truepilot

An AI-powered virtual assistant designed for tax accountants, streamlining tax research and automating client advisory services.

TruePilot

Hello TruePrep AI investors and advisers. I wanted to provide a Q4 update for you guys here as we approach the end of the year. Um been a really exciting quarter for us. Uh we had Jack and Sunny join us full-time. Um our CTO and head of AI and they've been working full-time now for probably seven weeks. Um and we've been able to achieve just an incredible amount here. 

Uh we're sprinting really hard getting ready for January when tax season kind of kicks into gear. So as a reminder our vision here has been to eliminate data entry for tax returns. So you know right now we have people submitting PDFs or JPEGs or whatever it might be and then a tax preparer will take that and um they actually push it into uh workpapers as well as the tax software. So they they literally type by hand for small firms. 

There's 100,000 firms under 20 people who are our target market. Um and right now there's a human in the middle of this where they're literally looking at field one and they're typing in the number from field one and so on and so forth. And then they screenshot it so it's easier for the reviewer to quickly review it. 

And TEP is going to replace that um very basic data entry as well as validation um in a way that's going to be just really really efficient for these.

Firms so let's jump into the product. Um we built this product this quarter. Uh we've got you know um this is just the beginning really you know an MVP effectively but it works really really effectively. Like most importantly um you know what's going on here behind the scenes is is the real Secret Sauce. Um we are able to really really accurately like 99.9% um accuracy in extracting data and labeling and parsing that data from what are really complex tax forms. 

We've already um uh successfully uh programmed for 60 different tax forms which is actually not far behind some of the industry leaders. Um like TruePrep that is really for larger firms but um you know has a 20-year head start on us. Um and so here's basically how the product works. Um you've got a client repository this is where you can go in and see client data. 

Um but what I really want to show you is the creation of a workpaper. So again what happens here is a preparer who's typically getting you know their fully loaded cost is probably 50 to $65 an hour. You know they're taking 10 to 15 PDFs for a client like 1099s and 1098s and W2s and k1s and they are manually typing in that information into an Excel document and they're screenshotting that um so the reviewer can kind of see any decisions that.

They're making as well as just ensuring that the data is entered properly. And then they do the same thing again in the tax software. And then they basically take the tax return and they tie it back to what they originally did. 

So we're going to take that process and expedite it just massively. Um, so here's how it works. Uh, I select a client. I've got a tax here. Um, and then I drag and drop documents in here. Um, I'm just doing this as an example, just a few documents. 

So, um, uh, just for this demo, but you know, typically you'd have 10 to 15 documents here. And each of those documents has like 20 pieces of information. So you're talking about two to 300 pieces of information that a person is putting in here. 

So I select the form types. I submit this. You'll see it takes, you know, just a few seconds for this to update. What it's doing is it's going in and extracting this data. Um, with OCR that we use, we use public OCR models. 

And then we have a lot of post-processing. So there's some eccentricities about tax. Um, uh, tax data that requires. Uh, just a great deal of logic built around the OCR. Um, so the good news is it's proprietary and is something that we are doing with a lot of success. 

If there's any errors in processing the data, which to be honest we don't really see many.

But we highlight those here where you have a screenshot of the original document and you can type in in the box. Um, uh, you know the actual number. It'll say we don't recognize box 13. Can you type in the number from box 13 so we can make sure we resolve any errors up front? 

And then I hit generate workpaper and um, this is going to create the Excel document that they Ed to collaborate between a preparer and a reviewer. So you can download that workpaper as you see it's just a few seconds. 

And let me show you an example of what this looks like. So TruePrep AI builds this entire workpaper here and you can see like for a W2 we've screenshotted the W2. We've extracted all the data, not just numbers but checkboxes um, as well as some of the codes associated with benefits. 

And um, we'll get to this a little bit later but we validate it back with the 1040 which is the actual tax return. Which is a way of for the first time creating a full circle um, uh feedback loop for uh for these folks automatically. 

So just flipping through a couple other things we do um, on the schedule B you got interest in and dividend income. We can we can process 1099 ints and divs. On the schedule C we have 1099 nec's and misc's. Um, one comment here is that we're actually wiping all of

The pii automatically from these forms when we upload them so we don't save pii in our system. Um we will uh blank out basically all of the Social Security numbers um and addresses for folks um not for their employers but for them personally. Uh so that we don't have any Pi in our in our um uh in our database. 

And later on when we start to use this database for other things it will be important that you can securely send these documents. Um on the schedule D these are brokerage statements so like Morgan Stanley or Wells Fargo um uh or ever Jones whatever it might be. We can we can process those statements which is great because every one of those financial institutions has a different format. 

And so we have to actually go in and individually solve each of those forms um one by one. But we've created a process where we can do that in about an hour uh which is pretty remarkable. Um given that like TruePrep who's 20 years ahead of us has only I think uh maybe like 75 total institutions that they've been able to um successfully process. 

So we can pull long-term and short-term gains basis reported to the IRS wash sales gain or loss. You know this is all going into the tax return and then we take snippets of the key parts of the brokerage statement um so they.

Can validate that these numbers are correct. Um, so that is a huge time saver. 1099 RS. Um, 1099 SSAs K1s, which are your pastor entity income statements. Uh, high wealth individuals who often work with a CPA have, um, many times multiple K1s. Um, really high wealth people have lots and lots of K1s. So this can be a huge time saver. 

Um, we also can do 1099 G's. Uh, 1098s for mortgage statements. And then this will be blown out, um, over time. But we can also do the entire 1040. And that may sound like it's insignificant if the 1040 is the tax return. But being able to automatically process last year and this year and the schedules associated with them, we can then start to validate back to the original, um, wages. 

And we'll be able to do the same thing for retirement and Social Security as well as the K1, um, in new ways. And so we've spent a lot of time in the last couple months, or I've spent a lot of time thinking about the design of these workpapers, um, in a way to meet people where they are. So they're very easy to understand. They look like, you know, the workpapers that firms use today, but also then build in functionality that we didn't really imagine or that you wouldn't have humans do because it takes too long. 

Um, but overall what we can do right now, um, we're not yet pushing.

To the tax software which will be the next step in Q1. But today we can take all of you know 60 different forms. We can process all of the data. Um this is going to save you know two to 300 uh manual data entry points for a tax return. Uh with increased accuracy increased security because we're wiping that PII. Um and a huge time savings. Uh we estimate that to be two to four hours per tax return. Um and we can do it across uh just a huge array of forms already. There's really nothing major that we're missing. 

Um the next thing we're working on is state K1s. But um but we're already getting to uh you know areas that like um other larger companies have not even addressed. Um like the state K1s for example. Um so really really good progress this quarter. 

Uh we are super excited for uh Q1 where we start to use this with my firm. And we've had one other firm also sign up for a pilot. We got a few other meetings with firms in Q1 as well in early January. Um I think we'll have two or three firms piloting this for tax season which is pretty fantastic. Um and those firms you know if they sign on after tax season and are paying what we expect to charge which is 20 or $25 per return. We um you know we would already be a significant portion of the way towards.

Break even um even early next year. So uh really really excited. It's been a great quarter. The technical team has been doing a great job. We really appreciate all the support um from the broader community. 

And we're finishing out our Angel round. So um you know continuing to fund raise here in q1 as well. Um if you guys have uh contacts or introductions you want to make that would be uh fantastic. 

And uh meanwhile we'll keep cranking on the product and make sure that we have something great here. So appreciate all the support. Happy holidays everybody. 

And if you've got additional questions just reach out to me. Thanks.

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