Highlights
- 58% of tax departments are under-resourced while 59% lack confidence in upgrading technology.
- Under-resourced departments face 50% penalty risk with 12% exceeding $1 million annually.
- Organizations with visible AI strategies are twice as likely to experience revenue growth.
Every morning, corporate tax professionals wake up to the same reality: looming compliance deadlines, resource constraints that never quite resolve, and technology that feels perpetually outdated. Like Bill Murray’s character in Groundhog Day, they’re trapped in a cycle that repeats year after year.
Tax leaders tell us this constantly, and our latest research confirms it. The dream? Contributing strategic business intelligence that drives real value for your organization. The reality? Being stuck in reactive mode, firefighting compliance issues with one hand while managing talent shortages with the other.
According to our recent State of the Corporate Tax Department report, the data reveals a concerning trend. This isn’t anecdotal. It’s based on input from hundreds of tax leaders reflecting the current state of the profession: 58% of tax departments are under-resourced, and 59% lack confidence in their ability to upgrade tax technology within the next two years.
If you’re nodding your head right now, you’re not alone. The question isn’t whether you’re in the cycle. It’s how you can break free.
Jump to ↓
The three forces keeping tax departments stuck
The hidden cost of staying stuck
Technology as the great liberator for tax departments
Breaking the cycle: How to make change happen in your organization
Time to break free from the old tax department cycle
The three forces keeping tax departments stuck
1. Persistent resource constraints
The resource challenge has gotten worse, and if you’re feeling it, you’re not in the minority. In our research, tax departments reporting they are under-resourced jumped to 58% this year—a significant 7-percentage-point increase from just last year. This isn’t a temporary blip; it reflects a chronic talent shortage that continues to plague the profession.
The most frustrating part? Many teams are so understaffed that they don’t even have time to fully utilize the technology tools they already have. It’s a vicious cycle: insufficient resources prevent proper tool adoption, which perpetuates inefficiency, which creates more work for an already overwhelmed team.
2. Slow technology adoption
If you’re like most tax professionals we work with, you want to automate repetitive processes and free up time for strategic work. But the path forward is blocked at every turn. Budget constraints, infrastructure limitations, and organizational inertia keep departments tethered to antiquated technology.
The data tells a sobering story: 68% of companies are still navigating the volatile leap from reactive to proactive technology stages. These departments struggle between legacy systems and the modern platforms they need to truly transform their operations.
3. The unrelenting compliance burden
Meanwhile, the work itself never lets up. If you’re like most tax professionals we partner with, excessive work volume and a heavy compliance burden are dominating your daily reality. New regulations like the EU’s Pillar 2 requirements and the U.S.’s One Big Beautiful Bill Act (OBBBA) keep departments constantly adapting. Add in political uncertainty, changing tariffs, and fluctuating regulations, and many departments adopt a cautious, reactive approach.
The result? Our research shows professionals spend more than half their time in reactive mode when they’d prefer to dedicate 70% of their time to proactive work. The gap between aspiration and reality has never been wider.
The hidden cost of staying stuck
Why deferring technology investment is a risk you can’t afford
Think delaying tax technology upgrades will save money? Our research shows otherwise. Our latest State of the Corporate Tax Department report reveals that those “cost savings” are an illusion, and the real costs are staggering.
Penalty risks
- At least 50% of under-resourced departments incurred penalties last year.
- 12% faced penalties exceeding $1 million. These aren’t minor fines.
Confidence gap
- Only 24% of under-resourced departments feel confident about avoiding penalties next year (vs. 37% of adequately resourced departments).
Hidden operational costs
- Missed tax-saving opportunities: failing to optimize structures, claim credits, or identify overpayments.
- Business initiatives delayed due to tax bottlenecks.
- Increased stress and burnout among teams.
- Less accurate forecasting.
- Talent retention crisis as skilled professionals leave.
Budget impact
- Under-resourced departments spend 44% of their budget on external support (vs. 37% for fully resourced departments).
- You’re paying more to achieve less.
Competitive risk
- Organizations that continue to delay strategic technology investment risk falling behind competitors within just three years.
Deferring technology investment isn’t saving you money. It’s costing you in penalties, missed opportunities, and lost talent. The data is clear: strategic tech upgrades aren’t optional; they’re essential to stay competitive and protect your bottom line.
