgins:Yeah. And so I think the first thing to say is that you know? So the term AI is kinda like the term Internet. Okay. What does the Internet mean?
John Higgins:Or what does cloud computing mean? I mean, it's just such a broad category. So AI means a lot of different things and and, of course, I saw one video clip where there was a trade show and the, they're they're promoting power, electric toothbrushes, and it said powered with AI. Right? So okay.
John Higgins:Alright. Remember remember the cracks in my teeth where these get a little worked a little hard? I don't know. Anyways, so you see there's a lot of hype about it. And, so for everybody to understand today, the tax practitioners, it's really about generative AI.
John Higgins:That's what chat GPT is. That's what Copilot is. And what does that mean in very simple terms is they have this huge data set. So in the case of, chat GPT it's called a large language model. They scrape the Internet for all the publicly available information and they license with other entities to get their information.
John Higgins:They don't disclose exactly who they license with, which comes to an ethical issue we could talk about, but they have this huge database, and I think the current version of chat GPT I read somewhere is, like, essentially 1 and a half trillion words of written communications from around
Chris Picciurro:the world.
John Higgins:Right? So that's what it's building off of. And then, that data set is part of the large language model then the application just applies algorithms to all that information and it all it really does is gives weighting to different words or phrases. And in in the in the most basic sense when you use generative AI, all it is doing when it generates output is predicting the next word in the sentence or the next string of words in the sentence or the next sentence in the paragraph or the next paragraph in the in the story and so on. But it's hard to wrap your head around it because when you start using this, like, no.
John Higgins:I feel like I'm just talking to a human back and forth. It's it's loaded with information and it's, given back to me. But that's that's what generative AI is. And, now at the extreme, we have what's called, and your tax practices are like this, AGI. Right?
John Higgins:Now when your tax practices here at DEI, we all know what they think, adjusted gross income. When you're talking about artificial intelligence, that stands for or represents artificial general intelligence. We're not there. We're not anywhere near there yet. May never get there, but that's at a point when we're on par.
John Higgins:The the AI humanoid robots are on par with humans as far as thinking, decision making, maybe even feeling emotion or understanding emotion. I mean, it's it's crazy stuff out there. That's way out there. But so kinda get rid of the word AI or the term AI and focus on just the fact that it generates, content for you. And, it does a great job at it.
Chris Picciurro:No. Absolutely. I've used it I mean, I've used it to help me, you know, with with p r, content pieces. Just kinda you know, you can't just in my opinion, you can't just take copy paste it. I mean, you need you need to look at it, but but, gosh, it's it is.
Chris Picciurro:It's like a co like a copilot. And I love what you said that, yeah, AI is not gonna protect people out of business, but tax people tax preparers that use AI are gonna put tax preparers that don't use AI out of business. So, I mean, that's that's huge. What other, what are what other ways are are tax pros diving into using AI now? I mean, obviously, not everyone is in a position where they're they're putting together continuing education.
Chris Picciurro:Although, one of the things we teach in the MRR Institute is that mister r show and mister r who's our who's our Kool Aid man, you know, we we feel like it's important for for tax pros to niche or segment. It doesn't necessarily be need to be an industry. It could you know, we're all from Michigan here. Right? So it could be a small town in in I don't know.
Chris Picciurro:I'm making up Saint Louis, Michigan, the middle of the men. And and and your focus could be on farming, but it could also be on small businesses in your county. And then maybe put a presentation together for at the at at your local library or something. But a lot of accounts are afraid to they think it's gonna take forever to put that presentation together, and that's really where AI can come in and help out too. So, yeah, what are some of the other ways that that we might not be thinking about AI that, that can help the the everyday tax pro?
John Higgins:Well, I think one of the best options because, you know, I'm sure all your audience uses Excel or, yeah, probably Excel as a spreadsheet. Right? And they probably use it a lot throughout the day, throughout the week. Chat GPT can be a great tool for automating your Excel spreadsheets. One of the examples I show is I create an amortization schedule.
John Higgins:Okay?
John Tripolsky:So so
John Higgins:if you have a new hire that doesn't really know Excel and you wanna figure out how do we get this person up to speed, they don't really have to get up to speed because they could say, tell me how to make an amortization schedule in Excel, and it would give you step by step instructions on how to do that. Okay? And you all you gotta do then is copy and paste into Excel to to to build the amortization schedule. And then the next part of that I show is, okay. Now I've got a 30 year, 360 payment amortization schedule.
