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IBM's Watson supercomputer wants to help with your taxes

Ethan Wolff-Mann
Senior Writer

This week, H&R Block (HRB) announced a partnership with IBM’s Watson artificial intelligence system, which the tax preparation company will be using to aid its employees file customers’ taxes.

Even for the most experienced CPA, finding every deduction can be a challenge, and H&R Block CEO Bill Cobb told Yahoo Finance that harnessing IBM’s computing power is a way to fill in the gaps that inevitably occur from a giant tax code.

“Our tax preparers are very well trained, but they’re not experts in everything,” said Cobb. “The tax code is 74,000 pages long—and that’s just the federal code. That’s hard for any one person to know. This is where Watson is really going to aid the tax pro.”

The Watson H&R Block system is being implemented with two monitors, one for the tax pro and the other for the client to follow along. “As they walk through the tax interview, Watson will be aiding the tax pro to come up with prompts and questions,” said Cobb. “People will see what the tax professional is doing in action and that will help the tax preparer because with this visual display people are going to say, oh I forgot, I did X, Y, or Z.”

IBM’s Watson computer destroyed Ken Jennings at Jeopardy. Source: AP

Watson’s true benefit, according to Cobb comes with knowledge about specific jobs and situations. “Where they’re especially going to help is by knowing and aiding the tax pro occupation by occupation,” he told Yahoo Finance. This means that the software may be able to do a better job to find relevant questions and prompts that could boost the deduction and lower the tax liability. Additionally, the system purportedly learns as it goes, sharpening itself against each tax return it works with.

At the end of this year’s tax process, this will also leave Watson with a massive library of tax data, which it can then analyze, so H&R Block’s partnership with IBM will be a long-term project.

“We were especially inspired by what they’ve done in oncology,” Cobb said. They’ve been able to get all the clinical trials in the world and help with cancer treatment. We thought the same thing could happen with taxes.”

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, tech, and personal finance. Follow him on Twitter @ewolffmann.

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