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The union representing IRS employees has asked a federal judge to block an agreement granting President Donald Trump, his two adult sons, and the Trump Organization protections from audits of previously filed tax returns, arguing that the arrangement is unlawful and could expose agency employees to legal or professional consequences. The National Treasury Employees Union alleges that the provision violates federal law prohibiting presidential interference in tax audits and could also violate the Constitution’s emoluments clause by potentially allowing Trump to avoid tens of millions of dollars in additional taxes and penalties. The challenge expands an existing lawsuit over a separate $1.8bn compensation fund for Trump supporters who claimed they were victims of political prosecutions, which a federal judge blocked from moving forward in June. Acting Attorney General Todd Blanche has since clarified that the tax protections apply only to past filings and has said the separate compensation fund has been dissolved.

 

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President Donald Trump has visited Las Vegas to promote his "no tax on tips" policy, claiming it has saved Nevada restaurant workers thousands. He said that over 440,000 tipped workers saved an average of $10,000 this filing season. However, the Institute on Taxation and Economic Policy argues that Trump's tax and tariff policies have led to increased taxes for most Americans, except the wealthiest 5%. Local Democrats criticized Trump's visit, with U.S. Rep. Steven Horsford stating: “working people and families in Nevada don't need another campaign stop, they need relief.” Critics argue that the "One Big Beautiful Bill Act" will result in millions losing health coverage, impacting many Nevadans who rely on Medicaid.

 

CPA Practice Advisor

As non-resident entrepreneurs establish U.S. limited liability companies, tax advisors face significant challenges due to the complex IRS international reporting framework. Arik Rozen, a CPA and international tax practitioner, emphasizes the importance of understanding IRS Form 5472, stating: "Proactively navigating these rules protects your clients from staggering penalties." Many foreign clients mistakenly believe that a single-member LLC operates like it does for U.S. citizens, leading to potential compliance issues. Missing mandatory filings can result in severe penalties, including a $25,000 fine for each tax year. To enhance compliance, firms should update intake questionnaires, streamline EIN processes, and clearly outline engagement letters. By educating clients and structuring workflows, CPAs can safeguard client capital and strengthen their advisory practices.

 

CPA Practice Advisor

Republican lawmakers in Iowa are highlighting the benefits of the federal "One Big Beautiful Bill Act" for manufacturers, even as the state continues to experience significant manufacturing job losses. U.S. Reps. Mariannette Miller-Meeks and Zach Nunn toured manufacturing facilities in their districts this week, arguing that the law’s tax incentives, workforce training provisions, and expanded deductions for equipment and research are helping businesses invest, grow, and bring jobs back to the United States. The events come as Iowa has lost 4,300 manufacturing jobs over the past year, more than any other employment sector, with major layoffs announced by companies including Whirlpool and John Deere. Republicans attributed long-term manufacturing growth to the tax law, while Democrats argued the legislation has failed to prevent job losses and instead favors wealthy individuals and corporations while reducing funding for public assistance programs.

 

Des Moines Register

The debate over whether contractual sale restrictions should influence the fair value of equity securities has been reignited. In 2022, the FASB issued Accounting Standard Update 2022-03, clarifying that such restrictions are not part of the security's unit of account. However, dissenting board members argue that these restrictions have economic substance that should be reflected in fair value. Current guidance under ASC 820 requires identical shares to be valued the same, which investment companies claim misrepresents market value. As companies remain private longer, the impact of these restrictions on equity values and net asset value (NAV) is significant. Valuation specialists highlight that these securities face unique liquidity and volatility risks. The FASB is fast-tracking a project to address these issues, proposing an exception for investment companies to consider contractual restrictions in fair value measurements. The comment period for this proposal closed on July 17th, indicating a potential swift finalization before year-end.

 

Accounting Today

U.S. unemployment benefit claims rose slightly last week, with initial jobless claims increasing by 1,000 to 199,000 in the seven days to August 1st, according to the Labor Department. Despite the uptick, layoffs remain at historically low levels, indicating that the labor market continues to show resilience even as hiring slows. The four-week moving average of new claims declined to 198,750, while continuing unemployment claims, reported with a one-week lag, rose by 24,000 to 1.8m, suggesting some unemployed workers are taking longer to find new jobs. The Labor Department also reported that U.S. labor productivity rose at a stronger-than-expected annualized rate of 1.4% in the second quarter, exceeding economists' forecasts and reflecting improved output per worker despite slower labor force growth. Productivity increased 2.2% from a year earlier, while the labor share of output fell to a record low of 52.9%, suggesting companies are generating more output with relatively fewer labor costs. Unit labor costs increased at a modest 1.3% annualized rate, below expectations, as hourly compensation rose 2.7% during the quarter. Economists said the combination of solid productivity growth and subdued labor costs could help ease inflationary pressures, although they cautioned the Federal Reserve is likely to keep the possibility of a September interest rate increase on the table unless inflation continues to moderate.

 

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Wall Street Journal

U.S. wholesale inventories increased 0.2% in June, slightly below the initial 0.3% estimate, as a decline in nondurable goods inventories, particularly petroleum, offset gains in durable goods, according to revised Commerce Department data. Inventories were up 4.2% from a year earlier, while business stockpiles have declined as a contributor to economic growth for five consecutive quarters amid strong domestic demand. Durable goods inventories rose 0.6%, led by motor vehicles, computer equipment, hardware, and machinery, while nondurable goods inventories fell 0.6%, including a 3.9% drop in petroleum stocks. Wholesale sales declined 3.0% in June after a 3.5% increase in May, pushing the inventory-to-sales ratio up to 1.19 months from 1.15 months.

