Here, Law360 highlights potential legislative trends to track this year.
[...]
Some states could also seek to raise revenue by dedicating more resources to auditing large corporations, especially those with foreign affiliates if revenue agencies suspect that profit shifting is occurring, according to Craig Fields, a partner at Blank Rome LLP.
"I think there's going to be a lot more audit activity next year because no state wants to raise taxes, so they'll just try and get more taxes from the people that are already paying," Fields said.
Fields said as more states have adopted combined reporting, where related entities of a business file state tax returns together, some state tax agencies have shifted their sights from scrutinizing a corporation's domestic affiliates to taking a closer examination of their foreign entities. He said he's already noticed more in audit activity in those areas and that he expects that trend to continue.
"I'm seeing a lot more states challenging whether foreign affiliates should be included in combined reports and whether the payments by U.S. companies to foreign affiliates should be added back," he said. "There are some statutes out there requiring add-backs, and there are cases that are starting to percolate on that."
To read the full article, please click here.
"State and Local Tax Policy to Watch in 2026," by Paul Williams was published in Law360 Tax Authority on January 2, 2026.
