DROPLETS
Any entity or individual with UK-facing operations, financial ties, or supply chain links to designated Russian persons or sectors must immediately review compliance protocols to avoid enforcement risk.
The UK has rolled out a fresh batch of sanctions designations targeting Russian individuals, entities, and sectors, alongside tightened restrictions on UK persons dealing in certain Russian-origin goods, financial services, and energy-related assets. These measures expand the scope of prohibited activities, introduce new licensing requirements, and increase penalties for non-compliance. In-house counsel should audit existing counterparty due diligence, transaction screening processes, and internal sanctions policies to ensure alignment with the updated framework, and monitor for further alignment with evolving international sanctions regimes.
Companies using individuals' images, voices or personas in content must update publicity releases, talent agreements and vendor contracts now to address AI-generated digital replicas and synthetic performers before new state and federal rules create unenforceable gaps.
Generative AI can now create realistic digital replicas of a person's face, body and voice, but many legacy publicity releases, talent agreements and influencer contracts lack clear AI-specific consent language. A rapidly shifting legal landscape—including California Labor Code section 927 and AB 1836, the pending federal NO FAKES Act, and New York's synthetic-performer disclosure law effective June 2026—means broad 'edit' or 'derivative works' clauses may no longer suffice. Litigation and FTC enforcement over unauthorized AI-generated likenesses and fake endorsements are already increasing. Organizations should review all agreements governing image, voice or persona rights, add precise definitions for digital replicas and AI uses, separate routine editing from synthetic recreation, price AI rights distinctly, require vendor restrictions on training models, build in approval and disclosure obligations, and add heightened safeguards for minors.
Public companies must now independently assess and defend Rule 14a-8 exclusion decisions without SEC staff no-action guidance, shifting full legal responsibility to issuers and their counsel.
The SEC Division of Corporation Finance has indefinitely ceased issuing no-action letters or any responses to Rule 14a-8 exclusion notices, including for Rule 14a-8(i)(1) arguments. Companies must still notify the SEC and the proponent when excluding a proposal, but no longer need to provide the unqualified 'reasonable basis' representation previously required for a 'No Objection' letter. The exclusion notice must still explain the basis for exclusion with reference to applicable authority and include counsel opinions when state or foreign law is involved. This places the entire analytical and litigation risk on issuers, as shareholder proponents, proxy advisors, and courts will scrutinize the company's stated rationale. The change aligns with Chairman Atkins's view that SEC staff interposition is unnecessary and costly, and signals potential broader rulemaking to reshape the shareholder proposal framework.
Companies that transacted with taxpayers named in recent SAT publications must immediately reverse tax effects of associated digital invoices within 30 days to avoid suspension of operations, tax assessments, and criminal liability.
Mexico’s Tax Administration Service (SAT) has published three rounds of taxpayer names—on July 10, August 7, and August 15, 2026—under its new expedited domiciliary audit procedure, deeming all digital tax invoices (CFDIs) issued by those entities fraudulent and without tax effect. Recipients of these invoices face a 30-day deadline to reverse tax treatment; failure to do so triggers temporary suspension of their digital seal certificate, halting business operations, assessment of back taxes with surcharges and penalties, and potential criminal charges for tax fraud or illicit origin transactions carrying up to nine years imprisonment. Businesses must immediately review accounting records for transactions with listed taxpayers and monitor future SAT publications, as the authority will continue periodic releases.
Any organization using AI or automated decision-making tools that affect individuals in the UK must begin mapping and documenting those systems now, because the ICO is legally required to issue a binding Code of Practice that will shape enforcement and litigation risk.
The UK Information Commissioner’s Office is now under a statutory duty to prepare a Code of Practice on AI and automated decision-making under the Data Protection Act 2018, following the Data (Use and Access) Act 2025 and related 2026 regulations. The Code will carry the same weight as the Children’s Code and Data Sharing Code, meaning courts and the ICO must take it into account in proceedings and enforcement. It applies to any controller using AI or automated systems to make decisions about people, including third-party tools, and covers organizations with no UK presence if they target or monitor UK individuals. The ICO has already signaled its expectations through draft ADM guidance, emphasizing meaningful human involvement and robust documentation. Businesses should audit AI use, update data protection impact assessments, review vendor contracts for AI-specific terms, and monitor for final guidance and the 2027 Code to reduce enforcement, litigation, and reputational exposure.
