Tax News & Views Supreme Tariff Sandwich Roundup

It's Tariff Week at the Supreme Court

Trump Admin Tells SCOTUS ‘Regulate Importation’ Includes Tariffs - Cameron Browne, Tax Notes ($):

The administration argues that IEEPA’s authorization to “regulate importation” plainly encompasses tariffs. It contends that under the fifth edition of Black’s Law Dictionary, “the contemporaneous ordinary meaning of ‘regulate’ includes to ‘control,’ ‘to adjust by rule,’ and to ‘subject to governing . . . laws.’” The administration asserts that tariffs are among the most common and traditional methods to “control” and “adjust” importation and subject imports to “governing laws.”

Toymaker Readies Supreme Court Fight Over Trump’s Tariffs - Greg Stohr, Bloomberg via MSN:

Ask Rick Woldenberg why he’s challenging President Donald Trump’s tariffs at the US Supreme Court, and he might mention a furry unicorn yoga ball.

Woldenberg, who runs two educational-toy businesses near Chicago, says the BubblePlush Yoga Ball Buddies, designed to help kids control their emotions, has been hit especially hard by Trump’s fluctuating global tariffs.

The BubblePlush, which also comes as a penguin or puppy, was slated to be made in China. But when Trump jacked up tariff rates to 145% on imports from that country in April, Woldenberg’s team scrambled to shift production to India, only to see Trump reduce the China duties and slap higher ones on India imports. The company rushed to have the goods arrive before the 50% India tariff took effect, but the shipment arrived six hours too late.

“We paid a $50,000 penalty for that,” Woldenberg said from a toy-festooned conference room in Vernon Hills, Illinois.

Trump reverses course on attending Supreme Court arguments this week - Josh Gerstein and Alex Gangitano, Politico:

Trump had flirted publicly with going to the oral arguments in the tariff case Wednesday, even though such a move by a sitting president would appear unprecedented. But as he returned to the White House from Florida on Sunday, he told reporters on Air Force One that he doesn’t plan to go.

...

“It will be, in my opinion, one of the most important and consequential Decisions ever made by the United States Supreme Court,” Trump wrote. “If we lose, our Country could be reduced to almost Third World status — Pray to God that that doesn’t happen!”

The Supreme Court justices to watch during the tariffs oral argument - Washington Post:

Despite his reputation as a member of the court’s most conservative bloc, Gorsuch should be a winnable vote for the challengers. His philosophy is fiercely originalist with a libertarian streak. The Founders would not have recognized a system in which tariff power resided primarily with the president instead of Congress. Gorsuch has argued that the court should vigorously enforce the separation of powers, even when legislators try to give away their powers to the executive.

Trade Tracker #2: IEEPA tariffs will cost households $1,300 annually - Erica York, Supernormal Returns. "In short, the IEEPA tariffs amount to one of the largest tax increases in US history—implemented without congressional approval."

Shutdown Drags on

Shutdown pain grows, polls shift with Election Day one year out - Jake Sherman, Andrew Desiderio and John Bresnahan, Punchbowl News:

Even as party leaders and Trump refuse to meet with each other on ending the standoff, rank-and-file senators on both sides are talking, focusing on finding some agreement on FY2026 spending bills. The hope is that an agreement on spending can help unlock the shutdown.

Those bipartisan talks continued over the weekend, and there’s some optimism about getting to a resolution.

However, Trump and the GOP leaders are showing no signs of caving on extending the expiring Obamacare premium subsidies. Schumer and Jeffries continue to demand an extension as part of any deal to reopen the government. So the standoff grinds on. Open enrollment began on Saturday.

States Say Federal Funding Pause Will Have Tax Ramifications - Kennedy Wahrmund, Tax Notes ($): "In an October 29 letter to President Trump, Michigan Gov. Gretchen Whitmer (D) and 20 other Democratic governors urged the U.S. Department of Agriculture and the White House to avert SNAP disruptions. According to the letter, the program not only "supports approximately 388,000 jobs nationwide and more than $20 billion in direct wages" but also generates more than $4.5 billion in federal and state tax revenue."

SNAP Food Aid At Risk In Shutdown Has A Nearly Century Long History - Kelly Phillips Erb, Forbes. "The basic formula used to determine your monthly SNAP benefit amount is the maximum benefit for household size, less 30% of your net monthly income. That 30% is based on the assumption that households can spend about 30% of their own income on food. SNAP fills in the gap between that contribution and the USDA’s estimate of what a healthy diet costs."

