This transcript has been edited for length and clarity.

David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: 2023 wrap-up.

We are continuing our tradition at the start of the new year of reviewing what happened in U.S. tax policy and looking ahead to what we can expect in the next 12 months.

Here to recap the 2023 highlights and make some predictions for 2024 is Tax Analysts' Chief Operating Officer Jeremy Scott. Jeremy, welcome back to the podcast.

Jeremy Scott: Thank you, always happy to be here.

David D. Stewart: Now to start off, did we see any significant changes in U.S. tax policy in the last year?

Jeremy Scott: No, we did not. This was not an eventful year for federal tax policy. There were a lot of reasons that went into it; some of them were predictable, and some of them may be a little surprising. But obviously we entered the year with divided government. The results of the 2022 election returned a Republican House, a Democratic Senate, and obviously President Joe Biden remains in office.

The problem wasn't even so much that; it was that the Republican majority was much smaller than expected. So divisions within their caucus made lawmaking extremely difficult this year. And I think because of that, some tax policy objectives that they had, some bipartisan tax policy objectives that people expected to see taken up, we never really got to them. And so what happened in U.S. tax policy was essentially a legislative freeze. There wasn't even that much discussion about it, and basically, nothing of any significance happened.

We got an early indicator of this. You could see what kind of year it was going to be when the House failed to elect a speaker in a timely manner. Back in January [Kevin] McCarthy [R-Calif.] took not a record number of ballots, but quite a number of ballots to even be elected speaker. He made a number of concessions to one element of his caucus, an element that did not intend to be cooperative regardless of his concessions. And once he made those concessions, it limited what he could do in the House.

And so as the year progressed, it became more and more difficult for the House to take up business. And what they ended up doing was they held a lot of hearings on conservative priorities, pro-Trump Republican priorities, but they did not get around to substantive lawmaking. And when the time came to pass bills that people thought might be vehicles for tax legislation, the House simply couldn't deal with it.

And when McCarthy cut a bipartisan deal to pass a temporary funding measure, he lost his job. The concessions that he made at the beginning of the year to become speaker meant that one member could essentially raise a vote of no confidence against him — it's actually called a "motion to vacate" in the United States — and Rep. [Matt] Gaetz [R-Fla.] did that.

McCarthy could not hold his job. Republicans took a long time to elect a successor, and by the time the successor was elected, essentially we were in crisis mode on just how to keep the government funded and so tax priorities did not get addressed.

So again, very uneventful year. We expected it to not have anything major occur, but we did expect to see some discussions on some bipartisan priorities, perhaps extenders, perhaps a few compromises here and there, and we didn't get any of that. Instead, we spent a year with hitting the pause button on tax policy, and that is where we are today.

David D. Stewart: Now you mentioned the changeover to House Speaker Mike Johnson [R-La.]. Can we expect any changes in direction from that change in leadership?

Jeremy Scott: Well, I think that's interesting because I think the stock answer would've been no. And in fact, things might actually get worse because Johnson was the preferred candidate of a number of very conservative representatives who had helped bring McCarthy down. And they had prevented the election of a number of more traditional Republican-type candidates who might've succeeded McCarthy, including Majority Leader [Steve] Scalise [R-La.], who probably would've followed a more traditional line on funding and tax policy.

But what's been interesting about Johnson has been he almost immediately has compromised and brought bipartisan things to the floor on the government funding issue. Despite the fact that McCarthy was removed because he relied on Democratic votes to keep the government open, Johnson did almost exactly the same thing. He did not bring any new ideas on how to fund the government. He simply came to the conclusion faster that he was going to have to use Democratic votes to keep it going.

And so I think we will see what Johnson can do here as we come up against a January funding deadline. He has made a number of promises, promises that McCarthy did not necessarily make about some tax priorities that he expects to consider for funding bills. One of those is on the SALT [state and local tax] cap to buy some of the New York Republican votes. But the issue for him is going to be, again, any one member can bring a motion to vacate if they want to bring the House down, if they essentially want to pause legislative business, and some of these very conservative Republicans have shown they're willing to do that.

