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Accountancy Slice
USA
5th February 2026
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THE HOT STORY

New tax bill targets presidential lawsuits

In response to President Donald Trump's $10bn lawsuit against the IRS and Treasury, House Ways and Means Committee member Mike Thompson (D-CA) plans to introduce the Prevent Presidential Profiteering Act. This legislation aims to impose a 100% tax on any civil judgment or settlement awarded to a sitting president or their immediate family if the lawsuit was filed during their term. Mr. Thompson criticized Mr. Trump, saying: “He continues to use the Office of the Presidency for personal gain.” The lawsuit, filed by the president and his sons, seeks damages for the alleged mishandling of their confidential tax information by an IRS contractor. Mr. Thompson's bill will be formally introduced in the House this week. Mr. Trump, meanwhile, has pledged to donate any money won in the lawsuit. “Any money that I win, I’ll give it to charity, one hundred percent to charity, charities that will be approved by government or whatever,” he said in an interview with NBC News.

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TAX

2025: A year of sales tax upheaval

A recent report by Vertex highlights that 2025 was a notably active year for sales and use tax changes, with 681 total adjustments made. Chris Hall, senior tax officer at Vertex, said: “The pace and scale of sales and use tax changes in 2025 are unlike anything we've seen in recent years.” The report, titled 2025 End-of-Year U.S. Sales Tax Rates and Rules Report, reveals that 335 new taxing jurisdictions were established, marking a 10-plus-year high. Additionally, the average state sales tax rate rose to 5.5592%, and 219 new district taxes were enacted. As states face revenue challenges, trends such as a shift in federal funding and the impact of AI on compliance are expected to shape the tax landscape in 2026. Multinational companies must also adapt to evolving global tax requirements, including e-invoicing compliance and potential trade tensions.

D.C. Council defends tax decisions

The House is set to vote on a disapproval resolution aimed at reversing a D.C. Council measure that separates local tax policies from the federal tax code. Rep. Brandon Gill, R-Texas, sponsors the resolution, which local advocates argue undermines D.C.'s autonomy. Michelle Chappell, a volunteer organizer with Free DC, said: “This Congress is doing so much to interfere in our autonomy.” The resolution could significantly impact the local budget, as D.C. Council member Christina Henderson emphasized the need to decouple from certain federal policies to protect finances. The D.C. Council has also introduced local tax credits aimed at reducing child poverty by 20%. Activists plan to voice their concerns as the resolution moves through Congress, highlighting the ongoing struggle for local governance.

Tax cut lawsuit heats up in Massachusetts

A coalition of union leaders and community activists has filed a lawsuit to block a proposed reduction in Massachusetts' personal income tax rate from 5% to 4% over three years. The lawsuit claims the petition wording was "misleading and deceptive," failing to mention that the cuts would apply to all income tax categories, including capital gains taxes. Plaintiffs argue that the tax cuts would primarily benefit the wealthiest 1% of taxpayers, leading to "massive state budget cuts" that would harm public services. Lew Finfer, director of Massachusetts Action for Justice, said: "With this lawsuit, we're standing up for the right of voters to know what they're voting on." Meanwhile, supporters of the tax cut maintain that it will provide significant relief to working families and help improve the state's economic competitiveness. A report from the Massachusetts Budget and Policy Center estimates the tax cut could result in a $5bn revenue loss for the state.

FIRMS

RSM US opens PartnerSight tax platform to external licensing

RSM US has expanded direct licensing of its cloud-native PartnerSight platform, allowing financial institutions, private equity firms and family offices to use the firm’s partnership tax allocation technology internally for the first time. Previously available only through RSM-led engagements, PartnerSight centralizes partnership tax data, automates allocation workflows and supports compliance tasks such as K-1 and K-3 generation. The move reflects growing demand for digital tax infrastructure and aligns with RSM’s $1bn investment in AI and digital transformation.

