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Former Treasury Secretary Lawrence Summers has warned that the Trump administration's efforts to downsize the Internal Revenue Service (IRS) could lead to a $1tn loss in federal revenue over the next decade. He said: "We are threatening the basis of our tax system, which is based on voluntary compliance," as he highlighted the potential for increased tax non-compliance. Approximately 20,000 IRS employees have opted for deferred resignations, exacerbating the agency's staffing crisis. Summers, now a Harvard University professor, noted that the downsizing could push many taxpayers to shift income to cash payments and engage in dubious transactions to evade taxes. He cautioned that the consequences of these changes could be severe, observing: "I don't think we've seen large consequences yet from all of this. But the risks are very big." The Budget Lab at Yale estimates that layoffs could result in a revenue loss of $159bn over ten years, potentially escalating to $1.6tn if non-compliance increases.

 

Accounting Today

The Columbian

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Baker McKenzie's Amanda Worcester Martin, Wenham Shen, and Christine Kim, highlight that the IRS's Advance Pricing and Mutual Agreement (APA) program remains effective, despite potential challenges from workforce reductions and fluctuating tariff policies. The 2024 APA report shows a slight decrease in executed APAs, from 156 in 2023 to 142 in 2024, yet this number is still higher than the annual average from 2014 to 2022. The median completion time for APAs improved significantly, dropping from 42.0 months in 2023 to 33.5 months in 2024. Amanda Worcester Martin, a partner at Baker McKenzie, noted that "APAs offer taxpayers the ability to proactively manage their transfer pricing disputes." However, the program may face difficulties due to recent staff cuts and retaliatory tariffs, which could complicate negotiations and increase the risk of double taxation. The need for a robust APA program remains critical for taxpayers seeking efficient resolution of international tax controversies.

 

Bloomberg Tax

Arkansas Gov. Sarah Huckabee Sanders has enacted a law modifying the Arkansas Income Tax Withholding Act, which lowers the employee threshold for mandatory electronic filing of annual withholding statements from 125 to 75. This change will take effect for tax years starting on or after January 1st 2026, while certain provisions will apply to tax years beginning on or after January 1st 2025. The update aims to streamline the filing process for employers in the state.

 

Bloomberg Tax

Indiana Gov. Mike Braun has signed a law that provides an individual income tax exemption for military pay, retirement income, and survivor's benefits for members of the United States Space Force, the United States Public Health Service Commissioned Corps, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps. This law, known as H.B. 1280, takes effect retroactively on January 1st 2025, and will apply to taxable years following December 31st 2024.

 

Bloomberg Tax

The PCAOB has released a new group of staff presentation videos designed to help audit firms implement four components of their quality control system under QC 1000, A Firm’s System of Quality Control. The resources are designed to enhance the overall quality of audits, ensuring firms can effectively meet industry standards.

 

CPA Practice Advisor

The integration of artificial intelligence and the entrance of private equity into the public accounting landscape are significantly transforming the profession. As firms adopt AI-powered tools, they enhance auditing accuracy and efficiency while reducing manual data entry. However, this shift raises concerns about the diminishing role of accountants and the potential compromise of audit integrity due to profit-driven motives. In a piece for Accounting Today, Deven Sanghavi highlights the apprehension surrounding whether AI will require accountants to develop new skill sets or if it will replace traditional roles. "The intersection of AI and PE in public accounting presents both opportunities and concerns," he writes, emphasizing the need for adaptability and ethical considerations in this evolving environment.

 

Accounting Today

Grant Thornton's U.S. division is set to enhance its global presence through the merger of three affiliates located in Luxembourg, the United Arab Emirates, and the Cayman Islands. This strategic move, announced on Wednesday, will integrate these units with Grant Thornton's existing Irish business, resulting in a workforce exceeding 13,000 professionals. The firm aims to bolster its growth strategy, which includes exploring additional deals in the future.

 

Bloomberg Tax

CPA Practice Advisor

Financial Times

The PCAOB has sanctioned Adeptus Partners and partner Howard Krant for failing to adhere to audit supervision and quality control standards. The violations occurred during audits of Blockchain of Things and Applied UV, with PCAOB Chair Erica Williams commenting: "Substandard audit work and inadequate quality control put investors at risk." Krant's failures included inadequate supervision of engagement teams and insufficient review of workpapers. The PCAOB's Division of Enforcement and Investigations, led by Robert Rice, emphasized the need for accountability, noting that the firm did not implement necessary quality control measures. Krant and Adeptus Partners consented to the PCAOB's order without admitting to the findings.

 

Accounting Today

A new report from the Federal Reserve shows that U.S. businesses are reporting increased costs due to tariffs, which they expect to largely pass on to consumers in the form of higher prices. The latest Beige Book compilation of anecdotes from businesses across the Fed's 12 member districts, gathered over the weeks to April 14th, found that prices increased across districts, with businesses expecting elevated input costs as a result of the levies. Many firms reported receiving notices from their suppliers about rising costs, and most businesses cited plans to pass higher prices onto consumers. Employment was little changed to up slightly. The report highlighted declines in government roles and at organizations receiving government funding. It contained 80 mentions of uncertainty, nearly twice as many as the last report, and 107 mentions of tariffs.

