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15th May 2026
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THE HOT STORY

IRS tackles backlog with record closures

The IRS successfully closed approximately 200,000 amended return cases during the recent tax filing season, which concluded on April 15th. Despite this progress, the agency is still addressing a backlog that peaked during the pandemic, with individuals waiting an average of five months and businesses 13 months for refunds in 2025. Ken Corbin, the IRS chief of taxpayer services, stated: “Our amended return backlog for individuals actually sits in pretty good shape,” highlighting the agency's efforts to manage the situation. To expedite processing, the IRS reassigned employees from human resources and IT departments, with many remaining on duty through the summer. The agency has faced challenges, including losing nearly 25% of its workforce due to incentives from Elon Musk's Department of Government Efficiency.

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TAX

IRS launches significant issue ruling program

The IRS has introduced a significant issue ruling program through Revenue Procedure 2026-21, allowing corporate taxpayers to seek rulings on specific tax issues. These issues must fall under the jurisdiction of the IRS's associate chief counsel (corporate) and be significant in nature. The IRS emphasized that a "significant issue" must be a "germane and specific issue of law," not merely a "comfort ruling." To request a ruling, taxpayers must provide a detailed narrative of the transaction, identify the issue, analyze relevant laws, and include specific representations.

IRS filing season results mask ongoing service and processing problems

The IRS may have reported strong headline results for the 2026 tax filing season but Misty Erickson, a tax content manager for the National Association of Tax Professionals, says those figures conceal persistent operational weaknesses that continue to frustrate taxpayers and practitioners alike. According to IRS data, the agency received more than 143m individual tax returns, processed over 142m, and issued more than 97m refunds by May 1st. However, Ms. Erickson argues that these statistics measure processing volume rather than how effectively the agency resolves problems when issues arise. She highlighted ongoing concerns involving delayed amended returns, confusing IRS notices, identity theft cases, authentication barriers, outdated paper-based systems, and limited access to assistance. Tax professionals say many taxpayers still face months-long delays and repeated administrative hurdles when trying to resolve routine issues.

Portland arts tax overhaul faces legal threat from business group

Portland’s proposed overhaul of its long-running arts tax has triggered a legal threat from the Portland Metro Chamber, the city’s largest business organization, which argues the City Council lacks authority to change the tax without voter approval. In a letter sent to all 12 councilors, the chamber warned it was prepared to pursue legal action if the council adopts proposed reforms backed by Council President Jamie Dunphy. The group claims Oregon law and Portland’s city charter require voter approval for any creation, expansion, or modification of taxes. The proposed changes would increase the annual arts tax from $35 to $50 per person for the first time since voters approved the measure in 2012. The plan would also raise the income threshold for paying the tax to $20,000 for individuals or $40,000 for households, exempting an estimated 44% of current taxpayers. Both the tax rate and filing thresholds would also be indexed to inflation. The Portland Metro Chamber said the reforms would illegally alter a voter-approved tax without public consent. The organization cited a legal analysis from tax consultants arguing that Portland cannot “unilaterally create or expand tax obligations” absent voter authorization.

INDUSTRY

AICPA updates peer review standards for SOC 2 risk oversight

AICPA emphasizes the growing importance of SOC 2 reports in managing third-party risks in a technology-driven market. Carl Mayes, vice president of Ethics and Firm Quality at AICPA, stated, “SOC services continue to grow, and with that growth comes complexity.” AICPA's Peer Review Board is closely monitoring firms performing SOC 2 engagements, particularly those using third-party platforms, to address risks associated with nonconforming engagements. A new structured monitoring process will be implemented to support peer reviewers and ensure consistency. The goal is to ensure that SOC 2 engagements reflect the professional judgment and client-specific tailoring expected from CPAs, reinforcing quality across the profession.

ECONOMY

New jobless claims rise modestly but remain historically low

U.S. jobless claims increased by 12,000 to 211,000 in the week ending May 9th, slightly above economists’ expectations of 205,000, according to Labor Department data released on Thursday. Despite the increase, claims remained relatively low, suggesting employers are still avoiding widespread layoffs. The four-week moving average inched up 750 to 203,750, while continuing claims, reported with a one-week lag, grew 24,000 to 1.78m.