John Higgins:Right? And we're 2 years into it. Well, I don't wanna print out for the client the 30 years of, you know, all those future payments. So I went in and told, ChachiPT. I said, okay.
John Higgins:I uploaded the spreadsheet, Right? The amortization schedule the spreadsheet, schedule. And I said, create a macro for me that will, prompt the user to print the amortization schedule through a specified payment date. Okay? So I just upload the file.
John Higgins:Mhmm. It did that. It it created the macro for me in about 2 2 minutes. It just is okay. Then it gives me step by step instructions.
John Higgins:Here's what you have to do to paste this into the Excel spreadsheet, and then I run it. And sure enough, I run it. It prompts me a nice user prompt, enter the payment through date. I put that in, and then it prints the amortization schedule through that date and eliminates the rest of it. That's just one simple example.
John Higgins:So think of all the ways you use spreadsheets and, you know because creating macros actually has gotten more difficult over the years than supposed to used to be easier, but, I guess because Excel's got more sophisticated. Chatcpd can create your macros. That's workflow automation of a tool that you're using, every day, and it can also be your educator for your staff, of how to use Excel. And I'm just using Excel because it's such a predominant, tool, but, you know, you can apply the same to Word or any of any of the Microsoft applications. Now just ironically so Copilot's still fairly new.
John Higgins:Okay? Chat GPT today is much better with Excel than Microsoft Copilot.
John Tripolsky:It's funny how that works out, isn't it?
Chris Picciurro:Some of these documents that we're using to prepare returns or even prepare financial statements, are important. I mean, especially for the small practitioner, that amortization schedule is a great example. We. But what happens like, when you're preparing tax returns, in a perfect world, everyone makes the payment exactly on time on the amortization schedule. Well, sometimes, especially if you have a client that does a lot of land contract work, or seller financing and, in in there are lump sum payments, you don't wanna have to refigure the whole amortization schedule or buy separate software.
Chris Picciurro:This could really be a help in, you know, preparing those source documents that ultimately go on the, you know, on the tax return. So
John Higgins:Yeah. I mean, you're the pilot. It's the copilot. Right? So you tell because you have the knowledge.
John Higgins:See, the stuff you're just talking about is already over my pay grade when it comes to tax stuff.
Chris Picciurro:Oh, no. I mean, I think it it helps people, you know, put together these the the source documents or the support, for, you know, for tax for the for preparing the tax share, but I agree on the tax planning. I mean, there's so many, like, there's so many phase outs and so many different rules, that you can you know, that it could help you out with. It's it's not just creating the content, but also, you know, just just being, yeah, being a Copilot. Other than chat gpt, what are some of the other AI because this is kinda one of those, like, you know, growing up again, I could figure out what type of maybe this wasn't a Michigan thing, but my mom would always say, hey.
Chris Picciurro:Go get me a Kleenex. And then when I got older, I realized Kleenex is not is a brand. It's Right. Right. It's a facial tissue.
Chris Picciurro:So, you know, just like Bitcoin, you know, now I think people understand Bitcoin is a piece of digital currency. So I think chat gbt, people use that in just like, you know, with the same term as AI. So what are some of the other the other AI tools out there specifically for tax and financial pros that they should look at beyond chat GPT? Yeah.
John Higgins:So I think the first place I would recommend any tax practitioner to look is look to the software vendors that you're already using and, you know, inquire with them what are you doing with with the, you know, generative AI? How are you making your product better? Because they're all doing it. Trust me. They're all doing it.
John Higgins:And so, you know, I've always been a proponent. If you have software you like and it's working pretty well, the last thing you wanna do is go out and change it. Right? Because that's that's a big job. Change the technology.
John Higgins:I don't care what everybody says. I don't care how good the news technology is. It's just it's a challenge. So if you've got something you like, see if you can't use what the vendor already has and what they're doing to make it better. If they you know?
John Higgins:And and I don't wanna name names, but there's some of the big players in the market haven't changed much in the last 20 years, their software. Right? So then you have the a bunch of new innovation coming out there. And because I'm not actively involved in tax, I don't I I don't know the names per se. I go to the conferences and I, you know, stop by their booths and ask them about it.
