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Written by Annette Nellen | Posted in Tax Advice

You likely have lots of apps on your smartphone such as for shopping, interacting with hotels and airlines, social media, and lots more. You may have seen or heard about H&R Block’s 2017 Super Bowl ad about their artificial intelligence (AI) partnership with IBM (Watson). Per the H&R Block website, they are working with “Watson cognitive computing technology from IBM.”

Every year, there are a good number of tax cases where the taxpayer loses because of missing or incomplete records. And even more lose during audits. I’m sure we’ll soon see a case where the judge asks the taxpayer: “I see you have a smartphone. Why don’t you use it to keep proper records?”

There are numerous tools to track mileage and whether for personal or business, easily convert paper receipts into pdfs, keep detailed record-keeping, and more.

I’m working on an article for State Tax Notes on how we need to make far better use of today’s technology for income tax compliance, which is still too tied to paper filing. Basically, we just moved the paper to e-files. You still manually enter a lot of information even though much of it exists electronically. Brokerage firms have advanced to easily let your account information feed into your tax prep software. But, even though, for example, I’m paid via automatic bank deposit (so electronic records exist), I have to type my W-2 information in to my tax prep software (from the paper W-2 my employer mailed to me via the US Post Office). Yes, I know some software allows scanning, but we still have the paper. Why can’t it all feed into a system when created. And, combined with record-keeping tools, you should even be able to track your income tax liability on a daily basis if needed. Just open the app and see what your income and income tax bill is to date, and if you need to, for example, increase your estimated tax payment.

Well, more on this later.

What modern technologies are you using to help with tax compliance? What do you think?

Annette Nellen

Annette Nellen, CPA, Esq., is a professor in and director of San Jose State University’s graduate tax program (MST), teaching courses in tax research, accounting methods, property transactions, state taxation, employment tax, ethics, tax policy, tax reform, and high technology tax issues.

Annette is the immediate past chair of the AICPA Individual Taxation Technical Resource Panel and a current member of the Executive Committee of the Tax Section of the California Bar. Annette is a regular contributor to the AICPA Tax Insider and Corporate Taxation Insider e-newsletters. She is the author of BNA Portfolio #533, Amortization of Intangibles.

Annette has testified before the House Ways & Means Committee, Senate Finance Committee, California Assembly Revenue & Taxation Committee, and tax reform commissions and committees on various aspects of federal and state tax reform.

Prior to joining SJSU, Annette was with Ernst & Young and the IRS.