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The Senate voted 52-48 on Thursday to overturn a Consumer Financial Protection Bureau rule capping the overdraft fees that banks can charge. The resolution under the Congressional Review Act now heads to the House, where the Financial Services Committee approved a companion bill on a 30-19 vote earlier this month. CRAs both invalidate regulations and preclude future administrations from introducing “substantially similar” proposals. The rule would have limited the fees banks and credit unions could charge when customers spend more than they have in their accounts, typically $35 per overdraft. The bureau estimated it would save American households $5bn a year. The American Bankers Association, a plaintiff in the lawsuit, praised the Senate’s action; Rob Nichols, its chief executive, said that the rule would, if implemented drive Americans "to less regulated and higher risk non-bank lenders to cover unexpected or emergency expenses." Consumer Reports advocacy program director Chuck Bell said that repealing the law "will hurt working families who are already struggling with high prices and inflation."

 

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Senate Republicans are revising a House GOP tax plan to reduce cuts in Medicaid benefits for the poor and disabled, aiming to address concerns about public backlash. The adjustment, still in progress, also lessens other spending cut requirements but may alienate fiscal conservatives who advocate for significant cuts to balance the multi-trillion-dollar tax-cut package. The Senate budget plan allows the party to avoid immediate political turmoil, as it "eliminates one of the most contentious issues." The change could win the votes of Republican senators representing states with high Medicaid usage who have expressed concern about the House tax blueprint, including Josh Hawley of Missouri and Tommy Tuberville of Alabama.  West Virginia Republican Senator Jim Justice said this week he does not want to see Medicaid benefits cut, although he is open to rooting out fraud and imposing work requirements. "A whole lot of people are on Medicaid," in his state, he said, predicting Congress wouldn't slash their benefits.

 

Bloomberg Tax

Accounting Today

The IRS is set to refund $168.7m to tax preparation professionals as part of a settlement from a decade-long class action regarding Preparer Tax Identification Numbers (PTINs). Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia mandated the payment to claims administrator Verita Global LLC, which will handle the claims for individuals who paid fees for PTINs between 2011 and 2017. Verita has indicated that approximately 77,500 individuals may qualify for these refunds.

 

Bloomberg Tax

Disruptions at the IRS have led many millennials to reconsider their tax filing habits, with some contemplating skipping the process entirely. According to a report by Intuit Credit Karma, 24% of the 1,003 taxpayers it quizzed earlier this month say they’re less concerned about making mistakes on their tax return, rising to nearly one-third of millennials (31%). In addition, one in six (17%) millennials admit they’re considering not filing their taxes because they believe there’s a lesser chance of being audited because of the smaller workforce at the IRS. “Americans are grappling with an overwhelming news cycle, and recent developments regarding the IRS have not been helping with their tax anxieties,” Courtney Alev, consumer financial advocate at Intuit Credit Karma, said in a statement. “We’re also seeing this could drive irresponsible behaviors among some misinformed consumers who think they can use recent disruptions at the IRS as a reason to ignore their tax filing responsibilities. There are steep consequences that can come from not filing your taxes, and I urge people to not lose sight of their civic duty to do so. If you haven’t filed, do so as soon as you can, and if you need an extension to file, you can easily request one from the IRS before April 15th."

 

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California legislators are proposing an increase in the film tax credit to 35% for qualified expenditures on movies and TV series shot in the Los Angeles area. For productions outside this region, an additional 5% will be added, bringing the total to 40%. Assembly Member Rick Chavez Zbur, a co-author of the bills, emphasized the need for competitiveness, saying: “The longer we go without making our program competitive, what we're doing is we're basically helping other states.” The current tax credit ranges from 20% to 25%, and the proposed changes aim to align California with other states like Georgia, which offers a 30% credit. The legislation also expands eligibility to include animated films and large-scale competition shows. Gov. Gavin Newsom previously proposed a $750m increase to the program, which has generated $26bn in economic activity and nearly 200,000 jobs in the state.

 

Los Angeles Times

The FASB is moving forward to simplify hedge accounting guidance, aiming to alleviate the complexities associated with forecasting losses on short-term credit. The board instructed its staff to prepare final updates based on public feedback received last year, with votes on these updates planned for future meetings. In September, FASB proposed modifications to make hedge accounting rules more user-friendly, reflecting its commitment to enhancing financial reporting standards for the private sector.

