Transforming tax for a real-time world | EY - US

Photographic potrait of Colleen Sebra

4 minute read 11 Aug 2026

Related topics

Discover how tax leaders can adapt to a rapidly changing regulatory environment through trusted data, AI-enabled workflows and an ecosystem-powered approach.

In brief

Tax authorities are gaining greater visibility into transactional data through e-invoicing, digital reporting and advanced analytics.
Traditional tax operating models built on fragmented data and manual processes are struggling to keep pace with the increasing scrutiny.
Ecosystem-powered approaches and strategic alliances can help organizations leverage leading data and artificial intelligence (AI) technologies for tax to create capacity, manage risk and operate more effectively in a real-time world.

Tax functions are navigating one of the most significant transformations in their history. Advances in AI are reshaping how work gets done, while regulators are gaining unprecedented visibility into transactions through digital reporting, e-invoicing and advanced analytics.

EY teams collaborate, co-create and innovate with our category-leading organizations to drive transformation, performance and growth.
Read more

According to Colleen Sebra, Partner, Tax Technology and Transformation, Ernst & Young LLP, these forces are fundamentally changing the environment in which tax operates. “Right now, the tax function is going through a fundamental shift, and it’s being driven not only by AI and the availability of new technologies, but even more tangibly by how the regulatory environment is changing,” says Sebra.

As real-time reporting becomes more common and tax authorities move from periodic reviews to ongoing scrutiny of transactions and tax positions, tax leaders must rethink how work gets done, how risk is managed and how teams are equipped for the future.

The tax operating model wasn’t built for a real-time world

The environment surrounding tax has changed dramatically. Tax authorities are investing heavily in technology, advanced analytics and AI to gain greater visibility into transactions and tax positions. Digital reporting and continuous audit capabilities mean potential issues can surface faster than ever before, often before organizations detect them themselves.

Yet many tax functions continue to rely on operating models built for a different era. Findings from the 2025 EY Tax and Finance Operations Survey reveal that tax professionals often spend between 40% and 70% of their time on manual activities such as collecting data, validating information, reconciling discrepancies and preparing reports.

“Most tax functions are simply not designed for this new reality,” says Sebra. “They’re dealing with fragmented data across disconnected systems, manual processes and collaborating with teams across the organization that are traditionally siloed.”

The challenge is not simply the volume of work. Traditional tax operating models were designed for a world of periodic reporting and retrospective review. Today's environment requires faster access to information, greater transparency and the ability to respond quickly as issues and opportunities emerge.

Why an ecosystem approach matters

As tax authorities gain greater visibility into transactions and tax positions, the role of tax is shifting from managing historical compliance to managing continuous controversy.

Organizations must be prepared not only to comply with requirements, but also to anticipate scrutiny, defend positions and respond quickly when questions arise. That requires tax teams to spend less time preparing data and more time managing risk, interpreting insights and supporting business decisions.

Rather than relying on a single platform or provider, leading organizations are adopting an ecosystem approach. An ecosystem-powered tax function combines purpose-built tax capabilities with leading data and AI technologies. This allows organizations to leverage the strengths of multiple providers while reducing manual effort, creating capacity for higher-value work and managing risk with greater confidence.

At EY, this starts with helping clients establish a unified data foundation across finance, tax and the broader business. Through alliances with technology leader, organizations can connect data, AI capabilities and tax workflows in ways that support faster decisions and more effective risk management.

The path to an ecosystem-powered tax function

An ecosystem approach is not a single technology investment. It requires organizations to establish the foundations that allow data, technology and talent to work together more effectively. For tax leaders, three priorities stand out.

For many organizations, tax data remains fragmented across ERP systems, finance platforms and business applications. That fragmentation makes it difficult to generate timely insights, respond to regulatory inquiries and manage risk in real time.

Tax functions are going to have to lean in to solve the data problem,” says Sebra. “A trusted data foundation creates the visibility needed to support decision-making, enable automation and improve confidence in tax positions.

Colleen Sebra

Partner, Tax Technology and Transformation, Ernst & Young LLP.
AI delivers the greatest value when embedded within tax processes and connected to trusted data sources. Organizations that take this approach can automate repetitive activities, accelerate analysis and create capacity for higher-value work.

Even modest reductions in the time spent on manual activities can free tax professionals to focus on managing risk, interpreting insights and supporting the business.
Technology alone will not transform the tax function. The future tax workforce will require a broader mix of skills, including data literacy, analytical thinking and the ability to challenge and interpret AI-generated insights.

Many organizations are embedding the skills of data engineers and data scientists within tax while upskilling existing professionals to work more effectively with AI-enabled technologies.

Summary

The current tax operating model was built for a different era. Today's environment demands faster insights, greater transparency and a more proactive approach to managing risk.

Organizations that embrace an ecosystem-powered approach can create capacity, strengthen risk management and respond more effectively to a rapidly changing regulatory landscape.

The question is no longer whether tax functions need to transform. It is how quickly they can make the shift.

About this article

Photographic potrait of Colleen Sebra

Related articles

Demand won’t stand still: Smarter, faster decisions keep supply aligned

See how real‑time data and connected planning enable resilient supply‑demand alignment in an increasingly volatile market.

Sachin Shetty

Modernizing CPG through AI and compliance readiness

CPG companies are transforming with AI, streamlined service delivery and agile strategies to meet evolving expectations and regulations.

Tom Edwards

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.