Key Takeaways
- 13 working days for Congress to deal with health insurance tax credits.
- "Time is not our friend."
- Trump touts tariffs as income tax cure.
- IRS says it's time to get ready for tax season.
- What OB3 means for charitable deduction timing.
- Swiss nix 50% inheritance tax proposal.
- CPA tax fraud fail.
- Eat a Red Apple Day.
Employee Benefit CPE Webinar - Tomorrow! The Eide Bailly Employee Benefit team will sponsor a free webinar on Common Errors and Their Corrections in Employee Benefit Plans at noon Central time December 2. Eligibility errors, contribution errors, document failures and much more are on the menu. Free, 1 hour of CPE available. Register here.
December is going to be crazy in D.C. - Jake Sherman, Andrew Desiderio and John Bresnahan, Punchbowl News:
Health Care. The most critical deadline is Dec. 31, when enhanced Obamacare premium subsidies expire. Millions of individual Americans and small businesses face higher premiums or could even lose coverage if the ACA premium subsidies end.
Before Thanksgiving, President Donald Trump sent signals that he might propose a pared-back two-year extension of the tax credits in order to give Hill Republicans time to come up with a longer-term health care plan.
But after significant blowback from Republicans on the Hill — including Speaker Mike Johnson —Trump administration sources tell us it’s exceedingly unlikely that the White House will embrace an ACA subsidies extension or offer its own plan.
‘Time is not our friend’: Health care scramble begins amid mixed signals from Trump - Jordain Carney, Politico:
In his only comments on the matter, Trump injected more uncertainty last week, saying he doesn’t want to extend the subsidies but understands it might be necessary.
The mixed signals have left the various factions on Capitol Hill trying to figure out where Trump will ultimately come down — and how to entice the president to back their side in a thorny policy fight that could have major political consequences in next year’s midterm elections.
Trump Again Says Tariffs Could Wipe Out Income Tax
Donald Trump Proposes Eliminating Income Tax - Hugh Cemeron, Newsweek:
...
For Fiscal Year 2025, which ended September 30, the government collected $195 billion in customs duties, up more than 250 percent from the previous year, while bringing in nearly $2.7 trillion in income taxes.
The sizable disparity has led economists—when such proposals were previously made—to question whether tariffs could come close to offsetting the fiscal impacts of abolishing income tax while still allowing the government to pare down the national debt.
"Simply put, no. It wouldn't even be close," Kimberly Clausing, professor of Tax Law and Policy at the UCLA School of Law, told Newsweek in January.
How Many Shopping Days Left Until Tax Season?
It’s not too early to get ready for the 2026 tax season - IRS:
- View tax records, including adjusted gross income and transcripts.
- Make, schedule and view payments.
- Get or view their Identity Protection PIN (IP PIN).
- Authorize a tax professional to access their tax records digitally.
- Access available Forms W-2 and certain 1099s.
Speed tax refunds with direct deposit
Direct deposit is the fastest way to receive a refund. Additionally, in accordance with Executive Order 14247, the IRS began phasing out paper tax refund checks on Sept. 30, 2025, which means most taxpayers must provide routing and account numbers to get their refunds directly deposited into their bank accounts.
State Tax Decoupling Sets Off Scramble Ahead of Filing Season - Daniel Moore, Bloomberg ($):
Nearly two dozen states automatically conform to changes in the federal tax code unless they pass laws to go in their own direction. Some states facing revenue hits from the federal law passed budgets or called special sessions this fall to decouple from those changes.
Tax preparation experts are now racing to update their clients on the changes, which are arriving in addition to federal updates. Software systems must also be updated to reflect new laws.
How the Megabill Changes 2025 Tax Breaks for SALT and Charity - Laura Saunders, Wall Street Journal:
In 2026, itemizers deducting charitable gifts lose an amount equal to 0.5% of their adjusted gross income. So if a couple has $200,000 of AGI, they’ll get a deduction only for amounts above $1,000—whether their total donations are $2,500 or $25,000.
What about donors who want a full tax deduction this year but aren’t ready to disburse the entire amount? Here a donor-advised fund (DAF) could come in handy. Givers could make a large gift to a DAF, get the deduction this year, and choose recipients later on.
Also starting next year, the highest-income filers will get a benefit of only 35% for itemized deductions rather than their top rate of 37%. That will reduce the value of charitable deductions by 5.4% for these filers, according to San Francisco CPA Richard Pon. So DAFs could be useful here as well.
Foreign Tax News Works Through Thanksgiving
U.K. Unveils Sweeping New Tax Hikes - Max Colchester and Paul Hannon, Wall Street Journal:
Reeves said that a smorgasbord of tax hikes—from a tax on more expensive properties to a levy on sweet dairy products such as milkshakes—would raise £26 billion, equivalent to $34.2 billion, to patch up public finances when the economy is forecast to grow slowly for years to come, crimping future tax receipts. The tax hikes may constrain that growth further, economists say.
