Unveiling TaxGPT: The Future of Tax Preparation

0:00Something I have been wishing ChatGPT would do ever since the very beginning mostly because this is a task I absolutely hate and I have had to do a lot of this lately is taxes. So today on the podcast, we are going to talk about how ChatGPT OpenAI is helping to revolutionize the tax code taxes, a company that is doing that something that just happened in the Wall Street Journal, we'll be talking about a little bit of current events, some politicians on Twitter, spicy stuff. And we're going to be going over how this is actually going to help us in the future what some people are doing now and talk about the implications so without further ado let's dive into it so right off the bat a bunch of stuff we're gonna be talking about today is from the wall street journal they recently wrote an article about a company called muse tax now muse tax essentially harnesses chat gpt uh 3 and 3.5 and is using that to help you do your taxes better so the company is one of many across a range of industries that's really started to figure out how to use chat gpt and put it into a very practical use it's kind of interesting because the ceos of muse tax they said you know we're looking at all these really fun ways that you can use um chat gpt and ai and whatnot for different things and they're like but at the end of the day uh we wanted to use it for something really concrete and really useful so they decided to focus on tax um the both of them it's a startup out of new york but both of them have a background in accounting and the company is one of many that is essentially using an API or what's called an API just means application programming interface right but essentially that just means they're plugging straight into ChatGPT and some other software allegedly and they're kind of building on top of those technologies to be able to use this so this started back in February of 2022 two, meaning that these guys actually got this thing up and running before, you know, chat GPT's big launch to everybody.

2:04So they would have been using what was formerly called DaVinci 3, and they were using that to kind of help them. And I've actually seen, you know, this is kind of the case with a lot of people that you would see having fully fledged products come out today. These guys were getting started with DaVinci pre-chat GPT. and now that I honestly this is going to absolutely explode but it takes time and money to build out a fully fledged functional company and so I predict after chat GPT we are going to see hundreds and thousands of these companies coming out that are starting to really launch over the next six months to a year because of all the hype all the people that are in the space and working on it and it takes time for these people to fully fledged their products but people that were early to the game are getting rewarded so one example muse tax back in february they launched um they were both certified public accountants they had a lot of years of experience in financial services i think this is going to be a format we see a lot of you know people have experience in one specific area so they launch a product built on chat gpt open ai um in that specific vertical and um the company essentially it has a business to business model so it it more um creates partnerships with financial institutions um and it's pretty interesting like these guys were started with um i mean they both put in their own some of their own money and then they had around 350 000 in pre-seed capital from some early stage investors including tech stars right which is like y combinator this is like one of the premier biggest um tech incubators and so they also have um the ai operators fund and everywhere ventures, which is formerly known as the fund.

3:46So all of those people are plugging in. Mrs. Or Mr. Horsford is the CEO of MuseTax. And currently they're raising$2 million in a seed round, which is, you know, interesting to see how if they pull that off, based on their trajectory, when they got started, what they're building, their 350k, I believe they'll be able to pull that off. I mean, they got a Wall Street Journal article. So if that doesn't help raise exposure to new investors, I don't know what will, I think they'll be able to pull this off. And this is important because these guys are going to be helping us to, you know, whether it's them or another copycat or another person in this vertical, there's gonna be some massive shifts in the tax code itself.

4:28And you know, this has come after years of years of different people criticizing how taxes are done, specifically in America, I'm not super familiar with other countries. but essentially users will be able to feed their tax returns and transaction data into MuseTax and that's going to keep track of all the latest updates to the tax code. So you know other financial service companies are also going to be able to plug into this and their system essentially recommends ways that a user can help keep their tax bills to a minimum. This is interesting because you know, with COVID, there was a lot of different tax changes that happened.

5:06And, you know, people are saying that a lot of different accountants are missing some of those tax changes, incentives, write offs, etc. And so Mr. Horsford said that this is really what their model is trained to do to be more up to date and process information a lot faster than the average human accountant, even if they're really experienced. So MuseTax usually can make tax recommendations in 20 to 30 seconds, which is super fast, sometimes takes 45 seconds. I mean, which is really not a big deal. I mean, I just did all my taxes on TurboTax. I think, you know, everyone in the states here in the last few days might have been through that process as taxes were due on the 15th.