ECONOMY

U.S. services sector shows strongest momentum since 2024

U.S. service-sector activity posted its fastest back-to-back growth since 2024 in January, signaling continued expansion in the largest part of the economy. The Institute for Supply Management’s services index held steady at 53.8, matching its highest level since October 2024 and remaining firmly above the 50 mark that separates growth from contraction. The strength was driven by a sharp pickup in business activity, with that sub-index rising to its highest level since October 2024. Eleven industries, including health care, utilities, construction and retail, reported growth. However, the report showed signs of uneven momentum: new orders growth cooled, employment barely expanded, and export demand contracted at the fastest pace since March 2023. Separately, the January U.S. Services Purchasing Managers' Index (PMI) from S&P Global inched up 0.2 points to 52.7. Chris Williamson, the group's chief business economist, said that industry sentiment has been bolsetered by such factors as lower interest rates and favorable financial conditions, although he noted that inflationary pressures remain elevated.

CORPORATE

Dental-service group hires turnaround adviser for restructuring

Affordable Care, one of the nation’s largest dental-service organizations, has hired restructuring advisers from AlixPartners for advice, according to people with knowledge of the situation. The group, which faces an uncertain economic outlook that has been curbing consumer spending, has been struggling to service debt stemming from a 2021 leveraged buyout by private-equity firm Harvest Partners that valued the business at about $2.7bn, the people said.

AUDIT & REPORTING

Audit alert: Broker-dealer transactions under scrutiny

The PCAOB has released a staff report titled "Broker-Dealer Audit Focus: Related Party Transactions," addressing the importance of identifying and disclosing transactions between broker-dealers and related parties. The PCAOB emphasized that auditors must obtain evidence to ensure these relationships are accurately accounted for in financial statements. The report highlighted common deficiencies and reminded auditors to assess risks of material misstatement and communicate their findings to the audit committee. The PCAOB stated, "Auditors must also design and perform procedures that address the risks of material misstatement." Good practices for auditing broker-dealers were also provided.

ACCOUNTING

Behind the streams: Why music royalties are harder to track than ever

In the streaming era, paying musicians accurately has become far more complex, driving demand for specialised royalty accountants. Instead of simple percentage calculations, today’s royalty payments involve massive datasets from platforms like Spotify, Apple Music and YouTube, each with different rates, contracts and reporting formats. Accountants audit streaming data line by line to ensure artists, songwriters and rights holders are properly paid, often reconciling millions of transactions across distributors, performance rights organisations and the Mechanical Licensing Collective. Payment timing adds another layer of complexity, with royalties often arriving months after songs peak in popularity — explaining why holiday hits generate “Christmas in July” paychecks. As streaming volumes surge and data grows more fragmented, royalty accounting has become both more technical and more critical, with errors risking lost income for artists in an industry where getting paid depends on mastering the numbers behind the music.

LEGAL

First Brands founder pleads not guilty in case over group's collapse

Patrick and Edward James, founders of First Brands Group, have pleaded not guilty to fraud charges in Manhattan. Prosecutors allege they fraudulently obtained billions from lenders while the company failed. The brothers face eight counts of fraud and conspiracy, with Patrick also charged with managing a continuing financial crimes enterprise. They were allowed to remain on bail, with Patrick's bond set at $50m and Edward's at $25m. Prosecutor Nicholas Chiuchiolo described the charges as "extremely serious" and highlighted Edward's significant assets, which could pose a flight risk. First Brands collapsed into bankruptcy in September after raising $12bn in financing.

INTERNATIONAL

Lenders strike deals to end Brazilian tax disputes

Lenders Itau, Santander Brasil and Citi have reached settlement deals with Brazil's National Treasury Attorney General's Office that have resulted in about 2.4bn reais ($458m) in tax payments in recent weeks. The agreements bring to an end court battles that had continued for years. Mariana Lellis, PGFN's chief negotiation coordinator, said the figure reflects net payments after average discounts of 21% on fines, interest and penalties.
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