But the other issue is the Republican majority is actually smaller because Kevin McCarthy has resigned, Rep. [George] Santos [R-N.Y.] was ejected. These are two key votes. The Republicans are down to, I think, being able to lose one or two votes total depending on who is attending at any given time before they can't control a majority.

And I think that's going to make it really difficult for Johnson, No. 1, to control the House floor, No. 2 to control his caucus, and it puts him in an even weaker position when he has to compromise with Democrats. Because you are going to have to compromise with Democrats in order to pass overall government funding. And the only way we're going to get tax legislation probably prior to 2025 at this point is through the government funding mechanism. And so there's a number of things people want to see included in these funding bills. Those are going to have to have Democratic support, and they're going to have to pass a very divided House, the Senate, and be signed by the president.

And so it's not entirely clear how that's going to happen, but I do think Johnson showed that he wasn't going to be quite the candidate everyone expected given where his background came from. So maybe there will be some surprises in early 2024, but a surprise would be funding governments. It is not going to be major tax reform; it's not going to be a massive change in direction. It's not even going to be what some people expected to see dealing with some of these TCJA [Tax Cuts and Jobs Act] provisions that expire in the near future.

Some people thought this two-year window in the second half of Biden's term with a divided Congress, you might see some compromise on this. You might see some of these things extended, not extended. Yeah, we're not going to get to that probably in an election year with the current House of Representatives.

David D. Stewart: Now turning back to a subject that we were discussing last year around this time, it was all about inflation as a policy driver. So how did things play out over 2023?

Jeremy Scott: Well, I think inflation continued to be a major story for a very long time, and for the first part of the year, I think there was some feeling that there might have to be another legislative response to inflation. And we had the Inflation Reduction Act last year, really didn't have a lot to do with inflation so much as it had to do with reviving some Build Back Better priorities and passing some green priorities and essentially also buying Sen. [Joe] Manchin's [D-W.Va.] vote by having some deficit reduction components in, all of which people thought might reduce inflation. Don't know what impact that had on inflation, but there was talk at the beginning of the year that more would have to be done. But that's not really how it played out. I think inflation has largely been the province of the Federal Reserve.

I think that Congress and the president have indicated the willingness to react to Federal Reserve moves or to try to pressure the Federal Reserve. But I think in 2023 this was largely the Federal Reserve's area. And what they tried to do, obviously, is affect this soft landing, continue to raise interest rates, aggressively raise interest rates, hit these inflation targets without tanking the economy. Many people thought they had failed. About three quarters through the year the stock market was in correction. Job numbers continued to be stronger than the Federal Reserve thought they should be. So people thought there was going to be even more stringent measures applied — by that I mean higher interest rates.

But then all of a sudden it began to ease. In the fourth quarter of the year, we did not hit the targets the Federal Reserve had, but things began to improve, to the extent that the Federal Reserve sent out statements, sent out those messages that they so indirectly love to do that we were entering perhaps the final phase of some of their interest rates hikes, some of the more aggressive anti-inflation policies, and this caused a recovery in the stock market. I believe the stock market today has not only moved out of correction territory, but some of the indexes are at all time highs. And so inflation has receded as a crisis.

I think there are a number of politicians, a number of lawmakers who continue to emphasize the idea that inflation has hurt the average American more than maybe it has hurt the overall economy. And so there continues to be democratic efforts to revive some measures that assist lower- or middle-income people, particularly in expanded child tax credit. But those aren't gaining a lot of traction because it's no longer seen as a major crisis. And again, we have essentially legislative paralysis in Washington.

So inflation was a large story for a big part of the year, and then it has receded in the last quarter. And I don't know that it will dominate 2024 the way people thought it might and certainly not the way it dominated 2022 and the first part of 2023.

David D. Stewart: Now another issue that came up last year was with Republicans taking charge of the House, the question of the IRS budget and money that had been allocated to it under the Inflation Reduction Act just kept coming up. So how did that end up playing out?

