If you’ve seen any of the recent headlines about clients suing their accounting firms for not properly advising them on state and local taxes (SALT) after they’ve racked up millions in tax exposure across jurisdictions, you already know that following the 2018 South Dakota v. Wayfair ruling from the Supreme Court, the stakes for getting SALT engagements right are high.
If you expected things to cool off as time passed after Wayfair, think again. SALT compliance is becoming more complex, opening the door to liability for both clients and the firms that serve them. Clients need to track their sales activities while also staying up to date on tax law changes, which can be different in every state in which they do business. As a result, businesses of all sizes are more vulnerable to audit exposure.
Fortunately, clients aren’t defenseless when it comes to managing their tax implications across state lines. When they have partners like your firm using end-to-end tax automation solutions from providers like Vertex that keep track of every significant change in tax law across all 50 states and countless local jurisdictions, they can more easily manage SALT exposure. It’s nearly impossible for firms—even the largest ones—to keep up with changes and updates in SALT tax policy across so many state and local jurisdictions. Commercial software packages like Vertex, developed specifically for cross-jurisdiction sales and use tax compliance and constantly updated with the latest regulatory updates, can play a huge role for firms seeking to manage this complexity for clients. Firms using these tools can focus on their clients’ sales and use tax challenges without having to track regulatory changes at the state and local levels. That comes as a huge relief to firms worrying about helping clients meet the challenge of SALT compliance.
These tools are already proven and in use by firms of all sizes. And they’re becoming even more powerful due to advances in artificial intelligence (AI) and other emerging technologies. Whether you’re already using SALT-focused technology solutions and are wondering what to expect from them in the future, or are considering implementing them for the first time, here’s a closer look at the AI-enabled capabilities that are already available today or just around the corner.
Content curation
With each individual state (and many municipalities) issuing and constantly updating their own guidance on SALT, the volume of legislative data that firms must have access to at any given moment can be staggering. AI tools make it easy to scan and search such large volumes of text data with simple commands, giving firms a serious productivity boost in gathering relevant legislative data for clients. It streamlines the processes required to provide and continuously update tax rates, rules information, and related forms that inform indirect tax solutions.
Tax automation
AI-supported automation instantly executes a chain of events that are otherwise resource and time intensive, even for technologically sophisticated clients who are not using SALT-ready solutions. Using automation, a client notches a sales transaction, and the smart database deployed by its supporting systems recognizes it as a sale involving tangible personal property (TPP).
At the end of the filing period, the systems tap that account to remit the tax to the state and e-file the return. This requires minimal human oversight and happens automatically, using systems that are constantly updated with the latest SALT guidelines.
AI-enabled co-pilots
SALT-focused tax automation solutions like Vertex are packed with insights, features and capabilities—so many that some users don’t even know the full extent of what these solutions can do for them. AI-enabled co-pilots serve as practical, easy-to-use guides—true co-pilots—to getting the full value from these solutions. “What’s the best way to configure the system for tax scenario X?” “Can you double-check the setup of this complex tax calculation?” “My client is expanding operations into Arizona, Vermont, and Louisiana. How should I reconfigure the software for this client to make sure they’re covered?” With AI co-pilots, getting the answers to these questions can be as simple entering a prompt using those exact questions, or even saying them out loud. The co-pilots will quickly provide context-sensitive answers, allowing users to avoid having to perform special exports and other types of complex reporting to access the same information.
Deeper insights from large amounts of data
SALT customers generate high volumes of tax-related data: transaction data on the calculation side, and returns & filing information on the compliance side. What useful, actionable insights can all that data provide? With AI, it will be easier to troubleshoot reconciliations, improve forecasts, and inform a wide range of related decision making. AI capabilities will also help flag potential configuration issues or unusual trends requiring further review.
Start small today to prepare for tomorrow’s big AI advantage
The stakes are high when it comes to SALT, and leveraging technology is a sure-fire way to stay compliant. AI has reached a familiar point in the trajectory of virtually every major technological advance. The initial excitement surrounding AI has receded in the wake of the wave of hype that introduced it to the business world, and many decision makers are wondering if it’s still worth their attention. It absolutely is. AI capabilities are already beginning to have an impact across accounting solutions and will continue to progress. The complexity of SALT regulations and the data it requires make SALT a prime target for AI-enabled solutions.
To learn more about how CPA.com and Vertex can help you take advantage of these capabilities today, start by visiting our Firm Advisor Program page.