Retail sales growth decelerated in April due to rising gas prices

U.S. retail sales growth slowed in April as rising gasoline prices, driven by the Iran war, left consumers with less money to spend on discretionary items such as clothing and furniture. According to Commerce Department data, retail sales increased 0.5% in April, down from a revised 1.6% gain in March, when spending surged amid rapidly rising fuel prices. Excluding gasoline sales, retail sales rose 0.3%, slowing from 0.7% growth in March. Gas station sales climbed 2.8% in April after a sharp 20.9% jump the previous month, reflecting continued increases in fuel costs. The conflict in the Middle East and the closure of the Strait of Hormuz have disrupted global oil supplies, pushing average U.S. gasoline prices to $4.53 per gallon, up $1.35 from a year earlier. Spending patterns were mixed across retail categories. Department store sales fell 3.2%, while furniture and home furnishing sales declined 2%. Building material and garden equipment stores posted only modest growth. Meanwhile, online retailers saw sales rise 1.1%, and electronics and appliance stores recorded a 1.4% increase. Restaurant spending, the report’s only major services category, rose 0.6%, suggesting consumers are still spending on dining out.

Business inventories record strongest monthly increase since 2022

The Commerce Department reported on Thursday that U.S. business inventories rose 0.9% in March, marking the largest monthly increase since June 2022. The gain exceeded economists’ expectations for a 0.8% increase and followed a 0.4% rise in February. The increase was driven primarily by wholesalers, where inventories jumped 1.3%. Retail inventories rose 0.6%, while manufacturers’ inventories increased 0.6%. On a year-over-year basis, business inventories climbed 2.0%. Inventories also contributed to first-quarter economic growth, with the government estimating they added 0.40 percentage point to GDP growth during the quarter. Business sales increased 2.1% in March after rising 1.8% in February. At the current sales pace, businesses would take 1.32 months to clear inventories, slightly down from 1.33 months in February.

Import prices jumped in April as fuel costs posted biggest increase in four years

U.S. import prices surged in April, driven by a sharp rise in fuel costs linked to disruptions caused by the Iran conflict, according to Labor Department data released Thursday. Import prices rose 1.9% during the month, following a revised 0.9% increase in March and exceeding economists’ forecasts for a 1.0% gain. On an annual basis, import prices climbed 4.2%, the largest year-over-year increase since October 2022. Imported fuel prices jumped 16.3% in April, marking the biggest monthly increase since March 2022, after already rising 10% in March. The report follows recent data showing rising consumer and producer inflation in the U.S., reinforcing expectations that the Federal Reserve will keep interest rates elevated through 2027. Excluding food and energy, import prices increased 0.7% in April. Prices for imported capital goods rose 1.1%, while non-automotive consumer goods gained 0.4%. The data also showed rising import prices from major trading partners, including China, Japan, the European Union, and Mexico.

RISK

Private credit is not ‘a cancer’, says Wall Street’s top prosecutor

Manhattan U.S. attorney Jay Clayton has dismissed fears of a looming private credit crisis, arguing the fast-growing asset class has fuelled U.S. economic strength while Europe has lagged behind. The former SEC chair told a conference organized by the Managed Funds Association, an alternative assets lobby group, that private credit should not be treated as a systemic “cancer” on the financial system. 

WORKFORCE

Cisco to cut about 4,000 jobs in AI-focused restructuring

San Jose, California-based networking equipment maker Cisco has said it would cut nearly 4,000 jobs as part of restructuring aimed at ‌shifting investment toward artificial intelligence and related growth areas. "The companies that will win ​in the AI era will be those with focus, urgency, and the discipline to continuously shift ​investment toward the areas where demand and long-term value creation are strongest," CEO Chuck ⁠Robbins wrote in a post on Cisco's website. 

INTERNATIONAL

U.S. expects China to commit billions to American farm imports after summit

The U.S. expects China to agree to “double-digit billion” annual purchases of American agricultural goods over the next three years following talks between Presidents Donald Trump and Xi Jinping in Beijing, according to U.S. Trade Representative Jamieson Greer. The summit marked the first visit by a U.S. president to China in nearly a decade and focused on stabilizing trade relations after both countries agreed a tariff truce last year. U.S. officials are also considering a new “Board of Trade” framework aimed at reducing tariffs and trade barriers on non-sensitive goods. Mr. Greer said the discussions were centred on expanding mutually beneficial trade rather than national security issues, downplaying tensions around Taiwan and suggesting semiconductor export controls were not a major focus during the bilateral meetings. The talks come after a period of escalating tariffs between the two countries in 2025, which disrupted markets before both sides agreed to ease levies and relax some export controls, including on rare earth materials.

KPMG admits improper use of confidential Lendlease documents in Westpac audit pitch

KPMG Australia has admitted that a senior audit partner improperly accessed and displayed confidential Lendlease board documents during the firm’s successful pitch for Westpac’s audit contract, escalating a growing scandal surrounding the accounting firm’s conduct. The admission came in a letter published by a parliamentary committee after Labor senator Deborah O’Neill used parliamentary privilege earlier this year to accuse KPMG executives of misusing confidential client information and conflicted relationships to secure major contracts. Lendlease chief executive Tony Lombardo described KPMG’s actions as “not acceptable” and confirmed the company was discussing potential action with the firm.
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