Jeremy Scott: Yeah, that's one of the few issues that unites all parts of the Republican caucus in the sense that they are opposed to increase IRS funding. They are opposed to that $80 billion that was set aside in the Inflation Reduction Act to the IRS to increase enforcement. And so there has been some unity on the Republican side on this issue. And there has been some sign that the Democrats are not quite as committed to that $80 billion as they are to other Inflation Reduction Act proposals.

The problem for Republicans has been the lack of unity on other issues means they have not been able to come to the table and achieve this goal of reducing IRS funding in a concrete way. What happened was, when Speaker McCarthy made his deal with the White House to keep the government funded, he managed to extract a promise from President Biden to cut IRS funding by about $21 billion.

Now, this number came in dispute shortly afterwards. It was not part of the initial legislation that kept the government open, but this was the deal that was made. So in other words, President Biden seemed to have conceded that about a quarter of the funds that had been set aside for the IRS were going to go away. They were going to give into Republican demands to recapture some of that funding and use it for something else or to simply take it away. With McCarthy's exit, partly around the fact that some of these very conservative Republicans were opposed to the idea of dealing with Democrats at all on this issue, it is not clear where this stands.

And so the IRS still technically has the budget that it had under the Inflation Reduction Act, but Republicans have become much more aggressive in their language as to what they expect in a deal to keep the government open. And several times, including under Speaker Johnson, McCarthy's replacement, we've seen some concrete proposals of what they're going to do.

One of Johnson's first bills was an attempt to pass foreign aid packages to Israel and to others for some of the wars that are going on, and it included a $60 billion cut to the IRS. The idea being that was going to be how they paid for some of these aid packages. That did not go anywhere; it was dead on arrival in the Senate, but it can show you that this funding is very tentative, that if the IRS is counting on having 100 percent of this funding indefinitely, they probably are being myopic. Democrats have shown a willingness to compromise on this issue. There's going to have to be some compromises in a bill that ultimately passes both Houses and gets signed by President Biden. That bill is going to include a cut to IRS funding. If I had to make a prediction, it's going to look closer to the $20 billion that McCarthy negotiated earlier in the year and not the $60 or $80 billion that Republicans are talking about today.

But I do think that funding is under threat. I do think it is an item the Democrats are willing to give in order to get a funding bill through. And I think that that is a Republican priority that, again, they can command most of their votes on. The only way they lose votes on this is if someone thinks they haven't gone far enough and just cast a nay vote just to be obstinate, which again has happened most of the year. But I think we're going to see cuts to the IRS funding. I think that's just a given that's going to show up in the January proposals for keeping the government open.

David D. Stewart: Now, you don't sound very optimistic about substantive tax changes coming in 2024. Is there any chance that we could see something? I know it's going to be closely divided government, also an election year. Is there just no appetite for anything?

Jeremy Scott: I think it's less about the appetite and it's more simply about who can come together, who can control a majority in both of the chambers of Congress and make an agreement with the president. An election year is always a charged environment. It is very difficult to get things done in a presidential election year. And 2024 will feature a very partisan presidential election environment. It's going to pull people apart; it's certainly not going to bring people together, particularly as you get closer and closer to what is expected to be a very competitive election day.

So I do not think there is much opportunity for major federal tax policy in 2024. I do not think you're going to see, for example, any movement on bringing the U.S. in alignment with some of the international moves that are happening with pillars 1 and 2. I do not think you're going to see any moves to address some of these expiring TCJA provisions that, again, people thought there was this window to maybe take advantage in the second half of Biden's first term. I'm not sure that you're going to see anything on that level.

What you can still probably see are, again, movement on extenders, movement on the research credit, movement perhaps on the child tax credit. Maybe you would see some movement on the SALT cap. The SALT cap is very complicated; there's certainly a constituency that continues to say, "If you want our votes, this has to be addressed." And there are both Republican and Democratic representatives who talk about this.