UAS manufacturers, operators, and importers must assess and respond to new Section 232 tariffs of up to 100% on imported drones and components effective September 3, which will significantly alter supply chain costs and sourcing strategies.
The U.S. has imposed new Section 232 tariffs on imported unmanned aircraft systems (UAS) and their components, with rates reaching up to 100% and an effective date of September 3. This action directly impacts manufacturers that rely on foreign-made parts, operators that import ready-to-fly systems, and any entity involved in the UAS supply chain. Companies should immediately review their import volumes, evaluate alternative sourcing from domestic or unaffected countries, and model the financial impact of these duties on pricing and margins. Engaging trade counsel to explore potential exclusions, tariff classification strategies, and supply chain restructuring is critical to mitigating exposure and maintaining competitiveness.
Limited partners and their tax advisors must review partnership agreements and income allocations to ensure self-employment tax exemption compliance following the Fifth Circuit's narrowed ruling on rehearing.
On August 12, 2026, the U.S. Court of Appeals for the Fifth Circuit issued an opinion on rehearing in a case addressing the limited partner exception to self-employment tax under Internal Revenue Code §1402(a)(13). The court narrowed its prior taxpayer-friendly ruling but preserved the core holding that certain limited partner interests can still qualify for the self-employment tax exemption. The rehearing opinion clarified the scope of the exception, emphasizing that limited partners must still meet specific requirements regarding their partnership role and the nature of their income. Tax practitioners should carefully review partnership agreements, allocation provisions, and the specific activities of limited partners to ensure compliance with the court's refined standard. The ruling provides continued taxpayer benefit but introduces additional scrutiny on how limited partner status is documented and operationalized within partnership structures.
Illinois employers must remove driver’s license requirements from job postings unless driving is an essential job function, effective January 1, 2027, or face liability under the amended Ban the Box law.
Effective January 1, 2027, Illinois HB 4758 amends the state’s Job Opportunities for Qualified Applicants Act (Ban the Box law) to prohibit covered employers from stating in job postings that applicants must hold a valid driver’s license unless driving is an essential function of the position and a business necessity. The amendment restricts pre-hiring license requirements that may disproportionately exclude applicants without licenses, such as those with disabilities, younger workers, or low-income individuals who lack vehicle access. Covered employers must review all job postings to remove non-essential driver’s license mandates and ensure any such requirement is narrowly tailored to actual job duties. Noncompliance may trigger claims under the Act, with potential remedies including fines and injunctive relief. Employers should update hiring policies, train recruiters and hiring managers on the new standard, and document business necessity for any roles where driving remains a bona fide requirement.
Employers using AI in hiring must treat the technology as a regulated employment practice, not just a vendor purchase, because algorithmic bias and lack of transparency create direct liability for discrimination and failure to accommodate.
The article explains that AI-powered hiring tools—such as resume screeners, video interview analyzers, and scheduling optimizers—are subject to the same anti-discrimination and accommodation obligations as traditional employment decisions. Even unintentional disparate impact can trigger claims under federal and state laws, and employers cannot rely on vendor assurances of compliance. The piece highlights active enforcement and litigation, including EEOC actions and cases like Mobley v. Workday. It also notes the growing patchwork of federal, state, and local AI-specific regulations. To mitigate risk, employers should inventory all AI tools, demand validation and bias-audit documentation from vendors, conduct independent adverse impact analyses, maintain human oversight, provide disability accommodations, and retain detailed records. The core message is that legal responsibility stays with the employer, making governance and documentation essential.
Employers facing frequent employee complaints about supervision style or working conditions should note that the Eighth Circuit ruled such general grievances do not constitute protected activity under Title VII’s anti-retaliation provision unless they explicitly oppose unlawful discrimination.
