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# Core concepts

Understand how AI-assisted reconciliation works at the reporting entity level and how it aligns with tax filing periods.

This section describes the foundational principles that govern AI-assisted transaction reconciliation.

## Reconciliation scope

Reconciliation operates at the reporting entity level. A reporting entity may span multiple AvaTax companies when consolidated tax returns are filed. The AI must recognize company hierarchies and filing relationships to ensure transactions are reconciled within the correct reporting structure.

Reconciliation doesn’t operate at an isolated company level when consolidated filing applies. It aligns with the defined reporting entity and associated filing relationships.

## Filing period alignment

Reconciliation periods align with the organization’s tax filing schedule.

If the customer uses Avalara Returns, reconciliation periods follow the configured filing timelines for each state. If the customer doesn’t use Returns, reconciliation periods are configurable by jurisdiction and may be monthly, quarterly, or annually.

Users can also initiate on-demand reconciliation for a custom date range.

The AI aligns reconciliation periods with configured filing timelines to help ensure that discrepancies are identified and resolved before return deadlines.

> **Note**
>
> Part of the **AI-assisted tax reconciliation** AI use case. [Open the full "Core concepts" section on Avalara](https://developer.avalara.com/transaction-reconciliation/dpw0796993403664/).