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18th September 2025
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THE HOT STORY

Federal Reserve announces quarter-point rate drop

The Federal Reserve approved a quarter-point interest rate cut Wednesday, the first in nine months, with officials judging that recent labor market softness outweighed setbacks on inflation. The cut, anticipated for months, brings the benchmark rate to a range of 4%-4.25%. Fed ChairJerome Powell described the reduction as “a risk-management cut” against the growing downside risks to employment, although he added there is no "risk-free" path for the central bank. “It’s not a bad economy or anything like that,” he said during a news conference. “But from a policy standpoint . . . it’s challenging to know what to do.” The newest appointee to the Fed board, Stephen Miran, a top economic adviser to President Donald Trump, was the only Fed official to dissent, favoring a larger rate cut. Additionally, a narrow majority of Fed officials penciled in at least two more rate cuts this year. 

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TAX

New estate tax exemption skyrockets

The One Big Beautiful Bill Act (OBBBA) significantly increases the federal estate tax exemption, raising it from $10m to $15m, with inflation indexing, making it permanent. This change allows couples to shelter up to $30m in assets by 2026, a substantial rise from previous years. The OBBBA also enhances the generation-skipping transfer exemption to $15m for 2026. This adjustment may necessitate updates to essential estate planning documents, including wills and trusts, to align with state laws.

Oregon Senate delays crucial transportation tax vote

The Oregon Senate has postponed its final vote on a transportation tax proposal, originally scheduled for Wednesday, to allow Sen. Chris Gorsek time to recover from back surgery. Senate President Rob Wagner emphasized the importance of the bill, saying: “The stop-gap transportation bill before the Senate is important for all Oregonians who rely on our roads.” The delay pushes the vote to at least September 29th, a month later than initially planned. The House had already passed the package on Labor Day, but complications with Mr. Gorsek's health have hindered progress. Hundreds of workers face potential layoffs if the bill does not pass, prompting Governor Tina Kotek to extend the deadline for layoffs to October 15th. The Senate will reconvene for Legislative Days at the end of September, when the vote is expected to occur.

IRS unveils draft for 2026 Form 1042-S

On September 16th, the IRS released a draft of the 2026 Form 1042-S, which pertains to Foreign Person's U.S. Source Income Subject to Withholding. This draft introduces a renumbering of several boxes on the form. Previously combined boxes 12i, 13d, and 15i have been expanded into multiple boxes for better reporting of addresses related to withholding agents, recipients, and intermediaries. The new box groups are numbered 12i to 12m, 13d to 13h, and 15i to 15m, reflecting a significant change in the reporting structure.

INDUSTRY

CPE standards get a makeover

The National Association of State Boards of Accountancy (NASBA) and AIPCA have introduced an exposure draft proposing updates to the Continuing Professional Education (CPE) standards. These revisions aim to address new learning methods, clarify credit-awarding processes, and ensure the standards remain relevant to the profession's evolving needs. Erin Scruggs, associate director of NASBA's national registry, said: "These proposed revisions reflect the hard work and collaboration... as learning technologies and delivery methods evolve, it is essential that the Standards adapt." The public is invited to provide feedback until December 16th, 2025. Barbara Andrews, senior director at AICPA, emphasized the importance of ongoing education for CPAs in maintaining high service standards and supporting resilient financial systems.

Banking industry demands hedge accounting reform

The banking sector is urging the FASB to prioritize improvements in hedge accounting, which is known for its complexity. Rosemarie Sangiuolo, FASB's deputy technical director, highlighted during a conference in Maryland on Tuesday that public feedback indicates risk management and hedge accounting are critical issues for banking groups. Businesses often use futures, options, or swaps to mitigate risks associated with fluctuations in interest rates or commodity prices. Sangiuolo noted: "risk management and hedge accounting are top priorities."

FIRMS

BDO USA expands with Horne merger

BDO USA announced its largest expansion to date by merging with Horne, a top 30 accounting firm based in Ridgeland, MS. The deal, expected to close on November 1st, aims to enhance BDO's geographic footprint and government services capabilities. Wayne Berson, chief executive of BDO USA, said: “This strategic combination brings together two firms with complementary strengths and shared values.” Horne, which has over 1,300 employees, will integrate into BDO's practices, including assurance, tax, and advisory services. The merger will also establish BDO Government Services LLC, focusing on disaster recovery and support for state and local governments. Rusty Butcher, CEO of Horne, emphasized the alignment of their mission with BDO's commitment to community service. The merger will also allow BDO to provide services directly to the government of Puerto Rico for the first time.

Andersen Group gears up for IPO

Andersen Group Inc., established by former members of the defunct accounting firm Arthur Andersen, is preparing to file for its IPO this week. The tax advisory firm is collaborating with Morgan Stanley and UBS Group AG, who are leading the IPO process. According to Bloomberg News, Andersen Group had previously filed confidentially for a listing in April. The move positions the company to potentially debut in early October, joining a wave of firms looking to attract investor interest.