PCORI fees updated

IRS Posts Adjusted Applicable Amount for Determining PCORI Fees - Tax Notes ($). "The IRS has provided (Notice 2025-61, 2025-45 IRB 693) the adjusted applicable dollar amount for determining section 4375 and 4376 fees, which help fund the Patient-Centered Outcomes Research Institute, for policy years and plan years ending on or after October 1, 2025, and before October 1, 2026."

Link: Notice 2025-61. The applicable dollar amount is $3.47.

Wealth Taxes, Head Taxes Fail

Illinois Lawmakers Pass Transit Funding Plan Without New Taxes - Emily Hollingsworth, Tax Notes ($):

Illinois lawmakers have approved a transit funding plan that leaves out a previously proposed amusement tax and a mark-to-market tax on billionaires.

...

The Legislature-approved plan, which would take effect on June 1, 2026, would direct motor fuel tax revenue to regional transit funds and allow some counties to increase — via ordinance — local sales taxes that fund regional transit.

French lawmakers reject wealth tax proposal in budget debate - AFP:

A left-wing bloc made up of the Socialist, Communist, Green parties and the hard-left France Unbowed had proposed a minimum two-percent tax on wealth over 100 million euros ($115 million), dubbed the "Zucman tax" after the French economist who devised it.

But lawmakers in the National Assembly rejected the measure on Friday evening, 228 voting against and 172 in favour.

Is Brandon Johnson's head tax already dead? - Austin Berg, The Last Ward:

Johnson introduced his head tax proposal in a city where hiring expectations just hit a five-year low, economic growth is slower than all peer cities, and businesses already pay the highest commercial property taxes among the top 10 cities in the country.

Further, no other big city charges anything close to what Johnson is proposing. Only four of the 20 largest cities in the country charge any kind of tax based on the number of employees a business hires.

Chart of municipal head taxes by Austin Berg, The Last Ward

Blogs and Bits

5 tax moves to make this November - Kay Bell on Substack. "Explore expiring home energy credits. The OBBBA also ends tax breaks for several home-related energy projects. This includes elimination on Dec. 31 of relatively easy upgrades that improved a residence’s energy efficiency. Tax-favored improvements here are such things as installing Energy Star rated windows; doors; insulation; and heating, ventilation, and air conditioning equipment."

Author Calls For Elimination Of Estate Tax And More Tax On The Wealthy - Peter Reilly, Forbes. "Madoff recommends three steps to improve things. The first is to repeal the estate and gift tax, which are broken and unfixable. Next is to repeal the income tax exclusion for inheritance and gifts and tax unrealized gains at death. She also calls for meaningful payout requirements on donor advised funds."

Tax Court Warns Counsel in Advance of Trial in Syndicated Conservation Easement Case - Jack Townsend, Federal Tax Procedure. "I think Tax Court judges are getting less tolerant, rightfully so, considering the massive waste of time for trials to claim grossly inflated valuations for conservation easements."

Five Ways The IRS Can Get Even More Time To Audit You - Robert Wood, Forbes. "The IRS statute of limitations never starts to run if you do not file a tax return."

An Overview of the IRS MATH Act - Thomas Gorczynski, Tom Talks Taxes. "§6213(b)(1) allows the IRS to assess additional tax due to “mathematical or clerical error appearing on the return” without issuing a notice of deficiency, which gives the taxpayer the right to contest the assessment in the U.S. Tax Court."

Tax Obscura - Foreign Trusts and Vacation Homes

Foreign Trusts have an air of intrigue about them. I have had clients - sophisticated ones - wonder why I don't just offer to set up a web of trusts located in exotic tax havens to make all of their tax problems go away.

Consider the case of somebody who sets up a trust in, say, Monaco, to own a vacation home in St. Thomas. The taxpayer who sets up the trust uses the vacation home several weeks a year, rent-free - why would you pay yourself rent?

Maybe because that rent-free use triggers a tax reporting requirement with severe penalties for non-compliance. That rent-free use is considered a distribution from the foreign trust, requiring a Form 3520 filing. Failure to file Form 3520 is subject to a penalty of $10,000 or 35% of the unreported distribution, if greater.

It's not just vacation homes. Boats, cars, airplanes - any trust asset is subject to these rules.

Foreign trusts can sometimes meet specific planning needs, but they don't magically make taxes go away, and they can carry serious compliance costs. Be careful.

What day is it?

It's National Sandwich Day! It's fun when what you do every day, like eating a sandwich, suddenly observes a holiday.

Tax News & Views Supreme Tariff Sandwich Roundup

Make a habit of sustained success.

Joe B. Kristan, CPA