Planning for a Changing Tax Landscape: Insights From Avalara’s VP of Government Relations

Why It Matters

State tax complexity and AI‑powered enforcement will raise compliance costs and audit risk, making automated solutions essential for firms operating across multiple jurisdictions.

Key Takeaways

• State sales taxes expanding; Iowa, Kentucky, Alaska new regimes
• AI targets non‑compliant firms, reducing random audits
• Services tax adoption varies; Maryland leads, others hesitant
• Multi‑state nexus from device leasing raises cross‑state tax obligations
• Global e‑invoicing standards grow, driving VAT fraud prevention

Pulse Analysis

The post‑2025 tax landscape is increasingly fragmented, as states fill the fiscal gap left by reduced federal aid. Iowa and Kentucky have introduced fresh sales‑tax frameworks, while Alaska’s recent rollout adds another layer of compliance for out‑of‑state sellers. The 2018 Wayfair decision continues to ripple through every jurisdiction, forcing businesses to monitor economic nexus thresholds in real time. This shift compels companies to adopt flexible tax‑automation platforms that can instantly adjust to divergent state rules.

Artificial intelligence is redefining audit strategies. Rather than relying on random field visits, state revenue departments now deploy AI models to flag transactions that exhibit high non‑compliance risk. This precision reduces audit costs for governments and raises the stakes for firms that lag in tax‑technology adoption. Companies leveraging automated compliance solutions can stay ahead of AI‑driven scrutiny, ensuring that sales‑tax calculations, filing, and remittance are consistently accurate across all jurisdictions.

Beyond domestic borders, Europe and the Middle East are standardizing e‑invoicing to curb VAT fraud, a trend that will likely influence U.S. B2B invoicing practices. Governments are moving toward mandatory digital invoice stamps, creating a unified data set that AI can analyze at scale. For multinational corporations, aligning with these emerging standards not only mitigates cross‑border tax risk but also streamlines reporting processes. Early adoption of e‑invoicing and AI‑enabled tax analytics positions firms to navigate both domestic and international tax reforms with confidence.