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Accountancy Slice
USA
2nd September 2025
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THE HOT STORY

Congress faces IRS funding showdown

As Congress reconvenes after its August recess, it faces a critical deadline to fund the IRS before the September 30th government shutdown. Lawmakers are under pressure to finalize government-wide funding, with House Republicans pushing for significant cuts to the IRS budget. Meanwhile, Democrats are resisting further reductions, citing the agency's recent leadership challenges and layoffs. The situation is tense, with one lawmaker noted "Even a stopgap measure that leaves long-term funding..." is not a viable solution.

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TAX

Trump's tariffs: A prescription for chaos?

President Trump is set to impose significant tariffs on pharmaceuticals, a sector previously exempt from such taxes. As part of a new trade deal, a 15% tariff on certain European goods, including drugs, has been proposed, with Trump threatening up to 200% on imports from other countries. Maytee Pereira from PwC described this as “shock and awe,” highlighting the potential impact on drug prices. While Trump aims to lower drug costs for Americans, experts warn that these tariffs could lead to increased prices and shortages, particularly affecting low-income households. Diederik Stadig, a healthcare economist, noted that even a 25% tariff could raise U.S. drug prices by 10% to 14%. The administration is also investigating the national security implications of drug imports, with the goal of bringing pharmaceutical manufacturing back to the U.S. However, building domestic factories is costly and time-consuming, and many drugmakers rely on foreign ingredients.

Tax benefits overhaul on the horizon

Carly E. Grey and Michael Mahoney from Ogletree Deakins discuss a proposal by the Treasury Department and IRS to update the outdated “line of business” test for tax-free fringe benefits. The new regulations aim to replace the Enterprise Standard Industrial Classification Manual with the North American Industry Classification System (NAICS), which is updated every five years. This change is crucial as it will help ensure that employee discounts and no-additional-cost services remain tax-exempt under Section 132. The proposal includes defining lines of business by NAICS four-digit codes and aligning with existing IRS forms to simplify compliance. Employers are advised to reassess their NAICS classifications and update their payroll systems accordingly. As Grey notes: “A more granular classification system may prompt auditors to challenge aggressive aggregation positions.”

California tax tribunal gains new power

The California Office of Tax Appeals has recently solidified its authority to challenge regulations from the state's other tax agencies, following an opinion from Attorney General Rob Bonta. This decision, which had been anticipated for over two years, allows the tribunal to potentially expand its influence. As Bonta stated, the office now has the power to "strike down regulations" issued by these agencies. Taxpayer groups and practitioners are keenly observing how the tribunal will exercise this newfound authority in its upcoming opinions.

INDUSTRY

More Fortune 500 companies are promoting CFOs internally

Data from Crist Kolder Associates' summer 2025 Volatility Report, gleaned from 667 Fortune 500 and S&P 500 companies, suggests that there has been a dramatic swing of late toward internal promotions for chief financial officers, with external hiring down almost 50%. Through July 31st, 28% of CFOs were hired externally down 47% last year. Additionally, the company's analysis indicates an uptick in the pipeline of CFOs moving into chief executive roles at Fortune 500 and S&P 500 companies. In the first half of the year, 7.5% of sitting CEOs came directly from a CFO chair, up from 6.5% in 2015. “The most successful CFOs that we talk to now have an ultimate goal of reaching the CEO chair, where it used to be that the ultimate goal was to become CFO,” said Crist Kolder managing director Kirby Perkins. “It’s no longer viewed as a ceiling.”

New service models for accountants

In the evolving landscape of accounting, firms are modernizing their service models to enhance client satisfaction and employee engagement. Anita Dennis highlights the transformation of CRC in Ozark, Montana, which shifted from a high-volume tax compliance model to a client advisory services (CAS) practice. Gary Wood, CPA, noted, “The legacy firm had thousands of clients paying a few hundred bucks a year, but now we have a few hundred clients paying thousands of dollars a year.” Similarly, Swindoll, Janzen, Hawk & Loyd has implemented a new pricing model, raising minimum fees to improve profitability and employee satisfaction. Chet Buchman, CPA, CGMA, emphasized the importance of right-sizing their client base, stating, “Right-sizing the client base was one of the best things we did.” These firms demonstrate that strategic changes can lead to better outcomes for both clients and employees.