5:50Um, and you know, it can take, you know, five to seven hours for comparable advice. And, um, according to Muse tax and, you know, like when they're talking about five to seven hours, I think, you know, there's recently a tweet by Elizabeth Warren that said, um, you know, it takes the average American 12 hours to do their taxes. I'm not sure where she got that number from. She might be completely accurate. She was more just getting roasted on Twitter because, you know, she was saying that that was all due to corrupt corporations, which a lot of people are criticizing, saying that it's, you know, also due to politicians like herself or any other politicians, right or left, that are creating a lot of these complex tax codes that are taking people a long time to do.

6:36so it's not just corporations i mean what she's referring to is turbo tax which if you think about it this i guess is relevant because turbo tax is pretty threatened by muse tax probably in a lot of these other companies but turbo tax uh in intuit who runs turbo tax they lobby the government to keep a lot of tax things the same because they obviously make a ton of money during tax season whenever it has to file the turbo tax or their taxes through them i personally paid i think like 180 bucks or something to just file some taxes through there and that's just their fee or whatever so um you know they're making this off a lot of people i think the average that an american pays is about 200 to file their taxes whether they're going with um a bunch of different in-house or like in uh where they're actually going to a place or they're doing some of these online things like turbo tax it's it's about 200 bucks that people are paying so muse tax is going to be able to focus on capturing some of that with their new service they have.

7:35And they said that currently it's all on GPT-3, GPT-3.5, but they plan to move to the latest version, GPT-4, which I think is not relevant news. I don't know why that would be included in the Wall Street Journal article, considering everyone's going to be moving to GPT-4. It's just a matter of when they release their API, which is currently not available for everyone. And as soon as that launches, everyone's going to get it because gpt4 is literally 10 times cheaper they're dropping the price by 10x from just the previous version of chat gpt so and it's also way better so it's way better and it's 10th of the cost i don't know why anyone has to talk about that they're switching to it or act like that's a feature since everyone's going to do it when everyone gets the api whatever anyways um it is you know it's pretty interesting because they apparently mused hex has a bunch of procedures in place to kind of oversee the responses generated by ai and according to their ceo he said we are familiar with the oversight needed when managing ai responses and apparently he says that his co-founder had prior experience building an ai chatbot called ask my uncle sam now again i don't know i guess everyone's got to kind of like build their own credibility but that in in and of itself in my opinion and I guess I haven't researched too much about ask my uncle sam's chat bot but that is not necessarily that impressive considering anyone can um here's something crazy you can do if you did not know this um quora who is the massive question and answer website on the internet they have something called poe which is their own um number one some of their own ai tools and also they plug into chat gpt and also they plug into anthropic it's the only consumer facing way you can use anthropic which is a massive chat gpt competitor go check it out but something interesting they launched which i bring this up uh talking about my earlier point about why ask michael sam may not be that impressive is because you can go there and create your own chatbot based off of any base model you want so essentially um and i've also personally uh launch products and companies doing some of the similar stuff so maybe that's why i'm less impressed um i mean you know it does take some some time but it's not like you i guess what i'm saying is you don't have to know how any ai works it's still just plugging into the api of chat gbt so just because his co-founder has experience building a chat bot like it's really not that no really not that crazy it's just a plug into uh you know the api but anyways if you go on to Poe, which is run by Quora, you can create your own chatbot.

10:14You essentially just create whatever prompt that you want. So for something like Ask My Uncle Sam, I'd say, pretend you are a tax accountant, you have relevant tax experience in, you know, the state of Connecticut, or just all of America for federal taxes, or whatever. Help someone to learn about what their current income is, and help them come up with new expenses and find new tax stuff, new tax um you know information blah blah blah and boom all of a sudden you probably have what that guy developed with ask my uncle sam i don't know maybe i'll get roasted for this guy went above and beyond and integrated a bunch of crazy stuff the other thing um that i'm assuming they're coming out with this new version that's hopefully better than ask my uncle sam's ai chat bot is i'm assuming um that they're going to plug in a bunch of like modern real world new tax code changes that have come out since ChatGP stopped being trained.

