Key Takeaways
- The key doctrines before the court in the tariff case.
- Are taxes a special case?
- Is there really an emergency?
- How a blog post helped the tariff plaintiffs come together.
- Treasury Secretary to attend arguments.
- Glimmers of hope in shutdown talks.
- Why you always pay your payroll taxes.
- Election Day, Waiting for the Barbarians Day.
A major question for the Supreme Court: Will it treat Trump as it did Biden? - Mark Sherman, Associated Press:
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In each case, the court held that Congress had not clearly authorized an action of economic and political significance, a legal principle known as the major questions doctrine.
The Washington-based U.S. Court of Appeals for the Federal Circuit had little trouble applying those precedents to the tariffs case.
2 Doctrines Likely To Direct Justices' Review Of Trump Tariffs - Dylan Moroses, Law360 Tax Authority ($):
The major questions doctrine generally says large-scale regulatory initiatives that have broad effects can't be grounded in vague, minor or obscure provisions of law without clear congressional authorization. The nondelegation doctrine prevents Congress from delegating its constitutional legislative powers to the executive branch.
Untangling the Tariff and Tax Delegation Case at the Supreme Court - Marie Sapirie, Tax Notes ($):
The result, in Learning Resources Inc. v. Trump, No. 1:25-cv-01248 (D.D.C. May 29, 2025), is a case that unfortunately dabbles in tax delegations and highlights the differences between taxes and tariffs. Although the tax and tariff powers are in the same clause of the Constitution, they haven’t developed in parallel over the nation’s history.
The petitioners’ basic theory is that the executive’s power to regulate imports does not include the power to impose tariffs. That theory is interesting but would be of little concern to most Tax Notes readers except for what they go on to say: that tariffs are effectively like the internal taxes collected by the IRS, and taxes — apparently uniquely — can be delegated by Congress to the president only with a highly specific delegation.
5 things to watch as Supreme Court considers Trump’s tariffs - Zach Schonfeld and Ella Lee, The Hill:
He has pointed to an influx of fentanyl to impose levies on Canada, China and Mexico that date back to February. And beginning with his April “Liberation Day” announcement, Trump has declared an emergency over trade deficits to impose sweeping tariffs on countries across the globe.
The plaintiffs will contend that neither is an emergency.
How a Blog Dragged The Tariffs Into Court
Blog Posts Help Spur Trump Tariffs Challenge at Supreme Court - Justin Wise, Bloomberg ($):
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That post, published by George Mason University law professor Ilya Somin, got the attention of Jeffrey Schwab, a lawyer at a libertarian-leaning nonprofit known for its work challenging mandatory union fees for government employees and Covid-19 vaccine mandates.
Schwab contacted Somin, and within months they were pushing to bring a lawsuit challenging the “Liberation Day” tariffs Trump issued in April. A subsequent blog post from Somin “looking for plaintiffs” connected them with multiple small business owners now anchoring a case that could implicate trillions of dollars in international commerce.
The blog post: Challenge Trump's Tariffs Under the Nondelegation and Major Questions Doctrines
Other Tariff Case Coverage:
Bessent Plans to Attend Tariff Arguments at the Supreme Court - Nathan Willis, New York Times. "Treasury Secretary Scott Bessent announced on Monday that he would attend the Supreme Court arguments this week over President Trump’s power to levy many of his tariffs, emphasizing how pivotal the case could be to Mr. Trump’s signature economic policy."
The White House’s Plan A is winning its Supreme Court tariff case. It also has a Plan B. - Megan Messerly, Doug Palmer, Daniel Desrochers and Ari Hawkins, Politico. "However, those alternatives are slower, narrower and, in some cases, similarly vulnerable to legal challenge, leaving even White House allies to acknowledge the administration’s tariff strategy is on shakier ground than it is willing to publicly concede."
Trump's Tariffs and John Roberts' Credibility - Damon Root, Reason. "If Roberts now allows Trump to get away with the same kind of executive overreach that Roberts previously stopped Biden from getting away with, Roberts' credibility as a principled judicial arbiter will be sullied forever."
Shutdown: Glimmers on the Horizon?
ACA Tax Credit Compromise Framework Floated as Shutdown Drags On - Katie Lobosco, Tax Notes ($):
The blueprint calls for a two-year extension of the credit, an income cap that phases out between $200,000 and $400,000, and guardrails to prevent improper payments.
What the group is calling a “statement of principles” is the most public, bipartisan proposal addressing the expiring healthcare tax credit put forward by lawmakers since the shutdown began October 1. But party leaders have suggested they are far from reaching any agreement on the tax credit, which is at the center of the shutdown fight.
Moderate House Dems, GOP release ‘principles’ for ObamaCare subsidy extension - Nathaniel Weixel, The Hill:
The “statement of principles” from centrist Reps. Don Bacon (R-Neb.), Tom Suozzi (D-N.Y.), Jeff Hurd (R-Colo.) and Josh Gottheimer (D-N.J.) represents the only public proposal from either side to address the subsidies since the government shut down more than a month ago.
How Democrats may reopen the government - Andrew Desiderio and Jake Sherman, Punchbowl News:
Senators and aides involved in negotiations tell us some Senate Democrats are warming to Thune’s offer to open the government and then hold a vote by a date-certain on extending the expiring Obamacare subsidies. Senators involved in these talks include Gary Peters (D-Mich.), Katie Britt (R-Ala.), Jeanne Shaheen (D-N.H.), Susan Collins (R-Maine), Maggie Hassan (D-N.H.) and Mike Rounds (R-S.D.).
