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Accountancy Slice
USA
22nd October 2025
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THE HOT STORY

AICPA asks IRS for clearer tax guidance on tips and overtime

The IRS has issued new guidelines regarding tax deductions for tips and overtime, but uncertainty remains among employers about their reporting responsibilities. AICPA is requesting further clarification and "safe harbor" protections for employers and employees concerning W-2 and other filings. Cheri Freeh, Chair of the AICPA Tax Executive Committee, emphasized the need for guidance, stating: “Employers and payors are unsure of how to satisfy information reporting required under section 224 and section 225.” The new tax deductions, part of the One Big Beautiful Bill Act, are set to last from 2025 to 2028, but complexities in implementation raise concerns for both employers and workers. The AICPA is advocating for safe harbor protections during this transition period.

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TAX

IRS shutdown: a tax nightmare unfolds

As the federal government shutdown continues, the IRS has largely ceased operations, affecting both tax professionals and taxpayers. Clay Hodges, a director at Baker Tilly, emphasized that furloughed IRS employees "can't take their computer home or look at anything," leading to significant delays in tax processing. Approximately 75% of revenue agents from the Large Business and International Division and 67% from the SB/SE Division have been furloughed, causing a backlog in operations. Mr. Hodges noted that while some essential functions remain active, taxpayers will experience slowdowns, particularly in resolving inquiries. "We need to take action and it's just not happening as expeditiously as taxpayers need," he stated, highlighting the challenges ahead for those awaiting responses from the IRS.

Illinois Gov. Pritzker slams Chicago's new corporate head tax

Illinois Gov. JB Pritzker has publicly opposed Chicago Mayor Brandon Johnson's proposed $21-per-employee head tax, which aims to generate an estimated $100m for the city's budget. Speaking at the Economic Club of Chicago, Mr. Pritzker said: “It penalizes the very thing that we want, which is we want more employment in the city of Chicago.” The budget proposal, totaling $16.6bn, faces skepticism from City Council members, with Ald. Anthony Beale criticizing it as “smoke and mirrors.” Concerns were also raised about a $1bn surplus from tax increment financing districts, which critics argue could jeopardize local projects. Ald. Michael Rodriguez emphasized the need for a budget that does not rely on layoffs, stating: “We cannot balance this budget on the backs of working people.” The budget hearings are set to continue over the coming weeks.

INDUSTRY

IRS offers relief for lenders' car loan reporting

The IRS has announced transition relief in Notice 2025-57, easing the reporting requirements for lenders regarding car loan interest under the new tax law. This relief, effective for 2025, allows lenders more time to adjust their systems and suspends penalties for non-compliance. The One Big Beautiful Bill Act (H.R. 1) excludes qualified passenger vehicle loan interest from personal interest definitions for 2025-2028, with a cap of $10,000 per year for eligible taxpayers. The IRS stated, "Lenders will meet their reporting obligations if they provide a statement indicating the total amount of interest received." Qualified vehicles include cars, SUVs, and motorcycles with a gross weight under 14,000 pounds, assembled in the U.S. Businesses must comply with new reporting requirements for interest received over $600.

CORPORATE

Netflix's Brazilian tax troubles lead to earnings miss

Netflix reported disappointing earnings for the latest quarter, missing analysts' expectations due to a significant $619m expense related to a tax dispute in Brazil. The company earned $2.5bn, or $5.87 per share, which was below the anticipated $6.96 per share, despite revenue matching forecasts at $11.5bn. Netflix's management has shifted focus from subscriber growth to financial performance, resulting in a 40% stock price increase this year. However, the recent earnings miss caused shares to drop by about 5% in after-hours trading.