The Eighth Circuit affirmed summary judgment for an employer in Joseph v. Thomas-Grace Construction, Inc., holding that an employee’s repeated complaints about micromanaging supervisors, unwanted reassignments, and disrespect did not amount to protected activity under Title VII. Although the employee later referenced sex-based stereotypes, the court found the decisionmaker’s adverse reaction predated any discrimination-flavored complaint, breaking the causal chain. The ruling underscores that protected activity requires opposition to conduct made unlawful by statute, not merely workplace friction. Employers should document performance and conduct contemporaneously, train managers to avoid inflammatory communications, and ensure HR reviews any complaint that touches on a protected characteristic.
Founders, venture capital investors, and fund managers must adjust to a bifurcated market where a small group of large firms control most fundraising, exit returns are driven by paper marks rather than cash distributions, and deal terms increasingly center on waterfall mechanics and secondary liquidity.
PitchBook’s Q2 2026 data shows U.S. venture funds raised $74.8 billion in the first half of 2026, with funds of $1 billion or more capturing 68.3% of that capital and just twelve firms accounting for roughly three-quarters of all dollars raised. At the same time, smaller funds under $50 million represent a decade-high 67.7% of all funds closed but raised only 4% of total capital, while first-time fund closings hit a decade-low. Reported one-year returns of 17.1% are largely unrealized, as cash distributions to LPs remain well below long-run averages. Secondary trading volume is near $100 billion for the year, concentrated in companies with tight transfer restrictions, and GP-led secondaries, continuation vehicles, and NAV loans have become standard liquidity tools. The median exit for a company valued above $500 million now requires $323.7 million in total raised capital, up from $157 million ten years ago, while the valuation step-up at exit has collapsed from 62.8% in 2021 to 15.5% today. As a result, liquidation preferences, participation rights, and management carve-outs have bec
…
BESS developers and their lenders must address new Foreign Entity of Concern supply chain rules to secure project financing and maintain asset value across the lifecycle.
New Foreign Entity of Concern regulations are changing how battery energy storage projects are financed in the United States. The rules make FEOC compliance a core capital allocation issue rather than a peripheral compliance checkbox. Developers are responding by diversifying supply chains away from restricted sources, restructuring project ownership to isolate risk, and strengthening contractual protections to preserve financeability over the long term. Lenders and investors should review their due diligence and covenant packages to ensure FEOC compliance is embedded in project documentation and ongoing monitoring.
U.S. crypto exchanges and trading firms are launching broker-dealer affiliates and tokenized securities products while regulators simultaneously impose OFAC sanctions and pursue fraud and market-manipulation charges.
This digest covers four major developments. First, digital-asset infrastructure firms are deepening U.S. regulated operations: Wintermute registered a U.S. broker-dealer affiliate with the SEC and FINRA, and Copper’s U.S. affiliate became a FINRA member to offer qualified custody and OTC services. Second, crypto exchanges are launching tokenized securities products, including tokenized stocks in the EEA and S&P 500 perpetual offerings, expanding retail and institutional access to traditional equities via blockchain. Third, OFAC sanctioned two crypto exchanges—Shelbit Exchange and Aban Tether—for facilitating Iran sanctions evasion and IRGC funding, adding wallet addresses to the SDN List. Fourth, DOJ, SEC, and CFTC announced parallel enforcement actions: an NFT founder was indicted for securities and wire fraud; a crypto market-maker was sentenced for wash-trading conspiracies; and Goliath Ventures and its CEO faced SEC and CFTC charges over an alleged $425 million Ponzi scheme. In-house counsel should review sanctions compliance programs, broker-dealer registration obligations, and
…
San Francisco employers and affordable housing providers must update background-check procedures by August 10 to comply with expanded protections for out-of-state records and steeper penalties for violations.
Amendments to San Francisco’s Fair Chance Ordinance, effective August 10, prohibit covered employers and affordable housing providers from considering out-of-state arrests or convictions for conduct lawful in California, including abortion-related healthcare, drag performances, gender-affirming care, and spontaneous abortion. The law also formalizes the adverse-action process with specific deadlines: seven days for individuals to respond to a pre-adverse action notice, 14 days for employers to confirm receipt and delay action, and 30 days to issue a final decision. Administrative penalties for noncompliance double, with first violations now carrying a $1,000 fine. Employers operating in San Francisco should review screening criteria, update notices and templates, and train relevant staff and vendors on the new requirements.
