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Avalara Revolutionizes Compliance with AI Innovations and Advanced Technologies

Avalara, Inc., known as a leader in tax automation and compliance, is once again making headlines with its latest advancements in enterprise compliance. On October 6, 2025, the company unveiled several innovative technologies, including its AI agent, Avi, and the introduction of Model Context Protocol (MCP) servers, which are designed to create a seamless compliance experience for users.

Avi: Your AI Tax and Compliance Companion

Avi, Avalara's powerful AI agent, is now incorporated into users' everyday environments, where it assists with compliance in real-time. Avi does not merely exist in the background; it actively guides users through their workflows, ensuring that compliance is integrated directly into the processes they follow. For example, the Avi browser extension helps users configure their enterprise resource planning (ERP) systems while proactively detecting compliance actions that might be necessary. A prompt might pop up asking if an exemption certificate is required for a newly added vendor, thus preventing potential compliance errors before they can occur.

Moreover, Avi extends its functionality into email systems, such as Outlook, where it scans incoming invoices, digitizes and validates all pertinent data regarding taxes, duties, and tariffs, all while integrating the results seamlessly into ERP systems. This innovative feature significantly lowers invoice processing costs while catching compliance risks at an earlier stage, which is crucial for maintaining operational effectiveness.

MCP Servers: The Backbone for Intelligent Compliance

Avalara is pioneering a new era in compliance with the introduction of MCP servers. These servers facilitate third-party agents and systems’ ability to connect with Avalara's application programming interfaces (APIs), fostering a robust network of interoperability. With this connected ecosystem, compliance no longer exists as an isolated function but as an integrated part of the entire business operation.

Scott McFarlane, CEO and Co-Founder of Avalara, emphasizes this shift, stating, "Compliance is no longer a back-office burden, but a mission-critical function." This change allows businesses to drastically cut down their compliance filing times from days to mere hours, reducing risks while enabling teams to focus on growth initiatives.

New AI Features Set to Transform Compliance Workflows

With the introduction of upgraded AI features, Avalara is poised to enhance the efficiency and effectiveness of compliance processes significantly. Key updates include:

• - AI Visualization for Advanced Rules: Users can develop and visualize compliance rules using natural language, leading to greater precision and speed in the compliance process.
• - AI-Powered Reporting and Insights: Integrating AI into the reporting suite has transformed it into a proactive compliance tool. The new intelligence highlights anomalies, tracks trends, and generates tailored reports, thereby aiding finance teams in transitioning from reactive reporting to proactive compliance management.
• - Global E-Invoicing Capabilities: Utilizing AI to align invoice fields with specific compliance requirements for various countries ensures minimal customization and faster adaptation to local regulations.

These features highlight Avalara's commitment to leading the market in compliance automation, as acknowledged by the IDC MarketScape Report on SaaS and Cloud-Enabled Sales and Use Tax Automation Software for Enterprise in 2024.

Expanding the Reach of AI Capabilities

Avalara is not only refining existing tools but is also branching out into new areas of compliance, introducing functionalities such as exemption certificate validation, cross-border classification, generative tax research, and property tax classification. Each of these advancements is aimed at further simplifying compliance tasks and improving accuracy through AI integration.

For example, Dakota Cox from Averitt Express, an Avalara customer, noted how the AI-powered search in Avalara Tax Research has significantly cut down research time by over 80%, enabling quicker and more accurate compliance responses.

Market Adoption Strategies

Avalara is actively working on strategies to ensure that these innovations reach a broad audience. This includes registering Avi in Google AgentSpace and other registries, making Avalara's capabilities visible to other enterprise AI solutions, and effectively integrating them into various customer workflows.

Additionally, Avalara is fostering relationships with partners and VARs (Value-Added Resellers) through face-to-face meetings, ensuring support and education on how to optimize these new capabilities.

To keep pace with the evolution of compliance technologies, Avalara is also organizing events designed to provide hands-on experience with their latest offerings, reinforcing their role as thought leaders in the compliance sector.

About Avalara

With a robust portfolio developed over the years, Avalara has established itself as a frontrunner in compliance solutions. Spanning more than 75 countries, their cutting-edge AI agents facilitate streamlined compliance for over 43,000 businesses and governmental units. For further details about their offerings and innovations, interested parties can visit Avalara.com.