AI’s Role in Tax Compliance: Predictions for 2024
In the rapidly evolving landscape of tax compliance, artificial intelligence (AI) is expected to play a significant role in the year 2024. According to Vsu Subramanian, Avalara’s Senior Vice President of Content Engineering, conversational AI interactions will become even more commonplace in the compliance space. AI assistants will analyze data, search for deductions, perform anomaly audits, and assist with tax research and filing.
This prediction indicates that AI technology will continue to automate and streamline tax compliance processes, providing businesses with more assistance and efficiency. By leveraging AI, businesses can expect to navigate the complexities of tax compliance more effectively in the coming years.
How AI and Automation will Transform Accounting in 2024
The impact of AI on the accounting industry is expected to be profound in 2024. With digital transformation initiatives unlocking vast amounts of data, accountants will increasingly harness the power of AI and data analytics. Sona Akmakjian, Avalara’s Senior Director of Global Accounting Strategic Partnerships, predicts that this shift will drive more informed decision-making and significantly enhance the efficiency of accounting processes.
Moreover, prevailing economic conditions will drive the accounting industry to embrace AI-infused technology and data analytics. Accountants in 2024 will also explore cost-effective measures such as outsourcing and offshoring to adapt to the changing landscape and optimize their operations.
Increased Audits: What to Expect in the Year 2024
Scott Peterson, Avalara’s Vice President of U.S. Tax Policy and Government Relations, foresees an uptick in audits in the year 2024. As state budgets recover from the impact of the pandemic, legislatures will encourage increased audits to make up for any lost revenue. Businesses and consumers should prepare for a more rigorous auditing environment and ensure they have accurate and up-to-date financial records.
The anticipated increase in audits highlights the importance of maintaining proper tax compliance practices and keeping meticulous records. Businesses should stay informed about any changes in audit procedures and be proactive in addressing potential compliance issues.
The Convergence of Tax Compliance and Business Processes with E-Invoicing
Alex Baulf, Avalara’s Vice President of E-Invoicing, predicts that in 2024 tax compliance and business processes will converge into a single streamlined process through e-invoicing. As tax authorities worldwide grant businesses more time to prepare for e-invoicing implementation, the trend of electronic invoicing will continue to spread globally.
With e-invoicing becoming more prevalent, businesses will share the same electronic invoices with both tax authorities and their customers. This convergence simplifies business processes and reduces the burden of separate tax compliance and invoicing procedures.
The Rise of Social Commerce in Retail: Insights for 2024
George Trantas, Avalara’s Senior Director of Global Marketplaces, observes that in 2024, marketplaces will continue to shift their strategies for reaching consumers. Social commerce will emerge as a significant channel, allowing retailers to sell directly to consumers through social media platforms. As a result, some retailers may no longer need to rely on traditional advertising methods to reach their target audience.
The rise of social commerce presents both opportunities and challenges for retailers. They must adapt their strategies to effectively leverage social media platforms and engage with customers in this evolving retail landscape.
Further Reform to IRS Form 1099 Rules
Kael Kelly, Avalara’s General Manager of Exemption Certificates, Tax Research, and 1099, predicts further reform to existing IRS Form 1099 rules. In 2023, the IRS adjusted the filing requirements for marketplace sellers and shared economy workers, shifting the threshold from $20,000 to $5,000. However, Kelly expects an announcement in 2024 that the threshold will drop further, potentially back to the original $600 level.
Businesses and individuals affected by these changes should stay updated on IRS regulations and be prepared to comply with any revisions to the Form 1099 rules. This proactive approach can help mitigate the risk of non-compliance and potential penalties.
In conclusion, Avalara’s tax and technology predictions for 2024 indicate significant advancements in AI’s role in tax compliance, the transformative impact of AI on accounting practices, increased audits, the convergence of tax compliance and business processes through e-invoicing, the rise of social commerce in retail, and further reform to IRS Form 1099 rules. These predictions emphasize the importance of embracing technology and staying informed about regulatory changes to navigate the evolving landscape of tax compliance effectively.
Analyst comment
Positive news:
1. AI’s Role in Tax Compliance: Predictions for 2024: This news is positive as it highlights that AI technology will continue to automate and streamline tax compliance processes, providing businesses with more assistance and efficiency. It suggests that businesses can expect to navigate the complexities of tax compliance more effectively in the coming years.
2. How AI and Automation will Transform Accounting in 2024: This news is positive as it suggests that the impact of AI on the accounting industry will be profound in 2024. It predicts that AI and data analytics will significantly enhance the efficiency of accounting processes and drive more informed decision-making.
Neutral news:
1. Increased Audits: What to Expect in the Year 2024: This news is neutral as it warns businesses and consumers to prepare for a more rigorous auditing environment in 2024. It emphasizes the importance of maintaining proper tax compliance practices and keeping meticulous records.
2. The Convergence of Tax Compliance and Business Processes with E-Invoicing: This news is neutral as it predicts the convergence of tax compliance and business processes through e-invoicing. It highlights the simplification of business processes and the reduction of the burden of separate tax compliance and invoicing procedures.
Negative news:
1. The Rise of Social Commerce in Retail: Insights for 2024: This news is negative as it suggests that traditional advertising methods may no longer be as effective for retailers in 2024 due to the rise of social commerce. It implies that retailers will need to adapt their strategies to effectively leverage social media platforms.
2. Further Reform to IRS Form 1099 Rules: This news is negative as it predicts further reform to IRS Form 1099 rules, potentially lowering the threshold for filing requirements. It emphasizes that businesses and individuals affected by these changes should stay updated on IRS regulations and be prepared to comply with any revisions.