11:10And that's not that crazy either because essentially what you can do is just plug in giant like data set or like PDFs or documents of information around different topics. So you could just go probably to different places on the IRS website and look up different tax codes and changes. I'm not an accountant, so I don't know where all that stuff is aggregated, but wherever that's aggregated, you go grab all that information and say, find me the latest you know tax breaks that I could get based off of my situation and make sure to include and then you just plug in all of that new relevant data for new tax breaks that have you know come out in the last few years or whatever so that's how I'm assuming they're doing this whole thing I mean not to say it's not impressive and like impressive or not this is incredibly useful and this is the way forward for all taxes so I absolutely hate doing taxes by myself.

12:06It is a pain. It takes a lot of time. A lot of stuff, it's tricky to automate. So yeah, it kind of makes sense. It's interesting. A lot of people have had a lot of discussions, especially with like TurboTax and Intuit, who's done a lot of lobbying to the government to keep some things kind of complicated, allegedly. And so some people have floated like just completely eliminating the IRS and instead putting taxes exclusively on product sales taxes. I think that was a GOP recommendation that came down the pipe a little bit earlier this year. I think it's probably a bit of a, you know, extreme view in a sense that it probably wouldn't actually ever pass.

12:51And I think one of the big criticisms of this concept that people have is, sure, you could put a sales tax on everything. But like, let's say you put sales taxes on all, you know, yachts, then all of a sudden billionaires are going to be like, well, I'll just go buy my yacht from China or Germany or somewhere other than America. And America just wouldn't collect, you know, anything on that if there's an extra 30 % sales tax on all super yachts, people buy them other places. That being said, though, I guess a counter argument I recently was thinking of is the fact that yes, things like super yachts or maybe private jets, that might be the case, but things like property obviously are never going to move.

13:31And that's one of the biggest, you know, expenses people ever have. Um, and in addition, if you're going to buy a car, whether like you could maybe go, but you say, I'm going to buy my car direct from a factory in China, but you probably just have to pay when it got imported. Um, and groceries, you're not going to go buy them anywhere else honestly a majority of everything you would ever buy is going to be purchased in the country or when it's imported you probably have to pay that tax so I'm not a tax expert but it personally just for simplicity's sake I do see the appeal of that of a program or a proposal like that and I'm sure there's a lot more nuance a lot more goes into it and some people think I'm you know crazy but from the layman's perspective that is not a you know not an expert on anything political or accounting wise that from the layman's perspective that seems like it would be a lot simpler so for all you lawyers out there that might be listening to this or accountants I would love to hear your opinion on this on maybe you can throw that into our Facebook group link in the description what your opinion is and what you're thinking on this but But in any case, back to MuseTax and what's going on there.

14:46MuseTax's publicly announced partners include Built Rewards, which is essentially a reward program that allows people to earn points when they're paying rent. And Nestment, which facilitates pooling of capital among homebuyers and primarily younger ones. and they also help people on their platform to sort out the tax implications of a potential home purchase right so they're it's kind of interesting there seems like they're partnering with people and helping them for a variety of different areas they're probably not directly taking on turbo tax quite yet for like an entire overall tax thing that they're you know taxing their tax form that you might be filing and they say that they have lowered the barrier to building tax analysis um in and they've kind of built that into nestment services and uh it's gonna be pretty interesting because a lot of more conventional approaches probably would have required nestment to spend more time and money without really achieving the same level of accuracy or speed um and so you know i think this is kind of cool when you think of all the like exciting and fun areas of AI that are out there.

16:01It's kind of cool to see something like this that is a real business case. So you know, the tax code is one of the more obviously boring and mundane things for many. And so this is probably an area that is going to get a lot of adoption, whether it's this company or another one, using these chat GPT like models to take in your situation and help you find the best tax breaks, especially new and relevant ones. I think this is going to be really powerful and a very interesting area to watch moving forward.