A powerful House committee has tucked language preventing states from regulating artificial intelligence into President Donald Trump’s massive tax and spending bill, a move that would benefit many of the U.S.’s largest tech and AI companies. 

OpenAI, Meta Platforms Inc., and Alphabet Inc.’s Google are among the firms that have argued that state AI regulations would hamstring the burgeoning technology. Meta in April comments to the White House also said state-level rules would raise compliance costs for AI companies. 

The House Energy and Commerce Committee’s draft bill, which the panel will debate on Tuesday, would place a 10-year moratorium on “any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems,” according to language released late Sunday. 

It’s unlikely the language will meet the strict bar for ultimate inclusion in the tax bill, which is being pushed through Congress with only Republican support using a special parliamentary procedure. Senate rules require that provisions passed using the procedure be primarily fiscal in nature.

But its inclusion signals where key Republicans stand on the matter just one month after tech executives urged Congress to pass federal AI legislation to prevent states from creating their own rules. 

AI safety advocates and critics of big tech on Monday warned that the language, if passed, would hamstring state governments seeking to ensure the technology is deployed safely and ethically.  

Brad Carson, president of the AI safety think tank Americans for Responsible Innovation, called the language a “giveaway to Big Tech that will come back to bite us.”

“Tying the hands of lawmakers when it comes to taking on big tech could have catastrophic consequences for the public, for small businesses, and for young people online,” Carson said. 

Patchwork solution

This year alone, at least 45 states and Puerto Rico introduced at least 550 AI bills, according to the National Conference of State Legislatures. And that number is only set to grow in the months ahead. 

California lawmakers’ push last year to pass AI safety laws was opposed by tech companies and venture capital firms, such as OpenAI and Andreessen Horowitz, and ultimately vetoed by California Governor Gavin Newsom, a Democrat. State lawmakers are trying again this year to pass a pared-back bill aimed at holding AI developers accountable for any severe harm caused by their products. 

During an April Energy and Commerce hearing, Scale AI Inc. CEO Alexandr Wang called for “one federal standard” on AI. 

“We cannot afford a patchwork of 50 different state standards that we have to execute against,” Wang said. 

Representative Jay Obernolte, a California Republican on the panel, agreed with Wang, saying Congress has a “limited amount of legislative runway to be able to get that problem solved before the states get too far ahead.” 

But Jan Schakowsky, a senior Democrat on the committee, said the provision would give tech companies “free reign to take advantage of children and families.” 

“This ban will allow AI companies to ignore consumer privacy protections, let deepfakes spread, and allow companies to profile and deceive customers using AI,” she added.

The Internal Revenue Service has not yet satisfied the goal of the Payment Integrity Information Act to reduce improper payment rates to less than 10%, according to a new report.

The report, released Monday by the Treasury Inspector General for Tax Administration, found the total amount of improper payments for four of its refundable tax credits — Additional Child Tax Credit, American Opportunity Tax Credit, Earned Income Tax Credit and Net Premium Tax Credit — totaled $21.4 billion in fiscal year 2024.

In accordance with the Payment Integrity Information Act of 2019, TIGTA has to annually assess and report on improper payment requirements and determine whether the IRS complained with them. The IRS calculated improper payment estimates for four programs that were considered to be high risk because they have improper payments exceeding $100 million annually.

The four programs and their improper payment rates are:

• Net Premium Tax Credit (29%);
• American Opportunity Tax Credit (28%);
• Earned Income Tax Credit (27%); and,
• Additional Child Tax Credit (11%).

The Treasury Department attributed the causes behind the errors to factors such as the complexity of the eligibility rules, inability to verify taxpayer-provided information prior to issuing refunds, lack of correctable error authority, and a requirement to issue refunds within 45 days.

“For example, when there are taxpayers who claim the same dependent, the IRS cannot determine which taxpayer is eligible at the time a tax return is filed, and the IRS must process both claims and complete post-filing activities such as issuing notices or conducting audits to determine eligibility,” said the report.

For the 2025 filing season, the IRS made a change in its Identity Protection PIN process that will accept electronically filed individual tax returns when a dependent has already been claimed on another return to reduce the burden on taxpayers and issue their refunds timely. But there was minimal impact of the duplicate dependent condition on total improper payments. 

The IRS isn’t reporting improper payment rates for pandemic-related programs because they believe it would be an inefficient use of resources given the short-term nature of  pandemic programs, according to the report, though the IRS is continuing to assess risks for pandemic-related programs, such as the Employee Retention Credit. 

TIGTA made three recommendations in the report, suggesting the IRS should request additional legislative considerations to help reduce improper payments and analyze the impact of the new processing procedures for returns claiming duplicate dependents. The IRS agreed with all three of TIGTA’s recommendations.

“The refundable tax credit (RTC) programs examined in this report are designed to provide critical financial support to eligible taxpayers,” wrote IRS CFO Teresa Hunter in response to the report. “The IRS is committed to administering these programs effectively, ensuring that eligible taxpayers receive the credits to which they are entitled while maintaining program integrity and compliance with improper payment reporting requirements.”

She argued that the RTC errors are not a result of internal control weaknesses within the IRS’s processes, but the complexity of the eligibility requirements and the IRS’s reliance on taxpayer self-certification of accurate RTC claims put them outside the traditional improper payment framework.

The Financial Accounting Standards Board released an accounting standards update Monday to improve the requirements for identifying the accounting acquirer in business combinations such as mergers and acquisitions.

The update applies to Topic 805, Business Combinations, and Topic 810, Consolidations, in FASB’s Accounting Standards Codification, and is based on a recommendation of FASB’s Emerging Issues Task Force.

In a business combination, FASB noted, the determination of the accounting acquirer can significantly affect the carrying amounts of the combined entity’s assets and liabilities. The update will revise the current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business. The amendments require an entity to consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions.  

“The new ASU is the first recommendation from the recently reconstituted EITF to be issued as a final standard, and we thank the group for providing a path forward in making financial reporting in this area more comparable and decision useful for investors,” said FASB chair Richard Jones in a statement Monday.

The amendments are effective for all entities for annual reporting periods starting after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. The amendments require an entity to apply the new guidance prospectively to any acquisition transaction that occurs after the initial application date. Early adoption is permitted as of the beginning of an interim or annual reporting period.