The thing is there's not broad support within both parties for repealing that cap, No. 1, because it's going to go away naturally when some TCJA provisions expire. No. 2, there are elements within the Democratic Party that believe capping the SALT deduction benefits the middle class because the deduction primarily benefits upper-income earners and itemizers. And No. 3, Republicans outside of New York and one or two other states, they just don't care. And they don't want to see this provision come back because they don't want to see what pay-fors people come up with. They don't want to give something else up in order to repeal the SALT cap.

But the SALT cap does get a disproportionate amount of attention because some of these representatives, again, particularly from New York and New Jersey, make this their number one issue going into any funding bill. And so Johnson had to make a promise that it would get addressed in order to buy some of these votes to win the speakership. Democrats have said privately that they would address it. Now they have not kept their word because it didn't show up in Build Back Better or the Inflation Reduction Act. But again, you have reps that get together and make this into a big issue. They just have not been successful in winning.

And I don't think they will be in 2024, but you might see some chatter around it. You might see some chatter around it, particularly in January as you're trying to cobble together every vote you can for a funding bill. So that's something that might get addressed in 2024, at least in terms of the discussion. But no, I think 2024 looks like an even more dire year for major tax policy changes than 2023 did. I think 2023 did not even develop in the most positive way. And I think 2024 is an even less positive environment for tax policy changes.

David D. Stewart: Now, earlier you said that the only vehicle for any change would be the funding bills. And so we are looking ahead at these two continuing resolutions expiring in January and February, I believe it is, so it's this two-stage expiration. How do you expect negotiations around that to play out for additional funding for the rest of the year?

Jeremy Scott: I think that the negotiations will be chaotic. I think they will appear to be going nowhere and then at the last minute a deal will be cut that is probably very sloppy. And that has just been the nature of it. I think it is impossible to be precise on what might show up in this. There is a chance of a shutdown obviously, but I believe that since Johnson has already shown a willingness to use Democratic votes, I suspect he will use Democratic votes again to keep the government open. But I don't think it's going to be an environment where for several weeks you're progressing towards a solution, and as you progress towards a solution, the bills get more fleshed out, and you see an opportunity to do more with them. I think it's going to seem as though nothing is happening. I think you're going to see groups that simply pledge to vote no on anything. These are going to be particularly within the Republican caucus.

I think you're going to see Johnson up until the last minute pretend that he's only going to move a package that can pass with only Republican votes until he suddenly drops it, and a package moves with Democratic votes. But I don't think that package is going to differ very much from simply being a continuing resolution. I mean, we've already seen how charged the environment was around defense spending, which usually passes with a large majority of both parties. It barely passed, and the reason is Republicans within this very conservative group continue to insist on changes that are unacceptable to the Senate. They're unacceptable to a majority of the Republican Party, and they're certainly unacceptable to the Democratic Party. And so that makes negotiations chaotic, it makes things come together at the last second, and it leaves a lot of things unfinished. Little priorities that should have been taken care of don't necessarily get taken care of.

I think that's going to be what happens in January and February. I would not be surprised to see more short-term resolutions get passed. I know that there were Republicans that are 100 percent opposed to that, but again, Johnson has used Democratic votes to accomplish that. And I think it's somewhat strange to think of a more conservative speaker being more willing to work with Democrats, but again, coming in somewhat fresh, he did it almost immediately. McCarthy dithered on it for a lot of the year, and then Johnson immediately was willing to put packages up that would require some Democratic votes to pass.

And again, with the defense bill with the continuing resolutions, I think that's what we're going to see. I expect it to be a very messy January, and I think there's an excellent chance that we will have another speaker of the House at some point after this is all done. I would not be surprised to see a member of the House step up in motion to vacate once again.

David D. Stewart: Well, turning from the legislative to the judicial side of the U.S. government. In early December we heard oral arguments in the Moore v. United States case about the transition tax and basically, challenging whether a realization event is required under the 16th Amendment in order to tax. How do you expect that case to play out?

