Businesses nationwide are facing a compounding set of issues when it comes to tax reporting and compliance, including increased complexity, higher penalties and an accelerating pace of business.
Ryan Padget, president at Appleton-based tax compliance technology company IGEN, says almost every company today is dealing with more regulations than it was five years ago. In 2024’s record-breaking year, federal agencies issued more than 3,248 new regulations.
Highly regulated industries, such as oil and gas, tobacco, vape and alcohol, are especially affected.
“In excise tax alone, between motor fuel and tobacco, we manage over 10,000 rates between federal, state and local across different product categories,” Padget says. “In those spaces, compliance isn’t a background function you can set and forget. It directly affects a company’s ability to operate and sell.”
Complying with evolving tax laws and regulations was the top concern of respondents in Deloitte’s Tax Transformation Trends 2025 research. And with good reason — as regulation is getting more complex, the penalties and fees for non-compliance are getting higher.
“We’ve seen businesses get blindsided by taxes and penalties they didn’t see coming, and by that point the numbers can be pretty ugly,” Padget says. “And in the most serious cases, compliance missteps can lead to criminal liability, including jail time for executives. That’s not hypothetical. It happens more than people realize.”
It’s hard to believe that, in many cases, all of this is riding on manual workflows (i.e. spreadsheets) that are “based on the back of deep and long institutional knowledge” of the baby boomer generation, Padget says. While some companies have built more sophisticated systems to manage tax and regulatory compliance over the years, many simply rely on people to fill the gaps.
“A lot of those people are retiring age,” Padget says. “And as those people are retiring, the risk is really compounding.”
These issues are driving a need for more automated systems and unified platforms that increase visibility and accuracy.
“Ultimately, what we’re seeing is compliance being elevated from a source of friction into a strategic function that supports growth. When the system is connected and controlled, compliance enables the business instead of slowing it down,” says Padget, who points to Wallis Companies, a Midwest multi-state fuel and commercial business, as an example of this.
Wallis Companies, which operates in 21 states, was facing increasing complexity in excise tax compliance as a result of multiple entities, acquisitions and its expanding retail operations.
Wallis worked with IGEN, a division of U.S. Venture, to centralize task tracking, deadlines and filings across every state and entity; this eliminated hours of manual reporting work that previously required digging through spreadsheets, folders and PDFs.
For business leaders facing similar challenges, Padget recommends answering some questions honestly — do you have a single source of truth for your tax and compliance data? Can you validate your compliance position before you file, or are you finding out about problems after the fact? Where are the manual workarounds in your operation that everyone just kind of accepts as normal?
“The first step is understanding your exposure, and then moving toward a more connected, controlled system,” he says. “At the end of the day, it really does come down to trust, accuracy and reliability. You need to trust your data, trust your calculations and trust that your compliance will hold up under scrutiny.”
In March, IGEN named Nickolo Villanueva as its new chief technologist. Villanueva’s background in digital transformation and AI adoption in highly regulated industries will be especially crucial as IGEN sharpens its focus on responsible use of AI.
Padget says while new technology like AI can create efficiency gains for businesses in their reporting and compliance, regulatory agencies are finding the same efficiencies.
“We see a step change in terms of audit ability, the ability to capture inaccuracies … and that’s going to put additional pressure back to the industry as a whole,” he says.
But Padget predicts along with the AI arms race and the advancement of tools to process more information more quickly, there will be a “renaissance of [human] wisdom” and its importance in the loop.
“There’s wisdom that still needs to be layered into the decisions that we make,” he says, “whether that’s tax software or other business decisions.”
