A comparison of sales and use tax compliance workflows

This guide provides a detailed comparison of two approaches to sales and use tax compliance:

1. Manual tax compliance workflow: Tax teams manually extract and aggregate financial data, perform adjustments, prepare and file returns across disconnected systems with significant human intervention at each stage

2. Touchless automated compliance workflow: AI-powered automation handles data integration, validation, reconciliations, and filing with minimal human intervention, until the review and analysis stage, before signing off using ONESOURCE Sales & Use Tax AI

An important clarification: Tax determination and calculation happen at the point of transaction throughout the month. Touchless compliance is a movement driving a shift in how compliance functions operate through advanced and intelligent tools. In the context of sales and use tax, this specifically refers to the autonomous process of preparing returns for the prior month using that already-calculated transaction data.

The following comparison examines three critical stages: data processing, validation, corrections and reconciliation, and return preparation and filing.

Jump to ↓

Stage 1 of 3: Data processing

Stage 2 of 3: Validation, corrections, and reconciliation

Stage 3 of 3: Return preparation and filing

The cumulative impact on indirect tax workflows: A real-world comparison

Beyond time: The quality difference in an automated sales tax workflow

Frequently asked questions about touchless tax compliance

See the difference for yourself

Stage 1 of 3: Data processing 

Traditional manual tax compliance workflow

Process description: Your tax team extracts transaction data from multiple financial systems, often running custom reports that export to CSV or Excel files. Hours are spent standardizing date and number formats, aligning file structures to templates, and making sure all the necessary fields are present, due to differences in how data gets exported from the multiple systems most organizations use as sources of compliance data.

Beyond this, there are functional differences that need to be accounted for, like different product codes across platforms or when customer identifiers don’t match. Teams also need to conduct reviews of key compliance documents to ensure their validity.

The exemption certificate database, a combination of PDF files and spreadsheet tracking data, must be manually cross-referenced. Expired certificates require customer follow-up. Missing certificates need flagging for review.

Time required: Multiple hours to days depending on transaction volume

Risk factors: Format errors, missed transactions, and outdated exemption status create compliance exposures that increase audit risk by 3x compared to automated solutions

Touchless compliance workflow

Process description: ONESOURCE Sales & Use Tax AI automatically pulls transaction data from connected systems autonomously, ensuring seamless ingestion of data and automatic initiation of the compliance workflow.

Intelligent algorithms immediately screen for anomalies, like unusual tax amounts and inconsistent records. Most issues are resolved automatically and decisions are documented.

Time required: Only minutes due to automated processing

Risk factors: Dramatically reduced through automated validation

Stage 2 of 3: Validation, corrections, and reconciliation

Traditional manual workflow

Process description: With data compiled, your team begins tedious validation work. They spot-check hundreds of transactions manually, looking for anomalies, including unusual tax rates, inconsistent exemption applications, and unexpected taxable amounts. Each anomaly requires investigation to determine if it’s an error or a legitimate transaction.

Reconciliation is where return preparation stalls. Common reconciliation challenges include timing differences, system synchronization issues, exemption certificates applied later than the transaction date, and mid-month rate changes.

For B2B companies, use tax accrual adds complexity. The team manually reviews purchase data, researches vendor nexus, calculates use tax liability, and prepares accrual entries in a separate process.

Time required: Days per filing period for validation, anomaly investigation, and reconciliation

Risk factors: Manual validation creates compliance vulnerabilities. Under deadline pressure, some issues inevitably slip through. Human reviewers suffer from fatigue, making it so that the hundredth transaction gets less scrutiny than the first.

Touchless compliance workflow

Process description: ONESOURCE Sales & Use Tax AI applies intelligent anomaly detection algorithms to every transaction automatically. Machine learning analyzes patterns across the entire dataset, identifying outliers and potential compliance issues before returns are prepared. When anomalies are detected, the AI provides context and a recommended resolution. Most issues are resolved automatically with human approval.

Reconciliation happens proactively throughout the compliance period. Rather than discovering variances at month-end, the AI monitors calculated-versus-collected differences and automatically categorizes variances by type — processing known patterns automatically and escalating novel situations with context.

For B2B companies, use tax identification and accrual integrate seamlessly. The system recognizes purchase transactions subject to use tax and generates accrual entries as part of the return preparation workflow.

Time required: Hours focused on exception review rather than days of manual investigation

Risk factors: Dramatically reduced through systematic validation and proactive reconciliation. Automated detection catches issues before they become compliance problems.

Stage 3 of 3: Return preparation and filing

Traditional manual tax compliance workflow

Process description: Return preparation means preparing, potentially, dozens, hundreds, or even thousands of returns simultaneously — each with unique formats and requirements. Manual data entry populates return forms. Reconciliation investigations consume extensive time when calculated tax doesn’t match collected tax.

For B2B companies, use tax accrual adds complexity through separate identification, validation, and calculation processes.