Jeremy Scott: Yeah, I think this is a case that has defied expectations from the beginning because I think for many people the decision to even grant cert was a shock in the summer. And so I think making too many predictions on this is dangerous because you're likely to be proven wrong.

But the oral arguments were very interesting because they did not divide along ideological lines the way some Supreme Court cases do. And I think what we saw is from many justices, they pressed both the government and the taxpayer for what would a limited ruling look like? How could they make a decision in this case without jeopardizing huge parts of the tax code? Without sending reverberations throughout the entire tax system, how could they make a ruling that applied to the facts in the Moores' case that didn't necessarily touch on this broader question of whether realization is applied or what is a direct tax?

And so if I had to make a prediction, I think I will join the vast majority of people who have written on this. I think what you're going to probably see is a very limited ruling in favor of the government. And then I think what you're going to see as part of that are a lot of opinions, both concurring and dissenting opinions to get individual justices' point of view across about whether they consider realization a requirement or not.

I think there is a core group of justices that would like to opine on whether realization is required for taxation. I think that's why the Moore case is before the Supreme Court today. But I think the facts in the Moore case, I think the overall tenor of the oral arguments, I think particularly when you listen to Justice [Brett] Kavanaugh and Chief Justice [John] Roberts talk about the issue, I think all of this points to how can we make a ruling here that probably favors the government?

Maybe it'll be a limited ruling in favor of the taxpayer. The Moores' facts are pretty bad to win the case outright if you're not going to address the major policy question that's a thing. But how do you make a ruling for the government that No. 1, does not open the door to the government expanding its use of non-realization based taxes, primarily wealth taxes, which of course are very unpopular in certain segments of the political community? How can they rule for the government in a way that doesn't affect the ability of people to challenge say, a more clear wealth type tax, a more clear violation of this direct tax and apportionment? A more clear challenge to Macomber, which is an earlier Supreme Court case. How can you rule for the government [to] allow those challenges to come later or to deter lower courts from ruling automatically in favor of the government when these types of taxes appear?

So that's what I would predict is a limited ruling in favor of the governments. But we'll see, as I said, this has defied expectation. And the one thing that people seem to forget is to even get Moore before the Supreme Court, you needed four justices to want to hear it. And I can't imagine any justice that was strongly in favor of the government signed on to want to hear this case. So there were four justices that had something to say about this case. And given the facts of the case, I suspect they had something they wanted to say about realization. I suspect they wanted to say something about wealth taxes, but I'm not sure this is going to be the vehicle that gets that out, but we'll see.

David D. Stewart: Well, let's go down the road of questioning, what if? What if this case comes down as it's not entirely expected to? But if it were to come down strongly against the government, upending the way the tax system works, is Congress in any position to respond to that?

Jeremy Scott: No, I believe Congress will not be able to respond. And I think the reason is because there would be a significant number of Republican representatives who would be very pleased to see this chaos hit the tax system. As former Speaker [Paul] Ryan said, up to a third of the code could be affected by a very broad ruling in favor of the taxpayer. That jeopardizes a lot of government revenue. But there are Republicans that want to see that type of revenue jeopardized. There are many Republicans who are opposed to things like mark-to-market taxes.

The entire Republican Party is opposed to anything resembling a wealth tax. So I think they would be thrilled to see the Supreme Court come strongly out and say, "These type of taxes are not allowed. You must realize income in order for it to be taxed." So I don't think you will see much appetite to issue technical corrections or to go through and tweak certain provisions that are critical for the functioning of the current tax system to make them comply with whatever the Supreme Court ruling is.

And I believe if you listen to the oral arguments, this is at the front of some justices' minds. I think this is more, the left of center justices raised these concerns more overtly. But again, Kavanaugh and Roberts seem skeptical of a broad ruling in favor of the Moores. And so I think the weakness of the legislative branch, the fact there will be no response from Congress to work around a very broad decision is going to deter some justices from ruling in that favor.