LEGAL

Tariff turmoil: small businesses fight back

Small businesses are urging the U.S. Supreme Court to uphold lower court rulings that President Donald Trump's tariffs constitute an illegal tax on American companies. Learning Resources Inc. argues that Mr. Trump overstepped his authority by imposing tariffs under an emergency law not intended for such duties. The company stated, "By the government's own account, those actions amount to an over $3tn tax increase on Americans over the next decade." The court will assess whether Trump legally enacted the tariffs under the 1977 International Emergency Economic Powers Act (IEEPA). Despite a federal appeals court ruling against him, the tariffs remain in effect as the justices prepare to hear the case on Nov. 5. The appeal also includes tariffs imposed on Canada, Mexico, and China, with critics arguing that these actions contradict the founders' intentions regarding taxation powers.

Education Department agrees to student debt and tax relief plan

The U.S. Department of Education has agreed to procedures for student debt relief, ensuring eligible borrowers won't face hefty tax bills due to delays from the Trump administration. A joint status report from the American Federation of Teachers (AFT) and the Department of Education outlines actions to protect borrowers in income-driven repayment plans. AFT president Randi Weingarten stated: "This year, we took on the Trump administration when it refused to follow the law." The agreement aims to provide immediate relief to borrowers and prevent them from being taxed on canceled debts. Legal director Winston Berkman-Breen emphasized that borrowers can now feel secure knowing they won't face unjust tax penalties when their loans are canceled. The relief is expected to benefit all borrowers under the agreement.

Amazon faces NJ lawsuit over driver misclassification

New Jersey officials have filed a lawsuit against Amazon, claiming the company improperly classified its Flex delivery drivers as independent contractors to avoid paying employee benefits and state taxes. The lawsuit, filed in Essex County Court, argues that this misclassification denies drivers essential rights, including minimum wage and overtime pay. New Jersey Attorney General Matt Platkin said: “When a trillion-dollar company says it is providing you with ‘a flexible way of earning extra money on your own schedule,' it is not offering this opportunity for your benefit." The state is seeking back wages, unpaid taxes, and penalties from Amazon. This legal action aligns with New Jersey's broader efforts to address worker misclassification, as seen in a recent $19.4m settlement with Lyft. The outcome of this lawsuit could influence future regulations regarding independent contractors in the state.

HEALTH CARE

Average cost of a family health insurance plan hits $27K

The cost of health insurance rose steeply for a third year in a row in 2025, reaching $26,993 for a family plan, according to an annual survey from the nonprofit KFF—a 6% annual increase. New weight loss drugs, higher hospital prices and a host of other factors such as tariffs are driving costs higher. Some of those same forces are being blamed for sharp price increases in Medicare coverage and individual policies next year. The KFF survey found that, across the country, workers on average are contributing $6,850 this year, about one quarter of the total $26,993 average premium, for family coverage, a similar share to 2024. Employers are paying the rest, an average of $20,143. The average annual premium for single coverage is $9,325, up 5% over last year.

CRYPTO

Coinbase acquires crypto platform Echo for $375m

Coinbase Global has struck a roughly $375m deal to acquire Echo, a platform that allows crypto companies to quickly raise capital directly on the blockchain. Echo’s platform facilitates fundraising and investing by letting crypto users participate in both private and public token sales. A private token sale is offered to a select group of qualified investors, such as venture capitalists, while public token sales are open to the general public and often in the final stages of a fundraise. Coinbase hopes the deal will give its customers access to more investment opportunities and allow Coinbase to offer more services to early-stage companies. 

AND FINALLY...

California rolls out $334m in film tax incentives

The California Film Commission announced that a new Jumanji movie is among 52 film projects awarded production incentives, totaling approximately $334m in tax credits. These projects are projected to create around 8,900 jobs for cast and crew, alongside over 46,000 background actors, generating an estimated $1.4bn in economic activity. Gov. Gavin Newsom emphasized the importance of the film industry, stating, “These investments reaffirm that California isn't just where stories are told, it's where the future of storytelling is built.” Notable projects include Michael Mann's Heat 2 and Netflix's The Fifth Wheel. The incentives come after a coalition of Hollywood studios and unions lobbied for increased funding due to challenges like runaway production and recent strikes.
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