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President Donald Trump's tax-and-spending legislation was passed by the Senate on Tuesday, with a 50-50 deadlock decided with a tiebreaking vote from Vice President JD Vance, enabling the extension of trillions in tax cuts from Mr. Trump's first term and new measures like eliminating income taxes on tips. The bill proposes cuts of about $1tn to Medicaid and other health programmes, potentially leaving nearly 12m people without healthcare coverage. It also raises the debt ceiling by $5tn. "There will be a day that conservatives will rue the fact that some of them actually voted for this," remarked Sen. Rand Paul (R-KY). The legislation must now pass the House, where it faces opposition. Rep. Ralph Norman (R-SC), a member of the conservative House Freedom Caucus, told reporters about an hour after the Senate bill’s passage Tuesday that he wouldn’t vote to move the president’s tax bill out of the House Rules Committee, adding: “Our bill has been completely changed - from the IRA credits to the deficit. This bill’s a nonstarter. We want to do this, but this bill doesn’t do what the president wants it to do." Should House Speaker Mike Johnson (R-LA) fail to get enough members to back it, the House and Senate will have to confer to reconcile the differences, likely going past Mr. Trump's deadline of July 4th to pass the bill.

 

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AICPA has commended the Senate for passing the Reconciliation Bill, expressing strong support for its tax provisions. It said: “We appreciate the challenges that come with drafting a budget reconciliation bill that permanently extends tax provisions,” such as the removal of the limit on pass-through businesses' state and local tax (SALT) deductions, the expansion of section 529 accounts, and an increase in the filing threshold for Forms 1099-NEC and 1099-MISC. AICPA president & chief executive Mark Koziel emphasized the importance of the SALT deduction for millions of businesses, saying: “We are grateful to members of Congress who supported millions of businesses' ability to retain this critical deduction.”

 

CPA Practice Advisor

The IRS has withdrawn proposed regulations concerning the treatment of built-in items of income, gain, deduction, and loss for loss corporations following ownership changes under Sec. 382(h). This decision, effective today upon publication in the Federal Register, reverses the notice of proposed rulemaking (REG-125710-18) issued in 2019 and a subsequent notice from 2020. The IRS aimed to provide “clearer and more comprehensive guidance” on Sec. 382(h) but faced criticism regarding the proposed regulations' effectiveness in simplifying calculations for taxpayers. In response to these comments, the IRS has decided to withdraw the regulations and plans to issue a revised notice of proposed rulemaking after further study. Taxpayers can still rely on the approaches from the 2019 proposed regulations until new regulations are finalized.

 

Journal of Accountancy

Ohio Gov. Mike DeWine has vetoed several property tax relief measures in the state budget, citing concerns over potential harm to school districts. "We have to find solutions to our property tax problem," Mr. DeWine explained during a news conference. The vetoed proposals included allowing counties to reduce property taxes in districts with significant budget carryovers and changing the calculation for the 20-mill floor. Local officials and Democrats argue these measures would not provide meaningful relief and could harm educational resources. Some Republican lawmakers are considering an override of Mr. DeWine's vetoes, emphasizing the need to address taxpayer concerns. The debate continues as Mr. DeWine plans to form a working group to study the property tax system further.

 

The Columbus Dispatch

Wisconsin Gov. Tony Evers and the Republican-controlled Legislature have finalized a two-year budget agreement that includes $1.3bn in income tax cuts primarily benefiting the middle class. Mr. Evers described the budget as “a pro-kid budget that's a win for Wisconsin's kids, families, and our future.” The deal also allocates $256m to the Universities of Wisconsin, marking the largest funding increase in two decades. Additionally, $200m in new tax revenue will support transportation projects, while child care funding will rise by $330m. Despite missing the June 30th budget deadline, the agreement reflects a compromise between Mr. Evers and Republican leaders, who have historically struggled to collaborate. The budget is set for final passage this week, with Mr. Evers expected to utilize his partial veto powers post-approval.

 

U.S. News

U.S. job openings rose unexpectedly in May, a sign that the American labor market remains resilient in the face of high borrowing costs and uncertainty over U.S. economic policy. In its latest JOLTS report, the Labor Department said that employers posted 7.8m vacancies in May, up from 7.4m in April, beating all estimates in a Bloomberg survey of economists. The number of layoffs fell by 188,000 in May, bringing the layoff rate down to 1%. Meanwhile, hiring declined, led by drops in health care and manufacturing. The number of vacancies per unemployed worker rose to 1.1, while the quits rate stood at 2.1%, well below the average rate of the past five years. 

