What is tax technology?

Tax technology is software that determines, calculates, files and documents tax: sales tax and VAT on transactions, e-invoicing mandated by governments, corporate and income tax returns, and the compliance work around registrations and audits. It splits between indirect tax tools used by finance teams and tax preparation tools used by firms.

Definition

Indirect tax, tax preparationTwo halves

Tax and complianceCategory

9Vendors profiled

Indirect tax is where the money has gone. Avalara, valued at $8.4 billion when Vista took it private, and Vertex and Sovos serve enterprises; Anrok, Numeral, Sphere, Zamp and Kintsugi raised more than $300 million between them to sell sales tax compliance to software and e-commerce companies; Fonoa raised $190 million for global indirect tax and bought PwC's platform. On the preparation side, AI agents from Accrual and Basis now complete individual and partnership returns inside firms' existing tax engines. E-invoicing mandates across Europe are the next driver.

Common questions

What is the difference between tax technology and accounting software?+

Accounting software records transactions; tax technology decides the tax on them, files the returns and keeps the evidence. Most tax tools plug into the ledger or billing system.

What is sales tax automation?+

Software that tracks where a company has an obligation to collect US sales tax, calculates it at checkout, registers in new states and files the returns. Anrok, Numeral, Zamp, Kintsugi and Avalara are the main vendors.

How is AI used in tax?+

Preparing returns from source documents, answering tax research questions with citations, monitoring rule changes across jurisdictions, and handling registrations and notices.