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31st July 2026
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THE HOT STORY

Senate panel advances tax administration bill with AICPA backing

The Senate Finance Committee has approved the Taxpayer Assistance and Service (TAS) Act by a 26-1 vote, advancing legislation designed to modernize the IRS, improve taxpayer services, and reduce administrative burdens. AICPA welcomed the bill, highlighting provisions that would expand digital services, improve access to tax and refund information, introduce taxpayer wait-time dashboards and callback technology, strengthen protections for taxpayers facing financial hardship, extend the "mailbox rule" to electronic submissions and payments, and give the IRS greater authority over preparer tax identification numbers. The legislation now moves to the full Senate for consideration. While supporting the bill, AICPA noted that it does not include the proposed Simplify Automatic Filing Extensions (SAFE) Act, which would streamline filing extension requirements, and said it will continue working with lawmakers to advance those reforms in future legislation.

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TAX

California billionaire tax proposal exposes divisions within organized labor

California's proposed Proposition 40, a ballot measure that would impose a one-time 5% tax on the assets of billionaires, has revealed growing divisions among the state's labor unions, with several organizations announcing their opposition while SEIU California adopted a neutral position. The measure, backed by SEIU-United Healthcare Workers West, is intended to help offset an estimated $100bn in healthcare and safety-net funding reductions linked to recent federal spending cuts, but opponents argue it would disproportionately benefit healthcare, fail to provide a sustainable long-term funding source, and could destabilize funding for education and public safety. Gov. Gavin Newsom has instead advocated for a federal wealth tax, contending that a national approach would be more effective because billionaires can avoid state-level taxes by moving elsewhere.

Washington millionaires tax repeal faces court challenge over ballot language

A legal dispute has emerged over the wording that will appear on Washington's November ballot for Initiative 645, which seeks to repeal the state's newly enacted 9.9% tax on households earning more than $1m annually. The initiative's sponsor, Let's Go Washington, has sued to change a 21-word disclosure saying that repealing the tax would reduce funding for K-12 education, higher education, and human services, arguing the language is misleading because the tax is not scheduled to take effect until 2029. Supporters of the ballot language say it complies with a 2022 state law requiring voters to be informed about the potential impact of tax measures on public services, while opponents contend it unfairly prejudices voters against the initiative. The lawsuit is one of two legal challenges to the disclosure requirements, with a court required to decide the final ballot language within five business days under state law.

INDUSTRY

Report finds indirect tax teams struggle to demonstrate strategic value

A new Thomson Reuters Institute report has found that indirect tax (IDT) teams play an increasingly important role in business strategy, but many struggle to demonstrate their value to senior leadership because they are primarily measured on compliance metrics rather than business impact. Among 290 professionals surveyed across the United States, Canada, Mexico, and Brazil, 88% said their function contributes value to their organization, yet only 32% described that contribution as significant, highlighting what the report calls a "contribution gap." The report also found that fragmented technology systems are limiting productivity, with 87% of organizations relying on multiple disconnected platforms and only 16% having fully automated data reconciliation. The report concludes that organizations can raise the strategic profile of their indirect tax functions through better performance measurement, greater executive engagement, and continued investment in technology and workforce development.

FIRMS

EY appoints David Leckstein to lead AI and consulting strategy across the Americas

EY has appointed David Leckstein as Americas chief artificial intelligence (AI) and product officer and Americas consulting strategy leader, where he will oversee the firm's AI, product, and platform strategy across the region. Based in New York, Mr. Leckstein will focus on expanding the use of AI, intelligent agents, autonomous workflows, and digital platforms to improve productivity, innovation, and growth for both EY and its clients, while also driving strategy and coordination across the consulting business. Mr. Leckstein joins EY after 28 years at Accenture, where he most recently served as a senior managing director, leading the firm's Americas technology practice, products platform advisory business, and global SAP practice.

ECONOMY

U.S. economy slows to 1.5% growth in second quarter

The U.S. economy grew at an annualized rate of 1.5% in the second quarter of 2026, slowing from 2.1% in the first quarter as higher energy prices, supply chain disruptions linked to the conflict with Iran, and persistently high interest rates weighed on activity. Despite those headwinds, the Commerce Department's initial GDP estimate showed consumer spending and business investment remained relatively resilient, supported in part by continued investment in artificial intelligence, although inflation-adjusted incomes and consumer spending have weakened. Economists said the economy continues to show resilience, but warned that higher oil prices, remaining tariffs on imports, and shrinking household savings could curb growth and fuel inflation later this year. The Federal Reserve left interest rates unchanged at its latest meeting, while policymakers continue to balance inflation risks against economic growth, as strong corporate earnings and AI-related investment offset concerns about softer consumer demand.

U.S. inflation eases in June, but higher oil prices cloud outlook

U.S. inflation slowed in June, with the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure, rising 3.7% year over year, down from 4.1% in May, while monthly prices slipped 0.1%, the weakest reading since April 2020. Core PCE, which excludes food and energy, increased 3.3% annually and 0.1% from the previous month, reflecting a temporary decline in oil prices during a short-lived U.S.-Iran ceasefire. Economists cautioned that the easing is unlikely to last, as renewed conflict in the Middle East has pushed Brent crude back above $90 a barrel and U.S. gasoline prices above $4 a gallon, increasing the risk of renewed inflationary pressure. The Federal Reserve left interest rates unchanged at 3.50%–3.75%, although three policymakers favored a rate hike, and markets expect borrowing costs to rise as early as September. Meanwhile, consumer spending rose 0.3% in June, personal income increased 0.2%, and the household saving rate fell to 2.7%, its lowest level since June 2022, raising concerns that consumer spending could weaken later this year as tax refund benefits fade.