ECONOMY

Housing starts decline to lowest since May

The Commerce Department reported on Wednesday that U.S. housing starts fell to 1.307m in August, from an upwardly-revised 1.429m in July. The median forecast in a Bloomberg survey of economist was for 1.37m starts. Single-family housing starts, which account for the bulk of homebuilding, fell 7% to a seasonally-adjusted annual rate of 890,000 units, the lowest level since April 2023. Starts for housing projects with five units or more declined 11.0% to a rate of 403,000 units. Building permits, which point to future construction, decreased 3.7% to an annualized pace of 1.3m, a more than five-year low. By region, starts in the South fell 21% to the lowest in nearly a year, and were also down in the Midwest, although they rose in the West and Northeast. “It is past time that builders bite the bullet and cut back on the number of homes they are starting to get inventories under control,” commented Stephen Stanley, chief U.S. economist at Santander US Capital Markets LLC. “The August figures suggest that builders are perhaps finally doing just that.”

CORPORATE

Google and PayPal announce multi-year digital commerce partnership

Google and PayPal have announced a multi-year strategic partnership, combining their digital commerce capabilities and developing artificial intelligence-based shopping experiences. The collaboration will harness PayPal’s global payment infrastructure and Google’s expertise on AI to deliver new experiences in what is being called agentic commerce, in which AI-powered agents perform tasks like discovering new products, comparing options and making purchases for consumers. PayPal's Enterprise Payments will be a key payment provider, processing card payments across products such as Google Cloud and Google Play, among others.

REGULATORY

SEC reverses policy blocking IPOs for firms banning class-action suits

The SEC has voted to reverse an unwritten policy whereby it blocked the IPOs of companies that want to ban investor class action lawsuits in their charters and bylaws. The agency said it would allow companies seeking to go public to require that shareholders resolve claims of fraud or other false statements through arbitration rather than court litigation. "The commission is not a merit regulator that decides whether a company's particular method of resolving disputes with its shareholders is good or bad," SEC Chair Paul Atkins said. CalPERS, the California public pension fund, said forced arbitration would "diminish the deterrent effect" of class actions. Ann Lipton, a former class action litigator, said the change would damage the public interest, observing that lawsuits can expose corporate misconduct among other matters.

RISK & COMPLIANCE

Tax compliance stress skyrockets for e-commerce execs

According to a recent survey by Swap, tax compliance is a significant source of stress for e-commerce and procurement executives, driven by complex tax laws and the high stakes of noncompliance. "Digital commerce is growing more sophisticated, and more regulated than ever before," Swap noted. The survey revealed that 84% of executives plan to focus more on domestic markets in 2025, with 72% making substantial shifts due to the challenges posed by international regulations. Key issues include keeping up with varying state tax codes (68%) and the risk of lengthy audits (53%). Many companies are investing in automation software to manage compliance, with 65% exploring artificial intelligence capabilities. Juan Pellerano-Rendon, chief marketing officer at Swap, emphasized that "tax compliance has shifted from being a back-office function to a strategic business imperative."

TECHNOLOGY

DeepSeek's AI code flaws exposed

Research by CrowdStrike reveals that DeepSeek, a Chinese artificial intelligence engine, often produces flawed code when asked to assist with programming for sensitive topics such as the religious movement Falun Gong. The study also found that requests related to the Islamic State resulted in 42.1% of unsafe responses. DeepSeek rejected 61% of requests for Islamic State projects and 45% for Falun Gong. The results suggest political influences may compromise the quality of AI-generated code.

CRYPTO

IRS summonses: a crypto compliance conundrum

The IRS has been utilizing John Doe summonses to gather information from cryptocurrency exchanges about taxpayers suspected of underreporting income. These summonses, which target groups rather than individuals, have raised constitutional concerns regarding the Fourth and Fifth Amendments. Critics argue that the third-party doctrine, which allows the IRS to access records held by exchanges without a warrant, is outdated in the digital age. The First Circuit's ruling in Harper v. Werfel reinforced the IRS's position, stating that users relinquish their privacy when using exchanges. The IRS's focus on cryptocurrency compliance is evident, with plans for new reporting rules expected by 2025–2026. As the landscape evolves, taxpayers must adopt proactive strategies to navigate the complexities of crypto tax compliance, as the IRS can scrutinize their transactions without a warrant.

INTERNATIONAL

China drops Google antitrust probe during U.S. trade talks

China is dropping an antitrust probe into Google, as Beijing and Washington step up trade negotiations over TikTok and Nvidia at a time of heightened tensions between the two countries. The State Administration for Market Regulation is dropping the probe, according to the Financial Times, having previously said it suspected Google of violating the country's anti-monopoly law, without providing further details on the investigation or on what it alleged Google had done to breach the law. 

France's proposed 2% wealth tax sparks fierce debate

The proposed 2% wealth tax in France, championed by economist Gabriel Zucman, is at the center of negotiations for the 2026 budget. Zucman, a professor at the University of Berkeley and director of the European Tax Observatory, aims to impose this tax on households with wealth exceeding €100m. He argues that billionaires pay “half as much tax” as the average citizen, and the tax could generate €20bn annually, affecting only 1,800 households. While the Socialist Party supports the tax, right-wing leaders and business executives express strong opposition, fearing it could hinder investment. Olivier Faure, the socialist leader, said: “What I do not want is for the French middle and working classes to end up tomorrow paying the bill for a debt for which they are not responsible.”
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