An AI-driven art installation interacts with its audience.

The race to reinvent the tax function is on

Photographic portrait of Martin Fiore
Martin Fiore

EY Americas Vice Chair – Tax

4 minute read 06 Mar 2026

EY and IBM are reinventing tax with AI—automating compliance, connecting data and freeing teams for higher‑value work.

In brief
  • Rising rule changes and data demands are pushing tax teams to adopt intelligent, automated models that connect data and execute work faster at scale.
  • The EY–IBM Alliance can help organizations hyperscale tax outcomes by shifting tax functions from traditional execution to AI-powered operating models.
  • Tax leaders can unlock value by fixing data foundations, modernizing system links, prioritizing high-volume use cases and embedding governance early.

Existing processes can no longer keep pace with rising regulatory complexity. Transformative new technologies are making artificial intelligence-powered tax organizations possible.

How EY can help

  • AI Insights

    EY AI insights cover how the technology is changing workplaces and society, and challenging us to be better humans and smarter leaders. Learn more.

    Read more

To help tax organizations move beyond traditional operating models, EY teams collaborated with IBM’s tax department to develop EY.ai for Tax, built with IBM watsonx®, a coordinated collection of AI-powered technologies that use automation, connected data and domain-trained AI agents to change how tax work gets done at scale.
 

More tax regulatory pressure; greater business risk

Intense pressure for accuracy and unforgiving deadlines have long been the reality for corporate tax teams. Now, as regulatory requirements expand and laws change more frequently across jurisdictions, the volume and complexity of information required to maintain compliance are forcing already overextended teams to spend disproportionate time interpreting evolving rules, reconciling data and producing filings. 
 

Additionally, the human skills needed to address these developments continue to evolve. Today’s professionals must be tax technical, technology-proficient, business-minded, sector-focused and globally connected. Collectively, these constraints are no longer sustainable and are precisely what next-generation tax technology is designed to address.

The next era of tax

The convergence of mature tax platforms and artificial intelligence is ushering in a new tax operating model focused on the automation of human-led work, connected data and near-real-time execution. Unlike the narrow, rules-based RPA initiatives of the past, this model delivers scalable and sustainable value across jurisdictions and processes.

This shift is already reflected in enterprise investment priorities. According to the 2025 EY Tax and Finance Operations Survey, decision-makers expect technology to improve effectiveness by up to 29% over the next two years and free 23% of budgets for higher-value activities. As a result, 86% report prioritizing investments in data, generative AI (GenAI), and related technologies to drive predictive insight, innovation and automated reporting.

Turn complexity into clarity with trusted generative AI

Tackle some of the most manual and resource-intensive tax processes and turn them into catalysts for innovation and efficiency. See how trusted generative AI from two industry leaders can transform your tax team and your broader business.

Discover more

AI-powered transformation at IBM Tax

By combining the EY organization’s deep tax domain knowledge with IBM technologies including the IBM watsonx® portfolio (watsonx.ai®, watsonx.data®, watsonx.governance®, and watsonx Orchestrate®), EY and IBM are transforming how tax work is executed at scale.

In fact, IBM Tax is well on the way toward becoming an AI-powered tax organization. “Utilizing IBM Tax’s domain and technology capabilities, along with watsonx.data and watsonx.ai to consolidate transaction data for tax filings, we first created an AI-powered Intelligent Tax Data Lake with built-in controls to facilitate data reconciliation from many sources within IBM's tax department, which has saved countless hours,” says Kanthi Morrissey, IBM Chief Tax Officer. “Now we are deploying coordinated, domain-trained AI agents to execute core tax activities.” 

One example of these activities is the EY.ai for Tax — Detect and Suggest with Business Documents Agent, which automates invoice validation against ERP data extracts for tax determinations and filings. Specialized agents identify business documents based on predefined criteria, extract and interpret relevant data, verify data accuracy against transactional information, and correct discrepancies as necessary.

These solutions reflect how IBM is driving toward a light-touch tax operating model. Coordinated, domain-trained agents ingest and validate data, reconcile transactions, perform determinations, and generate documentation. IBM watsonx Orchestrate manages execution by sequencing tasks, enforcing controls and escalating only when experienced judgment is required, while IBM watsonx.governance provides compliance-ready AI. Together, these capabilities embed tax controls directly into core systems, helping enable technology-led execution with human oversight focused on risk, interpretation and decision-making. Our teams believe it is the best of both worlds — technology performance and human ingenuity.

Enabling the AI-powered tax organization

As tax leaders move toward AI-powered operating models, the challenge is no longer technology but delivering change at scale. Service-as-Software (SaS) addresses this by embedding proven tax capabilities into software-like solutions that can be deployed, governed, and continuously improved rather than rebuilt process by process. We help organizations hyperscale tax outcomes by shifting tax functions from traditional execution to AI-powered, standardized and governed operating models across jurisdictions.

How tax leaders can get started

The following foundational moves help unlock near-term value while setting the stage for becoming an AI-powered tax organization:

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

Summary 

Both of our organizations are proud of the results of our collaboration. Click here to learn more about solutions from the EY and IBM teams, including EY.ai for Tax built with IBM watsonx, and sign up for the latest updates.

About this article

Photographic portrait of Martin Fiore
Martin Fiore
EY Americas Vice Chair – Tax
Focused on purpose, facilitating personal and professional growth. A change agent and transformation optimist. Committed to promoting lifelong learning.
Related topics
Tax
AI
Alliances

Related articles

How to automate invoice validation and modernize tax with GenAI

EY.ai for tax, built with IBM watsonx, unlocked workflow automation and enabled a pivot to higher-value-added activities.

EY Americas

EY.ai for tax, built with IBM watsonx®: a generative AI agent

EY.ai for tax, built with IBM watsonx, helps enable workflow automation and unlocks data-driven insights for tax leaders and teams.

EY–IBM Alliance

Fueled by technology-enabled innovation, EY teams and IBM blend a deep understanding of cloud, asset management and cognitive technologies. Learn more.

    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.