For many years, taxes were the quiet endnote in financial decisions, an obligatory step taken after the strategic direction had been set. In mergers and acquisitions, IPO planning, and corporate restructurings, tax professionals were often brought in late in the process to "clean up" or validate decisions already made by legal, finance, or operational teams. Tax implications were often a secondary concern.
That era is over.
Today, tax planning is no longer a reactive exercise. It has become a central, strategic function that companies increasingly rely on not only for compliance but often as a critical aspect of a transaction’s economics. The most forward-thinking organizations now include tax professionals at the table from day one, recognizing that tax decisions can shape outcomes, not just respond to them. This integration of tax planning into core financial planning is a significant shift.
Why the Shift?
Legislative Changes Reshaped the Playing Field
One of the most transformative legislative developments was the passage of the Tax Cuts and Jobs Act (TCJA) in 2017. It marked the most sweeping overhaul of the U.S. tax code in more than 30 years. While the reduction in the corporate income tax rate from 35% to 21% captured headlines, TCJA’s long-term influence has been far more profound.
The TCJA triggered a broad reassessment of entity choice, impacting how businesses approach taxes. With C corporations becoming more tax-efficient, many businesses, particularly those in private equity and closely held partnerships, began reevaluating the tax consequences of their structure, holding strategies, and long-term planning. Another structure favored by certain segments of the energy industry, Publicly Traded Partnerships (PTPs), was suddenly not an obvious choice for those entities due to evolving tax liability and burdensome administrative considerations.
International tax provisions such as GILTI, FDII, and BEAT introduced unprecedented complexity and blurred the lines between domestic and foreign income. Cross-border tax planning, once a niche concern, became central to the global strategy of U.S. multinationals. These decisions have direct tax implications on their overall financial decisions.
More recently, the Inflation Reduction Act (IRA) enacted in 2022 provided significant credits that impacted the energy industry broadly. Additionally, the IRA included the so-called “direct pay” provisions that allowed for transferability of certain credits allowing for a mechanism created by Congress to allow for monetization of these credits.
Ultimately, these pieces of significant tax legislation reminded both taxpayers and advisors that tax policy is not just about rates and rules. It is about behavior. It reframed tax not as a compliance hurdle, but as a strategic lever in financial decisions.
Tax Planning as a Lever for Value Creation
Modern tax planning focuses on optimizing outcomes, not merely minimizing liabilities. One example of this evolution is the rise of UP-C structures, which gained traction in the early 2000s and surged in popularity in recent years. These structures have significant tax implications.
Often used in IPOs, these structures allow legacy owners to maintain partnership interests while giving public investors access through a traditional C corporation. This model balances economic flexibility with tax efficiency and has become a preferred strategy for private equity sponsors and founders preparing to enter public markets.
UP-Cs exemplify how tax considerations can now drive, rather than follow, capital market decisions and broader financial planning.
The Evolving Role of the Tax Professional
As tax planning has become more strategic, so too has the role of the tax professional. Once seen primarily as compliance technicians focused on tax preparation and ensuring accurate tax records, today’s tax advisors are expected to contribute to broader business strategy by helping clients structure for future transactions, public offerings, international growth, and succession planning. Their understanding of tax liability and tax implications is paramount.
They are also expected to weigh in on increasingly complex and niche topics, whether involving international cryptocurrency taxation in a remote foreign country or how to depreciate a goat for goat yoga classes. Today’s tax professionals must be technically deep, commercially minded, and highly adaptable.
Changing Expectations in Tax Advisory Relationships
Large tax firms have dominated the tax advisory landscape for the better part of a century. Their scale, brand recognition, and technical expertise made them the default choice for many businesses whose size and global footprint require the capabilities of a large international firm. However, selecting the right tax advisor is not a one-size-fits-all decision, and for many clients outside the Fortune 500, the sheer scale of the largest tax advisory firms can present inherent challenges.
People have increasingly expressed frustration with persistent issues such as frequent turnover within service teams, escalating fees, and a perceived lack of focus on those outside the top-tier segment. Understanding the costs associated with tax preparation, tax planning, and advisory services is a crucial part of making informed financial decisions, particularly considering the impact of taxes on overall expenses.
In response, boutique and mid-sized advisory firms have risen to meet this demand. Led by seasoned professionals, often alumni of large firms, these organizations offer technical depth, direct access, and consistent dedicated service. This allows for more tailored tax planning and advice on managing their tax liability.
The increasingly competitive landscape has transformed client relationships, making loyalty and trust a result of sustained performance rather than an automatic expectation. This shift has ultimately benefited clients, prompting tax firms of all sizes to prioritize transparency, responsiveness, and measurable value in their tax services.
A New Era of Tax Strategy
Over the past two decades, tax has transformed from an afterthought into a cornerstone of strategic decision-making. Legislative reform, increasingly complex business environments, and evolving client expectations have fundamentally changed the way businesses engage with tax professionals and the role those professionals play in their overall financial planning.
Tax is no longer something to check off after the deal is done. It is an engine for value, a tool for managing risk, and a critical factor in structuring for the future, impacting everything from capital gains to long-term savings and investment deductions (in a business context).
As we look ahead, one thing is clear: forward thinking tax planning will continue to shape, not just support, the strategy of tomorrow’s most successful organizations, influencing their key financial decisions and overall income management.