Jobless claims rise modestly as labor market remains resilient

New applications for U.S. unemployment benefits increased by 9,000 to 197,000 in the week ended July 25, remaining near historically low levels despite a modest uptick from the previous week, according to the Labor Department. The total was below economists' expectations of 207,000, while the four-week moving average fell to 202,750, suggesting layoffs continue to remain limited. Continuing claims, reported with a one-week lag, declined to 1.78m.

LEGAL

Trump threatens to delay Todd Blanche's AG nomination

President Donald Trump has threatened to temporarily withdraw Todd Blanche's nomination for attorney general until Sens. John Cornyn (R-TX) and Thom Tillis (R-NC) leave office, after the Senate Judiciary Committee postponed a vote on the nomination because of their objections. The two Republican senators have raised concerns about provisions in the administration's settlement with the IRS over the disclosure of Trump's tax returns, including a $1.8bn anti-weaponization fund and protections related to future IRS audits. Cornyn and Tillis said they support Blanche personally but want the Justice Department to formalize in writing commitments Blanche made during his confirmation hearing regarding the settlement's scope. Trump argued the senators' political careers were ending and suggested renominating Blanche after their departures, while both lawmakers warned that delaying the nomination could carry political risks and noted that a change in Senate control after the midterm elections could jeopardize the confirmation altogether. 

Supreme Court declines to hear tax jury trial appeal, leaving circuit split intact

The U.S. Supreme Court has declined to hear Hirsch v. Commissioner, leaving unresolved whether taxpayers facing IRS civil fraud penalties are entitled to a jury trial under the Court's 2024 decision in SEC v. Jarkesy. While the refusal to review the jury trial question was widely expected because only the U.S. Tax Court has ruled on the issue, legal observers say the Court's decision not to address the differing standards for obtaining a writ of mandamus was more surprising, allowing a split among federal appeals courts to remain in place. The result means taxpayers' ability to seek an early ruling on jury trial rights will continue to depend on where they live, with some federal circuits permitting mandamus petitions under a less restrictive standard than others. The commentary argues that future disputes are likely to focus on whether tax penalties fall within the "public rights" exception discussed in Jarkesy, particularly following the Supreme Court's recent decision in FCC v. AT&T, and advises tax professionals to carefully consider the procedural options available when challenging IRS penalties.

ADVISORY

Financial advisors urged to coordinate more closely with lawyers and accountants

Financial advisors can deliver greater value to clients by acting as the central coordinator between attorneys, accountants, and other professionals, helping streamline financial, tax, and estate planning while improving communication across advisory teams. Industry experts say this collaborative approach can reduce duplicated work, lower legal costs, and ensure clients receive more consistent advice on complex financial matters. Advisors are encouraged to work closely with specialists in areas such as tax, estate planning, and insurance while recognizing the limits of their own expertise. Practitioners say regular collaboration enables professionals to identify planning opportunities throughout the year, provide additional oversight through checks and balances, and develop more comprehensive solutions, ultimately creating a better experience and stronger outcomes for clients.

CYBERSECURITY

Anthropic says Claude AI hacked three organizations during cyber tests

Anthropic has disclosed that its Claude AI models gained unauthorized access to three outside companies during an evaluation of its cyber-offensive tasks, days after rival OpenAI ⁠revealed a rogue agent had gone on a hacking spree at AI ​firm Hugging ‌Face. “Claude compromised the ​impacted ​organizations’ infrastructure using ​basic techniques, such as ​exploiting ‌weak passwords and ​unauthenticated ​endpoints,” Anthropic said. Two of the organizations were ​unaware of the activity ‌before being contacted, and Anthropic said that ​it was still trying to reach the third. “We discovered these incidents after a proactive review of our cybersecurity evaluation transcripts,” the company said in a statement.

TECHNOLOGY

AI will transform tax, not replace professionals

Rob van der Woude of Fonoa emphasizes that AI will not reduce tax work but will transform it, creating a connected data infrastructure essential for compliance and competitive advantage. He notes that "the transition is real; it has just been slower than the loudest voices claimed." With the rise of real-time reporting and e-invoicing, tax teams face increasing pressure to deliver accurate data. Automation and AI are seen as solutions to meet these demands, leading to a shift in the roles of tax professionals. Rather than reducing jobs, AI is expected to increase the workload and importance of tax professionals, as they will be responsible for overseeing automated processes. The future of tax work will rely on a robust data-driven approach, with AI enhancing efficiency and accountability in the tax function.

INTERNATIONAL

KPMG Australia has made no decision on possible job cuts

KPMG Australia says it has made no decision on possible job cuts after the Australian Financial Review reported that ​the firm plans to eliminate about 1,000 positions or 10% ‌of its workforce in the wake of an audit misconduct scandal, with details of the roles to be eliminated being shared with selected partners this week. "We are reviewing our operating model, ⁠cost base and workforce needs. It is important to note that ​no decisions have been made regarding any specific measures or potential impact ​on roles," said a KPMG spokesperson, who added the firm was continuing to evaluate "a range of options to ensure the firm remains well positioned for the challenges ahead."
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