By Mike Johanns, alliantgroup Chairman of Agriculture; Former U.S. Secretary of Agriculture
If you have any questions about this article, please send us a message.
By Mike Johanns, alliantgroup Chairman of Agriculture; Former U.S. Secretary of Agriculture
If you have any questions about this article, please send us a message.
The agricultural industry is no stranger to innovation. From advanced machinery to sustainable farming practices, farmers and business owners continually seek ways to improve efficiency and productivity. However, one area where caution is essential is the use of AI R&D providers for tax credits. At alliantgroup, we’ve delivered billions of dollars to the agriculture community through the R&D credit over the years, and we’ve always done it the right way. Now we’re seeing pop-up providers claiming they can do 80% of an R&D study with AI. In this blog, I explore why AI R&D providers should be avoided and why human expertise remains crucial to avoid forcing farmers to make their own legal and tax determinations.
The Rise of AI in Agriculture
A Growing Trend
AI is making waves in various industries, and agriculture is no exception. With promises of increased efficiency and cost savings, it’s no wonder that AI is becoming a buzzword. However, not all applications of AI are created equal.
The Temptation of AI R&D Providers
Recently, some providers claim they can conduct 80% of an R&D study using AI. For busy farmers and business owners, this might sound like an attractive proposal. But is it too good to be true?
The Complexity of R&D Credits
R&D tax credits are designed to incentivize innovation. However, qualifying for these credits involves complex legal and tax determinations, something AI is not yet equipped to handle accurately.
The Risks of Using AI for R&D
IRS Warnings
The IRS’ Taxpayer Advocate Service has explicitly advised against relying on AI-generated responses for complex tax questions. This warning should serve as a red flag for anyone considering an AI R&D provider.
Government Accountability Office Findings
The Government Accountability Office reports that using AI in your R&D study can be used as evidence against you in an audit. This is a risk that no business owner should take lightly.
Lack of Reliable Data
AI models require extensive data to function correctly. The IRS itself has struggled with inadequate data for training its AI systems. If even the IRS faces challenges, how can a new firm with limited experience and data be trusted?
Human Expertise vs. AI
The Importance of Field Work
R&D studies involve more than just data analysis. They require fieldwork and interviews to qualify projects. Human judgment is indispensable in making these complex determinations.
Over the years, we’ve helped thousands of farms across the country claim the R&D Credit. One thing I’ve learned, you have to go out into the field to really understand how an operation qualifies for the credit.
The Role of Human Judgment
AI may assist in certain aspects, but it cannot replace the nuanced understanding and decision-making capabilities of a human expert. This is particularly true for something as intricate as R&D tax credits.
The Reliability of Established Firms
alliantgroup has been conducting R&D studies for over 20 years. Our experience and methodology ensure that every credit study is thorough and compliant with regulations.
The Limitations of AI in Tax Matters
Incomplete Data Sets
Training AI models requires comprehensive data. Without sufficient data, the AI’s conclusions could be inaccurate or misleading. This is especially problematic in audit scenarios.
Potential for Errors
AI is not infallible. The complexity of R&D credits means that errors can easily occur, putting your business at risk during an audit or review.
Trust Issues
New firms promising AI-driven R&D solutions often lack the track record and credibility that established firms possess. Trusting them with something as critical as tax credits is a gamble.
Why Human Expertise Matters
Detailed Analysis
Human experts can provide detailed analyses that AI simply cannot match. This includes understanding the nuances of each project and its eligibility for tax credits.
Personalized Service
alliantgroup offers personalized service tailored to your specific needs and circumstances. This level of customization is something AI cannot replicate.
Compliance Assurance
Our team ensures that every aspect of your R&D study complies with current regulations, minimizing the risk of issues during an audit.
The Future of AI in Agriculture
Potential Benefits
While AI has limitations in R&D studies, it holds promise in other areas of agriculture. From predictive analytics to automated machinery, AI can revolutionize farming practices.
A Balanced Approach
The key is to balance AI’s capabilities with human expertise. Leveraging AI for routine tasks while relying on humans for complex decision-making can yield the best results.
Continuous Learning
AI technology is continually evolving. Staying informed about its advancements and limitations will help you make better decisions for your agricultural business.
Conclusion
In summary, while AI offers exciting possibilities, it is not yet suitable for conducting R&D tax credit studies. The complexity and nuances involved demand human expertise, which AI cannot provide.
I strongly advise against using AI R&D providers. Instead, rely on experienced professionals who understand the intricacies of tax laws and can ensure compliance.
If you have any questions about AI, R&D credits, or how we can help your business, don’t hesitate to reach out. alliantgroup has been around for over 20 years and we’ve always done R&D studies the right way. Our team at alliantgroup is here to support you every step of the way.
My team and I look forward to assisting you in achieving your business goals.
Although a few of the MSPs have been discussed above, other problem areas made the NTA’s list, including return preparer oversight, identity theft, online account access for taxpayers and tax professionals, and international information return penalties. All of these are key areas for tax practitioners.
Featured Leadership
Mike Johanns was the U.S. Secretary of Agriculture from 2005-2007 as well as the Governor of Nebraska from 1999-2005 and the state’s U.S. Senator from 2009-2015. As alliantgroup’s Chairman of Agriculture, Johanns brings more than 30 years of experience at virtually every level of government and a strong background in both agriculture and economic development. As the Secretary of Agriculture, he managed 18 different agencies, opened or expanded access to 40 international markets and was responsible for multiple agricultural breakthroughs as a negotiator for the Doha Development Round.
Tim Taschner, Associate Director, is a leader of alliantgroup’s R&D and ERC practice. Tim and his team specialize in serving the agriculture and life science industries at alliantgroup. Under Tim’s direction, the team has helped clients ranging from livestock producers and row crop farmers to dental laboratories and pharmaceutical companies claim over $500 million in federal and state tax incentives.
