Avalara’s AI Agents Automate Tax and Compliance for You

▼ Summary
– Avalara is launching Agentic Tax and Compliance, a new class of AI agents that autonomously execute compliance workflows from start to finish, scheduled for release in October 2025.
– These AI agents are built on the proprietary ALFA framework, combining trusted content, specialized language models, and scalable infrastructure to deliver real-time compliance execution.
– The agents integrate directly into business systems like ERP and ecommerce platforms to observe, advise, and execute tasks such as calculations, filings, and validations, transforming compliance into a seamless, automated process.
– Avalara’s AI agents are designed for interoperability, allowing them to collaborate with other enterprise agents and operate across various environments, including productivity tools and data streams, to handle compliance tasks globally.
– The company leverages its best-in-class compliance content to train small language models (SLMs) and combines them with enterprise LLMs in its ALFA framework, ensuring accurate and scalable agentic compliance without using untrusted data.
Businesses navigating the intricate world of tax and compliance now have a powerful new ally. Avalara is launching a groundbreaking platform for Agentic Tax and Compliance, a fleet of intelligent AI agents designed to initiate and execute entire compliance workflows from start to finish. Slated for an October 2025 release, these agents promise to deliver unprecedented accuracy, scalability, and speed across the entire compliance lifecycle.
This new platform is built upon the proprietary ALFA framework, which stands for Avalara LLM Framework for Agentic Applications. This sophisticated system integrates trusted content, specialized language models, agentic middleware, and scalable infrastructure to provide real-time compliance execution. The goal is to move beyond simple assistance and create AI agents that perform the actual work.
Scott McFarlane, CEO and Co-Founder of Avalara, emphasized the importance of specialization. He pointed to how Harvey AI transformed legal work and PathAI redefined medical diagnostics, positioning Avalara as the new domain-specialized leader for agentic tax and compliance. While many companies are building AI copilots that assist, Avalara is building AI agents that execute. These agents are embedded directly into business environments like ERP and ecommerce systems, performing tasks that traditionally required entire departments of professionals.
The core of this innovation is a concept Avalara calls agentic compliance. This represents a fundamental shift in how businesses handle regulatory obligations. Instead of treating compliance as an afterthought, it becomes a built-in function powered by AI that continuously performs four key actions: integrating with business systems, observing data and workflows, advising on risks and obligations, and executing critical tasks like calculations, filings, and document classification. This transforms compliance from a manual burden into a seamless, scalable, and intelligent process.
Consider the practical application with a Returns AI agent. This agent can automatically ingest transaction data, invoke Avalara’s headless Returns APIs, apply the correct forms and jurisdictional logic, and, after receiving approval, file returns on the client’s behalf. The result is a digital compliance professional that operates around the clock, stays current with the latest rules, and delivers both performance and peace of mind.
Avalara’s journey to this point is rooted in its history of disruption. The company first revolutionized tax automation by introducing a true SaaS model to an industry dominated by on-premises software. That initial transformation was enabled by the widespread adoption of broadband internet. Now, the company is leveraging its unique position as a technology firm with deep tax expertise to drive its next major disruption. This agentic shift is supported by a robust, resilient multi-cloud architecture spanning AWS, Azure, GCP, and OCI, designed for global scale and averaging a 15-millisecond response time.
A critical feature of this new system is agent-to-agent interoperability. Avalara’s AI agents are designed to seamlessly collaborate with other agents within an enterprise, whether they come from an ERP, point-of-sale, or ecommerce system. This “have your agent call our agent” approach turns Avalara into a force multiplier, enabling different systems to work together to complete tax and compliance tasks with speed and precision. The agents are portable, operating directly within productivity tools, development environments, and file storage systems to validate taxes, classify products, or file forms at the very source of the data.
Underpinning this intelligent execution is a suite of specialized small language models (SLMs). These SLMs are trained on Avalara’s best-in-class repository of compliance content, embedding deep domain knowledge into scalable execution. Crucially, these models are not trained on untrusted content, helping to ensure all outputs remain compliant and accurate.
The entire agentic stack, powered by the ALFA framework, combines several key components. It leverages enterprise LLMs from leading providers like Amazon, Anthropic, Google, Meta, Microsoft, and OpenAI, all with strict data isolation. This is complemented by proprietary SLMs tuned on billions of compliance data points, along with prompt libraries, guardrails, reasoning engines, and an extensible agentic architecture. Developers can already begin exploring this technology by accessing Avalara’s MCP servers through its developer portal.
For customers, the experience becomes significantly more intuitive. Instead of navigating complex software screens, users can simply ask an AI agent to handle the work. This natural, seamless execution makes even the most difficult tasks, from managing returns to validating certificates, virtually effortless. Avalara is applying this agentic AI across its entire portfolio of solutions, including Avalara AvaTax, Returns, E-Invoicing, Business Licenses, and more. As each product is reimagined, customers benefit from greater automation and a consistent experience.
Looking forward, Avalara is not just keeping pace with regulatory changes but is actively shaping the future of compliance. With open networks, sandbox testing environments, and low-code partner integration, the company’s AI compliance layer is designed to be embedded and interoperable across thousands of systems, always on and always compliant. It is built for developers, operators, and executives alike, unifying deep domain content with agentic infrastructure to scale intelligent automation across every category of compliance. To discover more about these AI advancements, further information is available on the company’s dedicated web page.
(Source: ITWire Australia)