Tax discrepancies can be costly and time-consuming for businesses to correct, and they can also result in penalties and other consequences from tax authorities. One way to help avoid tax discrepancies is by using artificial intelligence (AI) automation, specifically decision automation.
Decision automation refers to the use of technology to help make decisions based on expert reasoning. Tax compliance is ripe for decision automation, as tax is essentially rules-based but too complex for traditional RPA tools to handle.
Decision automation can improve efficiency and accuracy for tax filing and reporting because it utilises computer models programmed with human expertise. Meaning that it is able to calculate tax discrepancies in a more holistic way.
RPA alone isn’t enough
RPA is excellent for automating repetitive, rule-based tasks. While it can be useful for automating certain aspects of tax compliance, it is not a comprehensive solution for avoiding tax discrepancies.
Organisations need to use a combination of technologies and internal controls, along with human judgement, to ensure compliance and accuracy.
Handling complexity with RPA is challenging
Tax laws and regulations are complex and subject to continuous change. RPA systems are not able to understand and comply with all of the rules or apply logic and reasoning.
RPA cannot apply human judgement
Some tax compliance tasks require human judgement, such as interpreting ambiguous regulations or making decisions about the appropriate treatment of transactions. RPA systems are not capable of making these types of decisions on their own.
Ability to Audit
Accurate and concise auditing is critical for filing tax returns, and RPA systems can only automate routine tasks. They cannot replace the need for human auditors to review and verify the accuracy of the information processed, nor can they flag discrepancies.
Improve your RPA process with Decision Automation
RPA works better with decision automation because it deploys automated processes with human logic. As opposed to traditional decision trees, Rainbirds’ automated decision-making democratises knowledge capture by providing visual no-code tools for domain experts to model their knowledge. Then we leverage knowledge graphs, rules and an inference engine to automate high-quality operational decisions. These models can then be repurposed and scaled across the business.
What’s more, Rainbird delivers auditable decisions, regardless of volume or complexity. This allows your firm to increase efficiency, quality, and revenues with a rapid return on investment. All of this, while remaining compliant with policies and regulations both at home and abroad.
This leads to faster and more accurate tax filing, as well as increased efficiency, cost savings and human output. Paired with RPA, Rainbirds decision-automation can:
Identify tax liabilities
Decision automation can be used to analyse a business’s transactions and identify which ones are subject to tax. By identifying these tax liabilities in real-time, businesses can ensure that they are properly accounting for taxes and are in compliance with tax laws.
Identify errors and discrepancies
Identifying errors or discrepancies in tax reporting using decision automation allows businesses to correct these issues before submitting their tax returns. It is a much more efficient way of identifying incorrect tax rates or missing transactions.
Monitor tax compliance
Decision automation can be used to automate compliance tasks, such as gathering and analysing data, identifying and flagging discrepancies, and generating tax reports. This can significantly reduce the risk of errors and compliance issues.
There is a huge benefit to automating the tax fraud process using decision automation. It is a much faster and more accurate way of analysing large amounts of data and identifying patterns or anomalies that may indicate fraudulent activity. This can help to identify fraud before it becomes a problem and prevent significant financial losses.
Decision automation can be used to analyse data and identify potential risks or liabilities. This can help to identify potential issues before they become major problems and allow for proactive solutions.
Deploy predictive analytics
AI can be used to analyse historical data and make predictions about future tax liabilities. This can help to identify potential issues and opportunities and give your advisors more time to support clients to incorporate tax preparation into their business strategy.
Automation of Tax Preparation
Decision automation can be used to automate the process of preparing taxes, by analysing financial data, identifying deductions, and accurately calculating tax liability. This can help to reduce the risk of errors and increase the speed and efficiency of the tax preparation process.
Combined with other forms of AI, decision automation can be a powerful tool for tax experts. It can identify and avoid discrepancies much faster by automating compliance tasks, detecting fraud, assessing risks, using predictive analytics, and automating tax preparation. It helps to increase the efficiency and accuracy of tax processes, and reduce the risk of errors and compliance issues.
Overall, the use of AI automation can help businesses to streamline their tax compliance processes. By using AI, businesses can save time and resources, freeing them to focus on other aspects of their operations.