Tax News & Views Candy Corn Shutdown Consequences Roundup

Shutdown Consequences

Trump’s Signature Tax Law Funds Political Goals During Shutdown – Jack Fitzpatrick, Bloomberg ($):

President Donald Trump is tapping money Congress approved in the massive tax and spending package earlier this year to cover his political priorities during the government shutdown.

Trump administration officials are using a $10 billion fund, enacted as part of Trump’s signature law (HR 1), to pay Department of Homeland Security law enforcement employees during the shutdown, a major priority for the president as he seeks to crack down on immigration and quell alleged unrest in some cities. The shift in funds was described by three people who spoke anonymously because the details of the plan have not been made public. Another person said other money in the law — a $3.3 billion fund for the Justice Department — is being used for federal law enforcement employee pay.

Government Shutdown Puts ERC Appeals on Hold – Katie Lobosco, Tax Notes ($):

The government shutdown is exacerbating problems some taxpayers were already experiencing when trying to claim the employee retention credit made available to qualifying businesses during the COVID-19 pandemic.

Thousands of claims have yet to be processed and taxpayers that have appealed an ERC disallowance faced slow response times from the IRS even before the federal government shut down October 1, limiting the agency’s operations.

Shutdown Already Cost US Economy $18 Billion This Year, CBO Says – Jarrell Dillard, Bloomberg ($):

The federal government shutdown has already cost the US economy at least $18 billion this year, a figure that “will intensify” in the weeks to come, according to the Congressional Budget Office.

The nonpartisan organization emphasized much of the impact will be temporary, with a short-term boost to economic growth in the first quarter of next year. However, they estimate between $7 billion and $14 billion of the hit to gross domestic product will not be recovered, dependent on the ultimate length of the shutdown.

Shutdown Progress?

Wyden Says He’s Hearing ‘Crickets’ From GOP on Healthcare Credit – Katie Lobosco, Tax Notes ($):

The top Democratic taxwriter in the Senate poured cold water on the idea that lawmakers have been moving toward a bipartisan deal on extending the enhanced premium tax credit.

The expiring healthcare credit is at the center of the government shutdown fight, which is stretching into its fifth week. Democrats are demanding a way to address healthcare in exchange for their votes for a stopgap funding bill, but Republican leaders refuse to have those negotiations until the government reopens.

Digital Tax

Trade Deals Outweigh Tax Treaties in US Digital Tax Fight – Ryan Hogg, Bloomberg ($):

The Trump administration’s recent trade deals with Southeast Asian countries signal its intent to use such deals in place of treaties to combat digital services taxes or similar taxes that it deems to be discriminating against US companies.

The trade agreements with Cambodia, Malaysia, and Thailand were made during President Donald Trump’s trip to Kuala Lumpur for the 47th Asean Summit.

Cambodia and Malaysia agreed not to impose DSTs or similar taxes that “discriminate against U.S. companies, in law or in fact,” while Thailand said it would “refrain from imposing” DSTs or “measures that discriminate against U.S. digital services or digital products.”

Energy Credits

Democratic Bill Would Undo Clean Energy Credit Cuts From OBBBA – Cady Stanton, Tax Notes ($):

New legislation from House Democratic taxwriters would restore clean energy credits from the Inflation Reduction Act that were slashed in the Republican reconciliation bill earlier this year, while also maintaining some of its small enhancements.

The American Energy Independence and Affordability Act, introduced by House Ways and Means Committee member Mike Thompson, D-Calif., on October 29, would reestablish a number of clean energy credits repealed or facing accelerated expirations as a result of Republicans’ One Big Beautiful Bill Act (P.L. 119-21) earlier this year.

Democrats move to revive green energy tax credits – Manuel Quinones, E&E News:

House Ways and Means Committee Democrats introduced legislation Wednesday to revive renewable energy tax credits from the Biden-era Inflation Reduction Act.

The legislation — from Rep. Mike Thompson (D-Calif.), Ways and Means ranking member Richard Neal (D-Mass.) and others — would also restore electric vehicle incentives.

G.M. Will Cut 1,750 Jobs in Electric Vehicle Business – Neal E. Boudette, New York Times:

General Motors plans to lay off 1,750 workers indefinitely in the coming months and an additional 1,670 temporarily as it reduces electric vehicle production, the automaker said on Wednesday.

The layoffs are a response to an expected drop in sales of electric cars and trucks after Congress and President Trump ended, on Sept. 30, a $7,500 federal tax credit for the purchase and lease of new electric vehicles.

GM Temporarily Cuts 5,500 Workers Amid EV Pressure – David Welch, Bloomberg ($). “General Motors Co. notified about 5,500 employees across three plants that they are being laid off at least temporarily as the carmaker reassesses electric vehicle production in the wake of President Donald Trump’s move to eliminate crucial tax credits.”

Tariffs

Amicus Briefs Urge Supreme Court to Overturn Trump’s Tariffs – Paul Jones, Tax Notes ($):

Members of Congress, business groups, think tanks, and others have filed a flurry of amicus briefs broadly urging the U.S. Supreme Court to strike down President Trump’s tariffs.

