Tax planning involves analyzing an individual or company’s financial situation with the intention of legally reducing tax liabilities by taking advantage of tax deductions, credits and exemptions available while abiding by applicable regulations.
AI can open up many opportunities for tax and accounting professionals. By taking advantage of automation, APIs, and generative AI capabilities, many tasks that used to take hours or days can now be completed quickly and efficiently – sometimes within minutes!
Taxes on Internet Sales
Online sales tax compliance remains an ongoing challenge for ecommerce, digital marketing and catalog businesses. Focused on data security and privacy issues, these firms must continuously adapt to emerging technologies like automation APIs and AI (artificial intelligence). AI applications range from machine learning for tax calculations, fraud detection, and more to other tools such as generative AI that produces text or video from user prompts – these technologies help streamline tax preparation by cutting manual work time and money savings as well as improving accuracy. Firms looking to maximize their impact should look for open ecosystem solutions which integrate quickly.
Taxes on Mail Order Businesses
As technology advanced in the 21st century, tax loss harvesting became easier to implement through portfolio management software packages. Such software automates much of the work associated with selecting tax lots that maximize harvesting opportunities while simultaneously detecting wash sales (the sale of an identical security in either taxable or retirement accounts within 30 days before or after loss-generating transactions that would disallow losses).
Artificial Intelligence technology has drastically transformed client services in the tax profession, providing instantaneous responses and elevating overall customer experiences. Although current regulations limit AI’s role in providing professional advice and counsel, tax practitioners who embrace AI will likely outshone and outcompete those who resist it.
Taxes on Electronic Transactions
Long considered slow adopters of technology, government entities – including tax authorities – were generally slow in adopting it. Yet in the last five to ten years most tax authorities have begun their digital transformation journey with tools like AI and automation becoming commonplace among tax authorities.
These new systems are revolutionizing tax functions and the tax landscape, with immense benefits and drawbacks for both governments and taxpaying individuals alike. While the advances may provide many advantages, some concerns exist regarding their impact on privacy and societal integrity; additionally, large language models and GenAI raise ethical considerations when used by governments with longstanding biases that exist in their information collection and decision-making processes.
As technology changes the tax world, it’s unlikely that human practitioners will be replaced anytime soon by machines; rather it will transform their roles by freeing them up to focus more on more complex and fully billable work. Leveraging AI will enable tax professionals to spend less time performing mundane research and basic drafting tasks so they can dedicate more time and energy on strategic planning, thought leadership and client relationship management activities.
Most firms may find a smaller, incremental AI project more cost-effective than using traditional development methodologies to build an enterprise-wide tax automation platform. Unfortunately, however, many such projects fail to meet risk/benefit metrics required to justify using nonproduction environments or engaging a PMO.
Taxes on Online Sales
Businesses dealing with multiple jurisdictions, drop-ship vendors, needing to map products and services with tax decisions or experiencing high filing fees should consider automated sales tax software. Some systems charge a setup fee followed by dollar-per-filing pricing while others can be subscription based with tiered pricing structures. Staying up-to-date with regulatory changes as well as technology advancements is often challenging but automating tax decisions may help. A system that integrates mapping, tax calculations and fraud detection may prove particularly useful.
