Key Takeaways
- Washington lawmakers back in session.
- Republicans expected to wrap up reconciliation package.
- Trump floats income tax cut.
- Challenges for newest IRS Chief.
- May 15th deadline approaching for tax-exempt organizations.
- IRS guidance on ERC claims.
- National Superhero Day!
Republicans sprint to wrap up Trump’s tax bill - Benjamin Guggenheim, Politico:
Treasury Secretary Scott Bessent will reconvene his “Big Six” meetings on the GOP tax bill this week with House Speaker Mike Johnson (R-La.), Senate Majority Leader John Thune (R-S.D.) and Congress’s tax chiefs. Meanwhile, GOP leaders are expected to huddle on Wednesday with a hardcore contingent of Republicans who have threatened to throw a wrench into the legislation without an expansion of the state and local tax deduction.
These GOP Lawmakers Could Sink Trump’s ‘Big Beautiful’ Tax Bill - Olivia Beavers, Wall Street Journal:
A group of so-called budget hawks have hinged their support of the president’s reconciliation bill on the idea that the tax cuts must be paired with significant spending cuts. These Republicans are willing to allow some deficit increases because they assume that economic growth will cover some of the costs. But they’ve indicated that—even though they’ve moved the process along so far—they aren’t automatic yes votes.
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A group of Republican lawmakers are vowing that their support for the Trump tax bill depends on raising the cap on state and local tax deductions, which was limited to $10,000 in 2017 as part of Trump’s tax law.
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A group of Republican lawmakers are vowing that their support for the Trump tax bill depends on raising the cap on state and local tax deductions, which was limited to $10,000 in 2017 as part of Trump’s tax law.
Trump and the GOP’s next 100 days - John Bresnahan and Jake Sherman, Punchbowl News:
Lawmakers are back in session after a busy two-week recess. House Republicans will begin on Tuesday marking up their massive reconciliation package, including potentially huge cuts to Medicaid and other social safety-net programs. They’re scrambling to come up with a package that meets Trump’s goal of cutting taxes for Americans making less than $200,000, plus four years of no taxes on tips, overtime and Social Security payments.
Tariffs
Trump floats income tax cut to ease tariff impact - Sarah Fortinsky, The Hill:
President Trump floated a new income tax cut Sunday as a way to mitigate the impact of his sweeping tariffs, which polls show Americans increasingly believe will lead to higher prices. “When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated,” Trump wrote in a post Sunday on his Truth Social platform. “Focus will be on people making less than $200,000 a year,” he continued.
Happening at the IRS
Trump’s Newest IRS Chief Tries to Steer a Leaner Agency Through Turmoil - Richard Rubin and Brian Schwartz, Wall Street Journal:
In front of Faulkender is the challenge of implementing the administration’s vision for shrinking and revamping the IRS. The basic idea: Rapidly replace people with computers and reduce reliance on contractors for technology and support. That is the agenda pushed by Elon Musk’s Department of Government Efficiency, and it isn’t substantially changing with Faulkender’s arrival, despite friction between Musk and Treasury Secretary Scott Bessent over Faulkender’s appointment.
The new IRS strategy carries risk. The administration is attempting fast changes to a government function that touches hundreds of millions of Americans. Technology failures or call-center backlogs can derail the tax-filing season, and agency veterans worry that weaker enforcement will erode compliance if tax cheats think they can avoid detection
The new IRS strategy carries risk. The administration is attempting fast changes to a government function that touches hundreds of millions of Americans. Technology failures or call-center backlogs can derail the tax-filing season, and agency veterans worry that weaker enforcement will erode compliance if tax cheats think they can avoid detection
IRS Reminders & Guidance
IRS highlights key forms, topics for tax-exempt organizations ahead of May 15 filing deadline - IRS:
As the May 15 filing deadline approaches for tax-exempt organizations, the Internal Revenue Service highlights important forms and topics to ensure successful and timely filing.
The annual filing due date for certain returns filed by tax-exempt organizations is the 15th day of the 5th month after the end of an organization's accounting period. Those operating on a calendar year basis must file a return by May 15.
The annual filing due date for certain returns filed by tax-exempt organizations is the 15th day of the 5th month after the end of an organization's accounting period. Those operating on a calendar year basis must file a return by May 15.
IRS Guidance on the Validity of Third-Party Payers’ Employee Retention Credit Claims Filed Without Schedule R - Ed Zollars, Current Federal Tax Developments:
According to the IRS, the absence of this schedule renders the return invalid for the clients, and any related refund claims are not considered valid formal, informal, or protective claims. The IRS's clear stance underscores the agency's view that Schedule R is not simply a procedural requirement but a necessary component for the IRS to accurately identify the taxpayers and assess the validity of each individual ERC claim within an aggregate filing.
Tax Trouble
$20 Million Payroll Tax Theft Leads to Multiyear Prison Sentence - Nathan J. Richman, Tax Notes ($):
A Florida man whose payroll services company underreported the taxes withheld from client businesses was sentenced to 50 months in prison after using the money on luxury goods, including dozens of Ferraris.
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According to a Justice Department release, Brown operated several businesses in Florida, one of which provided payroll services, including the collection of payroll taxes withheld from clients’ employees’ wages for passing along to the IRS. However, from 2014 through 2022, despite charging clients the full amount of their tax liabilities, Brown would file employment tax returns understating those liabilities and pocket the difference.
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According to a Justice Department release, Brown operated several businesses in Florida, one of which provided payroll services, including the collection of payroll taxes withheld from clients’ employees’ wages for passing along to the IRS. However, from 2014 through 2022, despite charging clients the full amount of their tax liabilities, Brown would file employment tax returns understating those liabilities and pocket the difference.
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