 

Reuters

RTT News

The next IRS chief counsel should focus not only on providing legal guidance and overseeing tax controversies, but also on strengthening the organization by fostering collaboration, supporting staff, and developing future talent, according to  Scott Vance, of counsel at Skadden and former IRS associated chief counsel (income tax and reporting). With responsibility for advising the IRS, the Treasury Department, and taxpayers, the chief counsel must rely on experienced attorneys and subject matter experts to navigate complex tax laws, resolve technical disputes, and produce timely, well-informed guidance. Vance argues that effective leadership requires balancing decisive decision-making with openness to internal expertise, particularly when interpreting evolving tax laws or addressing novel issues. The chief counsel also plays a key role in managing litigation priorities, ensuring consistent legal positions, and helping the IRS respond efficiently to examinations and disputes. Beyond legal responsibilities, Vance emphasizes that the IRS Office of Chief Counsel should be managed like a large law firm, with a strong focus on recruiting, retaining, and motivating employees.

 

Bloomberg Tax

President Donald Trump is seeking to scale back birthright citizenship in the U.S. just weeks after the Supreme Court shot down his previous attempt to eliminate the right. The president has signed two executive orders, including one that expands the existing definitions of non-citizens whose children are not eligible for birthright citizenship. The second order bans so-called birth tourism, whereby pregnant mothers come to the U.S. to give birth so that their babies will be citizens. "This should have happened years ago, but we're taking care of it now," Trump said from the Oval Office, as he criticized the Supreme Court's rejection of his previous bid to end the 150-year-old policy.

 

Jurist

Los Angeles Times

BBC News

Staff departures and fears of political retribution have largely sidelined two watchdog offices inside the Justice Department tasked with investigating misconduct, limiting new investigations into the administration of President Donald Trump, according to Reuters interviews with four former DOJ staffers and a review of ‌department employment and investigations data. Nearly half the workforce at the Office of Professional Responsibility has left during Trump’s second term, and about 17% have departed the Office of Inspector General, government records show. Many retired or took buyouts the administration offered to shrink the federal workforce.

 

Reuters

Major U.S. public pension funds and business groups have taken opposing positions on the SEC’s proposal to rescind its climate risk disclosure rule, highlighting a growing divide over corporate climate reporting. Pension funds including CalPERS, CalSTRS, and the New York State Common Retirement Fund argued that eliminating the rule would leave investors with inconsistent, more expensive, and less reliable climate data, while business groups such as the Business Roundtable and the American Petroleum Institute said rescinding the rule would reduce unnecessary compliance costs and focus disclosures on financially material information. Large asset managers adopted more nuanced positions. Vanguard supported avoiding overly burdensome reporting requirements but said standardized disclosure of material climate risks helps investors make better-informed decisions. The debate comes as several states move ahead with their own climate reporting rules, potentially creating a patchwork of requirements.

 

Financial Times

Net Zero Investor

Sen. Tom Cotton (R-AR), chair of the Senate Intelligence Committee, has urged the Treasury Department to clarify and expand tax incentives that encourage investment in operational technology (OT) cybersecurity, arguing that aging industrial systems leave U.S. critical infrastructure increasingly vulnerable to cyberattacks. In a letter to Treasury Secretary Scott Bessent, Cotton said existing tax guidance discourages companies from investing in the hardware and software needed to protect essential services, including water and energy systems. Cotton called on Treasury to confirm that developing cybersecurity software for industrial control systems qualifies for the federal research tax credit, create a safe harbor for cybersecurity service agreements with public utilities, and extend existing tax protections for leased security equipment to service providers offering monitoring services. He argued the changes would help modernize decades-old technology and strengthen defenses against growing cyber threats targeting critical infrastructure.

 

FedScoop

Some of the biggest U.S. hedge funds, including Steve Cohen’s Point72 and Ken Griffin’s Citadel, have been targeted by a wave of attempted cyber attacks. The hacking attempts featured phone calls in which ⁠cybercriminals tried to trick employees into granting them access or handing ​over other sensitive information, according to people familiar with the situation. Reuters notes that the phone call tactic is still widely used by hackers because of ​its effectiveness. Vinod Paul, president of Align Managed Services, which specializes in helping hedge funds with cybersecurity and information technology, said AI tools are helping bad actors launch attacks relatively cheaply and more broadly. “Before they could attack 50 entities in a targeted attack, now they can do 1,000 . . . Hackers can also listen into a phone call and mimic the voice, tone and phrasings of the speakers to create fake calls,” Paul said.

 

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Financial Times

Reuters

China’s super-rich are "in shock" after Beijing issued a surprise tax on offshore trusts. The new rules impose a 20% tax at nearly every stage of a trust’s life. Families have until Oct. 22 to declare and pay tax owed on assets moved into trusts since the start of 2023. Offshore trusts have long been used by China’s tycoons to hold everything from pre-IPO stakes to family fortunes. “Many clients, trustees, and advisors are still in shock,” said Clifford Ng, a Hong Kong-based partner at Zhong Lun law firm. “This is a watershed moment for China-linked private wealth planning,” Kia Meng Loh, chief operating officer and senior partner at Singapore-based law firm Dentons Rodyk added. 

 

CNBC