Public companies and accounting firms should anticipate heightened SEC scrutiny of financial reporting and auditing practices following the formation of a dedicated enforcement unit.
The Securities and Exchange Commission has established a new Financial Reporting and Accounting Unit focused on pursuing accounting fraud, financial reporting misconduct, and auditing-related violations. The creation of this specialized unit signals a strategic shift toward more concentrated enforcement resources in complex accounting areas. For in-house counsel and compliance officers, this development suggests the SEC will likely increase investigative activity, prioritize cases involving revenue recognition, internal controls, and auditor independence, and potentially adopt more aggressive discovery and litigation tactics. Organizations should review their accounting policies, internal control frameworks, and auditor relationships to ensure robust documentation and compliance, while also preparing for potentially longer and more intrusive SEC inquiries.
Any organization using AI or automated decision-making tools that affect individuals in the UK must begin mapping and documenting those systems now, because the ICO is legally required to issue a binding Code of Practice that will shape enforcement and litigation risk.
The UK Information Commissioner’s Office is now under a statutory duty to prepare a Code of Practice on AI and automated decision-making under the Data Protection Act 2018, following the Data (Use and Access) Act 2025 and related 2026 regulations. The Code will carry the same weight as the Children’s Code and Data Sharing Code, meaning courts and the ICO must take it into account in proceedings and enforcement. It applies to any controller using AI or automated systems to make decisions about people, including third-party tools, and covers organizations with no UK presence if they target or monitor UK individuals. The ICO has already signaled its expectations through draft ADM guidance, emphasizing meaningful human involvement and robust documentation. Businesses should audit AI use, update data protection impact assessments, review vendor contracts for AI-specific terms, and monitor for final guidance and the 2027 Code to reduce enforcement, litigation, and reputational exposure.
Founders, venture capital investors, and fund managers must adjust to a bifurcated market where a small group of large firms control most fundraising, exit returns are driven by paper marks rather than cash distributions, and deal terms increasingly center on waterfall mechanics and secondary liquidity.
PitchBook’s Q2 2026 data shows U.S. venture funds raised $74.8 billion in the first half of 2026, with funds of $1 billion or more capturing 68.3% of that capital and just twelve firms accounting for roughly three-quarters of all dollars raised. At the same time, smaller funds under $50 million represent a decade-high 67.7% of all funds closed but raised only 4% of total capital, while first-time fund closings hit a decade-low. Reported one-year returns of 17.1% are largely unrealized, as cash distributions to LPs remain well below long-run averages. Secondary trading volume is near $100 billion for the year, concentrated in companies with tight transfer restrictions, and GP-led secondaries, continuation vehicles, and NAV loans have become standard liquidity tools. The median exit for a company valued above $500 million now requires $323.7 million in total raised capital, up from $157 million ten years ago, while the valuation step-up at exit has collapsed from 62.8% in 2021 to 15.5% today. As a result, liquidation preferences, participation rights, and management carve-outs have bec
…
Illinois employers must remove driver’s license requirements from job postings unless driving is an essential job function, effective January 1, 2027, or face liability under the amended Ban the Box law.
Effective January 1, 2027, Illinois HB 4758 amends the state’s Job Opportunities for Qualified Applicants Act (Ban the Box law) to prohibit covered employers from stating in job postings that applicants must hold a valid driver’s license unless driving is an essential function of the position and a business necessity. The amendment restricts pre-hiring license requirements that may disproportionately exclude applicants without licenses, such as those with disabilities, younger workers, or low-income individuals who lack vehicle access. Covered employers must review all job postings to remove non-essential driver’s license mandates and ensure any such requirement is narrowly tailored to actual job duties. Noncompliance may trigger claims under the Act, with potential remedies including fines and injunctive relief. Employers should update hiring policies, train recruiters and hiring managers on the new standard, and document business necessity for any roles where driving remains a bona fide requirement.
Employers using AI in hiring must treat the technology as a regulated employment practice, not just a vendor purchase, because algorithmic bias and lack of transparency create direct liability for discrimination and failure to accommodate.
