Accounting

House passes bills on IRS penalties and Tax Court

Published

8 months ago

December 3, 2025

The House of Representatives approved two pieces of legislation this week to ensure Internal Revenue Service agents aren’t levying fines and penalties on taxpayers without supervisory approval, and to strengthen taxpayer rights in judicial proceedings before the U.S. Tax Court.

The first bill, known as the Fair and Accountable IRS Reviews (FAIR) Act (H.R. 5346), introduced by Rep. Glenn Grothman, R-Wisconsin, would clarify that supervisory approval of a penalty would be considered to be timely only if the person who proposed the penalty obtained approval in writing prior to any written communication to a taxpayer with respect to the penalty.

Currently, an IRS agent’s immediate supervisor provides a signature of approval for the initial determination of a tax penalty. However, an IRS rule under the Biden administration weakened taxpayer protections by allowing IRS agents to shop around for sympathetic supervisors, enabling IRS agents to get approval to apply tax penalties on taxpayers from virtually any other employee. Under the bill, written approval of the penalty must be provided by the immediate supervisor of the person proposing the penalty or another higher supervisory person that the Treasury Secretary may identify. The bill defines the immediate supervisor as the person to whom the individual making the determination reports.

“For decades, federal laws required that before the IRS can impose penalties on a taxpayer, an agent must first receive written approval from that agent’s immediate supervisor,” said Grothman during the debate Monday. “Congress put this safeguard in place to ensure that penalties are imposed fairly, consistently and with appropriate oversight.”

Grothman continued: “A supervisor’s signature helps prevent the use of penalties as a pressure tactic and creates a transparent record that benefits both taxpayers and the government in collection and appeals proceedings. In recent years, unfortunately, a regulatory interpretation complicated the intent of this longstanding statute. Instead of adhering to the clear requirement that an agent’s immediate supervisor must approve a penalty at the time of the initial determination, supervisory appeal could be obtained at any point in the process and the term ‘immediate supervisor’ was broadened beyond Congress’ original intent. As a result, an agent could propose a penalty without prior review and later seek approval from a wide range of individuals, weakening the transparency and accountability that the law was designed to ensure. The Fair and Accountable IRS Reviews Act restores clarity. It reaffirms that an IRS agent’s actual immediate supervisor must provide written approval at the initial determination of a penalty, ensuring proper oversight from the start. This simple clarification strengthens the taxpayer protections and promotes a consistent and reliable penalty process.”

He thanked House Ways and Means Committee chairman Jason Smith, R-Missouri, for getting it passed on a bipartisan basis from the committee before it was passed by the House.

“American taxpayers should not be at the mercy of rogue IRS agents who are handing out fines without reasonable due process,” said Smith during the debate. “At the very least, agents ought to have actual prior approval before issuing a penalty and should not be allowed to go around looking for a sympathetic employee to grant them that approval.”

The bill has been endorsed by groups such as Americans for Tax Reform, the National Federation of Independent Business, the National Taxpayers Union, the Small Business and Entrepreneurship Council and the Taxpayers Protection Alliance.

Tax Court Improvement Act

The other bill passed by the House, the Tax Court Improvement Act (H.R. 5349), authorizes the Tax Court to sign subpoenas to produce books, papers, documents, electronically stored information or tangible items for purposes of discovery or evidence, prior to a hearing. The bill would also ensure Tax Court judges are held to the same standards for disqualification as other federal judges. The bill would also clarify that the Tax Court has jurisdiction to extend a taxpayer’s deadline where timely filing was impossible or impractical. The bill has been endorsed by the National Taxpayers Union, the Small Business and Entrepreneurship Council and the Taxpayers Protection Alliance.

“This bill strengthens taxpayer rights during judicial proceedings before the U.S. Tax Court,” said Smith during the floor debate Monday. “The court will be able to more expeditiously resolve cases as the legislation enhances the efficiency of its judicial review to the benefit of the taxpayer. This will increase the court’s productivity, and Tax Court judges will also be held to the same disqualification standards as other judges. Finally, the court will now have the ability to extend taxpayer deadlines where timely filing is impractical. The U.S. Tax Court is the only venue where taxpayers can dispute a tax estimate without first paying that tax. Taxpayers must stand on equal footing when going toe-to-toe with the IRS. Without the guarantee of rights, taxpayers are put in a situation where the IRS is essentially saying: Heads, I win. Tails, you lose.”

