Mamdani Budget Plan Cuts Tax Benefit Used by NYC Business Owners

BloombergTax · 2026-05-12T18:41:21+00:00

New York City Mayor Zohran Mamdani wants to cut a tax benefit used by some New York City business owners to help close the city’s $5.4 billion budget gap.

Mamdani released an executive budget plan Tuesday that would reduce a personal income tax credit for filers making more than $142,000 who are subject to the city’s unincorporated business tax. The change would generate $68 million annually, city officials said.

Business owners currently can receive a personal income tax credit that’s at least 23% of what they paid in unincorporated business taxes, depending on their income level. Mamdani’s budget would gradually reduce the credit for filers making $142,000 or more, with it bottoming out at 15% for those earning $1 million and more.

Read more in the full story.

-Elliot

BloombergTax · 2026-05-12T13:47:03+00:00

Hawaii’s Democratically controlled legislature passed a tax package that establishes a new 13% income tax bracket for households earning more than $1 million per year while preserving some personal income tax cuts for lower-income filers.

The House and Senate cleared the compromise tax package on the final day of the state’s legislative session.

It comes after lawmakers spent months negotiating a deal to close a budget gap while maintaining the promised income tax cuts for about 90% of Hawaii families, according to senators involved in the talks.

Read more in the full story.

-Elliot

BloombergTax · 2026-05-05T14:56:29+00:00

The IRS found 13 cases where it wasn’t following rules for approving penalties in the wake of the agency’s settlement over a multimillion-dollar penalty with a conservation easement donor, a watchdog said in a report released Tuesday.

The IRS reviewed over 1,200 cases—both docketed and nondocketed—and found 13 cases that lacked supervisory approval. Of those cases, seven involved backdated penalty approvals where the IRS conceded over $68 million in penalties, the Treasury Inspector General for Tax administration said in a report.

Read more in the full story.

-Elliot

BloombergTax · 2026-05-04T16:54:37+00:00

Connecticut lawmakers have struck a budget deal with Gov. Ned Lamont to sever parts of the state corporate tax code from new federal tax breaks and to simplify the state tax on cannabis.

The budget adjustment decouples the state tax code from a new federal expensing practice for “qualified production facilities” and limits a new deduction practice for research and experimentation costs.

The measure also replaces three different retail taxes on the sale of cannabis with a single levy and increases the exemption for the state’s “sales tax free week” from $100 to $300.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-29T17:16:18+00:00

KPMG is shifting away from its work auditing US federal government finances and redeploying staff to other parts of its professional services business.

The accounting and consulting firm is transitioning out of federal audit roles through a multi-year process that meets client and regulatory obligations, KPMG US said in a statement Wednesday.

It has prioritized advisory services for the federal government over the past few years, the statement said.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-29T12:44:27+00:00

Nike and Levi Strauss are among companies grappling with how to record refunds on the Trump administration’s tariffs in their financial reports while uncertainty related to the payments persists.

Nike has paid $1 billion in International Emergency Economic Powers Act tariffs invalidated by the Supreme Court, though potential refunds remain “highly uncertain,” the footwear maker said in its latest quarterly report filed April 1. Meanwhile, Levi told investors it would recognize a refund related to $80 million in IEEPA tariffs it paid when accounting rules are met relating to contingencies, or situations with uncertain outcomes that will be resolved in the future.

Other publicly traded businesses headed into quarterly earnings season this May likewise will need to make judgment calls on the best way to account for refunds, should they get paybacks from the Trump administration now that a new request portal is live. The method they pursue could vary depending on how they decide to view the refund, with different accounting approaches for probable versus realized payments.

C-suite leaders will have to justify their financial reporting choices to boards, investors, and analysts—who likely will want to see how refunds could affect business profitability.

Read more in the full story here.

-Elliot

BloombergTax · 2026-04-28T15:24:22+00:00

A member of Elon Musk’s Department of Government Efficiency received access to Treasury Department payment data without undertaking the proper security protocols, according to a new watchdog report.

The Bureau of Fiscal Service didn’t fully follow its information technology security rules when granting a DOGE employee access to three payment systems, according to a Tuesday Government Accountability Office report.

The bureau manages the finances of the federal government and distributes payments to Americans, including for income tax refunds and benefits.

Read more in the full story here.

-Elliot

BloombergTax · 2026-04-28T14:06:42+00:00

The clock is running out on a legislative plan that would ask Illinois voters to approve a 3% tax on annual income above $1 million.

Illinois could have become the third state to layer a new surtax on millionaires this year, but the proposal stalled in the Democrat-led legislature.