 

Bloomberg Tax

The U.S. economy experienced a robust annual growth rate of 2.4% in the last quarter of 2024, driven by a surge in consumer spending, according to the Commerce Department. This figure marks a slight upgrade from previous estimates, although it reflects a deceleration from the 3.1% growth seen in the third quarter. The government’s other main gauge of economic activity, gross domestic income, rose 4.5% after a 1.4% increase in the third quarter. Overall, the economy grew by 2.8% throughout 2024. “The fourth quarter GDP data tell us the economy entered the year with momentum and profitability and can thus withstand a degree of policy uncertainty,” Wells Fargo economists Shannon Grein and Tim Quinlan wrote in a note following the release. “That said, the concern is increasingly centered on how will businesses act in the face of trade winds leading to tremendous uncertainty this year.” A separate report from the Commerce Department found that the U.S. trade deficit in goods contracted 4.9% in February amid a rise in exports. Goods exports increased $7bn to $178.6bn last month, while imports fell $600m to $326.5bn.

 

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Pending sales of U.S. homes last month rebounded in February from a record low, according to the National Association of Realtors (NAR), as calmer weather and a greater selection of houses provided some optimism headed into the critical spring selling season. The group's Pending Home Sales Index, based on signed contracts, rose 2% to 72. Economists polled by Reuters had forecast contracts, which become sales after a month or two, rebounding 1%. On an annual basis, they decreased 3.6%. Pending sales climbed 6.2% in the South, the U.S.’s biggest home-selling region, following a 9.2% decline a month earlier. They also increased in the Midwest, but fell in the West and Northeast. "Despite the modest monthly increase, contract signings remain well below normal historical levels," commented NAR chief economist Lawrence Yun. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”

 

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U.S. applications for unemployment benefits held steady in the seven days to March 22nd, edging down 1,000 to 224,000, the Labor Department reported on Thursday, just below the 225,000 expected among economists polled by Reuters. The four-week moving average of claims dropped 4,750 to 224,000, while the total number of recipients of government benefits fell 25,000 to 1.86m. Recent employment data shows "two separate worlds," according to RSM U.S. economist Joe Brusuelas. “One in which firms are managing their [workforces] incredibly carefully, because we still are under conditions where labor is tight; there’s going to be constraints on labor supply, and that’s what’s contributing to the remarkable stability in overall claims,” he said. “The other world is federal government employment, where, first, there’s likely more people who are unemployed than the claims would suggest. Second, individuals are clearly beginning to hedge their bets around employment and are actively seeking work.”

 

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The IRS secured a significant victory at the U.S. Supreme Court in the case of United States v. Miller, with an 8-1 ruling that reinforces its sovereign immunity over bankruptcy trustees. The court determined that a bankruptcy trustee cannot void tax payments made to the IRS prior to a company's bankruptcy if those payments would not be recoverable under state law. This ruling effectively limits the ability of bankruptcy trustees to use fraudulent transfer laws to reclaim payments made to government entities, which could have implications for future bankruptcy cases. The court said: “The court's precedents require construing sovereign-immunity waivers narrowly.” The case arose from a $145,000 transfer made by All Resort Group Inc. to the IRS, which was deemed fraudulent under state law. The ruling is expected to impact how bankruptcy cases involving government payments are handled moving forward.

 

Bloomberg Tax

ING has become the first systemically important global bank to have its climate goals validated by the Science-Based Targets initiative, aligning with efforts to limit global warming to 1.5 degrees. The Dutch lender has met targets across various sectors, including fossil fuels and power generation.

 

Daily Mail

The IRS' Criminal Investigation (CI) unit has initiated 2,039 tax and money laundering cases related to COVID fraud over the last five years, with attempted fraud totaling $10bn. As of February 28th 1,028 individuals have been indicted, and 569 have received an average sentence of 31 months in federal prison. IRS-CI Chief Guy Ficco said: "It's been five years since Congress enacted the CARES Act, and our special agents have used their financial acumen to root out thousands of instances of fraud, waste and abuse tied to CARES Act programs." The investigations have particularly focused on Employee Retention Credit fraud, with 545 cases involving over $5.6bn in fraud. Seventy-five of these investigations have led to federal charges, resulting in 38 convictions.

 

Accounting Today

Tax Notes

The French government is intensifying its efforts to combat tax fraud, employing advanced methods including artificial intelligence (AI), according to Jerome Barre, a partner at Yards. Speaking at a presentation by the French Association of Family Offices, Barre noted that the administration's systems are generating more inquiries, particularly regarding property valuations that impact foreign owners. Recent statistics indicate that detected tax fraud penalties reached €16.7bn ($18.1bn) in 2024, a 10% increase from the previous year. Budget Minister Amelie de Montchalin emphasized that "fraud is no longer just about isolated cheaters," highlighting the growing complexity of tax-related crimes amid France's fiscal challenges.

 

Accounting Today