January 2026 Recap: Compliance & Regulatory Insights in 10 Mins

Welcome to the January 2026 edition of Compliance & Regulatory Insights. In this recap, we dive into the latest regulatory updates and compliance trends, covering significant actions from the SEC, IRS, and AICPA. From penalty relief for taxpayers to shifts in stablecoin reporting, we’ll explore the key developments that impact professionals across finance, tax, and accounting. Stay ahead of the curve and ensure you’re prepared for what’s next in the world of regulatory compliance.

SEC Updates

How ADM’s Accounting Choices Triggered a $40M SEC Reckoning

In early 2024, Archer-Daniels-Midland (ADM) stunned investors by suspending its CFO and delaying earnings, signaling an internal probe into its nutrition segment’s accounting practices. The SEC later slapped the company with a $40 million fine for manipulating internal rebates and adjustments to meet growth targets. While ADM’s overall financials remained intact, segment reporting was altered, creating misleading performance narratives. The case emphasizes how even subtle accounting adjustments can trigger regulatory scrutiny, showing that internal incentives and external pressures don’t justify distorting financial truths.

SEC Secures $10 Million Order in Cemtrex Fraud Case

In a landmark ruling, the SEC won a $10 million order in the Cemtrex fraud case, reinforcing its commitment to holding companies accountable for financial misconduct. The case underscores the shift towards requiring solid evidence of harm, as the SEC had to demonstrate measurable losses rather than just technical violations. The ruling serves as a reminder that weak controls and poor disclosure practices still carry heavy penalties, especially when executives act on inside information while delaying market disclosures.

Why the SEC Dropped a $3.7 Billion Accounting Case

The SEC’s decision to drop its long-running fraud case against former Rio Tinto CFO Guy Elliott has left more questions than answers. The case centered on the company’s $3.7 billion acquisition of Mozambique coal assets, which later turned into a disaster, with asset values inflated and impairments delayed. While the SEC accused Elliott of misleading auditors, the case was dismissed after years of litigation. This outcome highlights the risks of accounting choices under pressure and the importance of timely and accurate disclosures.

SEC to drop Fraud Case Against ex-Rio Tinto CFO

After eight years, the SEC is dropping its fraud lawsuit against Guy Elliott, former CFO of Rio Tinto. The case stemmed from the company’s failed $3.7 billion investment in Mozambique coal assets, which ended up being sold for just $50 million. While Rio Tinto settled its claims in 2023, Elliott fought the allegations until the case was dismissed. The dismissal raises concerns about how long these cases can drag on and what it means for executives facing similar scrutiny.

SEC Approves 2026 PCAOB Budget and Accounting Support Fee

The SEC has approved the PCAOB’s 2026 budget of $362.1 million, marking a decrease of 9.4% from the previous year. The budget cuts reflect efforts to maintain fiscal discipline while ensuring the PCAOB’s mission to improve audit quality. The SEC’s approval includes a significant reduction in the compensation of board members and a decrease in the accounting support fee. This move highlights the ongoing focus on balancing regulatory effectiveness with financial responsibility.

IRS Updates

IRS Grants Penalty Relief to Nearly 5M Taxpayers

In 2026, the IRS provided nearly $1 billion in penalty relief to 4.9 million taxpayers after issues arising from the pandemic pause in 2022. While notices were suspended, penalties continued to accrue, resulting in higher balances for taxpayers. The IRS's automatic relief addressed balances for tax years 2020 and 2021, correcting errors for most taxpayers and providing crucial clarity. Tax professionals must now help clients stay proactive in the reactivated collection environment.

IRS Breaks Down Overtime Deduction Rules Ahead of Tax Season

Heading into the 2025 filing season, the IRS clarified rules around the new overtime deduction. Employees can deduct only the portion of overtime pay above their regular rate, capped at $12,500 per return. This deduction applies to federally required overtime, not state-specific enhancements. The IRS’s decision to skip W-2 reporting for 2025 means tax professionals must be diligent in verifying eligibility and documenting the deductions accurately. Expect confusion as taxpayers navigate this narrow benefit.