The shutdown has become too painful, many of these Democrats believe, and Republicans clearly aren’t going to cave by negotiating an Obamacare deal before the stalemate ends. A date-certain vote on Obamacare subsidies creates another new deadline and allows time to craft a bill that could win enough GOP support.
Tax Administration: Precedent and Hiring
4 Ways Justices' Jarkesy Ruling Could Affect Tax Controversy - Kat Lucero, Law360 Tax Authority ($):
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The Jarkesy precedent's narrowing the scope of civil penalties under the Seventh Amendment could also raise violations of the Fifth Amendment's due process protections, which may lend to suits challenging IRS fines to raise both amendments, according to attorneys.
In a concurring opinion with the majority, Justice Neil Gorsuch acknowledged that the Seventh Amendment's right to a jury "operates together" with the Fifth Amendment's right to due process to prevent the government from overstepping when it deprives an individual of life, liberty or property.
IRS Hiring Special Agents to Aid D.C. Law Enforcement Task Force - Benjamin Valdez, Tax Notes ($):
It’s unclear exactly how the IRS will contribute to the task force, which was formed through an executive order on March 28 and includes several federal departments and agencies. The IRS didn’t immediately respond to a request for comment.
The task force is aimed at ramping up law enforcement in the district, including by “directing maximum enforcement of Federal immigration law,” according to the executive order.
Administering the tax law apparently isn't an urgent priority.
Tax News Around The Weird World
Argentina Has the World’s Weirdest Tax. Can Milei Scrap it? - Greg Ip and Silvina Frydlewsky, Wall Street Journal. " Most countries promote, even subsidize, exports. Argentina does the opposite, imposing a tax on its most important exports, including soybeans, wheat, beef and corn. The tax helps explain Argentina’s stunted export sector, perpetual shortage of foreign reserves and recurrent currency crises."
Rachel Reeves prepares public for manifesto-breaking income tax rise - George Parker, Jim Pickard, Delphine Strauss and Valentina Romei, Financial Times:
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The option of raising the basic, higher and additional income tax rates by 1p is favoured by some in the Treasury as the simplest way to raise more than £10bn, but it could come at a heavy political cost for Labour.
Some close to the decision-making process say Reeves and Prime Minister Sir Keir Starmer are still weighing up whether a series of smaller tax rises could be deployed instead to fill the fiscal void.
Related: Eide Bailly International Tax Services.
What Transfer Pricing Can Learn from Shohei Otani - Chad Martin, Eide Bailly. "International tax and trade matters are far too complex and integrated to treat any aspect of a planning project or audit as siloed, and cost pressures and technological developments mean employers are looking to do more with less when it comes to subject matter experts and consultants."
Blogs and Bits
Has the Dodgers’ use of deferred compensation broken baseball? - Kay Bell on Substack. "As in all sports, money has become the dominating factor. And the Dodgers have mastered working within the rules with some creative financing in their quest to become the first team to win back-to-back MLB championships since the Yankees."
What the OBBBA Individual Tax Changes Mean for You - Garrett Watson and Nate Scherer, Tax Policy Blog. "Other temporary new tax provisions (available 2025-2028) include a car loan interest deduction for newly financed automobiles that are assembled in the US, and a new $6,000 deduction for 65 and older qualifying seniors, also available from 2025 to 2028."
Increasing Fines Or Fees Is Unlikely To Save State And Local Budgets - Aravind Boddupalli, TaxVox. "As state and local governments face growing fiscal uncertainty and shifts in federal policies, they may seek more revenue from fines and fees in the criminal legal system. But this strategy may do more harm than good."
Chicago Head Tax: So Many More Reactions - Mary Pat Campbell, Stump - Meep. "Given that pretty much all companies figured out how to manage a remote workforce in 2020, except for work that absolutely has to be done in-person, why the hell would you do a per-person tax based on location?"
A Business Can't "Borrow" Withheld Payroll Taxes
Individual Liable for Trust Fund Recovery Penalties - Tax Notes Research. "A U.S. district court granted the government summary judgment against an individual for trust fund recovery penalties for failing to withhold and pay over employment taxes for two home health and personal care businesses in which she held managerial roles, finding that she was a responsible person who willfully failed to pay employment taxes."
Perhaps the most important thing a small business should know about taxes is that you should always remit your withheld payroll taxes on time. As far as the tax law is concerned, that money belongs to the government as soon as the paycheck is issued. And if you are a "responsible person" in a business that doesn't remit the payroll taxes, you are on the hook for them. It doesn't matter whether the business is a corporation, an LLC, or a sole proprietorship.
IRS Publication 15, "Circular E," explains (my emphasis)
The district court opinion explains why the taxpayer was a responsible person for two LLCs that fell behind in their payroll taxes (taxpayer name omitted):
What is more, Taxpayer acknowledges that she is the person at each entity tasked with authorizing or making federal tax deposits.
The court said her failure to remit the taxes was also "willful" under the tax law:
The taxpayer had a sympathetic defense: she was trying to make the business profitable to enable it to catch up on payroll taxes. Unfortunately, that didn't fly:
The moral: Make sure the payroll taxes get sent in, regardless of who else wants the money. If you are writing the checks and the boss tells you to not pay the taxes, it's very likely time to find a new boss.
Related: Eide Bailly Payroll Services; Eide Bailly IRS Dispute Resolution and Collections Services.
What day is it?
It's Election Day in many places. It's also "Waiting for the Barbarians Day." Make of that what you will.
Make a habit of sustained success.
