AI Agents & Generative AI | Building the Future of Intelligent Automation

Introduction

In our previous post, we built a foundational AI-powered Tax Preparation Assistant to help accountants extract and categorize tax-related data from client documents. Now, we will enhance this system by automating tax calculations and compliance checks to further streamline tax preparation workflows.

This post will cover:

Implementing a tax calculation module
Checking compliance with IRS tax laws
Integrating real-time tax rate updates
Enhancing accuracy with multi-agent collaboration

Step 1: Adding Tax Calculation Logic

To make our AI tax assistant more useful, we need to incorporate basic tax computation logic that estimates taxable income, deductions, and potential tax liabilities.

Modify the API Route to Include Calculations

Edit pages/api/tax.js to add computation logic:

import { OpenAI } from "langchain/llms/openai";

export default async function handler(req, res) {
  if (req.method !== "POST") {
    return res.status(405).json({ error: "Method Not Allowed" });
  }
  
  const { documentText } = req.body;
  const model = new OpenAI({ openAIApiKey: process.env.OPENAI_API_KEY });
  
  try {
    const response = await model.call(
      `Extract and categorize tax-related data from the following document:
      ${documentText}
      Identify income, deductions, and expenses, and calculate the estimated taxable income.`
    );

    // Mock calculation logic (Replace with real tax logic)
    const taxableIncome = response?.income - response?.deductions;
    const taxOwed = taxableIncome * 0.22; // Example: 22% flat rate

    res.status(200).json({
      extractedData: response,
      taxableIncome,
      taxOwed,
    });
  } catch (error) {
    console.error("API request failed", error);
    res.status(500).json({ error: "Failed to process tax data" });
  }
}

Step 2: Enhancing the Frontend for Accountants

Modify pages/index.js to display tax calculations and compliance checks.

import { useState } from "react";

export default function Home() {
  const [documentText, setDocumentText] = useState("");
  const [responseData, setResponseData] = useState(null);

  const handleSubmit = async (e) => {
    e.preventDefault();
    const res = await fetch("/api/tax", {
      method: "POST",
      headers: { "Content-Type": "application/json" },
      body: JSON.stringify({ documentText }),
    });
    const data = await res.json();
    setResponseData(data);
  };

  return (
    <div>
      <h1>AI Tax Assistant</h1>
      <form onSubmit={handleSubmit}>
        <textarea
          value={documentText}
          onChange={(e) => setDocumentText(e.target.value)}
          placeholder="Paste tax document text here..."
        />
        <button type="submit">Analyze Tax Data</button>
      </form>
      {responseData && (
        <div>
          <p><strong>Extracted Data:</strong> {JSON.stringify(responseData.extractedData)}</p>
          <p><strong>Taxable Income:</strong> ${responseData.taxableIncome.toFixed(2)}</p>
          <p><strong>Estimated Tax Owed:</strong> ${responseData.taxOwed.toFixed(2)}</p>
        </div>
      )}
    </div>
  );
}

Step 3: Implementing Compliance Checks

Tax laws change frequently, and ensuring compliance is crucial. We can integrate real-time IRS tax data to verify deductions and tax brackets.

Integrate Real-Time Tax Rate Updates

Use an API like the IRS Data Retrieval API or tax-rates.io to fetch the latest tax brackets.

Example:

const fetchTaxRates = async () => {
  const response = await fetch("https://api.tax-rates.io/latest?country=US");
  const data = await response.json();
  return data;
};

Modify the tax calculation logic to use real-time tax brackets:

const taxBrackets = await fetchTaxRates();
const applicableRate = taxBrackets.find(bracket => taxableIncome >= bracket.min && taxableIncome <= bracket.max)?.rate || 0.22;
const taxOwed = taxableIncome * applicableRate;