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Accountancy Slice
USA
11th February 2026
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THE HOT STORY

IRS struggling with paperless processing, reports TIGTA

The IRS is facing significant challenges in its initiative to achieve paperless processing, as highlighted in a TIGTA report. The IRS aimed to digitally process 78% of paper-filed returns for the 2025 filing season but has only scanned 5% of its target, with individual paper tax returns costing 43 times more to process than electronic ones. Kenneth Corbin, chief of the IRS's Taxpayer Services Division, said: "The digitalization of tax documents benefits taxpayers and the IRS." Despite receiving $37.6bn in funding from the Inflation Reduction Act, the IRS has struggled with delays and contractor issues, raising concerns about meeting the federal mandate to digitize all records by December 2030.

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TAX

U.S. House votes down tariff rule

The House of Representatives has rejected a rule pushed by Republican leaders to prevent votes challenging US President Donald Trump’s tariffs. The move could pave the way for Democratic lawmakers to force a vote as soon as today on a resolution blocking Trump’s tariffs on Canada. The votes of three Republicans – GOP Reps. Thomas Massie, Don Bacon and Kevin Kiley – were enough to deal the blow to the administration. Bacon said: “Tariffs have been a ‘net negative’ for the economy and are a significant tax that American consumers, manufacturers, and farmers are paying. Article I of the Constitution places authority over taxes and tariffs with Congress for a reason, but for too long, we have handed that authority to the executive branch. It’s time for Congress to reclaim that responsibility.”

California's billionaires face new tax

Sen. Bernie Sanders (I-VT) is set to launch a campaign next week for a one-time 5% tax on California's billionaires, aimed at addressing healthcare funding cuts. He said the initiative "would provide the necessary funding to prevent over 3m working-class Californians from losing the healthcare they currently have.” The proposal, backed by the Service Employees International Union-United Healthcare Workers West, requires nearly 875,000 signatures by June 24 to qualify for the November ballot. While supporters argue it is crucial for vulnerable residents, opponents, including Gov. Gavin Newsom, warn it could drive wealthy entrepreneurs out of the state and hinder innovation. Over 200 billionaires in California would be impacted if the measure passes.

INDUSTRY

SEC swears in new leadership at PCAOB

Demetrios (Jim) Logothetis has been sworn in as the new chair of the PCAOB alongside board members Mark Calabria and Steven Laughton. SEC chair Paul Atkins appointed them following a lengthy search after the resignation of former chair Erica Williams. Mr. Logothetis, who retired from EY in 2019, expressed his gratitude for the appointment, stating: "Independent oversight of auditors is a critical pillar of the investor confidence that powers the U.S. capital markets." The SEC has also approved a budget reduction, cutting the chair's salary by 52% and board members' salaries by 42%. Mr. Calabria and Mr. Laughton bring extensive experience from their previous roles in government, with the former emphasizing the PCAOB's role in enhancing audit quality. Mr. Logothetis' term will end on October 24th 2030.

Op-ed: Why the PCAOB needs reform to curb political volatility

in an opinion piece for Bloomberg Law, Allison Henry, vice president of professional and technical standards at the Pennsylvania Institute of Certified Public Accountants, says the PCAOB is increasingly being undermined by a political instability that weakens regulatory consistency and slows innovation. Frequent leadership changes, sharp budget swings and shifting strategic priorities have left the audit regulator vulnerable to political influence, creating uncertainty for audit firms and eroding confidence in the oversight system. Her recommendations include stabilizing and clarifying the standard-setting process, modernizing inspections to concentrate on high-risk issues, and better aligning enforcement with serious audit failures rather than technical breaches. A coherent technology strategy is also seen as essential as auditing evolves. Without governance reform that promotes continuity, expertise and accountability, the PCAOB risks regulatory “whiplash” that could further weaken audit quality in a rapidly changing market.

FIRMS

Intuit unveils Online Accountant replacement

In a recent blog post dated February 5th, Intuit announced the replacement of QuickBooks Online Accountant with the new Intuit Accountant Suite. Kim Amsbaugh, who manages public relations for the Intuit Accountant Segment, said: “Firms using QuickBooks Online Accountant will be switched to the free Core plan starting between the summer and December 2026.” The Core plan will remain free, while the Accelerate plan will transition to a paid subscription of $149 per month starting May 1st 2026. Additionally, the Books Close feature will be available as an add-on, with pricing based on the number of clients. Intuit plans to replace the current ProAdvisor Program with a new global partner program in January 2027, aimed at helping accounting professionals grow their firms. More details will be shared during the Intuit Connect ON event on February 24th.

KPMG acquires PrivateBlok to strengthen AI and multi-agent capabilities

KPMG has acquired AI development platform PrivateBlok, bringing its founders and employees into the firm to accelerate the development of AI-first products and services. Financial terms were not disclosed, but KPMG said the deal is primarily a talent acquisition, adding deep expertise in multi-agent and AI-native system design to its existing technology stack. PrivateBlok specializes in secure, configurable multi-agent systems that combine public and proprietary data with AI copilot tools. The move is intended to speed up the delivery of production-ready AI products, reinforce KPMG’s shift toward subscription-based services, and support its broader strategy of defining the market for AI-native professional services.

ECONOMY

U.S. retail sales drew to surprise standstill in December

The Commerce Department reported Tuesday that U.S. retail sales were flat in December from November at $735bn. Analysts polled by the Wall Street Journal were expecting a 0.4% increase. On an annual basis, revenues grew 2.4%. Sales at furniture and home stores dropped 0.9%, fell 0.4% at electronics and appliance stores, and were down 0.7% at clothing outlets. There was a 0.1% decline at food services and drinking places, but growth of 1.2% and 0.4% at building and gardening outlets, and sporting goods, hobby, and book stores respectively.

