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Accountancy Slice
USA
21st April 2026
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THE HOT STORY

Payroll tax credit claims under scrutiny

According to a TIGTA report, some small businesses are improperly claiming the Qualified Small Business Payroll Tax Credit. The report revealed that 40 ineligible businesses claimed this credit for 2023, despite the IRS's efforts to prevent such occurrences. "While most businesses that claim the Payroll Tax Credit are eligible, incorrect claims can have far-reaching effects," the report stated. The IRS has received around 11,400 Forms 941 with $382m in credits for 2023. Although the IRS has implemented new controls, some ineligible claims continue to slip through. TIGTA has recommended that the IRS review these cases and recover any erroneously claimed credits. Lia Colbert, commissioner of the IRS's Small Business/Self-Employed division, acknowledged the issue but noted that only a limited number of cases were affected.

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TAX

IRS updates educational assistance FAQs

The IRS has revised its frequently asked questions in Fact Sheet 2026-10 regarding educational assistance programs. Notably, an employee's gross income can exclude educational assistance benefits up to $5,250 under a section 127 program. This exclusion will adjust for cost of living increases after 2026, as stated in the One, Big, Beautiful Bill. For the years 2025 and 2026, employees will not owe tax on the first $5,250 of these benefits, which should not be included in wages reported on Form W-2. The updated FAQs also clarify how these rules apply to qualified education loans and provide a modified sample plan.

Data center tax breaks under fire

According to a new report from Good Jobs First, 14 states, including Maryland, do not disclose the revenue lost to data center tax breaks. The report highlights that states like Georgia, Virginia, and Texas report losses exceeding $1bn annually due to these incentives. The study indicates that Alabama, Arkansas, Idaho, Iowa, Indiana, Louisiana, Missouri, Mississippi, North Carolina, North Dakota, Oklahoma, South Carolina, and Utah also fail to report such data. Greg LeRoy, executive director of Good Jobs First, said: “No form of state spending is more out of control today than data center tax abatements.” As local opposition to data centers grows, Maine has enacted a moratorium on large data centers, reflecting increasing scrutiny of these tax incentives. Good Jobs First urges all states to fully report their losses from data center tax breaks.

Des Moines leaders eye tax reform bills

Des Moines officials are monitoring two property tax reform bills that could restrict the city's revenue growth and limit its use of tax incentives for development. City Manager Scott Sanders expressed concern that these changes might hinder the city's ability to utilize tax increment financing (TIF), a crucial tool for economic development. He said: "This would mean low years, or even lower years, in both proposals." The proposed legislation includes caps on revenue growth and changes to TIF districts, which could complicate the city's budget planning. As the city prepares for its upcoming $855m operating budget, Sanders warned that the reforms could lead to difficult budget decisions for the community.

ECONOMY

Carney warns Canada must reduce reliance on U.S. economic ties

Canadian Prime Minister Mark Carney said in a recent video address that Canada's strong economic ties to the U.S. have become a liability. He noted that rising tariffs under President Donald Trump have created uncertainty, affecting investments in key industries including auto and steel. Mr. Carney emphasized the need for Canada to diversify its economy and reduce reliance on the U.S. He said: "Hope isn't a plan and nostalgia is not a strategy," as he urged Canadians to take control of their economic future.

CORPORATE

Low-cost U.S. airlines push for tax relief as fuel costs surge

Major U.S. low-cost airlines are lobbying for temporary tax relief to offset rising jet fuel costs driven by the Iran conflict, warning that higher expenses could lead to increased fares and reduced service. Executives from carriers including Spirit, Frontier, and Allegiant are urging Congress to suspend the 7.5% federal ticket tax and a $5.30 per-segment fee, a move they say could offset roughly one-third of fuel cost increases. The industry has already responded to higher costs by raising baggage fees, cutting flights, and scaling back capacity growth. The pressure comes as Spirit Airlines faces renewed financial strain, with rising fuel prices threatening its restructuring plans following a recent bankruptcy exit, underscoring broader challenges across the low-cost airline sector.

REGULATORY

Proposed reforms to Biden-era private fund reporting rules announced

Proposed ​reforms to Biden-era rules on enhanced disclosures by the $26tn private fund industry have been jointly tabled by the SEC and Commodity Futures Trading Commission. The SEC said such changes would reduce burdens on the private funds and investment advisers while still requiring the collection of "necessary and appropriate" information.

LEGAL

Supreme Court clears way for $12bn lawsuit against banks

The Supreme Court has declined to hear a bid by eight major financial institutions to prevent American cities, including Baltimore, Philadelphia and San Diego, from progressing a $12bn class action accusing them of artificially inflating interest rates on a popular municipal bond. The justices turned away an appeal by the ​banks - Bank of America, ​Barclays, Citigroup, Goldman Sachs, JPMorgan Chase, Royal Bank of Canada, Wells Fargo and Morgan Stanley - that was brought after a lower court upheld a judge's decision to certify the lawsuit brought by ​the cities as a class action. The Supreme ⁠Court's action paves the way for the suit to proceed as a class action.

INVESTMENT

Short seller targets $1tn tax strategies

A short seller is targeting the over $1tn invested in tax-reduction strategies for the wealthy, focusing on Affiliated Managers Group Inc., a firm managing $813bn. Orso Partners, led by portfolio manager Nathan Koppikar, believes AQR Capital Management's growth is "built on regulatory arbitrage that faces immediate scrutiny." AQR's tax-aware long-short strategies, which have grown significantly, are now under increased regulatory pressure. Koppikar warns that "when the regulatory hammer falls, the resulting hit to AQR's AUM and fee streams will be severe," potentially impacting Affiliated Managers' earnings.

RISK

Regulators monitor Anthropic's Mythos for banking risks

Reuters reports that global regulators are monitoring the development of Anthropic's frontier AI model Mythos, which experts ​say could have the capability to be used ‌to destabilise banking systems. "ASIC is closely monitoring these developments along ⁠with peer regulators to assess possible implications for the Australian ​market," a spokesperson for the Australian Securities and Investments Commission (ASIC) ​said. Meanwhile, South Korea's Financial Supervisory Service (FSS) said on ​Monday it had recently held ​a meeting ⁠with information security officials from financial firms to review Mythos-related risks.

INTERNATIONAL

China reinforces its ‘legal shield' against foreign pressure

China has introduced new regulations to combat the extraterritorial application of foreign laws, effective from April 13. The Regulations on Countering Unjustified Extraterritorial Application of Foreign Legislation aim to block foreign measures deemed improper by Beijing. Analysts see the move as a shift from diplomatic protests to “legal warfare.” The European Chamber of Commerce in China has voiced concern that the “broad scope, vague language and wide discretion” of the rules go far beyond similar statutes in the West. The move added to uncertainty around global supply chains amid the U.S. blockade of the Strait of Hormuz, the chamber said.

AND FINALLY...

Study suggests e-cigarette taxes do not necessarily lead to higher smoking rates

Regulators have hesitated to impose taxes on e-cigarettes, fearing it might push vapers back to traditional tobacco. However, a recent study published in Health Economics indicates that higher prices can effectively reduce e-cigarette use among adult vapers without increasing tobacco smoking. Lead researcher Shaoying Ma from the Center for Tobacco Research at Ohio State University stated, "Our findings suggest that increasing e-cigarette prices can effectively reduce vaping without the unintended consequence of more smoking among adult vapers." The study found that mid-range prices led to a 30% to 33% drop in vape sales, while the highest prices resulted in a 49% to 51% decrease. The research concluded that higher e-cigarette prices do not significantly correlate with increased cigarette smoking among adult vapers in the U.S.
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