The IRS Revives a 40% Expatriation Tax with Form 708

In 2025, the IRS revived Section 2801, a 40% tax on transfers from “covered expatriates” to U.S. recipients. This tax applies to gifts and bequests from former U.S. citizens or residents who failed to meet compliance requirements. The new Form 708 is now required for U.S. recipients to track these transactions. Tax professionals must update procedures to identify covered expatriates, manage trust contributions, and navigate the complexities of expatriation planning.

100% Bonus Depreciation Is Back, OBBBA Adds Fine Print

Congress made 100% bonus depreciation permanent under the One Big Beautiful Bill Act, with guidance from IRS Notice 2026-11. Professionals must pay close attention to the timing of asset acquisition and whether the asset is “placed in service” before year-end. This change is critical for businesses buying new equipment, vehicles, and property. Elections related to state conformity or NOL posture can impact the outcome, so tax advisors need to analyze the full picture when advising clients.

Why Payment Platforms Are Suddenly in the IRS Crosshairs

With the IRS tightening backup withholding rules under the One Big Beautiful Bill Act, payment platforms like PayPal, Etsy, and Airbnb must now comply with stricter reporting and withholding standards. These platforms will be required to track payments in real-time, and the IRS is aligning reporting thresholds with backup withholding requirements. This change affects both high-volume sellers and platforms, making it crucial for tax professionals to guide clients on compliance and ensure documentation is accurate.

AICPA Updates

What the AICPA Changed for Stablecoin Reporting

The AICPA's update to the 2025 Criteria for Stablecoin Reporting adds a new section focused on the operational controls supporting stablecoin issuers. The update aims to move beyond static disclosures to address ongoing concerns around custody, reserve management, and risk controls. For accountants and auditors, this means stablecoin reporting now demands more detailed assessments of systems and processes, not just asset-backed claims. This shift highlights the growing regulatory focus on ensuring stablecoin operations are as stable as the assets they claim to represent.

AICPA asks IRS to Automate Extensions After Disasters

The AICPA is urging the IRS to streamline the process for disaster-related extension requests under Section 1033 of the Tax Code. The proposed automation would reduce delays and offer more certainty to taxpayers replacing property destroyed by federally declared disasters. This request comes as natural disasters and IRS staff shortages have led to inefficiencies in processing these extensions, adding uncertainty to the process. For tax professionals, this change could improve the speed and clarity of extension approvals in disaster recovery situations.

Trending Updates

PCAOB bars Zwick CPA, Owner and Manager

The PCAOB has sanctioned Zwick CPA, its owner, Jack Zwick, and former audit manager Jeffrey Hoskow for serious audit violations during the 2022 audit of Genie Energy. The firm failed to properly assess audit risks, obtain sufficient evidence, and meet PCAOB standards for documentation and supervision. As a result, Zwick CPA has been barred from reapplying for firm registration for three years, and both Zwick and Hoskow face significant penalties and educational requirements. This case underscores the importance of maintaining high-quality audit practices and strict compliance with PCAOB standards.

The CPA Licensure Shift Taking Hold in New Jersey

New Jersey has officially adopted an alternative pathway for CPA licensure, allowing candidates to qualify with a bachelor’s degree and two years of relevant experience, bypassing the traditional 150-credit rule. This shift is part of a broader movement across the U.S. to make licensure more accessible and aligned with real-world experience. For firms, this change opens up a larger talent pool, especially for candidates balancing work and family obligations, while also emphasizing the importance of early career development and supervision.

Ahead of the Curve

As we move into 2026, the regulatory landscape continues to shift, with key updates influencing tax, accounting, and auditing practices. From IRS penalty relief to the AICPA's stablecoin reporting changes and new pathways for CPA licensure in New Jersey, these updates highlight the need for professionals to stay ahead of the curve. By staying informed and proactive, you can ensure your strategies align with the latest developments and maintain compliance in a rapidly evolving environment.