For years, the tax organization has often been treated as a backend function, brought in after systems are designed and transactions are complete. That model, flawed to begin with, no longer fits how businesses operate and is insufficient to meet today's regulatory requirements.
Today, real-time reporting requirements, continuous compliance needs and AI-powered systems are moving tax into the mainstream, influencing whether a transaction can happen at all. Yet many companies still don't fully involve tax departments in technology decisions that anchor today's demands, treating tax as something that can be added later.
It's a stark disconnect that's rapidly becoming a significant business risk, with consequences that extend beyond efficiency and administration to cash flow, profitability and reputation.
Recent Vertex Inc. research,
The intent-execution gap in tax technology
Almost every organization surveyed (94%) expects closer collaboration between IT, finance and tax to meet goals surrounding tax technology. But only 12% report having fully achieved end-to-end integration.
Such a wide gap indicates that tax technology is inadvertently still being seen as a narrow compliance tool. In reality, it connects to broad ERP systems, finance workflows, customer and supplier data, and reporting requirements. If tax is not included when those systems are designed from the outset, companies risk building processes that check boxes on paper but fail in practice.
The research demonstrates how this plays out: IT is frequently consulted on tax technology systems by 52% of organizations, while finance is consulted by 49%. Tax is consulted only 37% of the time. What's more, the pattern is not expected to change quickly. When respondents compared digital transformation projects completed in the last three years with those planned for the next three years, IT and finance consultation each rose by two percentage points. Tax consultation increased by only one point.
That is not enough to close the gap. Companies should make tax a required stakeholder in technology planning, ensuring alignment on requirements, data and workflow design, system testing, and governance before infrastructure decisions are finalized.
Collaboration has become an operating issue
When tax is brought in too late, the result is more than just poor communication. It's operational drag. Tax teams understand the rules, exemptions, jurisdictions and reporting requirements that determine whether a transaction is compliant. IT teams understand system architecture, data flows and integrations. Finance teams understand cash flow, reporting and downstream business impact.
Each function owns a different part of the outcome, which is standard practice. But when one of those perspectives is missing early on, companies spend time fixing problems that could have been avoided. According to the research, 31% of respondents said poor collaboration leads to data challenges, 31% cited wasted spend or poor ROI, and another 31% pointed to reduced business agility.
The solution is not more meetings for the sake of alignment. Companies need defined decision rights in which all departments share responsibility for project scoping, testing, change management and ongoing governance. That structure gives teams a practical way to work together without asking anyone to become an expert in another function.
AI raises the stakes
Artificial intelligence is increasing the urgency of this shift as organizations adopt it more widely. Many report already seeing value from AI-driven workflows, with 51% of respondents currently benefiting from them, and 49% expecting to benefit in the future. But AI adoption does not equal governance.
AI-driven tax technology can scale errors — from bad data inputs to flawed compliance rules — at a speed and volume human review teams cannot catch. A mistake that once created a limited issue can now become instantly embedded into automated workflows. This makes tax involvement more important than ever. Before applying AI to transaction processes, companies should define who approves compliance logic, who monitors data quality, who reviews exceptions, and who signs off on changes before they go live.
AI can help tax, finance and IT teams work faster in their respective functions, but only if governance is built into the process and shared across the board. Without that, companies risk automating misalignment.
The common ground where teams can meet
The good news is that IT, finance and tax do not need to speak the same technical or regulatory language at every level. They need a shared view of the data and the desired process outcomes.
Tax and finance depend on accurate data to meet compliance, reporting and cash flow goals. IT manages the systems where that data lives. If these teams align around the data layer, they can create a common language for decision-making. That means IT can help tax and finance understand where critical data comes from, how it moves, and how it changes over time. Tax and finance can define which data fields are most pertinent to them within the layer, what thresholds matter, and where business risk may be heightened.
This is especially important because only 37% of respondents reported high confidence in the quality of the data being used. Data cannot be treated as an IT issue, a tax issue or a finance issue alone, and improving that confidence will require shared ownership.
Closing the gap
Companies already agree on where they need to go; the challenge is changing how they operate to get there. Tax professionals do not need to become technologists, and IT and finance leaders do not need to become tax experts. What companies do need is an operating model where collaboration is built in from the start — one that brings tax into early technology decisions, establishes shared ownership, ensures the right resources are deployed, aligns teams around common metrics, and treats data as an enterprise asset rather than a departmental concern. This is what makes collaboration structural rather than optional.
The organizations that close this gap will build more adaptable technology environments with reduced compliance risk, which matter as tax requirements continue to evolve. The next advantage in tax technology will not come from better tools alone. It will come from designing operating models where tax, finance and IT make technology decisions together from the start.
