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Accountancy Slice
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20th February 2026
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THE HOT STORY

President Trump’s $10bn IRS lawsuit sparks conflict of interest claims

President Donald Trump faces a deadline next week to respond to claims that his $10bn lawsuit against the IRS creates a major conflict of interest, as critics argue he effectively controls both sides of the case. Mr. Trump sued the IRS and the Treasury Department in January, seeking damages over the illegal leak of his tax records by former IRS contractor Charles Littlejohn, who was sentenced to five years in prison. The lawsuit alleges violations of the Privacy Act and other tax laws, and demands $10bn for disclosures made to media outlets including The New York Times and ProPublica. A group of former government officials has asked a federal judge to intervene, arguing that as president, Mr. Trump oversees both the IRS and the Justice Department - the agency responsible for defending the government in court. They warn the case risks becoming “collusive litigation” and have urged the court to appoint an independent party or pause the case until Mr. Trump leaves office. They also argue the damages claim is excessive and may fall outside the statute of limitations.

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TAX

Senior IRS official departs after lawsuit and GOP pressure

A former top IRS executive, Holly Paz, has left the agency after reaching a settlement agreement and dropping a lawsuit over the alleged leak of her employment information. Paz, who previously led the IRS’s Large Business and International division, had sued the agency in September, claiming her employment data was unlawfully disclosed to media outlets in violation of the Privacy Act. Earlier this week, she voluntarily dismissed the case with prejudice following what her attorney described as a “mutually satisfactory arrangement” with the IRS. Paz had been placed on administrative leave in July by the Trump administration, along with another senior official, Elizabeth Kastenberg. Both had previously worked under Lois Lerner, a central figure in the IRS’s 2013 tax-exempt organizations controversy, in which conservative groups were found to have been improperly flagged for scrutiny - though later reviews showed progressive groups were also examined. In recent months, Republican lawmakers and conservative advocacy groups have pushed for the removal of IRS officials linked to that era. The Large Business and International division is now being led on an acting basis by Mabeline Baldwin.

The U.S. states with the highest property tax rates in 2026

The average U.S. household spends $3,119 annually on property taxes, with an additional $499 for vehicle property taxes in 26 states, according to the U.S. Census Bureau. WalletHub's 2026 Property Taxes by State report reveals significant disparities across states. “Some states charge no property taxes at all, while others charge an arm and a leg,” said WalletHub Analyst Chip Lupo. Hawaii has the lowest real estate tax, while New Jersey has the highest, being 7.9 times more. Blue states have 27.02% higher real estate taxes than red states. Mitchell Franklin, Ph.D., CPA, emphasizes the need for fiscal discipline, saying: “Over-taxation risks destabilizing housing markets and eroding community wealth.” He advises that property taxes should be a key consideration for families when moving, as they can greatly impact financial planning and affordability.

Illinois budget proposal calls for new tax on social media firms

In his recent budget proposal, Illinois Gov. JB Pritzker outlined a $56.1bn spending plan for the upcoming fiscal year, marking a 1.6% increase from the current year. A significant portion of this budget is allocated to education and pensions, with only a 0.5% increase in other areas. To boost revenue, Mr. Pritzker is considering a Social Media Platform Fee expected to generate $200m for K-12 education. This fee would impose charges on tech companies based on user numbers, with larger platforms facing higher fees. Additionally, the proposal includes extending corporate tax deductions to raise $269m and taxing casinos to generate $120m for education. Mr. Pritzker emphasized the need for a pause on new data center tax credits to assess their impact on energy usage and state revenues, stating: "With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families." The proposal also introduces a statewide zoning law to ease housing development restrictions.

FIRMS

Armanino partners with Accrual on AI tool

Armanino, a national accounting and consulting firm, has partnered with Accrual to implement its AI-native accounting platform, enhancing tax and business management practices. The collaboration aims to integrate intelligent AI into core workflows, providing deeper analysis and proactive insights for clients. Matt Armanino, chief executive of Armanino Advisory LLC, said: “We're not investing in AI to experiment, we're doing it to fundamentally change how we work.” The partnership will initially focus on individual tax returns, with plans to expand AI capabilities into audit and advisory services by 2026. Cosmin Nicolaescu, CEO of Accrual, emphasized Armanino's advanced vision for AI in accounting, making the firm a valuable partner in this transformative journey.

ECONOMY

U.S. trade deficit holds near $900bn despite tariffs

The U.S. trade deficit totaled $901.5bn in 2025, barely changed from the previous year despite President Donald Trump’s sweeping tariffs aimed at reducing the imbalance. The Commerce Department reported that December’s goods and services deficit widened sharply to $70.3bn, up $17.3bn from November and well above expectations. During 2025, the Trump administration introduced a 10% across-the-board tariff on imports along with additional country-specific duties. However, some measures were later softened, and companies front-loaded imports early in the year to get ahead of tariff increases, temporarily widening the gap. The largest goods trade deficits were with the European Union ($218.8bn), China ($202.1bn), and Mexico ($196.9bn). Exports rose to $3.43tn for the year, up nearly $200bn from 2024, while imports climbed to $4.33tn, an increase of about $198bn.