“Courts have repeatedly affirmed: Trump does not have the power to unilaterally impose these tariffs under” the International Emergency Economic Powers Act (IEEPA), House Ways and Means Committee ranking member Richard E. Neal, D-Mass., said in an October 27 release announcing the brief filed by 171 House Democrats and 36 senators in the consolidated cases Learning Resources Inc. v. Trump and V.O.S. Selections Inc. v. United States.

Senate Votes to End Trump’s Tariffs on Brazil, Canada – Jonathan Curry, Tax Notes ($):

A handful of Republican senators broke ranks and joined Democrats in voting to repeal President Trump’s hefty tariffs on Brazil and Canada, although observers see little path forward for the effort.

Late October 29 the Senate voted 50-46 in favor of a resolution to once again try to end the tariffs Trump began imposing on Canada in February after declaring a national emergency in Executive Order 14193. At the time, Trump justified the tariffs by citing drug trafficking across the Canadian border.

Trump and Xi Ease Tension With Truce on Tariffs, Rare Earths – Jennifer A. Dlouhy & Josh Wingrove, Bloomberg ($):

Donald Trump and Xi Jinping agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark summit on Thursday, potentially stabilizing relations between the world’s biggest economies after months of turmoil.

In the first sitdown between the leaders since Trump’s return to the White House, the pair agreed China would pause sweeping controls on rare-earth magnets in exchange for what Beijing said was a US agreement to roll back an expansion of restrictions on Chinese companies. The US will also halve fentanyl-related tariffs on Chinese goods, while Beijing resumes purchases of soybeans and other American agricultural products.

Senate Rebuffs Trump on Canada Tariffs Amid GOP Dissent on Trade – Alicia Diaz, Bloomberg ($). “The Republican-controlled Senate narrowly passed a bill to end Donald Trump’s tariffs on Canada, highlighting GOP divisions over the duties just days after the president threatened to increase them further to punish the US’s northern neighbor.”

Senate Backs Axing Brazil Tariffs, But House Vote Blocked – Kevin Pinner, Law 360 ($). “The Senate voted to end a declared national emergency underpinning U.S. tariffs placed on Brazil for the prosecution of its former president over an attempted coup, but the House has delayed a statutory requirement to expedite accompanying legislation.”

OECD

The OECD’s 10-Year-Old Tax Initiative – Alex M. Parker, Eide Bailly. "It’s been overshadowed by later initiatives, but in October of 2015 the Organization for Economic Cooperation and Development announced a then-groundbreaking global plan to curb international corporate tax avoidance—the Base Erosion and Profit-Shifting project. With buy-in from all of the organization’s members, including the United States, the plan comprised 15 “Action Items,” addressing issues such as interest deductibility, the pricing of intangible assets, reporting requirements, abuse of treaties and arbitrage from “hybrid” mismatches between national tax systems."

Federal Law Reach

American Airlines’ Texas Tax Case Will Test Reach of Federal Law – Perry Cooper, Bloomberg ($):

American Airlines Inc.‘s decade-long challenge to Texas’ franchise tax will give a branch of the state appeals court the chance to determine, for the first time, whether it runs afoul of a federal law limiting state taxation of air travel.

The state comptroller is asking the Texas Court of Appeals, Fifteenth Judicial District, to hold that the franchise tax isn’t a tax “on” gross receipts—which would be preempted and barred by the federal law—but instead uses those gross receipts as part of the calculation of the tax.

IRS Dispute Resolution

IRS Dispute Resolution Program Use Rises After Years of Lagging – Erin Slowey, Bloomberg ($):

Companies and individuals increasingly are taking alternative avenues to resolve their tax disputes with the IRS to avoid costly and drawn-out litigation.

Alternative dispute resolution options are more popular than they’ve been in years, with use growing 25% in fiscal year 2024, according to an IRS spokesperson. Participation kept rising in fiscal year 2025, though the agency couldn’t provide specific figures due to the ongoing federal government shutdown.

Pillar 2 Plan

Industry Group Voices Support for Side-by-Side Pillar 2 Plan – Alexander Rifaat, Tax Notes ($):

The National Association of Manufacturers threw its weight behind Treasury efforts to finalize a deal that would allow U.S.-parented companies to be exempt from some pillar 2 provisions.

In an October 28 letter addressed to Treasury Secretary Scott Bessent, Charles Crain of NAM said the organization “strongly supported” the adoption of a plan that would see the OECD-brokered global tax reform initiative and the U.S. tax system sit “side-by-side,” with U.S.-parented entities being exempt from pillar 2 global anti-base erosion rules, but still subject to qualified domestic minimum top-up taxes.

What Day is it?

To prepare yourself for how gross you’ll feel the day after all that Halloween candy, partake in today’s celebration: National Candy Corn Day!

Tax News & Views Candy Corn Shutdown Consequences Roundup

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Trina Pinneau