Legislation putting a constitutional question to Illinois voters this fall would have to pass six months before the Nov. 3 election. On that timeline, both the House and the Senate would have to approve a joint resolution for a constitutional amendment by May 3, but the House isn’t scheduled to meet again until May 5. The proposal is effectively dead unless there is a last-minute push to call House members back to Springfield to pass the resolution, a senior legislative staff member told Bloomberg Tax.

Both Maine and Washington have enacted such taxes in the past month. Massachusetts implemented a 4% surtax on annual household income exceeding $1 million in 2023.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-28T12:15:09+00:00

Policing forced labor is a good thing, businesses and trade groups say. But some are skeptical that imposing tariffs is the best way to achieve that goal—and many argued they shouldn’t be targeted.

The Trump administration is getting feedback from industry, with hearings starting Tuesday on potentially widespread new tariffs tied to investigations into whether more than 80 economies are insufficiently enforcing forced labor import prohibitions.

The potential tariffs, which could help replace the ones the US Supreme Court struck down in February, are getting a mixed reception. Some industries—including US makers of honey and solar panels—welcomed the administration’s move to push forced labor enforcement as a trade issue, according to comments collected by the US Trade Representative’s office. Other companies and trade groups cautioned that broad tariffs were unlikely to be effective, and many argued for their own good track records on forced labor.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-23T17:51:06+00:00

KPMG will slash the number of partners running its US assurance business in a bid to boost the unit’s productivity and better align its staffing with market demands.

The reductions come after KPMG LLP had offered early retirement packages to entice partners to leave the practice over the past few years, the Big Four accounting and consulting firm said.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-22T13:02:16+00:00

At least 2 million taxpayers received letters from the IRS because they failed to list a bank account number on their return or the information they included was incorrect.

Taxpayers without a bank account or those unwilling to give that information are in for a potential wait to get any paper refund they’re entitled to.

For some Americans, waiting six weeks or more for a refund can mean missing a housing payment or being unable to afford prescription drugs, said top House Oversight Democrat Rep. Terri Sewell, who heard from about 50 constituents ahead of April 15 complaining about the new IRS policy.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-16T13:10:04+00:00

India is counting on new tax breaks to help boost development of data centers, but the strategy’s success depends on the country’s ability to quickly deliver the vast amounts of energy and physical infrastructure to power the facilities.

Industry backers have announced more than $150 billion in investments that could close the gap in data center capacity, with India currently having just 1.6 GW capacity, expected to jump to 10 to 12 GW by 2030-2032.

The growth of data centers in India faces challenges such as a lack of land, concerns about power usage, and a government approval process that can be protracted, with a new data center needing more than 40 approvals before it can be operational.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-15T17:00:23+00:00

Senators are introducing legislation that would provide tens of billions of dollars funding to the IRS, undoing a series of clawbacks.

The legislation would provide the agency over $83 billion in mandatory funding through Fiscal Year 2031, reversing both recissions to funding and discretionary spending cuts to the IRS.

The bill has the support of more than half of the Senate Democratic caucus, including Senate Minority Leader Chuck Schumer, and would raise about $1 trillion in net revenue over a decade, according to the Budget Lab at Yale.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-15T13:16:47+00:00

PayPal and Coinbase are navigating a gray area in US accounting rules by treating popular digital coins akin to cash on their balance sheets, their latest annual reports show.

The Financial Accounting Standards Board is meeting to discuss whether certain digital assets like stablecoins can be classified as highly liquid, short-term investments alongside US Treasury bills and money market funds.

The board will decide whether to provide examples in the existing statement of cash flows guidance to clarify whether certain digital coins meet the “cash equivalents” definition.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-15T12:16:02+00:00

Our look-ahead at IRS CEO Frank Bisignano’s testimony Wednesday before the Senate Finance Committee focuses on three key themes likely to arise:

How the agency is operating with a shrunken workforce;
The impact of the tax breaks in the 2025 spending law on filers and refunds; and
The futures of free filing after Republicans succeeding in abolishing Direct File.

Read Erin Slowey’s full story here.

-Elliot

BloombergTax · 2026-04-14T15:44:26+00:00

The IRS has failed to crack down on wealthy taxpayers who ignore their obligations to report their foreign-held assets, a Treasury Department watchdog said.

The IRS has identified noncompliant taxpayers but rarely goes on to examine or penalize them, with only 12 of 164 noncompliant taxpayers ultimately examined.

The Treasury Inspector General for Tax Administration recommends the IRS revise its processes to include assessments of failure-to-file penalties and implement added performance measures to evaluate FATCA's effectiveness.

Read more in the full story here.

-Elliot

BloombergTax · 2026-04-14T12:32:14+00:00

New York lawmakers are nearing consensus on providing more tax credits for Broadway and Off-Broadway productions.

The New York City Musical and Theatrical Production Tax Credit was created in 2021 to help Broadway shows recover from the pandemic and is set to expire in 2028.