New jobless claims fall sharply, signaling labor market stability

New applications for U.S. unemployment benefits fell more than expected last week, pointing to a stabilizing labor market. The Labor Department reported Thursday that initial jobless claims dropped by 23,000 to 206,000 in the seven days to February 14th, well below economists’ expectations of 225,000 and down from 232,000 at the end of January. The four-week moving average of new applications was little changed at 219,000, while continuing claims, reported with a one-week lag, rose by 17,000 to 1.869m. “It appears the late-January cold spell and an imperfect seasonal-adjustment process have contributed to the recent volatility in initial claims," said economist Stuart Paul. "We take somewhat more signal from the rise in continuing claims. Workers have been finding it more difficult to find new jobs, and soft labor demand may prevent the unemployment rate from declining further in the months ahead."

Pending home sales declined again in January

U.S. pending home sales fell for a second straight month in January, defying expectations for a rebound as affordability challenges continued to weigh on buyers. The National Association of Realtors’ pending home sales index, a forward-looking measure based on contract signings, slipped 0.8% from December to 70.9. Economists had forecast a 1.8% increase. On a year-over-year basis, pending sales edged down 0.4%. Regionally, sales dropped 5.7% in the Northeast and 4.5% in the South, but rose 5% in the Midwest and 4.3% in the West. Compared with a year earlier, sales declined in the Northeast and Midwest while increasing in the South and West. NAR Chief Economist Lawrence Yun said improved affordability has not yet translated into stronger demand and warned that without increased housing supply, renewed buyer activity could push prices higher and further strain affordability. 

Philadelphia Fed's manufacturing index expands through February

Manufacturing activity in the Philadelphia region strengthened in February, with the Philly Fed’s Manufacturing Business Outlook Survey index rising 3.7 points to 16.3 - its highest level since September and well above forecasts of 7.5. As a diffusion index, readings above zero indicate expansion. The survey showed that general activity and new orders remained solid, while shipments slipped to near flat levels. Employment was largely steady but edged slightly into negative territory. Both price indexes indicated continued price increases. Looking ahead, optimism improved. The future general activity index jumped to 42.8 after two months of declines, and future new orders and shipments also rose sharply. However, the future capital expenditures index dropped significantly to 14.4, its lowest reading since September. Despite the index’s month-to-month volatility, the February data point to continued regional manufacturing growth and broader economic resilience.  

CORPORATE

JPMorgan to open over 160 Chase branches across U.S. this year

JPMorgan Chase aims to open more than 160 branches in 2026, in states including North and South Carolina, Florida, Pennsylvania, Kansas, Massachusetts and Tennessee. The New York Post says the push into physical banking bucks global trends and underscores U.S. lenders’ faith in Americans’ preference for face-to-face service. “Chase branches are more than just a place to transact; they are vital engines driving economic activity and supporting people, businesses, schools, hospitals and nonprofits,” Tom Horne, the company’s head of consumer branch banking, said.

INTERNATIONAL

U.S. companies are paying more taxes abroad than here

The FASB's new income tax disclosure standard has revealed that many major U.S. multinationals are paying significantly higher corporate taxes overseas compared to their home country. A report by the Financial Accountability and Corporate Transparency Coalition highlights that companies like Boeing and PepsiCo are shifting profits to tax havens, resulting in lower taxable income in the U.S. Boeing paid over twice as much tax in Germany than in the U.S., while Tesla's U.S. tax payment was only $28m compared to $751m in China. Thomas Georges, a policy officer at FACT Coalition, said: "We're seeing with many companies really low cash taxes paid in the United States," as he emphasized the impact of U.S. corporate tax policies. The new disclosures are expected to influence corporate tax strategies and provide valuable insights for investors regarding tax risks and potential reforms. Further disclosures from the EU and Australia are anticipated later this year.

Japan's new rules could stabilize insurers' earnings

A Japanese accounting group is proposing changes to how life insurers account for losses on government bonds, potentially easing the burden on major debt holders. The Japanese Institute of Certified Public Accountants is seeking public feedback on the proposal, which would allow certain bonds to be classified as held to maturity, thus avoiding impairment accounting. This change could help insurers like Nippon Life and Dai-ichi Life, which reported a combined ¥13.2tn ($86bn) in unrealized losses on Japanese bonds. Fund manager Ikuo Mitsui noted that the rule change could lead to "more stable dividends for shareholders." Bloomberg Intelligence analyst Steven Lam says the move would provide "significant relief" for insurers' earnings and balance sheets, while also benefiting Japan's bond market by reducing selling pressure. The final decision on the proposal is yet to be determined.
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