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Accountancy Slice
USA
2nd February 2026
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THE HOT STORY

IRS outlines contingency plan as partial U.S. government shutdown begins

The IRS has published a contingency plan detailing how it will manage operations during the partial federal government shutdown that began on 30 January. The plan, effective from 31 January through to 7 February 2026, sets out actions for the first five working days of a funding lapse and confirms the IRS will use Inflation Reduction Act funding to remain fully staffed during this period. It also identifies which employees would remain exempt and on duty if the shutdown continues. While the Senate has approved a bipartisan funding package, it still awaits House approval, and professional bodies have warned that any IRS furloughs could disrupt the 2026 tax filing season and negatively affect taxpayers.

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TAX

Georgia's income tax elimination proposal sparks debate

A proposal to eliminate Georgia's income tax by 2032 has raised significant concerns regarding its feasibility and potential consequences. While it aims to reduce tax burdens, the plan lacks details on how to compensate for the anticipated revenue loss. Currently, personal income taxes account for about 50% of the state's annual tax revenue. The proposal does not clarify how Georgia would replace this revenue without increasing other taxes or cutting services. Additionally, the administrative challenges of shifting from income tax to other tax types could lead to increased costs and burdens for both the state and taxpayers.

Chicago Mayor Pritzker faces pressure on school vouchers

Public school advocates gathered outside Governor JB Pritzker's office, urging him to reject participation in a new federal school voucher program. This initiative, part of the Republican “One Big Beautiful Bill Act,” offers tax credits for donations to scholarship nonprofits, which can be used for private school expenses. Critics, including Huu Nguyen from Illinois Families for Public Schools, argue that “public dollars should fund public schools,” emphasizing the potential harm to public education funding. Pritzker's office is still reviewing the proposal, with concerns that it could reduce funding for public schools. The debate intensifies as Illinois public school enrollment declines, with CPS losing 28% of its students since 2002. Advocates are calling for full funding of public education to address these challenges.

INDUSTRY

SEC appoints retired EY partner Jim Logothetis to lead US audit watchdog

The SEC has appointed retired EY partner Demetrios “Jim” Logothetis as chair of the PCAOB. Mr. Logothetis, who spent more than 40 years at EY before retiring in 2019, will lead a newly reshaped board as the SEC seeks to refocus the watchdog on what it describes as more “sensible, efficient” audit oversight. The SEC also named Mark Calabria, Kyle Hauptman and Steven Laughton as new PCAOB board members, while acting chair George Botic will remain on the board. The appointments follow criticism from audit firms over the PCAOB’s previous rule-making agenda and come alongside tighter SEC scrutiny, a reduced budget and lower board compensation. The leadership change marks a shift in direction for the PCAOB, which was created after the Enron and WorldCom scandals to strengthen audit regulation.

ECONOMY

Wholesale prices surge 0.5% in December

U.S. wholesale prices increased by 0.5% in December, surpassing economists' expectations of 0.3%, according to the Labor Department. The rise marks the fastest pace in three months. Year-over-year, producer prices rose 3%, aligning with forecasts. Services prices saw a notable increase of 0.7%, driven by higher profit margins at wholesalers and retailers. Despite concerns over inflation due to import taxes, the impact has been less severe than anticipated. The report was delayed due to a federal government shutdown. "Wholesale prices can offer an early look at where consumer inflation might be headed," the report noted.

Chicago business activity rebounds after two-year slump

Chicago-area business activity expanded in January for the first time since November 2023, according to the Chicago Business Barometer by MNI Indicators. The index surged to 54.0 from 42.7 in December, surpassing expectations. Key drivers of growth included sharp increases in employment, new orders, and production. Notably, employment reached its highest level since December 2024, and new orders hit levels last seen in March 2022. Meanwhile, prices paid dropped to a 12-month low, suggesting easing inflationary pressures.

PERSONAL FINANCE

Tax preparer warns against withholding taxes as a form of protest

Recent discussions among social media influencers have sparked a movement advocating for tax protests against government policies. One influencer provocatively asked, “So, we're not paying taxes this year, right?” However, experts warn of the serious repercussions of such actions. Daniel Friedman, chief executive of WMGNA, cautioned: “You will get arrested if you don't file your tax return as part of protest.” Historical examples, like Joan Baez's refusal to pay a portion of her taxes in 1963, illustrate the long-standing tradition of tax protests. Yet, Scott McLean, a political science professor, noted that modern protests lack the organization of past movements. He remarked: “I don't know if the people you're seeing on your Instagram are the Henry David Thoreau type of people.” As the IRS becomes more efficient in tracking unpaid taxes, the risks of noncompliance grow.

LEGAL

Senator urges IRS investigation into Trump tax leak rather than costly lawsuit

Sen. Ron Johnson (R-WI) said he would prefer the IRS to carry out a robust investigation into who leaked President Trump’s tax returns, rather than pursue a $10bn lawsuit filed by Trump against the agency and the Treasury Department. Speaking on CNN, Johnson said identifying and punishing those responsible for the leak - a federal crime - would be a better use of resources than litigation that could ultimately be paid for by taxpayers. Trump and his sons are suing the IRS, arguing it failed to protect confidential tax information, despite a former IRS contractor, Charles Littlejohn, already serving a five-year prison sentence for leaking tax data. The Treasury Department has since cancelled contracts with Booz Allen Hamilton, Littlejohn’s employer at the time, citing inadequate safeguards. Legal experts note the lawsuit faces hurdles, including a two-year statute of limitations, while critics warn a successful case would saddle taxpayers with a multibillion-dollar payout.

INTERNATIONAL

France replaces U.S. tech tools with domestic apps

France’s Prime Minister Sébastien Lecornu has ordered the country's ministries to shift their video calls to Visio, an application developed by the French government, from American-owned tools such as Zoom or Microsoft Teams, by the end of the year. “To guarantee the security, confidentiality and resilience of public electronic communications, it is  . . . imperative to deploy a unified videoconferencing solution, controlled by the State, based on sovereign technologies,” he wrote in a letter. The tool was built by the French government with Outscale, a France-based cloud company, and enlisted two French AI companies, Pyannote and Kyutai, to offer transcription and subtitling services.

WTO backs China over U.S. green subsidies

A World Trade Organization panel has upheld China’s complaint that US clean energy tax credits discriminate against imports, recommending changes to measures under the Inflation Reduction Act by October 2026. China welcomed the ruling, while the United States criticised WTO rules and signalled it could appeal. However, any appeal would not be resolved due to the paralysis of the WTO’s appellate body, limiting the ruling’s practical enforcement.
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