 

Financial Times

Bloomberg

Fox News

Reuters

Sales of new U.S. single-family homes increased more than expected in March, the Commerce Department reported on Wednesday, due to factors such as a dip in mortgage rates, and ongoing sales incentives to kickstart the Spring selling season. New home sales jumped 7.4% to a seasonally adjusted annual rate of 724,000 units last month, the highest level since September 2024. Economists polled by Reuters had forecast new home sales, which make up about 14% of U.S. home sales, climbing to a rate of 680,000 units. New home sales increased in the South and Midwest, but fell in the Northeast and West. The median new house price dropped 7.5% to $403,600 in March from a year earlier, and the inventory of new homes last month increased 0.6% to 503,000 units, the highest level since November 2007, representing an 8.3-month supply.

 

Bloomberg

Reuters

The S&P Global U.S. Composite Flash PMI slid to 51.2 in April from 53.5 in the prior month, according to data released on Wednesday, resting just above the 50-mark separating expansion from contraction. The preliminary April reading signaled a 16-month low in national business activity growth. The manufacturing component of the index rose half a point to 50.7, while the services gauge dropped three points to 51.4. “The early flash PMI data for April point to a marked slowing of business activity growth at the start of the second quarter, accompanied by a slump in optimism about the outlook," commented Chris Williamson, chief business economist at S&P Global Market Intelligence. "At the same time, price pressures intensified, creating a headache for a central bank which is coming under increasing pressure to shore up a weakening economy just as inflation looks set to rise.”

 

FX Street

MSN

The Trump administration's cost-cutting team, the so-called Department of Government Efficiency (DOGE), has effectively shuttered a 79-year-old federal agency that mediates labor disputes. The terminations at the Federal Mediation and Conciliation Service have precipitated concern among unions and employers alike about who will step in to help ease labor conflicts. The agency, though relatively small and obscure, is said to play a vital role in helping to settle disputes so as to avoid labor unrest that can disrupt the free flow of commerce, according to former federal mediators and experts.

 

The Columbian

A Financial Literacy Month survey conducted by The Harris Poll on behalf of AICPA found that more than one third of American adults have felt cautious (37%) or uncertain (36%) about their financial situation in the past 12 months. The trend highlights a growing concern among individuals about their financial stability. When asked about new financial behaviors they have adopted in the past 12 months, 28% of Americans reported that they have been charging less on their credit cards. Over a quarter (27%) said they have started saving or increased their savings rate in the past 12 months, with those ages 18 to 44 significantly more likely to have done so than those ages 45+ (37% versus 19%). “Money is one of the biggest stressors in many Americans’ lives, at times causing anxiety and tension with a spouse, partner, or other family members,” says Dan Snyder, CPA/PFS, AICPA's director of personal financial planning. “Taking control of your financial situation and finding comfort with what you can and can’t control is a good starting point to help alleviate financial uncertainty.”

 

CPA Practice Advisor

The International Monetary Fund has said that the economic gains from artificial intelligence - global output is expected to be boosted by around 0.5% a year between 2025 and 2030 - will outweigh the costs of rising carbon emissions by the data centres that are needed to run AI models. "Despite challenges related to higher electricity prices and greenhouse gas emissions, the gains to global GDP from AI are likely to outweigh the cost of the additional emissions," the IMF said. "The social cost of these extra emissions is minor compared with the expected economic gains from AI, yet it still adds to the worrisome build-up of emissions," the group said in its report titled "Power Hungry: How AI Will Drive Energy Demand."

 

Reuters

Toshiba Europe researchers have used so-called quantum key distribution (QKD) cryptography to transfer messages over a 250km German commercial telecommunications network in a milestone towards next-generation data security.

 

Financial Times

Japan is reportedly considering using increased rice imports from the U.S. as a negotiating tool in tariff talks with the Trump administration. Currently, Japan imports around 770,000 metric tons of rice each year, free of tariffs, under its “minimum access” deal signed with the World Trade Organization in 1995. Mr. Trump has criticized the system in the past, falsely claiming that Japan imposes a 700% tariff on U.S. rice. The government is now considering adding an annual import quota of at least 70,000 tonnes of U.S. rice to the trade deal, hoping it will give them more room in negotiations with the White House.

 

The Japan Times

TaxDown, a Madrid-based fintech, has successfully launched its services in Mexico, following a €4m funding round led by Bonsai Partners. The investment aims to enhance the company's artificial intelligence capabilities and improve tax experiences for users in Spain and Latin America. Founded in 2019, TaxDown combines an AI-driven tax engine with a team of over 200 tax experts, processing millions of data points to optimise tax returns. The company has seen significant growth, serving over 1.5m users in Mexico alone, and plans to expand further into Latin America.

 

Tech.eu

The Chicago Tribune reviews new movie "The Accountant 2," in which estranged brothers Chris and Braxton, played by Ben Affleck and Jon Bernthal, navigate a world of violence and human trafficking. The film, directed by Gavin O'Connor, features a gripping narrative where the brothers attempt to save child prisoners from a cartel in Juárez, Mexico. Mr. O'Connor described the challenge of balancing "heavy subject matter as human trafficking" with entertainment. The film also sees the return of J.K. Simmons as a former adversary of Chris, now on a mission to find a missing boy. With a mix of action and comedy, "The Accountant 2" aims to deliver a thrilling experience, though it may leave some viewers questioning its pacing, concludes Michael Phillips.

 

Chicago Tribune