The bipartisan bill was introduced by Reps. Terri Sewell, D-Alabama, and Nathaniel Moran, R-Texas.

“The Tax Court has a very important impact on everyday Americans,” said Sewell. “It provides individuals and businesses with an opportunity to be heard in court to challenge the Internal Revenue Service before paying a disputed tax. Our committee is always looking for ways to make the Tax Court more efficient and fairer for the taxpayer, and that is why we are here today. The Tax Court Improvement Act will strengthen Tax Court procedures and practices by making four commonsense reforms. The act will accelerate the collection of documents, expand the types of cases assigned to special trial judges, hold Tax Court judges to the same recusal standards as other federal judges, and allow the deadline for petitions to be extended in certain circumstances.”

She predicted the improvements to the Tax Court in the bill would have a tangible impact on thousands of taxpayers, and would raise $6 million over the next 10 years.

“For too long, the Tax Court has operated under preexisting rules that do not mirror many of the well-established procedures for other courts and rules that are antiquated in their application,” said Moran. “In short, changes need to be made so that the Tax Court process works better for the people that it serves. When a system is slow or confusing, the burden falls on taxpayers, often at moments when they are already under stress. This bill provides practical updates that help the court do its job more effectively, and it helps taxpayers find resolution more easily and quickly.”

Both bills have been sent to the Senate Finance Committee for further action.

Accounting

Continuous Auditing Transforms Corporate ERPs

Published

3 days ago

July 21, 2026

Business Finance News

continuous auditing transforms corporate erps

As corporate accounting departments cross the threshold into late July 2026, the adoption of continuous, automated auditing systems has reached a definitive turning point. Driven by advances in artificial intelligence and deep integration with modern Enterprise Resource Planning (ERP) platforms, leading finance organizations are moving away from traditional, periodic post-hoc audits in favor of real-time, 100% transactional verification. This technological transition is redefining internal control environments, reducing compliance costs, and eliminating the structural delays inherent in legacy quarterly closing processes.

Unlike traditional auditing frameworks that rely on statistical sampling—a process that inevitably leaves operational blind spots—continuous auditing software monitors operational data feeds continuously. Every purchase order, electronic invoice, payroll disbursement, and cross-border wire transfer is automatically cross-referenced against established corporate governance parameters, regulatory tax schedules, and anti-fraud algorithms in real time. Anomalies or unauthorized ledger entries are flagged instantly, allowing internal audit teams to investigate and remediate compliance gaps immediately rather than months after the close of a financial period.

The implications for executive financial management are far-reaching. By embedding continuous verification directly into daily transaction workflows, chief financial officers gain uninterrupted visibility into the organization’s true financial standing. Real-time balance sheet auditing eliminates the severe operational bottlenecks associated with month-end and quarter-end financial reconciliations, freeing accounting professionals to focus on strategic financial modeling, tax planning, and capital allocation rather than manual data entry and spreadsheet consolidation.

However, implementing continuous auditing requires accounting leadership to invest heavily in data governance and technical upskilling. Internal audit teams must evolve from manual ledger reviewers into system architects capable of auditing complex algorithms and validating automated data pipelines. Accounting firms and corporate controllers that master continuous auditing will establish a resilient compliance framework capable of meeting stringent international regulatory standards with total transparency.

Accounting

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

Published

4 days ago

July 20, 2026

Business Finance News

U.S. Imposes New 50% Tariffs on Canadian Imports Under Rare Legal Provision

WASHINGTON — In a major escalation of cross-border trade friction, U.S. President Donald Trump has signed executive orders imposing new 50% tariffs on a wide selection of Canadian exports, citing discriminatory practices by Ottawa targeting American auto, dairy, and beverage industries.

The new duties, announced Monday, will take effect in 30 days. They target a broad spectrum of consumer and industrial goods—ranging from wine, liquor, and milk products to commercial cement, furniture, clothing, and hockey equipment.

