Study Finds That Americans Are Searching for New Ways to Approach Tax Season: AI Will Be the Major Disruptor

By Business Wire On Feb 17, 2023

AI-powered tax tech company releases survey of over 4,600 American taxpayers
Americans are willing to pay for services and spend more time on their taxes in exchange for confidence and guidance to navigate the tax system

april (April Tax Solutions Inc.), the only AI-powered suite of embedded tax products, has announced the results of its “State of the American Taxpayer” report, a survey of over 4,600 taxpayers compiled to understand the pain points, gaps, and opportunities with existing tax software. Through a sample reflecting 2020 US Census demographic data, april’s report found that over 50% of respondents rank confidence and accuracy in receiving their maximum refund as a top priority. There is a growing interest in new software that can help with estimating and optimizations, with over 27% reporting interest in trying new products. Additionally, april’s report revealed that consumers widely vary in what they’re looking for when it comes to tax products, which increases the difficulty in developing new products for the category.

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“What we’ve come to understand is that despite the prevailing innovations of our time, tax innovation is virtually nonexistent, and Americans are asking for help with understanding their unique tax situation”

“For the average American, preparing to file taxes elicits anxiety and frustration, and many are left feeling that there has to be a better way. april is solving this with artificial intelligence,” said Ben Borodach, Co-founder and CEO of april. “As we see more and more Americans working multiple jobs and taking on side gigs or gig work, we see a world where more and more people will have complex tax situations that require more of a year-round approach. We believe AI is uniquely poised to be the game-changing development that allows every American to have access to a digitized version of tax planning,” he said.

According to the IRS, the average American spends nine hours on their individual tax returns. Despite lengthy filing times, reducing time spent on taxes from hours to minutes was ranked only the seventh priority for when filing taxes. april’s report revealed that Americans are willing to spend more time on their taxes if it helps them maximize their refund, even if it means engaging in tax optimization year-round.

Additional taxpayer priorities include:

21% of all respondents ranked having a more comprehensive understanding of their tax situation ahead of the filing process in their top three priorities, revealing a growing interest in preparing for tax season in advance.
Accuracy remains one of the key priorities for all taxpayers, yet existing solutions are simply digitizing tax forms, rather than building around a single user profile. This leaves more potential for discrepancies and inaccuracies while filing, asking the user to input the same data multiple times to fill out the various forms.
Existing research substantiates april’s findings. According to the Pew Research Center, 56% of Americans report that they dislike or hate doing their taxes. Industry research data reflects a growing demand for interoperability between tax filing services and everyday financial platforms, and a clear signal that current solutions are falling short in offering maximum refund potential.

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“What we’ve come to understand is that despite the prevailing innovations of our time, tax innovation is virtually nonexistent, and Americans are asking for help with understanding their unique tax situation,” said Borodach. “Given the complexity of the U.S. tax code, it’s no surprise that most Americans are willing to pay a premium for feelings of confidence and accuracy in the process.”

Additional key trends revealed by the study:

Taxpayers do want more opportunities to engage with their taxes year-round.
The inequity of the tax system is seen as a priority to solve, and there is a willingness to try new products.
Many people’s beliefs and behaviors are heavily influenced by tax software companies’ advertising and monetization efforts. These companies create fear around the tax filing process in order to upsell audit protection services and live support options.
Americans want the same benefits, regardless of which kind of tax service they choose: CPAs, DIY services, and everyone in between.
One quarter of respondents claimed they want to file taxes for free, every time.

As the country prepares for tax season, april’s solutions are combating discomfort surrounding tax filing. While less than 1% of all tax returns are audited annually, 1 in 4 Americans still report to be afraid of an IRS audit, according to Lexington Law

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