Confidence is in the details

That’s why businesses seek the help of KPMG LLP, a Big Four audit, tax, and advisory firm, especially when it comes to R&D tax relief. Tax professionals and engineers in R&D departments spend thousands of hours manually reviewing materials to discern the appropriate evidence, and missing a detail could mean missing out on millions. “The government stands to give back $148 billion in the next 10 years, but getting those rewards isn’t easy. It’s hard to build up detailed evidence to qualify,” said Brad Brown, Chief Innovation Officer, Tax, KPMG LLP.

KPMG turned to Watson to help them more effectively find R&D tax relief for their clients.

“We wanted to transform the industry,” said Brown. But embracing change meant finding a partner they trusted. “After researching all our options, we realized IBM was the technology provider we wanted to work with,” he said.

“KPMG needed a partner that could bring in the latest AI technology and align with our vision and innovation strategy. That’s where IBM came in,” said Steve Rainey, KPMG, Chief Innovation Officer, Tax. “IBM has had a longstanding strategic alliance with KPMG,” said Hill. “Working together was how issues were solved early on. It was a big part of our success.”

If AI was an answer, it had a lot of learning to do.

“Watson isn’t a PhD grad out of the gate. It starts off as a kindergartner and works its way up,” said KPMG’s Todd Mazzeo. But with training, Watson got better at helping tax professionals determine tax relief eligibility with confidence. “Watson becomes smarter with every new document we give it,” he said. And after integrating Watson into their workflows, KPMG’s tax advisors could more quickly examine massive amounts of information, like loan assets and nuanced tax interpretations, to help them offer clients richer, more detailed recommendations.

Using 10,634 documents, Watson was trained on five different R&D models by 13 tax professionals. After training, Watson recommended the correct tax treatment about three out of four times. “This means confidence in numbers for our tax professionals, because now we have an incredible audit trail of how to get to these conclusions,” Hill said.

“Watson helps us be more productive.” Employees are now able to analyze data and find deep insights more rapidly. Brown calls it an “energizing” experience. “The change Watson has brought internally is making a difference in people’s job satisfaction,” he said. “People are happy and motivated to come in and do something exciting.”

“The way we’re applying the technology is building excitement,” said Kay Sugarbaker, KPMG LLP Project Director. The project’s success is building interest around the office, with more departments excited to bring Watson on board. Vinodh Swaminathan, Principal at KPMG LLP, is ready for what’s to come. “With Watson, we’re able to offer our clients products and services we couldn’t imagine before,” he said. As Brown put it, “that’s a big home run for us.”