ECONOMY

New poll suggests Americans losing faith in the American Dream

A new Wall Street Journal-NORC poll has found that the share of respondents who believe they have a good chance of improving their standard of living fell to 25%, a record low in surveys dating to 1987. Additionally, more than three-quarters said they lack confidence that life for the next generation will be better than their own. A key finding was that nearly 70% believe the American dream, that if one works hard, it is possible to get ahead, no longer holds true or never did, the highest level in nearly 15 years of surveys. “It sort of saddens me,” said Neale Mahoney, a Stanford University economics professor who has studied economic sentiment. “I think one of our superpowers as a country is our relentless optimism…It is the fuel for entrepreneurship and other exceptional achievements.” The survey was conducted by NORC at the University of Chicago from July 10th-23rd and included 1,527 adults.

LEGAL

Tax court rules on façade easement

The Tax Court ruled against Capitol Places II Owner LLC (CPII), denying its claimed charitable contribution deduction of $23.9m for a façade easement on the Manson Building. The court found that the building did not qualify as a “certified historic structure” under Section 170(h)(4)(C) because it was not individually listed in the National Register of Historic Places. CPII argued that the building's location within a registered historic district should suffice for certification, but the court concluded that “listed in the National Register” requires individual entry. Additionally, the court rejected CPII's claim that the easement preserved a historically important land area, emphasizing that only purposes stated in the easement deed determine its conservation status. The ruling underscores the importance of formal certification for tax deductions related to conservation contributions.

PERSONAL FINANCE

Retirement secrets from CPA pros

As CPAs approach retirement, they face unique challenges in transitioning from their firms. Douglas H. Chaffins, a retired CPA, emphasizes the importance of recognizing when it's time to retire, stating: “You will know when it is time to retire.” Experts like Pamela Ladd suggest seeking outside opinions to ensure retirement plans are sound. A flexible exit strategy is crucial, as illustrated by DeAnn Hill, who sold her firm with a staggered retirement plan. Transitioning clients gradually is also vital; Ladd recommends joint meetings to ease clients into new relationships. Ultimately, making oneself less indispensable can facilitate a smoother transition, allowing future leaders to step up. Bill Pirolli highlights the importance of mentoring, viewing retirement as an opportunity rather than a challenge.

HEALTH CARE

Employers' medical costs continue to rise, reports Mercer

A Mercer survey of 711 organizations has found that the cost of health benefits is on pace to increase by 5.8% this year, the third straight year of growth, and a sizable jump from the 4.5% rise experienced in 2024. “One source of pricing pressure is the widening gap between the supply of health care workers and the demand for health care services, which is building as older Americans become a larger part of the population,” Mercer said. Another factor is the continuing consolidation of health care systems, which boosts their negotiating power. Three-quarters (74%) of the large employers reported they have taken action to increase their analysis of costs and benchmark comparisons, or plan to do so in 2026.

 
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TECHNOLOGY

AI tools transform accounting practices

Artificial intelligence (AI) is reshaping the accounting profession, presenting both opportunities and challenges for CPAs. As noted in the article: “CPAs that do not become comfortable with AI and integrate it into their toolkit risk falling behind the technology curve.” With corporate investments in AI reaching approximately $252.3bn in 2024, businesses are increasingly adopting AI for various operations, including fraud detection and customer support. The Big Four accounting firms are leading the charge, investing billions to enhance their AI capabilities. However, many smaller firms still struggle with AI adoption, often remaining in the education phase of the AI journey. The article emphasizes the importance of integrating AI tools to improve efficiency and accuracy in accounting tasks, while also highlighting the need for human oversight in decision-making processes.

INTERNATIONAL

French austerity plan faces fierce opposition

French Prime Minister François Bayrou is facing intense pressure as he attempts to navigate a political crisis stemming from his €44bn ($51.22bn) austerity plan. With the National Assembly vote approaching on September 8th, he stated: “The issue is not the fate of the Prime Minister; the issue is the fate of France.” Despite his efforts to reach out to opposition parties, including suggesting tax increases for the wealthy and a potential reduction in France's EU contributions, the opposition remains resolute. Olivier Faure of the Socialist Party declared his decision to vote against the government as “irreversible,” while National Rally president Jordan Bardella emphasized the need to “turn to the French people.” A recent poll indicates that Marine Le Pen's party could lead in future elections with around 31%. Mr. Bayrou warned of impending “disorder and chaos” if the National Assembly is dissolved again.
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