John Higgins:But, gosh, if you're not doing that stuff day in and day out, you know, it's hard for me to understand what all they're offering in their products. But that is something I would encourage the your audience, if they go to conferences and it's a tax related conference and you have exhibitors, spend some time with those folks because, yeah, they're gonna give you some sales stuff, but but they know their product. They know where they're going with it, and, gosh, there's some startups. I mentioned Stanford Tax already. But this is, I think, just 2 guys at
Chris Picciurro:this point, but, man, they they've really taken, AI technology to to streamline that document organization and, you know, acquisition process. So John, have you run into tax professionals, and maybe we haven't, but they're using AI as far as assisting or analyzing potential specialized tax services. Let me give you an example. Research and development credit eligibility, cost segregation studies. Obviously, there's a pause on employer retention tax credits, but it'd be not you know, I don't know if you've run into any of that that that type of use for for the software.
John Higgins:Yeah. I mean, you so some are using it for to help them with their research, but what you have to understand is very important with these large language models. Chat g p t, I'll go back to that because it is the Kleenex of the industry today. It's, it's so the large the data that I was talking about, the dataset is only that goes through a training process where it puts weightings on the words to help predict forward. Well, it's only been trained through, at this point, April of 2023.
John Higgins:So if anything happens since April of 2023, it doesn't even know about it. So if there was a change in the tax law, tax codes, so, you know, you gotta be careful about about that. But it could give you maybe you're trying to structure a tax deal yet. You can put in your prompt as they call it, and the more you can put in as an expert tax professional, the better it's gonna be able to give you information back that you can work from. Now if you use Microsoft Copilot, without getting into the weeds on on they have different products within Copilot, But, Copilot for the web, I'll just call it, that, it it will it will look into the large language model to generate output but it also looks into the web current to get current information, and it sources everything.
John Higgins:So when it gives you back, you say, okay. I'm trying to structure this this m and a deal. I wanna know the tax consequences. You know, give as much detail as you can. So it'll generate, you know, the response for you, and some of that response will be based upon kinda like a Google search.
John Higgins:Right? And it but it references it so you could go click on it then to go see the website where it pulled that information from. Now you got a whole big issue going on right now about intellectual property. So, you know, that's that's gonna be very soon to see how this plays out over the next couple years because, who's gonna have access to what data?
Chris Picciurro:I wanna ask you about something that is somewhat related to AI, but really, you know, you're you're such a voice, like I said, for the industry, and you you consult with many firms on technology in general. And we know that certain like tax prep software. Probably one of the stickiest pieces of technology you can find. Once you're in bed, for lack of a better term, using a software, and we've been web based since Moby Dick was a minnow. But once once you're in bed with somebody, you know, it's hard to it's hard to get divorced.
Chris Picciurro:Right? I can and they'll all say, well, we could you know, it used to be like, hey. You download this file. You know what I mean? It was on the desktop, the PC, and you upload it here.
Chris Picciurro:But I wonder if AI at some point is gonna be able to to grab and I know there's privacy issues, but grab tax return information from one tax software and convert that to the the other one. I don't know if that's something that anyone's asked about in your seminars or or or anything like that. But
John Higgins:The question has not come up with, Chris, that seems like probably something you could do today. If you can get the data file, like, from your one tag software, if it's a format that it can read, you just tell it to export it to a CVS or whatever kind of file you might need. If you're talking about actual actual client data yeah. If it's not there today, it can't be far away.
Chris Picciurro:Yeah. I'm thinking about I mean, some of these depreciation schedules and just just get really getting rid of all that manual data entry. You know? I wanna pivot and and talk about technology a little bit too because not just AI, but I kinda feel we we talk about in in we do a lot of consulting with helping tax professionals leave the traditional, punch in the clock billing to the to the flat fee pricing subscription model. I always say it's easier to turn a my motorcycle around than an 18 wheeler.
Chris Picciurro:So so for for I almost feel like if you're just starting a tax practice now, it is almost easier than maybe buying up existing practice with old technology. What are you seeing some trends, I just just in general as far as from a technology standpoint? And and, I mean, we've we all of our technology stacks in the cloud. I can't imagine something beyond a desktop, and it's been that way for a long time. But are a lot of tax professionals still using desktop?
Chris Picciurro:And and what are what are some of the the things that you're seeing that is trending?
