Key Takeaways
- Exempt organization filing deadline looms.
- Layoffs spare only two of 100 employees in the Taxpayer Experience Office, per report.
- Commissioner-designate loan to his failed congressional campaign paid via credit promoters.
- Can tariffs replace the income tax?
- Tax Bill timing.
- International Dance Day.
IRS highlights key forms, topics for tax-exempt organizations ahead of May 15 filing deadline - IRS:
- Form 990-series annual information returns (Forms 990, 990-EZ, 990-PF)
- Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ
- Form 990-T, Exempt Organization Business Income Tax Return (other than certain trusts)
- Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code
Related: Eide Bailly Exempt Organization Tax Services.
IRS - The Continuing Crisis
Taxpayer Advocate Service Excluded From Latest RIF - Benjamin Valdez, Tax Notes ($):
Treasury’s move to pause staff reductions for TAS is intended to give the office more time to assess the impact of the deferred resignation program, which many employees have opted to take, National Taxpayer Advocate Erin Collins wrote in an April 25 email to staff viewed by Tax Notes.
...
According to former IRS Commissioner Charles Rettig, there are about 100 employees in the Taxpayer Experience Office, and all of them have been terminated, with the exception of the chief and deputy chief taxpayer experience officers, currently Fumi Tamaki and Courtney Kay-Decker, respectively.
Courtney Kay-Decker is a former director of the Iowa Department of Revenue.
IRS’ Core Mission in Doubt as Trump Policies Push Leaders Out - Erin Slowey and Erin Schilling, Bloomberg ($):
But a common theme connects many: decisions by the Trump administration, guided in part by billionaire Elon Musk’s advisers, to stretch the boundaries of the law as it seeks to shrink the government and punish perceived enemies.
The departures—combined with broader workforce cuts—erode an important layer of defense to the IRS’ most important missions: taxpayer data security and a fair tax system, according to over a dozen former and current agency officials who spoke to Bloomberg Tax.
Trump IRS Pick Was Just Enriched By Tax Schemers - David Sirota, Freddy Brewster, and Luke Goldstein, The Lever:
But after Trump named Long to head the IRS, the committee suddenly raked in nearly $137,000 in less than three weeks in January — money that Long then used to remunerate himself, according to disclosure documents filed this week.
...
Numerous Long contributors in his new campaign disclosure report are financial advisors for White River Energy and Lifetime Advisors, among others. Those firms are named in an April 14 letter from Senate Finance Committee members Ron Wyden (D-Ore.) and Catherine Cortez Masto (D-Nev.) calling for a criminal investigation into what they allege is a fraudulent tax credit scheme orchestrated by the companies, many of which employ donors that helped retire Long’s debt.
The "scheme" is the promotion of a "Sovereign Tribal Tax Credit" the IRS and Treasury say does not exist. IRS Commissioner-designate Billy Long represented companies named in the story before his nomination.
The White House and Tariffs
Trump Floats Improbable Income-Tax Cut Tied to Tariffs - Richard Rubin, Wall Street Journal:
Trump’s statements point to a central riddle of his trade agenda—whether the point of higher tariffs is raising money or gaining leverage to strike better deals with trading partners, as some administration officials and congressional Republicans insist. But even if Trump left high tariffs in place, the revenue wouldn’t come close to the amount raised by income taxes for people making under $200,000.
Five Things To Know About Trump’s Income Tax and Tariff Idea - Erica York and Huaqun Li, Tax Policy Blog:
The individual income tax raises more than 27 times as much revenue as tariffs currently do, but it’s not the gap in revenue levels that makes replacement impossible. The bigger issue is the relative size of the tax base. Internal Revenue Service data for tax year 2021 shows American taxpayers reporting almost $15 trillion of individual income while paying $2.2 trillion of taxes, for an average tax rate of 14.9 percent. Total goods imports in 2021 were $2.8 trillion in 2021, while tariff revenues were $80 billion, for an average tax rate of 2.9 percent.
To replace the roughly $2 trillion of revenue raised by the individual income tax with tariffs would require astronomically high tariff rates. And raising tariff rates astronomically high would significantly depress imports, making it impossible to generate enough revenue to fully replace the income tax.
Amazon to display tariff costs for consumers - Punchbowl News. "The shopping site will display how much of an item’s cost is derived from tariffs – right next to the product’s total listed price."
White House Calls Amazon Displaying Tariff Costs ‘A Hostile And Political Act’ - Tarini Parti, Wall Street Journal:
"This is a hostile and political act by Amazon," White House press secretary Karoline Leavitt told reporters. "Why didn't Amazon do this when the Biden administration hiked inflation to the highest level in 40 years." Leavitt declined to speak regarding Trump's relationship with Amazon founder Jeff Bezos.