But in the event that five justices come out and strongly say, "Realization is required, no wealth taxes, no mark-to-market taxes," I think you will see upheaval in the tax system. I think you will see quite a lot of lawsuits, quite a lot of refunds. And I do not believe Congress will respond this year. They might be required to respond next year. This might overtake an incoming president or a continuation of President Biden's agenda, but I don't think it's going to happen this year with a House of Representatives that has a one to two seat majority and is already so divided.

David D. Stewart: Well, you just alluded to my next question, which is about this upcoming potential change in president, potential not. So the primaries haven't yet begun as we're recording this, but barring any unforeseen event, we know who the two candidates are going to be. So what policy directions can we expect from a Trump or Biden win?

Jeremy Scott: Yeah, I think tax is not going to play a major role in the election campaign. If this becomes a rematch of the 2020 election, I think we all know what the issues that are going to be at the forefront are, and tax is not going to be at the top. But tax will play a major role in any new administration. A lot depends on how Congress shakes out.

Let's postulate a non-divided government situation. If President Biden were to win reelection, if the Democrats were to hold their narrow majority in the Senate, which is shaky, or if they were to retake the House, which is perhaps more likely, you will see tax be at the center of what Biden wants to accomplish. President Biden is very much a traditional type politician in the sense that he knows that to accomplish many of the things he wants to accomplish we do that through the tax code.

We've seen him attempt to affect many of his agenda items using the tax system. That was the whole point of Build Back Better. That is how the Democrats envision achieving some of their green-related policy initiatives. The main reason for this, of course, is reconciliation allows you to pass these type of bills with a simple majority in the Senate. So tax will play a major role in a Biden win. I think you will see a revival of Build Back Better provisions. I think you will see a revival of this idea of "We need to raise more revenue from upper-income taxpayers. We need to make the tax system more fair." I think you'll see an expansion of some of the green-type programs that they have, perhaps with less reliance on coal state votes, which would allow them to do more of what they were trying to accomplish early in Biden's administration and not so much what you saw actually pass. Tax will be a big deal if the Democrats control the government.

Let's pivot to say what would happen if President Trump returned to office and Republicans held the House and retook the Senate? Again, it's a very favorable map for Republicans on the Senate, less favorable in the House. But let's say they come in with majorities, I think you're going to see tax cuts. I think again, President Trump likes wins, that's what he talks about. The easiest place to get legislative wins is not on things like immigration or nontax policy. Again, you need 60 votes in the Senate; it's very difficult to get that. You will probably see a lot of talk about extending the Tax Cuts and Jobs Act provisions. I think extension of those would be their number one priority. Former President Trump has talked about, he wants to get that corporate rate down. He would like to get down to that magic number of 15 that he floated in his first administration. I think you'll see him push to do that again. I think you'll see more corporate rate cuts, I think, discussed. So you'll see that talked about, and you'll see that be a big part of what anyone is trying to accomplish. So tax will play a role in any president's agenda in 2025 if they have control of all branches.

If you have a divided government situation, and let's just say the most likely divided government situations would be a Democratic House and a Democratic presidency or a Republican presidency and a Democratic House and a Republican Senate, you'll still hear talk about these agenda items, but much, much less is going to get done. Because there's just not that willingness to work together to make a broad compromise.

I do think TCJA expiring provisions are going to be part of the 2025 discussion regardless of who wins. But how those are framed and what the trade-offs are is going to be very, very different depending on whether you have a Republican or a Democrat in the White House. And again, divided government means that two houses of Congress have to cooperate. So tax is going to be a big deal in 2025. It's not going to be talked about in 2024. But whatever president wins and particularly if they win control of both houses of Congress coming in, tax will be the way they attempt to accomplish most of the agenda that they try to accomplish in their first year, that's just how it works in the modern United States. And again, a lot of that is simply because of how the Senate functions.