Risk factors: Traditional return preparation diverts tax professionals from strategic work, trapping them in manual data manipulation and variance investigation. Not only that, but audit risk and the potential for penalties and fines increase if there are inaccuracies picked up by the tax authority.

Time required: Days to weeks depending on jurisdiction count and complexity

Touchless compliance workflow

Process description: Returns are generated automatically using the latest, up-to-date forms. Reconciliation happens proactively throughout the compliance period. Use tax identification and accrual integrate seamlessly into the workflow.

Filing and payment execute automatically through integrated connections, with comprehensive documentation archived systematically.

Time required: Hours (time is mostly used to review and approve)

Risk factors: Significantly reduced through automation. This is verified by Adobe reporting that, “ONESOURCE improved tax filing processes 96%” through an integrated automation approach.

The cumulative impact on indirect tax workflows: A real-world comparison

Early internal research reveals meaningful efficiency gains for organizations leaving manual sales tax workflows behind. While these numbers represent evolving capabilities, the trajectory is clear.

Traditional manual sales tax workflow

Sample organizations profiled by Thomson Reuters spent weeks navigating manual compliance processes:

Small enterprise (916 returns): 14-day compliance cycle managing manual processes across multiple jurisdictions

Large enterprise (17,994 returns): 30-day compliance cycle coordinating complex, multi-state compliance

Touchless compliance workflow

The same sample organizations experienced dramatic efficiency gains:

Small enterprise (916 returns): 5-day compliance cycle (delivering $25K+ in annual savings)

Large enterprise (17,994 returns): 11-day compliance cycle (delivering $60K+ in annual savings)

The transformation: Sample organizations profiled by Thomson Reuters had their workflows reduced from 14-30 days to 5-11 days, with enterprises delivering $25k+ to $60K+ in annual savings based on time optimizations alone. This adds up to a 65% reduction in time spent on routine reporting processes, freeing tax professionals to drive strategic value for the business.

These projections reflect ongoing internal research and product development. Actual savings will vary by organization size, complexity, and current workflows, with many enterprises realizing substantially higher value. Refinement will continue, but even at this stage, the efficiency opportunity is evident.

Beyond time: The quality difference in an automated sales tax workflow

The traditional workflow’s manual nature creates quality risks across five key dimensions that automation eliminates:

Consistency: Manual processes vary based on who performs them, their workload, and their experience level. Automated workflows deliver consistent results regardless of circumstances.
Accuracy: Human errors are inevitable in manual data processing. Automated validation and calculation remove this risk from routine transactions.
Completeness: Manual processes under time pressure may cut corners. Automated workflows execute every step thoroughly, every time.
Documentation: Manual documentation is often incomplete or created after the fact. Automated workflows generate comprehensive audit trails as an inherent part of processing.
Scalability: Manual workflows break down as volume increases. Automated workflows scale linearly — processing 10,000 returns takes proportionally the same resources as processing 1,000.

Most organizations find that quality-of-life improvements for tax teams drives rapid adoption. When people see the elimination of tedious manual work, resistance to change disappears quickly.

Frequently asked questions about touchless tax compliance

1. What is touchless tax compliance?

Touchless tax compliance is a new toolkit that provides tax departments with next-generation, professional-grade AI. It liberates teams from the burden of manual data processing, time-consuming issue analysis, and manual resolution, enabling them to focus on reviewing work completed by agents, improving processes, and driving strategic optimizations. For sales and use tax compliance, this takes the form of AI-powered systems that handle data extraction, validation, tax calculation, return preparation, and filing with minimal human intervention. The term “touchless” refers to the elimination of manual data manipulation and processing.

2. How much time does tax automation actually save?

Based on actual customer results, organizations save 9-19 days per compliance cycle depending on size and complexity. This translates to a 63-65% reduction in time spent on routine tax compliance activities.

3. What are the main risks of manual tax workflows?Manual tax workflows create four primary risk categories:

Data format errors and missed transactions
Outdated exemption certificate status
Incomplete documentation for audits
Inability to scale with business growth

These factors combine to create audit risk that is 3x higher than automated solutions.

4. What is ONESOURCE Sales & Use Tax AI?ONESOURCE Sales & Use Tax AI is an automated tax compliance solution from Thomson Reuters that uses artificial intelligence and machine learning to automate the entire sales and use tax compliance workflow from data processing through filing and payment.

5. Can automated systems handle complex multi-state tax scenarios?Yes. Automated systems like ONESOURCE Sales & Use Tax AI are specifically designed to manage complex, multi-jurisdiction compliance scenarios. The system maintains continuously updated tax rates and rules for all U.S. jurisdictions and applies jurisdiction-specific logic automatically.

See the difference for yourself

Reading about workflow transformation is one thing. Seeing how it applies to your specific compliance challenges, jurisdictions, and business model is another.

Request a consultation to see ONESOURCE Sales & Use Tax AI in action. Discover exactly how much time your team could reclaim and what strategic initiatives that capacity could enable.