John Higgins:Yeah. So I I think that, you know, looking, like, say over the last 5 years, there's certainly been a trend for people, and I don't know, like maybe like yourselves a little bit, but, where they've worked in firms and they said, okay. This firm's not moving where I wanna move, and they're just going on starting their new practices. And so they have the beauty of being able to start fresh with no, you know, no legacy technology to deal with. And those folks are all a 100% in the cloud.
John Higgins:Right? 100% in the cloud. Like, you mentioned you're a 100% in the cloud, it sounds like. So, but if you have a firm and you have a legacy firm, where they've had, you know, on premise software, it's, you know, it's a big shift for them, and they're moving. They're moving.
John Higgins:They're finally moving. I mean, it's gosh. I haven't talked about the cloud since the mid nineties, and, you know, it's just taken a really long time. But I think more and more they're moving to it. Although, gosh, I just saw a, I think it was in accounting today.
John Higgins:They had an article of top firms, top technology firms, and they were, like, mid level firms. And they one of the questions they asked, what percentage are you to the cloud? Now some were a 100%, but I think there were a couple, like, at 50%. Gosh. It just seems like a, you know, behind the times because there's such a the value proposition is so strong, and, it's, I guess, partly the practitioners are busy.
John Higgins:They don't have time to make the change, or they're still absolute insecurity about the data privacy for sure, which is legitimate. You just gotta but I think it's mainly an education issue more than anything else.
Chris Picciurro:I mean, could you imagine your tax professional having your tax return documents saved on their laptop that they're going to Starbucks? And and we had Brad Messner on talking about, already on the podcast, talking about data security and WISP. But I'm just saying that that's a scary thought. You know? And and, I guess, there's there's pluses and minuses.
Chris Picciurro:So what if the Internet crashes? Well, if the Internet crashes, we all had a lot of problems, per se.
John Higgins:Yeah. We had And also Pickleball.
Chris Picciurro:Yeah. I'm gonna play pickle. That wouldn't be terrible. But the you know, with the technology part of it and and I so, yeah, all the new practitioners are are completely in the cloud. And as far as, you know, there's tax prep software, there's the bookkeeping software, what are some of the other things that you're seeing that are are kind of coming into the market?
Chris Picciurro:Or or I guess let me rephrase it. What are some of the objections you get from from older brick and mortar kinda new traditional firms to embracing technology? Well, you
John Higgins:should sadly to see I mean, price or cost is, you know, still a big concern. Yeah. It's just such a it's for for many, it's a, I think, a challenge to really understand the ROI they can get on an investment. I mean, I still hear people complaining about spending whatever it is, $40 a month for QuickBooks, and and I try to, you know, educate them. Understand, you're not just getting a piece of software, You get this whole infrastructure behind you.
John Higgins:You get this, you know, data center behind you. You get Intuit, making sure that everything's working properly. And just like anybody, they're gonna have problems, of of course, but they just pick out into it as an example. And, you know, it's like Microsoft Copilot costs $30 additional per month per user. So at first, it's like, woah.
John Higgins:That's a lot of money. I I get that. But if you can't figure out how to save that amount of time in the 1st week, every week of the month, that you're not getting the picture. It's just these technologies pay
Chris Picciurro:for themselves pretty quickly. And we've always embraced technology as actually another team member. And so if I've got if I've got a great technology stack, I might have a firm of 3 people, but I really have a firm of 4. That's just my mentality, and, so the smaller you are, believe it or not, the the more important technology is, I think. If you and this might be putting you on the spot, but if you had to assign for a normal tax practice a a kind of a fixed cost that someone should allocate per client to technology, we're talking, you know, their client portal, their Per client or per, like, just how do I kinda get into, like, what should your budget for technology?
Chris Picciurro:Yeah. What what should your budget be of gross revenue towards technology? And then if you had to assign because all firms are different, but but the way I look at it is we were talking, you know, in one of our mastermind groups about onboarding fees, and and my thought was, you know, there's a certain cost to onboard a client for them to use the technology you have, and so that cost has to get passed on to the clients at some point. I choose I think it's my it's my opinion it should be sooner than later, but but yeah. So I guess percent of revenue, in general and then maybe a per head you know, per client overhead cost?
John Higgins:Yeah. So that's a good question. I think that, it it also, of course, it depends what you what you add into the bucket of technology. Right? But, gosh.
John Higgins:I don't know. I would say it should be probably 20%. Like, I'm I'm gonna go out on revenue because poor clients can vary because every you know, different size clients and stuff. But I would say 20% 20% of revenue or maybe, I think, maybe 20% of a staff's compensation. It's it's it's it's at least double what most practitioners believe it should be.
