Key Takeaways
- Shutdown continues.
- ACA fight continues as open enrollment begins.
- IRS and ICE data sharing.
- Senate resolution to end tariffs.
- Tax Foundation releases 2026 State Tax Competitiveness Index.
- Tax Court: Part of settlement interest income, not capital gain.
- Happy Halloween!
Shutdown Continues as Open Enrollment Begins
Obamacare subsidies meet their moment - Laura Weiss, Punchbowl News:
That means many Americans looking to buy health coverage will see premium prices rise. Democrats are gambling that sticker shock will push Republicans to the negotiating table on Obamacare enhanced premium tax credits, their key demand in the government shutdown fight. And they’re confident health care costs and affordability are the right political focal point for the moment.
Here’s How Much Obamacare Prices Are Rising Across the Country - Margot Sanger-Katz and Alicia Parlapiano, New York Times:
Most people who buy their own coverage don’t pay full price. Tax credits created by the Affordable Care Act help pay the bills. But the new prices reflect what will happen if extra tax subsidies, first passed in 2021 and extended in 2022, are allowed to expire at the end of this year.
Open Enrollment Set to Begin Without ACA Tax Credit Extension - Katie Lobosco, Tax Notes ($):
Lawmakers have failed to extend the enhanced premium tax credit before taxpayers begin purchasing Affordable Care Act health insurance plans November 1.
While there’s still time to extend the subsidy before it expires at the end of the year, Democrats wanted to address the issue before the open enrollment period so Americans would have certainty about the cost of the plan they select for coverage next year.
Senators left Washington for the weekend October 30 and aren’t scheduled to return until November 3, effectively pushing the government shutdown into its 34th day.
While there’s still time to extend the subsidy before it expires at the end of the year, Democrats wanted to address the issue before the open enrollment period so Americans would have certainty about the cost of the plan they select for coverage next year.
Senators left Washington for the weekend October 30 and aren’t scheduled to return until November 3, effectively pushing the government shutdown into its 34th day.
Behind the Scenes of IRS - ICE Data Sharing
ICE made expansive request for taxpayer data amid IRS pushback - Danny Nguyen, Politico:
The records were released as part of a lawsuit filed by the Center for Taxpayer Rights and several other organizations against the IRS and Treasury Department seeking to halt the data sharing. They include hundreds of pages of email exchanges and attached documents that illustrate the Trump administration’s struggles to comply with taxpayer privacy laws as ICE looked to the IRS to obtain taxpayer records for undocumented immigrants.
How the IRS and ICE Tussled During Trump’s Deportation Push - Richard Rubin, Wall Street Journal:
The tax agency moved from flat rejection of February’s broad requests to a much narrower August disclosure. The IRS found more than 47,000 matches of name-and-address information from a list of 1.3 million provided by ICE. Immigration authorities haven’t said whether or how they are using that information, but up-to-date tax records could help them more easily locate people who have stayed in the country despite deportation orders.
Federal courts are reviewing the IRS actions to determine whether the agency complied with taxpayer privacy laws and other requirements. Partially redacted documents released in one case in U.S. District Court in the District of Columbia show the tension within the government as the Trump administration tried to break down the typical barriers between agencies and legal restrictions on data sharing.
Federal courts are reviewing the IRS actions to determine whether the agency complied with taxpayer privacy laws and other requirements. Partially redacted documents released in one case in U.S. District Court in the District of Columbia show the tension within the government as the Trump administration tried to break down the typical barriers between agencies and legal restrictions on data sharing.
Senate Takes Symbolic Anti-Tariff Stand
Senate Advances Resolution to End Trump’s Reciprocal Tariffs - Jonathan Curry, Tax Notes ($):
The target this time was the reciprocal tariff regime Trump announced in April. The Senate voted 51-47 October 30 in favor of S. J. Res. 88, which would terminate the national emergency Trump declared in Executive Order 14257 over “large and persistent annual U.S. goods trade deficits.” The order imposed 10 percent baseline tariffs on all imports, with higher tariff rates applicable to certain trading partners.
...
Observers have said that the votes are almost entirely symbolic: The resolutions would have to be adopted by the House and signed by Trump, who could veto it. Overriding his veto would require a two-thirds vote in both chambers. The process is further complicated by a set of procedures for challenging presidential emergency declarations, adopted by the House in March, that effectively precludes a vote in the other chamber from taking place until next year.
...
Observers have said that the votes are almost entirely symbolic: The resolutions would have to be adopted by the House and signed by Trump, who could veto it. Overriding his veto would require a two-thirds vote in both chambers. The process is further complicated by a set of procedures for challenging presidential emergency declarations, adopted by the House in March, that effectively precludes a vote in the other chamber from taking place until next year.