The article explains that AI-powered hiring tools—such as resume screeners, video interview analyzers, and scheduling optimizers—are subject to the same anti-discrimination and accommodation obligations as traditional employment decisions. Even unintentional disparate impact can trigger claims under federal and state laws, and employers cannot rely on vendor assurances of compliance. The piece highlights active enforcement and litigation, including EEOC actions and cases like Mobley v. Workday. It also notes the growing patchwork of federal, state, and local AI-specific regulations. To mitigate risk, employers should inventory all AI tools, demand validation and bias-audit documentation from vendors, conduct independent adverse impact analyses, maintain human oversight, provide disability accommodations, and retain detailed records. The core message is that legal responsibility stays with the employer, making governance and documentation essential.
Employers facing frequent employee complaints about supervision style or working conditions should note that the Eighth Circuit ruled such general grievances do not constitute protected activity under Title VII’s anti-retaliation provision unless they explicitly oppose unlawful discrimination.
The Eighth Circuit affirmed summary judgment for an employer in Joseph v. Thomas-Grace Construction, Inc., holding that an employee’s repeated complaints about micromanaging supervisors, unwanted reassignments, and disrespect did not amount to protected activity under Title VII. Although the employee later referenced sex-based stereotypes, the court found the decisionmaker’s adverse reaction predated any discrimination-flavored complaint, breaking the causal chain. The ruling underscores that protected activity requires opposition to conduct made unlawful by statute, not merely workplace friction. Employers should document performance and conduct contemporaneously, train managers to avoid inflammatory communications, and ensure HR reviews any complaint that touches on a protected characteristic.
San Francisco employers and affordable housing providers must update background-check procedures by August 10 to comply with expanded protections for out-of-state records and steeper penalties for violations.
Amendments to San Francisco’s Fair Chance Ordinance, effective August 10, prohibit covered employers and affordable housing providers from considering out-of-state arrests or convictions for conduct lawful in California, including abortion-related healthcare, drag performances, gender-affirming care, and spontaneous abortion. The law also formalizes the adverse-action process with specific deadlines: seven days for individuals to respond to a pre-adverse action notice, 14 days for employers to confirm receipt and delay action, and 30 days to issue a final decision. Administrative penalties for noncompliance double, with first violations now carrying a $1,000 fine. Employers operating in San Francisco should review screening criteria, update notices and templates, and train relevant staff and vendors on the new requirements.
BESS developers and their lenders must address new Foreign Entity of Concern supply chain rules to secure project financing and maintain asset value across the lifecycle.
New Foreign Entity of Concern regulations are changing how battery energy storage projects are financed in the United States. The rules make FEOC compliance a core capital allocation issue rather than a peripheral compliance checkbox. Developers are responding by diversifying supply chains away from restricted sources, restructuring project ownership to isolate risk, and strengthening contractual protections to preserve financeability over the long term. Lenders and investors should review their due diligence and covenant packages to ensure FEOC compliance is embedded in project documentation and ongoing monitoring.
U.S. crypto exchanges and trading firms are launching broker-dealer affiliates and tokenized securities products while regulators simultaneously impose OFAC sanctions and pursue fraud and market-manipulation charges.
This digest covers four major developments. First, digital-asset infrastructure firms are deepening U.S. regulated operations: Wintermute registered a U.S. broker-dealer affiliate with the SEC and FINRA, and Copper’s U.S. affiliate became a FINRA member to offer qualified custody and OTC services. Second, crypto exchanges are launching tokenized securities products, including tokenized stocks in the EEA and S&P 500 perpetual offerings, expanding retail and institutional access to traditional equities via blockchain. Third, OFAC sanctioned two crypto exchanges—Shelbit Exchange and Aban Tether—for facilitating Iran sanctions evasion and IRGC funding, adding wallet addresses to the SDN List. Fourth, DOJ, SEC, and CFTC announced parallel enforcement actions: an NFT founder was indicted for securities and wire fraud; a crypto market-maker was sentenced for wash-trading conspiracies; and Goliath Ventures and its CEO faced SEC and CFTC charges over an alleged $425 million Ponzi scheme. In-house counsel should review sanctions compliance programs, broker-dealer registration obligations, and
…
UAS manufacturers, operators, and importers must assess and respond to new Section 232 tariffs of up to 100% on imported drones and components effective September 3, which will significantly alter supply chain costs and sourcing strategies.