 

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S&P Global has released its Manufacturing PMI for June, showing a 0.9 point increase from May to 52.9, beating Wall Street's expectations for an unchanged reading, and remaining above the 50-mark separating expansion from contraction. Chris Williamson, chief economist at S&P Global, said: "The increase in orders from both domestic and overseas customers directly drove higher workloads and production recovery." He added, however, that "This may be due to customers placing advance inventory orders to hedge against tariff-driven price increases . . . Price pressures have already accumulated, and growth could slow in the second half of the year." Separately, the Institute for Supply Management's own Manufacturing PMI for last month remained in contractionary territory, at 49, inching up half a point from May. The production index jumped to 50.3 in June from 45.4, the new orders index fell to 46.4, and the employment index declined to 45.

 

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Construction spending in the U.S. decreased by slightly more than expected during May, according to the Commerce Department, dropping 0.3% to an annual rate of $2.138tn. Economists had expected construction spending to edge down by 0.2%. Spending on private construction decreased 0.5% to $1.627tn, and was up 0.1% for public construction, to $5.11.6bn. Residential construction declined 0.5% to $888.9bn, and non-residential works dropped 0.4% to $737.7bn. 

 

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In the first half of 2025, the number of global activist campaigns fell to 129, a 12% decrease from 147 in the same period last year, as economic and geopolitical uncertainties made investors more cautious. Jim Rossman, global head of shareholder advisory at Barclays, said: "The environment was shaped by mixed economic signals, fears about wars and geopolitical tensions." Despite the decline in campaigns, activist investors secured 86 board seats, a 16% increase, and settlements rose by 32% to 37. Most activity remained focused in the U.S., with 60 campaigns, while Europe saw 24 launched - a 17% decline. Japan saw 37 campaigns compared to 51 a year ago.

 

Reuters

The Tax Court has ruled that a completed signature block generated through the DAWSON electronic filing system meets the signature requirement for petitions. In the case involving taxpayers Robert and Kegan Donlan, the IRS sought to dismiss their petition, arguing it lacked proper signatures. However, the court determined that “a taxpayer's name on a signature block of a document that the taxpayer authorized to be filed electronically” constitutes a valid signature. The ruling clarifies that petitions created with DAWSON's online generator satisfy the signature requirement, allowing the Donlans' petition to proceed.

 

Journal of Accountancy

EY breached independence rules for its audits of Shell in the U.S. and in the U.K., the energy major has revealed, putting the Big Four firm in regulators’ crosshairs again. Shell said that it will today file an amendment to its filed Form 20-Fs - documentation required by the SEC for non-U.S. companies which have securities listed on U.S. stock exchanges - for the two years, with new U.S. audit opinions issued by EY. Shell’s financial statements remain unchanged. EY earned $66m from work for Shell in 2024, according to the company’s annual report.

 

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The U.S. Senate has voted down a proposed 10-year ban on states regulating artificial intelligence models. Major AI companies, including Alphabet's Google and OpenAI, had expressed support for Congress taking AI regulation out of the hands of states to free innovation from a variety of local requirements. Sen. Maria Cantwell (D-WA), the ranking Democrat on the Commerce Committee, said: "we can't just run over good state consumer protection laws. States can fight robocalls, deepfakes and provide safe autonomous vehicle laws."  Arkansas Gov. Sarah Huckabee Sanders said: "We will now be able to protect our kids from the harms of completely unregulated AI."

 

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The U.S. Supreme Court has declined to review an IRS summons requiring Coinbase to provide transaction details for over 14,000 cryptocurrency customers. The court's decision came without explanation, rejecting an appeal from Coinbase account holder James Harper, who argued that the IRS violated his Fourth Amendment rights. Harper contended that the ruling "will effectively strip millions of Americans of meaningful privacy protections over their most sensitive financial data." The IRS's investigation, which began in 2016, aims to address alleged underreporting of capital gains on cryptocurrencies. Despite President Donald Trump's administration supporting the IRS's position, Harper and Coinbase had sought to challenge the summons, emphasizing the need for privacy in financial records.

 

Accounting Today

Peruvian financial holding company Credicorp has launched legal action with the country's tax administration SUNAT. Credicorp says that SUNAT is ignoring the legal framework reopening a case and asking the company for 1.5bn soles ($422.65m) for the Grupo Credito purchase of Banco de Credito del Peru shares from Credicorp in 2018 and 2019. "At the time, Peruvian law exempted such transactions from income tax, provided that the transferred shares did not exceed 10% of the total outstanding shares of the issuing company within a 12-month period," Credicorp said.

 

Reuters

The Zeigarnik Effect, a psychological phenomenon, describes how unfinished tasks occupy more mental space than completed ones, leading to burnout, especially in high-pressure professions such as accounting. In a piece for Accounting Today, Kyle Walters, a partner at L&H CPAs and Advisors, writes that "the only way out is to create external systems that help you close the doom loop." To combat this effect, individuals can implement strategies such as the "Next Action" rule, time blocking for focused work, and regular weekly reviews to manage tasks effectively. Additionally, firms should establish clear communication and task ownership to prevent the Zeigarnik Effect from affecting team dynamics. Ultimately, the goal is to achieve peace of mind by ensuring that every open loop is either closed, scheduled, or under control.

 

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