Untested Legal Mechanism

To enact the sweeping measures, the administration invoked Section 338 of the Tariff Act of 1930—a rarely used legal provision allowing the executive branch to levy additional tariffs of up to 50% on foreign nations deemed to discriminate against U.S. commerce.

White House officials noted that Section 338 addresses trade discrimination rather than national security or economic emergencies. The move comes months after prior global emergency tariffs faced legal challenges in domestic courts, signaling Washington’s pivot toward alternate statutory authorities to maintain import duties.

Senior administration officials briefed reporters that the measure directly responds to Canadian provincial bans on U.S. alcohol, restrictions on American vehicle exports, and import quota disparities affecting U.S. dairy and cheese producers relative to third-party trading partners.

“While the administration continues to secure reciprocal trade agreements globally, Canada retaliated against efforts to protect domestic industry,” U.S. Trade Representative Jamieson Greer stated.

USMCA Impact and Carve-Outs

Significantly, the newly ordered 50% duties will apply to designated items even if they otherwise comply with the United States-Mexico-Canada Agreement (USMCA).

However, the administration confirmed key targeted exemptions:

Energy products (including oil and natural gas)
Potash and critical minerals
Fish and seafood
Goods already governed by sector-specific duties (such as existing steel and aluminum tariffs)

Administration representatives emphasized that the tariffs do not stem from recent disputes concerning drifting Canadian wildfire smoke, noting that policy options regarding environmental spillover remain under separate review.

Canadian Response and Market Reaction

Following the White House announcement, the Canadian dollar experienced a sharp decline against the U.S. dollar, falling approximately 0.4% during evening trading.

Canadian Prime Minister Mark Carney issued a statement emphasizing that Canada’s earlier counter-duties had merely matched previous U.S. trade actions. “Canada stands ready to engage intensively to address outstanding issues with the U.S. to the mutual benefit of our citizens,” Carney stated, pointing to detailed proposals Ottawa submitted to modernize the USMCA framework.

Ontario Premier Doug Ford took a firmer stance, urging a “dollar-for-dollar” reciprocal response if the measures go into effect on August 19.

With a 30-day implementation window before the duties officially lock in, industry associations and trade groups on both sides of the border are calling for urgent bilateral negotiations to avert further supply chain disruption across North America.

Accounting

Automated Continuous Auditing: Transforming Compliance and Real-Time Financial Oversight

Published

4 days ago

July 20, 2026

Business Finance News

Transforming Compliance and Real-Time Financial Oversight

The traditional accounting paradigm—defined by periodic monthly closures and post-hoc annual audits—is rapidly giving way to continuous, automated financial oversight. As of July 2026, forward-thinking accounting practices and multinational corporate finance departments are leveraging continuous auditing systems powered by advanced machine learning models. These systems monitor operational transactions in real time, shifting audit methodologies from sample-based post-analysis to absolute, 100% transaction-level verification.

The operational advantages of continuous auditing are transformative. Standard auditing procedures historically relied on statistical sampling, which, despite rigorous methodology, inherently left gaps where anomalies or fraudulent transactions could go undetected for months. Modern continuous auditing platforms integrate directly with enterprise resource planning (ERP) databases, instantly cross-referencing purchase orders, invoices, bank feeds, and tax records. Any deviation from established control parameters or unusual transaction behavior triggers immediate flags for internal audit teams, dramatically reducing detection lag from quarters to seconds.

Beyond fraud prevention, continuous auditing fundamentally alters internal reporting and decision-making. Executive leadership no longer has to wait weeks after the close of a quarter to evaluate precise financial standing; real-time verified ledger data provides an uninterrupted view of operating margins, tax liabilities, and cash flow dynamics. This real-time visibility enables corporate controllers to adjust capital allocation strategies dynamically, mitigating liquidity constraints and capitalizing on emerging commercial opportunities far more efficiently than competitors bound to legacy reporting cycles.

However, implementing continuous auditing requires accounting professionals to acquire new analytical capabilities. The role of the auditor is evolving from manual data reconciliation toward system validation, algorithmic model governance, and strategic risk interpretation. Accounting firms and corporate finance departments must invest in continuous technical education, ensuring that audit staff possess the data engineering skills necessary to design, maintain, and evaluate complex automated compliance systems.