Swiss voters reject mandatory national service for women and new inheritance tax - Jamey Keaten, Associated Press:
Tax News & Views International Weekly: Progress on the Global Tax Front - Alex Parker, Eide Bailly:
...
The U.S. has long maintained that its taxpayers should not be subject to the global minimum tax, because they are already subject to U.S. taxes on foreign income. Other countries have been implementing the new tax regime since an agreement was announced in 2021.
Pillar Two has sometimes divided participants on its true goal—whether it’s to prevent tax avoidance through on-paper income-shifting, or to disincentive countries from competing for investment by continually lowering taxes. The OECD’s recent report indicates there has been modest success on both fronts. Both statutory tax rates and effective tax rates have remained steady in 2024-25, after years of a downward trend, according to the OECD. And indicators of base erosion and profit shifting, such as the ratio of profits to employee in “investment hubs,” have decreased, although the OECD notes that the COVID pandemic could skew some of that data.
Related: Eide Bailly International Tax Services.
Defined Benefit Pensions and Their Discontents
Living in the age of discontent - Allison Schrager, Known Unknowns (my emphasis):
For all my finance education and training, I can’t tell you what will happen in the stock market—if it is a bubble, if it will crash tomorrow, next week, or go up 30% first. But I don’t believe you can consistently beat it. Or you can—but only if you take on more risk. Talk to any pension fund manager and they’ll tell you they can get alpha year after year, enough so underfunding isn’t an issue. The secret sauce is now private markets, but we’ve seen this movie before: different asset class, same outcome. And this now includes insurance companies too. It never ends well; higher returns always come with more risk.
This is why I am a defined-benefit skeptic. I see the advantages and efficiencies from risk-sharing, but it is impossible to get those incentives right. Fund managers have every reason—and no accountability—to believe they can beat the market.
How Pension Promises Fail: Examples in Christian Brothers Services and Chicago Pensions - Mary Pat Campbell, Stump - Meep:
Their failing systems aren’t bad luck.
They made deliberate choices.
And when you see the various other non-ERISA plans that have failed — and that includes Detroit, by the way — and they didn’t get bailed out. It’s not the moral hazard that people will be thinking about.
It will be: why are we bailing out one of the most corrupt cities and states around?
I remain convinced that government defined benefit pension plans are fundamentally dishonest. They either understate the cost of paying public employees today or overstate tomorrow's pension benefits.
Blogs and Bits
These tax-deductible medical expenses could make itemizing worthwhile - Kay Bell, Don't Mess With Taxes. "If you’re close to being able to itemize more deductions than your standard amount, pulling all these medical and dental costs into this tax year could be the best move. The tax-deductible health costs could be enough to make filling out a Schedule A worthwhile this coming filing season."
New Jersey: We Delayed Processing Your Extension Payment So We’re Going to Penalize You for Our Error - Russ Fox, Taxable Talk. "This is also a reminder to you that many notices sent by tax agencies are wrong in part or in whole. Do not blindly pay a notice! Send it to your tax professional and have them check it for accuracy."
How Cuts In Taxes On Capital Income Neglected Wealth Building For Much Of The Population - Eugene Steuerle, The Government We Deserve. "As I detail more thoroughly in Abandoned: How Republicans And Democrats Have Deserted The Working Class, The Young, And The American Dream, two Santas of easy money—a tax Santa and a spending Santa focused primarily on retirement and healthcare—have dominated federal budget policy to such an extent that they have overshadowed and effectively displaced almost all other government priorities for nearly 50 years."
Despite Credentials, CPA Fails to Get Away With Tax Evasion
Connecticut CPA pleads guilty to tax evasion - IRS (Defendant name omitted, emphasis added):
Defendant deposited funds derived from the cashed checks, as well as client payment checks to EJS-CPA, into a network of business, personal, and nominee accounts. He maintained, controlled, and used 15 different bank accounts to deposit business receipts and to evade income taxes. Through this scheme, Defendant failed to report to the IRS $1,379,694.21 in additional income, resulting in a tax loss to the government of $422,720.
Defendant is scheduled to be sentenced by U.S. District Judge Sarala V. Nagala in Hartford on April 15, 2026, at which time he faces a maximum term of imprisonment of five years. He is also required to make full restitution to the IRS.
15 bank accounts. It must have taken a lot of time to commit an ultimately failed fraud. He could have spent the time doing more tax work and improved his revenue per hour significantly. Then again, he could have done better just by using the time for naps.
What day is it?
It's Eat a Red Apple Day! Go crazy, eat two.
Make a habit of sustained success.