The U.S. has imposed new Section 232 tariffs on imported unmanned aircraft systems (UAS) and their components, with rates reaching up to 100% and an effective date of September 3. This action directly impacts manufacturers that rely on foreign-made parts, operators that import ready-to-fly systems, and any entity involved in the UAS supply chain. Companies should immediately review their import volumes, evaluate alternative sourcing from domestic or unaffected countries, and model the financial impact of these duties on pricing and margins. Engaging trade counsel to explore potential exclusions, tariff classification strategies, and supply chain restructuring is critical to mitigating exposure and maintaining competitiveness.
Companies using individuals' images, voices or personas in content must update publicity releases, talent agreements and vendor contracts now to address AI-generated digital replicas and synthetic performers before new state and federal rules create unenforceable gaps.
Generative AI can now create realistic digital replicas of a person's face, body and voice, but many legacy publicity releases, talent agreements and influencer contracts lack clear AI-specific consent language. A rapidly shifting legal landscape—including California Labor Code section 927 and AB 1836, the pending federal NO FAKES Act, and New York's synthetic-performer disclosure law effective June 2026—means broad 'edit' or 'derivative works' clauses may no longer suffice. Litigation and FTC enforcement over unauthorized AI-generated likenesses and fake endorsements are already increasing. Organizations should review all agreements governing image, voice or persona rights, add precise definitions for digital replicas and AI uses, separate routine editing from synthetic recreation, price AI rights distinctly, require vendor restrictions on training models, build in approval and disclosure obligations, and add heightened safeguards for minors.
Any organization using AI or automated decision-making tools that affect individuals in the UK must begin mapping and documenting those systems now, because the ICO is legally required to issue a binding Code of Practice that will shape enforcement and litigation risk.
The UK Information Commissioner’s Office is now under a statutory duty to prepare a Code of Practice on AI and automated decision-making under the Data Protection Act 2018, following the Data (Use and Access) Act 2025 and related 2026 regulations. The Code will carry the same weight as the Children’s Code and Data Sharing Code, meaning courts and the ICO must take it into account in proceedings and enforcement. It applies to any controller using AI or automated systems to make decisions about people, including third-party tools, and covers organizations with no UK presence if they target or monitor UK individuals. The ICO has already signaled its expectations through draft ADM guidance, emphasizing meaningful human involvement and robust documentation. Businesses should audit AI use, update data protection impact assessments, review vendor contracts for AI-specific terms, and monitor for final guidance and the 2027 Code to reduce enforcement, litigation, and reputational exposure.
Any entity or individual with UK-facing operations, financial ties, or supply chain links to designated Russian persons or sectors must immediately review compliance protocols to avoid enforcement risk.
The UK has rolled out a fresh batch of sanctions designations targeting Russian individuals, entities, and sectors, alongside tightened restrictions on UK persons dealing in certain Russian-origin goods, financial services, and energy-related assets. These measures expand the scope of prohibited activities, introduce new licensing requirements, and increase penalties for non-compliance. In-house counsel should audit existing counterparty due diligence, transaction screening processes, and internal sanctions policies to ensure alignment with the updated framework, and monitor for further alignment with evolving international sanctions regimes.
Public companies must now independently assess and defend Rule 14a-8 exclusion decisions without SEC staff no-action guidance, shifting full legal responsibility to issuers and their counsel.
The SEC Division of Corporation Finance has indefinitely ceased issuing no-action letters or any responses to Rule 14a-8 exclusion notices, including for Rule 14a-8(i)(1) arguments. Companies must still notify the SEC and the proponent when excluding a proposal, but no longer need to provide the unqualified 'reasonable basis' representation previously required for a 'No Objection' letter. The exclusion notice must still explain the basis for exclusion with reference to applicable authority and include counsel opinions when state or foreign law is involved. This places the entire analytical and litigation risk on issuers, as shareholder proponents, proxy advisors, and courts will scrutinize the company's stated rationale. The change aligns with Chairman Atkins's view that SEC staff interposition is unnecessary and costly, and signals potential broader rulemaking to reshape the shareholder proposal framework.
Public companies and accounting firms should anticipate heightened SEC scrutiny of financial reporting and auditing practices following the formation of a dedicated enforcement unit.