John Higgins:Okay? Let's let's go with that because I'm telling you, just for me with chat gpt and Copilot now, in the in the time I've been using it, it my time to develop a course, because that's my tax returns, is developing a course, dropped 40%. It's 40% of of my time is taken out, and I believe the quality is better. And I believe the quality
Chris Picciurro:is better. And you could probably update it pretty quickly, you know, these studies and and and and that sort of stuff too because, you know, some of the metrics I've heard is and now we develop our courses and stuff, but and not all of our courses are for CP. Some of them are for industries like real estate, and some of them are actually for CEs. But but, you know, the ratio for course development I've heard is as high as 20 to 1, you know, 20 hours for very CPE plus. Would so you so you're saying that's it's really cut down on the on the prep time for
John Higgins:It it has. Yeah. For sure. I mean, just doing the initial research because you now you have the world of information at your fingertips. Is it?
John Higgins:You just gotta know how to use your fingertips to write the prompt to get, you know, what you want. And then in Copilot, Microsoft Copilot, I can take the outline that chat gpt or Copilot generates, and I can say make a PowerPoint of it. It will make the PowerPoint. It'll put graphics in there. It puts images in there for me.
Chris Picciurro:Yeah.
John Higgins:And so now, you know, that can be time consuming. That can be, you know, 4 hours to create a 20 slide presentation. Well, now that's gone from 4 hours down to, 45 minutes because I just have to spend some time cleaning it up and rearranging things and so forth as an example.
Chris Picciurro:No. That makes sense. I mean, I would equate it to because baseball is my favorite sport. Knowing exactly what pitch you're getting before you still have to hit it, but if I know a guy's giving me a fastball on the outside or corner of the plate, I'm intent then I'm gonna move up on the plate. You know, move move closer.
Chris Picciurro:But if I know I'm getting a curveball, then I'm probably gonna move up and I know I have a little more time. You still gotta put the bat on it Mhmm. But knowing the pitch that's coming is huge. And if you if you're not using that, then you're always guessing. Yeah.
Chris Picciurro:Yeah.
John Tripolsky:Well, I know, guys, that we've we've talked on this for a good bit here, and we could probably continue to do this for a long time. And the good thing is is it's ever gonna evolve. Right? So we'll have new conversations on this for sure and kind of a a little bit of an odd suggestion. Right?
John Tripolsky:If somebody's really standoffish of even looking at chat g p t, I mean, I just did it moments ago. Almost have fun with it, and you'll get more comfortable with it. Right? Like, I I literally asked the prop of what is an entertaining definition of a tax pro? And I'll I'll read one segment of it instead of the full paragraph, but it says, you know, again, AI generated, and you heard the prompt.
John Tripolsky:It says a tax pro is like the wizard of the financial realm, wielding their magical knowledge of tax codes and regulations to navigate the labyrinth world of taxes. They are the Sherlock Holmes of deductions.
John Higgins:There you go. So I think
John Tripolsky:I think on that note, again, just have fun with it. I hear a lot of people, in and out of the, you know, the tax pro world treating it as like an assistant. Right? So speak to it and kinda consider, you know, that and the prompts and the prompts being the questions, the guidance, everything that you'd feed into it.
Chris Picciurro:But, and I want yeah. I know that that's I feel like a wizard now. I feel like I'm in playing Dungeons and Dragons again, not to get into all the nerdy things I did when I was a kid. But, John, to, yeah, to wrap it up, how you know, we do get a lot of tax pros listening. If someone wanted to think about working with you, contact you, what's the best way?
Chris Picciurro:And we'll put it in the show notes also. What's the best first step that they can take?
John Higgins:Just email me, john@higginsadvisoryllc.com. And I'm always happy to have a conversation, you know, to, give some insight and, you'll see where they're at, what they're trying to accomplish. If I can help them, I can help them. If I know somebody else can help them better, then I'll steer them that way. Awesome.
John Higgins:Well, thank
John Tripolsky:you both gentlemen for diving into the topic here with us back on the mister r show. And next time, we'll look into another topic as well. But thank you, John. Thank you, Chris. We really appreciate y'all's time.
John Higgins:Thank you, John. Thank you, Chris. Enjoyed it. I guess. We'll talk to you
John Tripolsky:guys soon. Thank you much.
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