Avalara, Inc. announced the launch of Agentic Tax and Compliance™, a new class of AI agents designed to initiate and execute compliance workflows end to end. The platform, set to debut in October 2025, promises to deliver accuracy, scale, and speed across the full compliance lifecycle.
Building on its long-standing expertise in tax compliance technology, Avalara is introducing what it calls the first platform for Agentic Tax and Compliance™, powered by its proprietary ALFA framework (Avalara LLM Framework for Agentic Applications). The system combines trusted content, specialized language models, agentic middleware, and scalable infrastructure to enable real-time compliance execution.
“The most trusted AI breakthroughs are purpose-built,” said Scott McFarlane, CEO and Co-Founder of Avalara. “Just as Harvey AI transformed legal workflows and PathAI redefined diagnostics, Avalara is now setting the standard as the domain-specialized leader in agentic tax and compliance.”
From Copilots to Autonomous Agents
Unlike copilots that assist users, Avalara’s AI agents take direct action, observing, advising, and executing tasks within ERP, ecommerce, and other operational systems. By combining AI agents, Model Context Protocol (MCP) servers, private LLMs, and proprietary small language models (SLMs) within the ALFA framework, Avalara aims to automate tax and regulatory processes more completely than ever before.
Defining “Agentic Compliance”
Avalara has coined the term agentic compliance to describe its approach, in which intelligent AI agents integrate directly with business systems to:
- Observe data, workflows, and user behavior
- Advise on actions, risk exposure, and obligations
- Execute calculations, filings, validations, and document classification
This shift transforms compliance from a manual, resource-heavy burden into a seamless, always-on process that scales with the business.
Returns in Action
One example is Agentic Returns: an AI agent that can ingest transaction data, apply jurisdictional logic, and file on behalf of clients via Avalara’s headless Returns APIs. The result, the company says, is “a digital compliance professional who works 24/7 and stays current with the latest rules and jurisdictions.”
Continuing a Legacy of Disruption
Avalara’s move into agentic AI builds on its history as a cloud pioneer in tax automation. The company’s first disruption came with the shift from on-premises software to SaaS. Now, Avalara says, it is executing “its next major disruption” — bringing agentic intelligence to compliance.
The underlying architecture supports this scale, with an active-active, multi-cloud deployment across AWS, Azure, GCP, and OCI. Designed for high performance, it averages 15-millisecond response times and can support global transaction volumes.
Avalara’s ecosystem now includes more than 1,400 partner integrations across ERP, ecommerce, POS, and back-office platforms — a reach the company says extends “into the agentic world.”
“Compliance has always been complex and resource intensive, and Avalara has worked for years to make it easier for businesses of all sizes,” said Jayme Fishman, EVP, Chief Strategy and Product Officer at Avalara. “Now, we’re delivering the first-ever digital compliance professionals, AI agents that advise and execute at global scale, making it even easier to handle the most onerous and time-consuming tasks — so businesses can move faster and focus on growth.”
Collaboration Between Agents
Avalara envisions a future where AI agents from different systems can collaborate seamlessly — an idea the company calls “Have Your Agent Call Our Agent™.” Its agents are designed to operate wherever work happens, from productivity tools and file systems to user devices.
This interoperability allows Avalara’s agents to validate taxes, classify products, initiate registrations, and file jurisdictional forms in real time — “meeting data at the source” rather than waiting for it.
Powering AI with Trusted Content
Avalara has also developed its own small language models (SLMs), trained using its proprietary compliance content repository. These domain-specific models complement private LLMs, embedding deep regulatory knowledge into every task while maintaining strict data trust standards.
Inside the ALFA Stack
The ALFA framework integrates:
- Enterprise LLMs with isolated data environments from Amazon, Anthropic, Google, Meta, Microsoft, and OpenAI
- Proprietary SLMs trained on billions of compliance data points
- Prompt libraries, guardrails, reasoning engines, retrieval-augmented generation (RAG) databases, APIs, SDKs, and third-party frameworks
Developers can already access Avalara’s MCP servers at developer.avalara.com.
A Simpler User Experience
Avalara says agentic automation will make its platform more intuitive than ever. Instead of navigating screens, users can ask AI agents to perform tasks directly. This capability extends across Avalara’s full product portfolio, including AvaTax, AvaTax for Accounts Payable, Returns, VAT Returns & Reporting, E-Invoicing and Live Reporting, Exemption Certificate Management, Business Licenses, Tax Research, Item Classification, Cross-Border, 1099 & W9, and Property Tax.
Looking Ahead
Avalara says its goal is to move beyond keeping up with mandates to shaping the future of compliance. Its platform supports open networks, low-code partner integrations, sandbox environments, and multi-cloud deployment, making it “the only AI compliance layer that is embedded, interoperable, and always on.”
To learn more about Avalara’s AI innovations, visit Avalara.com/ai.