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The U.S. Senate approved a Republican bill early this morning that aligns with President Donald Trump's immigration, energy, and defense policies, despite his preference for a more extensive House version that includes $4.5tn in tax cuts. The Senate's resolution, which passed 52-48, emphasizes increased defense spending and stricter immigration measures while promoting fossil fuel development. The legislation, which leaves the issue of Mr. Trump's desired extension of his 2017 tax cuts to a later date, will serve as a backup in case House Republicans cannot come to an agreement on how to pay for the tax cuts in their bill without slashing funding for popular safety net programs like Medicaid and Social Security. Senate Budget Chair Lindsey Graham stated: "I hope we can get one big, beautiful bill in the House, but we need to act on border security and national security now." The Senate's $340bn budget resolution allocates an additional $85bn annually for four years to enhance border security and military spending, while the House plan seeks to cover costs through $2tn in spending cuts.  Both chambers must agree on a budget to enable Republicans to advance Trump's legislative agenda.

 

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The White House and Treasury Department officials have reportedly agreed to prohibit the Department of Government Efficiency (DOGE) from accessing personal taxpayer data. Gavin Kliger, a DOGE software engineer, will have read-only access to anonymized tax data, the same access granted to academic researchers and IT professionals who work on IRS systems. The IRS was prepared to reject the White House’s request, the people said, on the grounds that allowing DOGE to have the information would put millions of taxpayers’ information at risk. However, Treasury officials have, over time, recognized the broad nature of DOGE’s request and agreed to limit Mr. Kliger’s access.

 

Politico

Washington Post

The Federal Disaster Tax Relief Act of 2023 allows taxpayers affected by federally declared disasters to deduct personal casualty losses without itemizing, reducing the deduction by $500 per loss. This applies to disasters declared between January 1st 2020, and February 10th 2025. The law suspends the 10% adjusted gross income threshold, providing significant relief for many taxpayers. AICPA has urged the IRS to enhance disaster relief identification methods to ensure eligible taxpayers receive the benefits. Mike Smith, a principal at CliftonLarsonAllen's Charlotte, North Carolina office expressed confidence that bipartisan support exists for disaster relief, regardless of political affiliations.

 

Accounting Today

Georgia's state senators have unanimously supported a significant initiative led by Republican Lt. Gov. Burt Jones to establish a child tax credit. The Senate passed Senate Bill 89, which proposes a state income tax credit of up to $250 for children under 7, an expansion of the existing child care tax credit, and increased employer credits for on-site child care investments. This initiative is projected to cost the state over $180m annually, with the new credit for young children accounting for more than $160m. Sen. Brian Strickland emphasized the importance of this investment, stating, “When you look at the expense of a tax credit, you've got to look at the return on investment.” Meanwhile, Democrats are advocating for even more generous tax breaks for families.

 

US News and World Report

Slightly more Americans applied for jobless benefits last week, with claims rising by 5,000 to 219,000 in the seven days to February 15th, according to the Labor Department. Economists polled by Reuters had forecast 215,000 claims for the latest week. Despite this increase, layoffs remain in a healthy range, with the four-week average dropping 1,000 to 215,250. The total number of Americans receiving unemployment benefits, reported with a one-week lag, rose 24,000 to 1.87m. Government job cuts ordered by the Department of Government Efficiency, including around 7,000 in the IRS, are yet to be reflected in the data. "The current round of unprecedented belt-tightening and budget cuts and layoffs in Washington have not become a reality in terms of showing up in the national statistics," said Christopher Rupkey, chief economist at FWDBONDS. "But actions taken in the early days of the new administration may yet bring about a broader economic slowdown and is frankly a risk factor that economists did not see at the start of the year."

 

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US News and World Report

The Conference Board reported Thursday that its Leading Economic Index (LEI) slipped 0.3% in January to 101.5, erasing almost all the gains made in the last two months. The consensus among analysts was for the LEI to be unchanged last month. For the six months ended January 2025, the LEI fell 0.9%. The Coincident Economic Index rose 0.3% to 114.3 in January from 114.0 in December (revised from 114.1), while the Lagging Economic Index climbed to 119.3 from 118.7. "Consumers' assessments of future business conditions turned more pessimistic in January, which — alongside fewer weekly hours worked in manufacturing — drove the monthly decline," commented Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators at The Conference Board. "However, manufacturing orders have almost stabilized after weighing heavily on the Index since 2022, and the yield spread contributed positively for the first time since November 2022."

 

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The Federal Reserve Bank of Philadelphia's diffusion index for current general activity declined to 18.1 in February from 44.3 in January, but remaining in growth territory. Economists had expected the index to slump to 20. The new orders index plummeted from 42.9 in January to 21.9, while the shipments index dropped from 41 to 26.3. Despite the significant decreases, the Philly Fed noted the indicators for current general activity, new orders and shipments remain elevated.

 

Nasdaq

F21 OpCo, the U.S.-based operator of Forever 21, is reportedly preparing to close at least 200 locations as part of an impending bankruptcy process, according to Bloomberg. The retailer is also seeking a buyer for its remaining stores, but if no suitable buyer is found, it may liquidate its entire chain of approximately 350 stores. The Forever 21 trademark is owned by Authentic Brands, which licenses it to Catalyst Brands, currently undergoing Chapter 11 proceedings. Authentic Brands' ownership of the Forever 21 brand would remain intact through any bankruptcy process, Bloomberg noted. Regardless of the outcome, Authentic Brands plans to license Forever 21 to other retailers.

 

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Bench Accounting, once a promising fintech startup, has faced a dramatic downfall, culminating in its bankruptcy filing in January. Despite amassing over 10,000 clients and raising over $100m in venture funding, the company struggled to achieve profitability. "It's literally days before year-end and I don't know what my books look like," said Sam Plester, a former client. The introduction of artificial intelligence (AI) tools, including BenchGPT, failed to alleviate operational issues, leading to missed tax deadlines and client extensions. The company’s financial troubles were exacerbated by high turnover rates and cash shortages. Following its closure, Jesse Tinsley, chief executive of Employer.com, acquired Bench's assets, promising to honor customer contracts and return to basics. The bankruptcy serves as a cautionary tale for fintechs rushing to adopt AI without a solid foundation.

 

Accounting Today

The Consumer Financial Protection Bureau (CFPB) has seen its signage removed from its Washington, D.C. headquarters, marking a significant move by the Trump administration in its efforts to dismantle the agency. The CFPB, established after the 2008 financial crisis, has faced increasing scrutiny and opposition from conservatives. Mark Calabria, a former housing official and adviser, has been temporarily detailed to the agency, while President Donald Trump's executive order has led to the termination of two advisory councils. Under a recent court order, CFPB's leadership committed to halting mass layoffs and preserving its data collections.

 

Reuters

A former tax partner at KPMG owes the federal government more than $115m in unpaid income taxes and penalties, a complaint filed Wednesday in federal court alleges. The U.S. seeks $113m in penalties, along with additional delinquent tax payments, against Robert Pfaff for failing to register tax shelters involving foreign currency trades he sold to more than 100 wealthy investors after he left KPMG.

 

Bloomberg Tax

A voluntary disclosure procedure in Israel offers individuals the opportunity to report concealed and unreported assets without facing criminal charges. The initiative allows taxpayers to pay their taxes and gain immunity from prosecution. The program serves as a lifeline for those who have previously evaded their tax responsibilities, encouraging compliance and transparency in financial reporting.

 

The Jerusalem Post