The Securities and Exchange Commission has established a new Financial Reporting and Accounting Unit focused on pursuing accounting fraud, financial reporting misconduct, and auditing-related violations. The creation of this specialized unit signals a strategic shift toward more concentrated enforcement resources in complex accounting areas. For in-house counsel and compliance officers, this development suggests the SEC will likely increase investigative activity, prioritize cases involving revenue recognition, internal controls, and auditor independence, and potentially adopt more aggressive discovery and litigation tactics. Organizations should review their accounting policies, internal control frameworks, and auditor relationships to ensure robust documentation and compliance, while also preparing for potentially longer and more intrusive SEC inquiries.
Companies that transacted with taxpayers named in recent SAT publications must immediately reverse tax effects of associated digital invoices within 30 days to avoid suspension of operations, tax assessments, and criminal liability.
Mexico’s Tax Administration Service (SAT) has published three rounds of taxpayer names—on July 10, August 7, and August 15, 2026—under its new expedited domiciliary audit procedure, deeming all digital tax invoices (CFDIs) issued by those entities fraudulent and without tax effect. Recipients of these invoices face a 30-day deadline to reverse tax treatment; failure to do so triggers temporary suspension of their digital seal certificate, halting business operations, assessment of back taxes with surcharges and penalties, and potential criminal charges for tax fraud or illicit origin transactions carrying up to nine years imprisonment. Businesses must immediately review accounting records for transactions with listed taxpayers and monitor future SAT publications, as the authority will continue periodic releases.
Limited partners and their tax advisors must review partnership agreements and income allocations to ensure self-employment tax exemption compliance following the Fifth Circuit's narrowed ruling on rehearing.
On August 12, 2026, the U.S. Court of Appeals for the Fifth Circuit issued an opinion on rehearing in a case addressing the limited partner exception to self-employment tax under Internal Revenue Code §1402(a)(13). The court narrowed its prior taxpayer-friendly ruling but preserved the core holding that certain limited partner interests can still qualify for the self-employment tax exemption. The rehearing opinion clarified the scope of the exception, emphasizing that limited partners must still meet specific requirements regarding their partnership role and the nature of their income. Tax practitioners should carefully review partnership agreements, allocation provisions, and the specific activities of limited partners to ensure compliance with the court's refined standard. The ruling provides continued taxpayer benefit but introduces additional scrutiny on how limited partner status is documented and operationalized within partnership structures.
Grade 3 — worth a glance, not the full analysis.
- Trump Crypto Firm Backs Venture Offering AI From Restricted Chinese Companies
A Trump-affiliated cryptocurrency firm is backing a venture that provides AI services from restricted Chinese companies, raising potential sanctions and national security concerns for financial institutions and crypto businesses engaging with the venture.
- Trump-Era 401(k) Rule Changes Ease Path for Small Employers
Small employers seeking to launch or expand 401(k) plans now face reduced regulatory barriers under updated Trump administration DOL rules, with implementation timelines and compliance obligations requiring immediate attention from benefits counsel and HR decision-makers.
- EU Methane Guidance and Brazil’s Oil and Gas Regulatory Push
Oil and gas operators with European supply chain ties or Brazilian assets must track emerging methane emission rules to avoid future compliance gaps.
- Collective Investment Trusts Offer Lower-Cost Retirement Plan Investment Option
Retirement plan sponsors and investment fiduciaries should evaluate collective investment trusts as a lower-cost, regulated alternative to mutual funds for plan investment lineups.
- Illinois mandates workplace accommodations for menopause-related conditions
Illinois employers must prepare to provide reasonable accommodations and prohibit discrimination based on menopause-related conditions under amended IHRA rules effective January 1, 2027.
- Mich. Court Upholds Co-Working Franchisor’s Termination Claims
Franchisors operating in Michigan must document multiple independent grounds for termination and provide cure periods exceeding statutory minimums to survive early dismissal challenges in enforcement actions.
- Q2 2026 Venture Capital Hits Record $85.7B Despite Down Round Uptick
In-house counsel for startups and venture-backed companies must track shifting deal terms and valuation trends to advise on fundraising strategy and investor negotiations.