7 Underappreciated Tax Trends with Major Implications for Businesses
Tax regulations are shifting in ways that catch many businesses off guard, creating unexpected liabilities and compliance challenges. This article examines seven often-overlooked tax trends that could significantly impact your company's bottom line, from audit exposure in digital sales to the pitfalls of cross-type nexus requirements. Industry experts break down these emerging issues and provide practical guidance for staying ahead of potential tax complications.
Audit Digital Sales Exposure
One major state tax trend that often does not get much attention is the expansion of digital tax policies. As more states have started taxing digital goods and services, online businesses are experiencing more compliance burden and potential new tax liabilities. To help customers prepare, we suggest starting with a detailed review of their digital sales activities to understand where they may be exposed. Strong record-keeping and staying up to date with changing regulations is important. Working closely with tax professionals and using the right technology tools can make a big difference. With more than 30 U.S. states now enforcing some form of digital tax, taking a proactive approach is a key to avoid surprises and stay compliant.
Prevent Cross-Type Nexus Traps
One underappreciated state and local tax trend with major implications for businesses is how states are using tax registrations in one area to assert nexus across multiple tax types.
Many businesses think they can manage state taxes in silos. They register for sales tax, payroll withholding or specific filing obligation without realizing those registrations often signal broader taxable presence. States are increasingly cross-referencing their own systems also using single registration or remote employee to assert nexus for income, franchise or gross receipts taxes that were never filed.
The risk is retroactive exposure. If business establishes nexus but never files return the statute of limitations may never start, allowing states to assess multiple years of tax, penalties, and interest once the issue is discovered.
I advise clients to treat any new state activity as holistic tax decision. That means reviewing implications before registering for tax account, coordinating between payroll, sales, and finance teams, and performing regular multi-state reviews rather than reacting to notices. When historical exposure exists, acting early before state reaches out preserves voluntary disclosure options and significantly limits risk.
Prepare For Pillar Two Realities
Pillar Two will push many groups to pay a minimum effective tax in each country, which upends old planning built on blending high and low rates. Incentives like tax holidays may no longer deliver a real benefit if a top-up tax applies. The rules also demand new, reliable data at the entity level, which stretches finance systems and closes gaps in reporting.
Carve-outs for payroll and assets reward real substance, so location choices and staffing models now affect the tax bill. Deals, joint ventures, and holding structures must be tested under these rules before signing. Model your exposure by country and upgrade data processes now.
Fix Remote Payroll Allocation Rules
Remote work has made payroll tax sourcing and withholding far harder, because pay may be taxed where the worker sits, not where the office is. Some states use special rules that can tax wages even when the work is done elsewhere, which can create double tax. Cross-border remote work can also trigger a taxable presence for the employer or force a shadow payroll, even for short stays.
Equity pay and bonuses often follow different sourcing rules, creating mismatches at filing time. Policies on where staff may work now carry real tax risk and should be tied to time tracking tools. Map current work patterns and reset payroll and travel rules before audits do it for you.
Embed Carbon Costs In Decisions
Carbon taxes and border fees are moving from talk to real costs, and suppliers will pass them on. Goods with higher emissions may face extra charges at the border, which can flip a low-cost source into a costly one. Fuel and energy levies can change the best routes and shipping modes, and they can hit margins with little warning.
Tax credits and rebates for green choices can offset part of this hit, but only if the data proves the claim. Teams will need vendor-level emissions data built into buying, pricing, and design decisions. Build a carbon cost playbook and bake it into sourcing and pricing now.
Adopt Real-Time E-Invoice Controls
More countries now require e-invoices to be cleared in real time, which turns a tax filing task into a live data pipeline. Invoices with errors may be rejected, delaying revenue and hurting cash flow. Governments are using these feeds to match buyers and sellers, so small mistakes can trigger quick fines.
Legacy ERP setups and master data problems become tax risks when every field is validated by the state. Getting this right can also speed VAT refunds and reduce fraud, but only if the process is tight end to end. Stand up an e-invoicing program that cleans data, tests flows, and links tax and IT today.
Map R&D Outlays And Locations
Rules that require R&D costs to be spread over years now strain cash flow and change where and when work should be done. Software development counts too, so tech heavy firms and start-ups may feel this most. Foreign R&D is written off even slower, which can tilt location choices and vendor deals.
Some states do not follow the federal rule, and credits still exist, so modeling the net effect matters. Better tracking of projects, labor, and cloud costs can raise credits and speed support for audits. Build a detailed R&D cost map and refresh your location and funding plans now.