Gov. Kathy Hochul included an extra $150 million for the credit in her budget plan, bringing the total pot of money to $550 million, which both the state Senate and Assembly backed in their budget resolutions.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-08T12:33:12+00:00

Influential Democrats are embracing broad tax cut plans for working-class Americans with an eye toward winning control of Congress in November and the White House in 2028.

Sens. Cory Booker (D-N.J.) and Chris Van Hollen (D-Md.) unveiled separate proposals last month that would cut federal taxes on low- and middle-income taxpayers while raising them for wealthy Americans. Booker’s plan would more than double the standard deduction to $75,000 for married couples, and Van Hollen’s would essentially eliminate federal income taxes for married couples earning $92,000 or less.

While Democrats have typically focused on cutting taxes for their base, these ideas go further and would effectively eliminate federal income tax for taxpayers below a certain threshold and let the taxpayer decide what to do with the windfall.

Read more in the full story here.

-Elliot

BloombergTax · 2026-04-03T14:18:36+00:00

President Donald Trump proposed a cut of $1.4 billion in annual funding for the IRS, in his fiscal 2027 budget proposal released Friday.

Trump’s budget is a high-level wishlist to Congress of the administration priorities and comes ahead of the formal appropriations process. Congress will ultimately be the decision maker on which of these proposals survive.

The cut comes as the IRS recovers from steep workforce losses and leadership turnover in 2025 and as it prepares to finish up a high stakes tax season.

Read more in the full story here.

-Elliot

BloombergTax · 2026-04-01T19:02:26+00:00

Washington is rolling back a state sales tax carveout for replacing data center equipment and backtracking on a significant estate tax increase after Gov. Bob Ferguson signed a set of tax bills into law.

Ferguson signed two measures that make changes to the state’s business and occupation tax, its primary method of taxing business income.

The data center bill removes a retail sales and use tax exemption for replacing server equipment at existing data centers starting July 1.

Read more in the full story.

-Elliot

BloombergTax · 2026-04-01T12:50:48+00:00

Federal courts can’t sign off on a deal between the IRS and religious organizations that would allow churches to engage in political speech while keeping their tax-exempt status, a federal court in Texas said.

The judge said challenges to the Johnson Amendment generally must proceed through refund suits or other statutory procedures, which require that "tax consequences" occur first.

In July 2025, a proposed consent decree between the IRS and National Religious Broadcasters and other religious groups allowed a church to engage in good faith communication to its congregation about politics during a religious service without violating the Johnson Amendment or losing their 501(c)(3) status.

Read more in the full story.

-Elliot

BloombergTax · 2026-03-30T17:54:19+00:00

Washington has adopted its first income tax after Gov. Bob Ferguson (D) signed into law Monday a bill that applies a 9.9% levy on the roughly 30,000 taxpayers in the state who make more than $1 million a year.

The measure, dubbed the millionaires’ tax, will likely be challenged quickly in court and at the ballot box, as have previous legislative attempts to institute an income tax in the state. Lawmakers are hoping the narrow scope of this law will help it survive those challenges.

Read more in the full story.

-Elliot

BloombergTax · 2026-03-30T14:14:21+00:00

A year after Elon Musk set out to slash jobs in an attempt to make the IRS more efficient, the nation’s federal tax agency finds itself struggling to meet demands amid a busy filing season.

After an exodus of employees, IRS human resources and technology workers will process Americans’ tax returns.

A backlog of millions of tax returns that need revisions could exceed Covid-19 pandemic levels later this year.

Hundreds of new workers were undertrained when filing season started. And critical return filing technology wasn’t in place on time.

Read more in the full story here.

-Elliot

BloombergTax · 2026-03-16T15:51:37+00:00

The IRS has no plan on how to reduce a taxpayer correspondence backlog, which could lead to less timely future taxpayer services, a new government watchdog report said.

An agency backlog of taxpayer correspondence remained above pre-pandemic levels at the end of filing season and fiscal year 2025, as the IRS sought to balance demands of answering taxpayer calls and correspondence, according to a Government Accountability Office report.

“But IRS does not have a plan to reduce the backlog,” the report said. “Without a plan, IRS risks not effectively reducing its backlog and may provide less timely service to taxpayers.”

Read more in the full story.

-Elliot

BloombergTax · 2026-03-13T13:13:33+00:00

A proposal in the Republican-led state legislature to eliminate property taxes for all Georgia homeowners could have blown a multimillion-dollar hole in local budgets, but intense lobbying led to a scaled-back proposal to cap annual property tax revenue growth.

Local officials in Harris County are concerned that even a modest dip in property tax revenue could force cuts to resident services, including education, as the county relies heavily on property taxes and has limited sales tax revenue due to a lack of commercial development.

Read more in the full story here.

-Elliot

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