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Don’t forget about machine learning

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As artificial intelligence (AI) and generative artificial intelligence (GenAI) applications and tools continue to dominate headlines, articles and white papers, tax leaders should keep in mind that other advanced technologies are also driving value throughout tax operations. 

About half of the 180 senior tax leaders in a new survey report from BDO identified AI and machine learning (ML) as their top technology priority for 2024. The granular nature of tax data makes it an ideal proving ground for these technologies, and tax leaders may want to champion the tax function as a launchpad for AI and ML initiatives. Doing so could also help elevate the value of ongoing tax transformation. 

The top use cases include highlighting trends or patterns in data closer to real time, improving access to data across functions and proactively identifying and reporting on potential tax risks. BDO emphasizes the importance of clean, secure data in securing the best results. If the data infrastructure is inadequate, tax leaders may be unable to capitalize on the full value of their investments.  

The report offers some AI and ML guidance that’s equally useful for related tax technologies and tools, including advanced analytics and optical character recognition (OCR): 

  • Start small: Consider deploying a pilot project to test the technologies in real-world tax scenarios, enabling iterative learning and strategy refinement. 
  • Lay the master data foundation. Conduct an assessment of the security, quality and accessibility of your current data sources. Build a unified data repository and implement robust data governance practices to maintain accuracy and consistency. Tax leaders should also encourage a culture of data literacy and awareness in their teams. Regular audits and assessments of data management processes can help you identify areas for improvement and ensure alignment with organizational goals.  
  • Factor change management and training into your project. While AI and ML can transform tax processes, human judgment and ingenuity will remain your most valuable assets. Create training policies and guidelines at the organizational and team levels to ensure smooth, effective adoption of the technologies. 

Blog Author

Larry Mellon, Tax Directory, Vertex Inc

Larry Mellon

Tax Director, Chief Tax Office

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Larry Mellon is a Tax Director in the Chief Tax Office, where he is responsible for providing insights, thought leadership and customer-centric direction to Vertex functional groups, supporting the continued expansion of Vertex indirect tax solutions and overall enterprise strategy. He has over 30 years of experience in sales and use tax compliance, risk assessment, jurisdictional audits, administration and management, as well as VAT compliance. Larry joined Vertex in 2005 as a Sales and Income Tax Supervisor and has served as Tax Manager since 2012, where he has played a pivotal role in elevating and advancing the company’s tax management offerings.

Prior to joining Vertex, Larry served as a Senior Tax Accountant and Property Tax Manager at Foamex International, Inc., a polyurethane and advanced polymer foam product manufacturer and marketer. Mellon also held multiple roles at The Franklin Mint and is a member of the Institute of Professionals in Taxation (IPT) and Tax Executives Institute (TEI).

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