David D. Stewart: All right, so lastly, we'll delve into something a bit more speculative. We've been hearing a lot about a role for artificial intelligence and tax. There are supporters and skeptics with vastly different views on what AI can do. What do you see as a realistic role for AI in tax?

Jeremy Scott: Yeah, I think this was the big issue in tax this year with the freezing of tax policy; I think it was AI. AI exploded onto the scene all of a sudden it felt like in 2022, and then it really became the dominant talking point in 2023. I think at the beginning of 2023, you had this idea that AI is going to come, it's going to eliminate accounting jobs, it's going to eliminate legal jobs, particularly legal support jobs. It's going to be the way that things are done in the future, and then some brakes got applied to that.

There was a very public New York Times story that followed a lawyer who had prepared a brief for a case and submitted it to a court that used AI. AI prepared it, and it made up fake cases. They were very convincing; they were very real-looking, but when the court went to find them, they simply didn't exist. And this has caused massive repercussions throughout the legal industry and throughout the legal ethics discussion points because we simply can't have this. You can't have AI making up cases. You can't trick the court.

And so this has put a freezing effect on some uses of AI. But AI is here to stay, and I think what you've seen this year is you've seen what it's going to look like. It is probably in the legal area going to be like a work product tool. It is going to make people more efficient. As we find safe ways to use it, it's going to make it easier to do jobs. Now, could that have repercussions in the number of people employed? Maybe. But what it's definitely going to have is what those people are doing. There's going to be less focus on some of this drudge work of research because AI is going to be able to make that simpler. Maybe some form type documents can be prepared a little quicker.

But everybody is moving into using AI despite the risks. Just as a couple of examples, EY and KPMG have partnered more closely with Microsoft to use their Azure platform for AI. They're looking for ways to use that. PwC is working with a company called Harvey, which has built a model off of ChatGPT. And again, this is to speed legal research. This is to speed up efficiency. And there was an article in Fortune recently that talked about how there are some experts that believe this could shave 15 hours a week off of the average tax practitioners job. It could make getting to partner within the Big Four easier. It could speed up the partner process because of this. So I think this is where we're going to see AI's role in the tax advisory space really take off in 2024.

We are seeing big investments from the Big Four in large law in how to partner with AI companies, how to use AI. You're going to see a focus within next year on how to make this safe, how to verify that what's coming into AI is good information, so that what it's spitting out are good answers. And you're going to see it start to become a work product tool. It's going to be a supplement to make people's jobs easier, to make some tasks go faster. But it will be a major talking point in the tax space. In the legal space as a whole, tax and law are not going to jump on it as fast as some other industries because we have more at stake from mistakes — malpractice looms around every corner.

Clients are not particularly — you can tolerate errors in a AI generated story about sports scores more than you can tolerate AI errors in a court brief or AI errors in something you send to clients that they have to rely on. So AI is not going to move as fast here as it's going to move in other areas. But it's coming. It will change how people do parts of their job, and by the end of next year, we may have an idea as to whether it changes some jobs altogether.

But that's what I think you're going to see next year. I think you're going to see it move into the Big Four space. You're going to see some of these vehicles be tailored for use in tax and law. And I think you're going to see an increasing use of it by most levels of the tax advisory world.

David D. Stewart: Well, this is going to be fascinating to watch play out. Jeremy, thank you so much for being here. It's always great having you.

Jeremy Scott: Thank you very much. I'm always happy to be here.

David D. Stewart: And now instead of coming attractions, joining me now with an important reminder is Acquisitions and Engagement Editor in Chief Paige Jones. Paige, what do you have for us?

Paige Jones: Thanks, Dave. Just a quick reminder to our listeners that the submissions period for the Tax Notes Student Writing Competition is open. This annual award recognizes superior student writing on unsettled questions in tax law or policy. Eligible students must be enrolled in an accredited undergraduate or graduate program during the academic year. Submissions are due by June 30. Visit taxnotes.com/students for more details.

David D. Stewart: That's it for this week. You can follow me online @TaxStew, that's S-T-E-W, and be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org. And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.

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