UPDATE: "Amazon has revised its earlier statement. New version 'The team that runs our ultra low cost Amazon Haul store considered the idea of listing import charges on certain products. This was never approved and not going to happen.' - Amazon spokesman."
Trump signs order easing some auto tariffs - Michael Wayland and Michele Luhn, CNBC. "Current tariffs of 25% on imported vehicles into the U.S. will continue, but the new measures will prevent other adjacent levies, such as an additional 25% tariffs on steel and aluminum, from “stacking” on top of the others, a White House official told NBC News."
Canada’s Mark Carney prepares to take on Trump after ‘American betrayal’ - Ilya Gridneff, Financial Times:
The margin was thin, but the verdict from Canadians was clear. With President Donald Trump’s tariffs threatening the foundations of their economy, voters wanted Canada’s leader to be the central banker who navigated the global financial crisis and Brexit.
Congress and Tax Bill Timing
White House sets new July 4 deadline for Trump tax agenda - Al Weaver, The Hill:
Bessent and Kevin Hassett, the director of the National Economic Council, met on Capitol Hill Monday with Speaker Mike Johnson (R-La.), Senate Majority Leader John Thune (R-S.D.) and top tax writers.
Congress returned to Washington on Monday to kick off a key stretch to get the package, which includes broad swaths of Trump’s agenda, passed. Republicans aim to pass it with only GOP votes but must first work out significant disagreements.
House tax writers close to wrapping up their part of massive budget bill - Benjamin Guggenheim and Meredith Lee Hill, Politico:
One of their biggest fears is that they’ll roll out the massive bill — which will also include border, energy and defense provisions — and Trump will balk. Republicans are relying on the president to muscle through the legislation if necessary, so his support throughout the process is critical.
Tariffs, Economic Change Add to Pressure on GOP Tax Bill - Cady Stanton, Tax Notes ($):
Senate Finance Committee member Thom Tillis, R-N.C., said that with the impact of the tariffs largely out of Congress’s control, Republicans could provide some needed certainty via tax cut extensions.
“There’s nothing we can do about tariffs. We’ve just got to hope that that has been well planned and it’s a good outcome,” Tillis said. “We’ve got to work on taxes, because I really do believe that by showing progress and increasing the likelihood that we get this done by the summer, we will help calm the nerves of people that are looking at these two areas of risk for businesses.”
Technically there is something Congress can do about tariffs.
Blogs and Bits
May 1 is disaster-delayed Tax Day for filers in 8 states - Kay Bell, Don't Mess With Taxes: "The May 1, 2025, disaster-delayed deadline applies to taxpayers, both individuals and those who own businesses, in the following eight states."
IRS Chief Counsel Advice on Theft Loss Deductions for Scam Victims and What It Means for Taxpayers - Erin Collins, NTA Blog. "The memo offers important clarification on when and how taxpayers may claim a theft loss deduction. It also exposes gaps in the current law that leave many taxpayers without meaningful relief."
In Lawsuit Settlements, Most Emotional Distress Damages Are Taxable - Robert Wood, Forbes. "Whenever possible, settlement agreements should be specific about taxes. The IRS is likely to view everything as income unless you can prove otherwise."
Eighth Circuit: Tax Debtor's Spouse Not Entitled to Proceeds from Judicial Sale of Home - Parker Tax Pro Library. "The Eighth Circuit affirmed a district court and held that the spouse of a taxpayer who owed the government a debt for unpaid taxes, interest, and penalties was not entitled to half of the proceeds of the judicial sale of the home the taxpayer owned but shared with his spouse. The court found that a state statute that forbids the owner of a homestead from conveying his interest without the approval of his spouse did not give the taxpayer's spouse a property right whose loss had to be compensated as a result of the judicial sale."
Related: Eide Bailly IRS Dispute Resolution and Collections Services.
Sometimes it's the user, not the software.
Car Dealer Can't Duck Fines For Cash Reporting Failures - Kat Lucero, Law360 Tax Authority ($). "The U.S. Tax Court upheld more than $118,000 in penalties Monday against an Arizona-based car dealership, rejecting its argument that third-party tax software errors were to blame for its failures to report cash transactions of over $10,000 for 2016."
From the Tax Court Opinion (emphasis added):
...
Dealers Auto argues that it reasonably believed the software was working as intended because it was generating some information returns. But the record shows that Dealers Auto software prepared only 116 Forms 8300 in 2016. The record also shows that Dealers Auto was required to file at least 212 Forms 8300 in 2014. That reduction in the number of forms should have placed Dealers Auto on notice that its software was not performing as intended. And Dealers Auto offers no explanation as to why the reduction in the number of forms would have appeared reasonable. Absent any explanation, we are not persuaded that Dealers Auto reasonably relied on its software.
The Moral? If you are blaming the software, you might not be winning.
What day is it?
It's International Dance Day! Best celebrated as a spectator event for some of us.
