“I see embedded taxes becoming a standard feature in financial services”: april’s Christina Taylor on what direction is embedded tax taking next

The fintech industry has harnessed the embedded finance trend to offer a variety of banking and payment solutions, but the tax sector has lagged behind. Now, fintechs are turning their attention to this area. Clients can choose to offer tax services for free, charge a fee, or include them in a bundle, with a growing trend toward bundled tax services.

I spoke with Christina Taylor, VP of Tax Development and Delivery at april about the decade-long evolution of the e-file product, the challenges and growth potential, and her outlook on the embedded tax trend for the next five years.

At april, Taylor heads the tax analyst team, guiding and connecting tax experts with engineers to enhance results.

Taylor brings nearly two decades of experience in tax, accounting, and business operations, having previously led teams at Credit Karma Tax and Cash App Taxes. She also co-created the online DIY tax preparation product that evolved into Credit Karma Tax.

Q: How has the e-file product evolved over the past 10-15 years?

Christina Taylor: The tax code has gotten increasingly more complicated. Every year there are more credits, deductions, and last-minute changes. We used to receive all of our changes by November/December, but now, a lot of states are having later and later sessions. The process is much more complex and more involved today than it was 10-15 years ago.

You also need to be involved with tax agencies more. As treasurer of the National Association of Computerized Tax Processors (NACTP) for the past five years, I have represented the entire tax industry, including our competitors, in discussions with state tax agencies and the IRS, ensuring that our tax strategies are aligned with regulatory changes.

Q: What were the challenges and growth opportunities in the tax tech space 10-15 years ago, and what do they look like now?

Christina Taylor: There wasn’t much going on 10-15 years ago, the tax tech space was a lot less dynamic. The landscape definitely evolved with fintech’s rise, but before, we had to work hard to make people see the value of tax. Credit Karma surprised the market when they acquired our tax filing product, it was a completely new concept at the time.

Another challenge in creating tax tech products back then was the white-labeling model. It was a new thing at the time, and primarily most digital platforms were built for desktops. The idea of doing taxes on your phone was unheard of back then. In tax year 2023, 98% of taxpayers who filed with april completed their returns completely on their mobile phones. 

Q: Is integrating taxes into other platforms like banking and payroll the next step forward? Do you expect the trend of embedding tax services in various platforms to gain importance over the next five years?

Christina Taylor: Yes, I think it’s already quite significant and I just see it growing. The concept of embedded tax services aligns perfectly with the broader trend of embedded finance, where financial services are integrated into everyday apps and websites. Integrating tax functionalities directly into banking apps, payroll systems, and other financial platforms, reduces the friction and complexity typically associated with tax filing. Meeting users where they are already engaging with their finances allows the tax process to evolve from a once-a-year scramble to a year-round easier effort, which could completely change taxes as we know them today. When users are managing their finances through a banking app, having embedded tax services allows them to see their tax implications in real time and make better financial decisions. This not only enhances user experience but also increases engagement and trust in the financial platform.

The rise of fintech has already shown us the potential of integrating various financial services, and tax is a natural extension of this. We are already seeing interest from multiple financial platforms looking to embed our tax services to provide a more comprehensive financial solution to their users. Plus, as data becomes more valuable and the fintech landscape more competitive over the next few years, I see embedded taxes becoming a standard feature in financial services.