Expert systems in the tax department.

• Author: Finkenaur, Allen

Expert Systems in the Tax Department

In the early 1960s, Tax Executives Institute (TEI) became involved in the Internal Revenue Service (IRS) computer training programs at Georgia Institute of Technology, where the IRS undertook to train its staff to work with and use mainframe computers. By 1968 the IRS had "Auditape," a program to extract specific information from the mainframe files of a taxpayer. TEI also worked with the IRS in developing Revenue Procedure 64-12, 1964-1 (Part I) C.B. 672. These IRS strides in using computers prompted taxpayers to ask themselves whether they would ever become really involved in using computers in the tax department.

In October 1975, tax executives were introduced to the personal computer at the TEI annual meeting in Houston, Texas. I can remember attending the session where we sat at an Apple computer and the instructors told us which keys to push. At that time I again wondered if computers would ever be commonplace in a tax department.

Slowly but surely, the answer to my question became self-evident: Yes, computers would become a staple in the tax department. The Institute's Automatic Data Processing Committee sponsored sessions on the use of micro-computers, Visi Calc, Lotus, and other programs. As a result, programs that previously drew a relatively few people became more and more popular.

Tax executives have now developed our own uses for the computer within our tax departments. We have seen software developed for our needs by public accounting firms and other outside vendors; very sophisticated systems have been designed to handle federal, state, foreign, and other needs of a tax department. We have computers on almost every desk of the tax department, and more and more we expect members of our department to be computer literate and oriented; we have even added computer experts to some tax department staffs.

Just like in the early 1960s and the mid-1970s, tax executives are again at the threshold of a new era. We are beginning to hear about and, in very few cases, to work with the concept of Artificial Intelligence (AI) through Expert Systems (ES). My prediction is that this area of knowledge will make what has come before it pale by comparison - it will become even more important than the use of spread sheets and word processors.

Once again, the IRS is ahead of us. In 1983, the staff of the Assistant Commissioner for Planning, Finance and Research began to study the potential uses of AI and ES...