One of the reasons there has been little innovation in tax tech is because of complex integration challenges. Still, april is using artificial intelligence to bring innovation to a sector badly needing change.
Founded by former Google data science head Daniel Marcous and Ben Borodach, april recently announced some key additions to its leadership team. Christina Taylor joins as vice president of tax development, Antonea Nabors is the product design lead, and Noah Brown is the senior product manager.
Taylor moved over from Block subsidiary Cash App Taxes, where she designed an e-filing product. Earlier in her career, she designed an online tax preparation product that became Credit Karma Tax. Nabors brings experience as Calibrate’s director of product design, while Brown worked at Rocket Money.
Borodach and Marcous founded april because they saw an opportunity to help Americans leverage tax for better financial outcomes.
“Taxes are either the largest expense that an American household has on par with housing or the largest single paycheck that an American will get throughout the year,” Borodach said. “And it is completely absent from day-to-day financial decision-making.”
He said the American tax system rests on three pillars. It is a one-size-fits-all model that can ask taxpayers several questions from a thousands-long list. The tax code has more than tripled in size over the past three decades to 8,500 pages. That confuses taxpayers and stifles innovators.
Companies often have siloed financial systems. That lack of integration increases the chances of errors. Tax is also retrospective, and that produces lost opportunities.
“There are decisions we can make that allow us better financial outcomes,” Borodach explained. “There was an electric vehicle credit. There may be child-dependent credits and credits that allow business owners to take different deductions and may impact what somebody does in the fiscal year that would enable them to take advantage of these laws.
“The problem is if you don’t know about the laws or you don’t know how they impact your situation, you can’t take advantage of them. And so by the time you get to tax season, you’ve missed that opportunity.”
april gives Americans visibility into their taxes. That brings the ability to optimize taxes by integrating APIs with data sets. This process pulls information into decisions the taxpayer needs to make.
Taylor explained that it allows companies to help people better plan their taxes throughout the year. Perhaps they can make estimated payments. Companies can use taxable events as customer education opportunities.
“That’s the beauty of embedding, being able to help people through those taxable events using the data already available in those situations,” Taylor said. “Bringing those tax opportunities to them throughout the year helps them feel more in control and like they’re planning for their taxes instead of it happening to them.”
“I think it’s asinine that Americans don’t know their tax situation,” Borodach added. “We’re the most advanced economy in the world. We built a complex system which enables us to create different incentives across our economy and country. But we need to give people control and visibility. If they understand, they’ll have a better stake in our democracy, and they’ll have a better stake in and understanding of our system.
“They’ll be more empowered to understand the impact on their lives.”
Taylor said AI provides the tools to allow innovators like april to bring sorely needed innovation to tax tech. It accelerates time to market by automating the conversion of tax law.
By embedding inside client applications, april can deliver an API-first product that leverages existing data sets. It allows many business users to file in under one hour.
“With the AI integration, it’s going to read it the same way every time, and it’s going to be consistent,” Taylor said. “And we are testing a lot. We’re doing unit tests, UX tests, and all the testing in between, ensuring everything’s correct.”
One of the most significant benefits users will see is something so simple. Taylor said the embedded capabilities ensure basic information is entered correctly. Simple errors such as transposed numbers are a common cause of rejected returns.
“We’re going to ask them to confirm their information, but it’s a good head start for them to get started on their taxes,” Taylor said.