Technology as the great liberator for tax departments
The good news? A fundamental shift is underway. 51% of tax departments now cite technology and automation as their main resourcing strategy, up from 45% just last year. This isn’t wishful thinking; it’s strategic imperative driven by compelling results.
The ROI is already materializing. According to the Thomson Reuters 2025 Future of Professionals Report, organizations with visible AI strategies are nearly twice as likely to experience revenue growth compared to those with informal adoption approaches. More than half (54%) of professionals report seeing returns from AI investment, including improved efficiency, faster response times, and reduced errors.
Perhaps most importantly for burned-out tax teams, AI eliminates burdensome manual work, freeing up mental energy for the complex activities that truly require your judgment and expertise. The vision is finally within reach: a proactive stage where automation delivers greater speed, accuracy, and efficiency.
Breaking the cycle: How to make change happen in your organization
Develop a strategic technology plan
Success requires more than buying new software. Map technology investments to your compliance calendar and business objectives. This alignment drives the most effective implementation. Deploy e-invoicing automation before the next reporting cycle, not after. Implement data management tools that integrate with your existing ERP systems, not parallel systems that create more work.
Without strategic alignment, individual preferences drive technology adoption rather than organizational goals. This results in fragmented implementations that deliver incremental improvements instead of transformative results.
Start with a focus on high-impact areas
Start with 2-3 areas where technology delivers immediate capacity gains. We consistently see the fastest ROI in high-volume compliance areas like indirect tax reporting, direct tax compliance, and tax provision. Why? Because automation dramatically reduces manual review time—in some cases, reallocating up to 50% of team effort to higher-value work.
This directly addresses the resource constraint challenge: 58% of departments are under-resourced, but technology can close that gap faster than hiring cycles. Consider e-invoicing solutions and tax data management software as your foundation. As you build from there, the technology landscape is evolving rapidly. 57% of departments implementing new technology plan to include generative AI, signaling where the industry is headed.
Secure leadership buy-in
Make the business case with numbers that leadership can’t ignore. Show them the cost of inaction:
- Penalties averaging hundreds of thousands (or millions). Last year, 12% of under-resourced departments faced penalties exceeding $1 million.
- Missed tax-saving opportunities from unclaimed credits and suboptimal structures.
- The competitive gap is widening as peers invest strategically while you fall behind.
Then demonstrate how technology investment enables the strategic contributions leadership actually wants from tax: proactive planning, scenario modeling, and business intelligence that drives decisions.
Thomson Reuters can help you build a business case that quantifies your penalty risk, current compliance costs, and projected ROI, giving you the specific numbers leadership needs to approve investment.
Embrace continuous learning
The role of the tax professional is evolving rapidly: 55% anticipate their tax department will alter job roles in the next 3 to 5 years because of technology—up from just 41% last year. Here’s the division of labor that makes sense:
AI handles: Pattern-matching across 10,000 transactions, reconciling data across systems, flagging anomalies, drafting initial compliance language, automating routine correspondence.
You handle: Judgment calls on complex transactions, risk assessment and mitigation strategy, relationship management with auditors and regulators, strategic tax planning that drives business value.
AI won’t replace tax professionals, but AI-powered professionals will have a decisive competitive edge over those who resist adoption.
Time to break free from the old tax department cycle
The Groundhog Day cycle can be broken, but only through action, not intention.
Our research is unequivocal: organizations that adopt a “wait and see” approach to AI and automation will find themselves floundering while competitors pull ahead. The technology exists. The ROI is proven in penalties avoided, hours reclaimed, and strategic capacity gained. The only departments still struggling are those waiting for perfect conditions that will never arrive.
You don’t need perfect conditions. You need clarity on where to start.
The departments breaking free right now aren’t beginning with unlimited budgets or executive mandates. They’re starting by identifying their highest-impact bottlenecks—the manual processes consuming the most time, the data integration gaps creating the most errors, the compliance areas carrying the most penalty risk.
Once you know where automation delivers the fastest relief for your specific constraints, the path forward becomes clear. That diagnostic step—understanding where you are and what to prioritize first—is what separates departments that transform from those that remain stuck.
Ready to identify your starting point? Take a quick assessment to see where your department stands and which areas offer the highest ROI for automation investment.
