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The Supreme Court has ruled unanimously that government agencies that seize private property to satisfy delinquent taxes can’t keep the surplus if it sells for more than the taxpayer owes. The case came from Minneapolis, where Hennepin County officials seized and sold 94-year-old Geraldine Tyler's condominium after she accrued $15,000 in penalties and delinquent taxes for failing to pay the property tax bill for five years. The apartment sold for $40,000 and county officials contended that they could keep the $25,000 difference because Minnesota law extinguished the owner’s interest in the property. Writing for the court, Chief Justice John Roberts cited legal precedents dating to Magna Carta, when in 1215 the English barons forced King John to swear that the remainder of a dead man’s property must be returned to the estate after tax debts are satisfied. In America, Roberts observed, most states followed that principle with laws requiring that officials return the surplus after seized property is sold for tax debts. “The taxpayer must render unto Caesar what is Caesar’s, but no more,” he wrote. Christina Martin, a lawyer with the Pacific Legal Foundation, which represents Ms. Tyler, called the decision “a major victory for property rights in the United States,” adding “The court’s ruling . . . makes clear that home equity theft is not only unjust, but unconstitutional.” The case is Tyler v. Hennepin County.

 

USA Today

New York Times

Wall Street Journal

House Budget Committee member Chip Roy (R-TX) has reiterated calls to repeal $80bn in funding for the IRS. “Recouping these funds will not only save billions in inflationary spending right now, it also reduces the size of a weaponized agency and protects hardworking American families and businesses,” Roy wrote to fellow Republicans on Wednesday. House Republicans sought to cancel the funding boost in their partisan plan to raise the debt ceiling last month. The bill includes language to cut $45bn for audits and $25bn for operations, while preserving allotments of $3bn for taxpayer services and $4.75bn for a technology update. Estimates from the Congressional Budget Office project that the IRS funding would lead to $180.4bn in additional revenue for the U.S. government over the next decade.

 

The Hill

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Grant Thornton is laying off about 300 U.S. employees, or roughly 3% of its workforce in the country, mostly in the advisory and tax divisions, due to declining demand for its services. The move follows similar cuts by other professional services firms in recent months, including Ernst & Young and KPMG. Grant Thornton cited a slowing economy and "pockets of underutilization" as reasons for the layoffs. The firm is providing severance benefits and professional outplacement services to affected professionals. "We value the contributions of all team members," said the firm in a statement.

 

Wall Street Journal

The U.S. economy grew at a 1.3% annual rate in the first quarter, as businesses wary of an economic slowdown trimmed their inventories, the government said Thursday in a slight upgrade from its initial estimate. The government had previously estimated that the economy grew at a 1.1% annual rate. Despite the first-quarter slowdown, consumer spending, which accounts for around 70% of America's economic output, rose at a 3.8% annual pace, the most in nearly two years and an encouraging sign of household confidence. Specifically, spending on physical goods, like appliances and cars, rose 6.3%, also the fastest growth rate since April-June of last year. A cutback in business inventories shaved 2.1 percentage points off January-March growth. “Consumers — the critical lynchpin to the U.S. economy — are still spending, tapping into savings and credit to be able to do so,″ said Jim Baird, chief investment officer for Plante Moran Financial Advisors. “That can’t persist indefinitely though, raising the risk of a more pronounced slowdown or recession the longer the Fed’s battle with inflation drags on.”

 

Market Watch

US News and World Report

U.S. pending home sales held steady in April, remaining unchanged after dropping in March, according to data released Thursday by the National Association of Realtors (NAR). The group's pending sales index, a forward-looking indicator based on signed contracts to buy a home rather than the final sales that are accounted for in existing home sales, recorded no change from March to April, nationally, remaining at 78.9. Year over year, pending transactions fell by 20.3%. “Not all buying interests are being completed due to limited inventory,” said Lawrence Yun, NAR’s chief economist. “Affordability challenges certainly remain and continue to hold back contract signings, but a sizeable increase in housing inventory will be critical to get more Americans moving.” Pending home sales dropped 11.3% from last month in the Northeast, while the index rose 4.7% in the West, 3.6% in the Midwest, and 0.1% in the South. “Minor monthly variations in regional activity are typical,” said Yun. “However, cumulative results over many years clearly point towards a much greater number of home sales in the South.”

 

CNN

Reuters

The number of Americans filing new claims for unemployment benefits increased moderately last week and data for the prior two weeks was revised sharply lower likely as fraudulent applications from Massachusetts were stripped out, indicating persistent labor market strength. The Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 229,000 for the week ended May 20th. Data for the prior week was revised to show 17,000 fewer applications received than previously reported. Claims for the week ending May 6th were revised down by 33,000. Economists polled by Reuters had forecast 245,000 overall claims for the latest week. The four-week moving average of initial claims was unchanged at 231,750, while the number of people receiving benefits after an initial week of aid fell 5,000 to 1.794m in the week to May 13th. “After trending higher through the first quarter, initial claims have leveled off and moving more sideways in recent weeks,” said lead U.S. economist Nancy Vanden Houten of Oxford Economics. “We expect jobless claims will resume their upward trend as the economy weakens and enters a mild recession in the second half of the year, when we look for layoffs to become more widespread".

 

Bloomberg

Market Watch

Reuters

Chief Justice John Roberts has admitted that the Supreme Court is at a crossroads amid mounting calls for reforms in the wake of a series of ethics transgressions. Speaking at the American Law Institute's annual dinner, he said that he is "committed to making certain that we as a court adhere to the highest standards of conduct." Roberts is considering adopting a formal code of ethics to inject a new level of trust into a public that's increasingly skeptical of the court's ability to remain independent and impartial. The justices have reportedly been internally debating how to reform their code of ethics for the last four years, but have failed to reach consensus and have not committed to a timeline. Senate Democrats have called for next year's funding for the Supreme Court to be conditioned on the creation of an ethics code for the justices. A Gallup poll taken last year showed that just 25% of the public has faith in the Supreme Court – a new low, and down from 31% in 2021.

 

U.S. News

The International Accounting Standards Board (IASB) has issued a set of amendments to its income tax standards to give companies temporary relief from accounting for deferred taxes arising from the Organization for Economic Cooperation and Development's international tax reform plans. The amendments to IAS 12, "Income Taxes" will provide a temporary exception to the accounting standards for deferred taxes from jurisdictions implementing the OECD's global tax rules. They also include targeted disclosure requirements to help investors better understand a company's exposure to income taxes arising from the OECD tax reform, especially before legislation implementing the rules take effect. The goal of the amendments to the income tax standard for the IASB is to ensure consistency in financial statements while easing into implementation of the rules internationally.

 

Accounting Today

Big four audit and consulting firm KPMG has expressed concern about the reputational damage inflicted on the industry by rival PwC's Australian tax advice scandal. KPMG chief executive Andrew Yates and chair Alison Kitchen have urged their firm's workforce to act ethically and in the public interest, admitting the company had not always met expectations in the past. The comments reflect growing concern and anger within the professional services community in Australia that the entire industry is threatened with a regulatory and political backlash because of PwC's failures. The scandal originated with PwC's former head of international tax, Peter Collins, who was deregistered by the Tax Practitioners Board for dishonesty after sharing confidential information about Commonwealth tax plans with other staff at the firm. The fallout has widened since a Senate committee published partly redacted emails that showed PwC partners used the leaked intelligence from Mr Collins to advise 14 clients on how to sidestep new multinational tax avoidance laws in 2016.

 

West Australian

The Australian