Labor cost growth slows to four-year low in late 2025

Growth in U.S. labor costs cooled unexpectedly in the fourth quarter, posting the smallest annual increase in four and a half years as easing demand for workers restrained wage gains. The Labor Department's Employment Cost Index rose 0.7% in the final three months of the year, down from 0.8% in the previous quarter and below economists’ expectations. On an annual basis, labor costs increased 3.4% through December, the weakest pace since mid-2021. Wages and salaries, which make up the bulk of labor costs, showed a similar slowdown, while a softer labor market was reflected in fewer job openings per unemployed worker. Despite the easing in wage pressures, higher import tariffs have continued to lift goods prices, keeping inflation elevated.

Business inventories rose less than forecast in November

U.S. business inventories increased by just 0.1% in November, undershooting expectations and marking a slowdown from October’s 0.2% gain, according to government data. Economists had forecast a 0.2% rise, while inventories were up 1.2% compared with a year earlier. The weaker growth reflected a decline in retail stocks, particularly motor vehicle inventories, which fell 0.9% during the month. Retail inventories excluding autos - a key input into GDP calculations - rose 0.2%, while wholesale inventories increased by the same amount and manufacturers’ stocks edged up 0.1%. Business inventories have now declined for two consecutive quarters, weighing on economic growth, though this has been partly offset by a narrowing trade deficit. Meanwhile, business sales rebounded 0.6% in November, reducing the time needed to clear inventories to 1.37 months from 1.38 months in October.

Import prices flat annually in December, after prior decline

U.S. import prices were unchanged in December compared with a year earlier, following a 0.1% decline in November, according to data from the Labor Department. On a month-on-month basis, import prices edged up 0.1% in December. The Bureau of Labor Statistics said data disruptions from last year’s federal government shutdown prevented it from publishing monthly import price changes for October and November, and led to a shorter release for December. The agency noted, however, that a more recent brief shutdown did not affect the collection of price data.

CORPORATE

Saks to close nine stores in first phase of bankruptcy restructuring

Saks Global, the parent company of Saks Fifth Avenue and Neiman Marcus, plans to close nine department stores and 14 stand-alone Fifth Avenue Club locations as part of an initial review under its Chapter 11 bankruptcy proceedings. The closures include eight Saks Fifth Avenue stores across the U.S. and one Neiman Marcus location in Boston, with stores expected to remain open until the end of April. Following the changes, Saks will operate about 25 stores, including its New York flagship, while Neiman Marcus will have 35 locations. The company is also shutting its Horchow home goods e-commerce site, redirecting customers to Neiman Marcus’s online platform. 

LEGAL

Tax Court rules on livestock R&D credits

The U.S. Tax Court has established a significant precedent by ruling that innovations in livestock production qualify for the research and development (R&D) tax credit. In the case of George v. Commissioner, the court recognized that efforts to enhance poultry health and growth rates meet the criteria for qualified research under Section 41 of the Internal Revenue Code. John Dies, lead counsel for the plaintiff, said: "These rulings recognize that agriculture is an innovation-driven industry." This decision aligns with a previous ruling that validated R&D credits for row crop farming. The court's ruling clarifies that agribusinesses are entitled to the same benefits as other innovation-driven sectors. Although some tax credits claimed by George of Missouri, Inc. were disallowed due to insufficient documentation, the court found that the company acted in good faith, thus avoiding penalties. Former U.S. Secretary of Agriculture Mike Johanns remarked: "These Tax Court decisions represent a watershed moment for American agriculture."

SMALL BUSINESS

Small business optimism slipped slightly in January

The National Federation of Independent Business (NFIB) has published its Small Business Optimism Index for January, showing a 0.2 point drop to 99.3, below expectations of 99.8 but remaining above its 52-year average of 98. Of the 10 components in the index, three improved while seven weakened, with the most notable change being a six-point jump in expected real sales volumes. At the same time, uncertainty among small business owners increased, with the NFIB Uncertainty Index rising seven points to 91, driven largely by growing hesitation over whether it is a good time to expand. NFIB chief economist Bill Dunkelberg said that while GDP growth continues, many small businesses are still waiting to see stronger economic momentum, even as more owners report improved business conditions and higher sales expectations. A newly introduced Small Business Employment Index pointed to a balanced labor market, sitting about 1.5 points above its historical average.

PROFESSIONAL DEVELOPMENT

IRS partners with PSI Services for EA exam

The IRS has awarded a contract to PSI Services to develop and manage the special enrollment examination for Enrolled Agents (EAs). This exam, crucial for tax professionals, sees over 29,000 tests administered annually. Starting in May, PSI will provide access to over 550 secure testing centers across the U.S. and plans to introduce an online proctoring solution for international candidates. PSI chief executive Janet Garcia said: "We're honored to support the IRS in advancing its mission of taxpayer service and compliance through the EA-SEE Program." The IRS aims to maintain high standards for EAs, with Kimberly Rogers, director of the IRS's Return Preparer Office, emphasizing the importance of a secure and candidate-centered testing experience.

INTERNATIONAL

EU Parliament backs digital euro

The European Parliament has given its first major backing to the digital euro, after it endorsed the European Council's negotiating stance for a central bank digital currency with both online and offline functionality. The parliament said the digital euro is “essential to strengthening EU monetary sovereignty, reducing fragmentation in retail payments, and supporting the integrity and resilience of the single market,” adding “The increasing digitalization of payments, if left exclusively to private and non-EU actors, risks creating new forms of exclusion for both users and merchants.” The European Central Bank wants a digital euro to lessen European reliance on U.S. payment firms like Visa and Mastercard amid deteriorating transatlantic relations.
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