State Tax Competitiveness
2026 State Tax Competitiveness Index - Janelle Fritts, Jared Walczak, Abir Mandal, Katherine Loughead, Tax Foundation:
The absence of a major tax is a common factor among many of the top 10 states. Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. South Dakota and Wyoming have no corporate or individual income tax; Alaska and New Hampshire have no individual income or state-level sales tax; Florida, Tennessee, and Texas have no individual income tax; and Montana has no sales tax.
This does not mean, however, that a state cannot rank well while still levying all the major taxes. Idaho and Indiana, for example, levy all the major tax types, as do all the other states that rank 11th to 16th: North Dakota, North Carolina, Missouri, Arizona, Utah, and Michigan.
This does not mean, however, that a state cannot rank well while still levying all the major taxes. Idaho and Indiana, for example, levy all the major tax types, as do all the other states that rank 11th to 16th: North Dakota, North Carolina, Missouri, Arizona, Utah, and Michigan.
Blogs & Bits
International workers get some U.S. tax help from inflation adjustments in 2026 - Kay Bell, Don't Mess with Taxes via Substack:
Excluding foreign-earned income: The most notable tax break for U.S. taxpayers working outside the country is the foreign earned income exclusion, or FEIE. This allows those who meet certain requirements to legally avoid paying U.S. tax on some of their foreign wages.
For the 2026 tax year, the FEIE is $132,900. That’s an increase from this year’s earnings exclusion of $130,000.
For the 2026 tax year, the FEIE is $132,900. That’s an increase from this year’s earnings exclusion of $130,000.
A Refined Approach to Math Error Notices: Analysis of the Internal Revenue Service Math and Taxpayer Help Act - Ed Zollars, Current Federal Tax Developments:
The Secretary of the Treasury (or delegate), in consultation with the National Taxpayer Advocate, is also required to implement a pilot program not later than 18 months after the date of the enactment of this Act.
The pilot program’s purpose is to test the delivery method for these notices. It requires sending a statistically significant portion of mathematical or clerical error notices under Section 6213(b) by certified or registered mail with e-signature confirmation of receipt.
The pilot program’s purpose is to test the delivery method for these notices. It requires sending a statistically significant portion of mathematical or clerical error notices under Section 6213(b) by certified or registered mail with e-signature confirmation of receipt.
The Best States for Retirement - Arnesa Howell, New York Times. "With its sunny beaches and friendly tax code, Florida is the best state to retire in, according to an annual study by WalletHub. But if you’re looking for a lower cost of living and you don’t mind experiencing all four seasons, you can find excellent alternatives in Western and Midwestern states."
Tax Trouble
3rd Circ. Affirms Tax On Interest In $191M Pharma Family Feud - Kat Lucero, Law 360 Tax Authority (defendant name omitted):
In a precedential opinion, a three-judge panel found that Defendant's payment in 2002 to a trust for one of the founder's sons was made under an earlier merger agreement and included imputed interest subject to ordinary income tax under Internal Revenue Code Section 483.
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The panel also rejected the trust's claim that the merger violated the company's articles of incorporation by not being subject to a vote of the shareholders. The trust did not present evidence showing that the parent company created ahead of the merger did not vote as a shareholder in favor of the merger, the panel said.
The panel noted that the disagreement about the tax implications of the settlement payment were present at the time of the deal, with the trust arguing then that the sale of the shares had occurred with the execution of the settlement and not three years earlier, avoiding any portion of the settlement being characterized as interest.
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The panel also rejected the trust's claim that the merger violated the company's articles of incorporation by not being subject to a vote of the shareholders. The trust did not present evidence showing that the parent company created ahead of the merger did not vote as a shareholder in favor of the merger, the panel said.
The panel noted that the disagreement about the tax implications of the settlement payment were present at the time of the deal, with the trust arguing then that the sale of the shares had occurred with the execution of the settlement and not three years earlier, avoiding any portion of the settlement being characterized as interest.
Puerto Rico Treasury Officials Charged in Bribery Tax Scheme - William Hoke, Tax Notes ($):
Puerto Rico’s governor said her administration has cooperated with a federal investigation that led to the indictment of two Treasury employees who allegedly manipulated tax records in a conspiracy that cost the government $3.5 million.
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The Justice Department said that an individual identified only as Person A was “engaged in the business of charging customers to unlawfully submit false tax information to the PRDT and unlawfully bribe and otherwise pay PRDT employees to create and submit materially false information to the PRDT for the elimination of taxes owed, evasion of taxes, and theft of funds by individual and corporations.”
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The Justice Department said that an individual identified only as Person A was “engaged in the business of charging customers to unlawfully submit false tax information to the PRDT and unlawfully bribe and otherwise pay PRDT employees to create and submit materially false information to the PRDT for the elimination of taxes owed, evasion of taxes, and theft of funds by individual and corporations.”
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