Tax News & Views Tax Legislation and Coconut Cream Pies Roundup

Tax Legislation

Republicans wage a tax war over SALT, stalling Trump’s ‘big, beautiful bill’ – Jacob Bogage & Marianna Sotomayor, Washington Post:

The fate of President Donald Trump’s tax legislation may rest on whether the GOP can find common ground on tax breaks for high earners in predominantly Democratic states — and the issue also could cost House Republicans their majority next year.

House Speaker Mike Johnson (R-Louisiana) and a band of moderate Republican rebels are at loggerheads over how to handle changes to the state and local tax deduction, often called SALT. That provision allows individuals or married couples to subtract the amount they paid in state taxes from their federal tax bill, but it’s been capped at $10,000 — well below what many taxpayers owe, especially in high cost-of-living areas — since 2017.

Even though it was his Tax Cuts and Jobs Act that limited the deduction, Trump made changing the cap one of a long list of campaign tax promises. All told, the tax plans he’s made could cost up to $11 trillion over the next decade if Congress enacts them all, according to nonpartisan estimates.

W&M Republicans Commit to Steep Cuts Despite Party Pushback – Doug Sword, Tax Notes ($):

House Ways and Means Committee Republicans asserted their support for reducing the tax package if spending cuts fall short of targets and spoke of a “generational opportunity” to change the government’s fiscal path.

The $4.5 trillion budget resolution (H. Con. Res. 14) set aside for a Ways and Means Committee tax package could be slashed to $3.5 trillion if House committees find only half of the $2 trillion in spending cuts committed to in the resolution, according to a May 7 letter to House GOP leadership from 32 House Republicans, including four taxwriters.

GOP centrists revolt against steep cuts to Medicaid and other programs in Trump's tax breaks bill – Lisa Mascaro & Kevin Freking, Washington Post. “When it comes to Medicaid , Rep. Juan Ciscomani is telling fellow Republicans he won’t support steep cuts that could hit thousands of residents in his Arizona district — “my neighbors, people my kids go to school with” — who depend on it.”

A ‘bunch’ of tax provisions in megabill could be temporary, GOP tax writer says – Brian Faler, Politico:

Republicans could end up putting a “bunch” of temporary tax provisions in their much-anticipated budget package to reduce its cost, a GOP tax writer said Wednesday.

Rep. Ron Estes (R-Kan.), a member of the Ways and Means Committee, said they want to make as many provisions permanent as possible, and he expects they will with tax breaks for things like business research and investment expenses.

House Taxwriters Aim to Settle on SALT Cap Number May 8 – Cady Stanton, Tax Notes ($):

Republicans on the House Ways and Means Committee said they are hoping to emerge from a May 8 marathon tax meeting with a consensus offer to bring back to their caucus on raising the cap on the state and local tax deduction.

House Republican taxwriters left a May 7 lunch that included a presentation from members of the SALT Caucus and told reporters there wasn’t yet a deal on a new number for adjusting the provision, but they expressed optimism that they could agree on details by the end of a May 8 meeting on reconciliation.

Tillis Bill Would Extend Tax Rates on Companies’ Foreign Income – Lauren Vella & Chris Cioffi, Bloomberg ($):

Senate Finance Committee member Thom Tillis (R-N.C.) introduced a bill that would prevent companies’ taxes on income they earn abroad from spiking next year.

The International Competition for American Jobs Act, filed Tuesday, is an expansion of legislation introduced by former Sen. Rob Portman (R-Ohio) in 2022, and includes beneficial tweaks to tax on foreign-earned income that have been on companies’ wishlist for the massive tax bill that’s under consideration in Congress.

Auto Interest Deduction Proposal Tweaked to Expand Eligibility – Zach C. Cohen, Bloomberg ($):

An ally to President Donald Trump in Congress is updating a measure codifying one of his signature campaign promises to expand auto interest tax deduction eligibility beyond wealthier filers.

Legislation introduced by Sen. Bernie Moreno (R-Ohio) and Rep. David Taylor (R-Ohio) last month lets taxpayers write off the interest on loans for cars assembled in the US, invoking pushes by Trump and Treasury Secretary Scott Bessent to make it easier for auto buyers, notwithstanding the yo-yo of tariff threats on the industry.

Favorable Tax Cut Baseline Won't Fool Lenders, House Told – Asha Glover, Law 360 ($). “If Congress uses a current policy baseline to permanently extend the 2017 tax overhaul's provisions, it will be a red flag to institutional investors, such as hedge funds, mutual funds and endowments, panelists told the House Budget Committee on Wednesday.”

Tariffs

Trump Expected to Unveil US-UK Trade Pact After Tariff Talks – Josh Wingrove, Ellen Milligan, Derek Wallbank, and Jennifer A. Dlouhy, Bloomberg ($):

Donald Trump is expected to announce a trade agreement with the UK on Thursday, according to people familiar with the matter, in a limited deal that may nonetheless signal the direction of the US president’s global trade war.

Trump teased the announcement in a social media post on Wednesday night, saying he would hold an Oval Office news conference to discuss “a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY.” While the details weren’t immediately clear, American and British officials were in talks this week about plans to reduce tariffs on cars and steel, among many levies imposed by the US president on allies and rivals alike in recent weeks.

Trump Says He Won’t Lower China Tariffs to Jump-Start Talks – Skylar Woodhouse & Akayla Gardner, Bloomberg ($):

President Donald Trump said he’s unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.

“No,” Trump said Wednesday when asked by a reporter if he is open to pulling back his 145% duties on Chinese imports to get the world’s second-largest economy to the negotiating table.

Global Minimum Tax

US Demands on Global Minimum Tax Face Obstacles Overseas – Lauren Vella, Bloomberg ($):

The Trump administration has demanded that the US global minimum tax and the OECD’s minimum tax “coexist,” but the grand ask will face political and procedural challenges from other countries.

Countries involved in negotiations at the OECD have the option of blessing the US tax on foreign-earned income as equivalent to part of the global minimum tax rules. The move would insulate American companies from global minimum tax liability.

U.S. – China Tax Treaty

Don't Scrap US-China Tax Treaty, Biz Groups Tell Treasury – Natalie Olivo, Law 360 ($):

Business lobbying groups have urged the U.S. Treasury Department to reject the White House's plans to scrutinize the U.S.-China tax treaty, warning that scrapping the accord would lead to higher Chinese taxes on U.S. companies.

Treasury should decline to act on a Feb. 21 policy memorandum from President Donald Trump's administration, which outlined plans to "review whether to suspend or terminate" the 1984 U.S.-China tax treaty, the National Foreign Trade Council said in an April 28 letter.

Tax Credits

Bessent Defends Cuts to Community Fund Amid Scrutiny – Stephen K. Cooper, Law 360 ($):

U.S. Treasury Secretary Scott Bessent on Wednesday defended the Trump administration's proposal to significantly slash the fund that operates the new markets tax credit, which is meant to boost investment in poor communities, telling lawmakers that a new $100 million program would better support affordable financing in rural areas.

Testifying before the House Financial Services Committee, Bessent said the Community Development Financial Institutions Fund is "performing its statutory functions," while affirming the administration's plan to cut the program's funding and refocus its efforts on boosting economic development in rural areas.

Corporate Transparency Act

Second CTA Constitutional Challenge Paused in Circuit Court – Amanda Athanasiou, Tax Notes ($):

The Fourth Circuit has joined the Ninth Circuit in pausing a constitutional challenge to the Corporate Transparency Act (CTA), despite the plaintiffs’ insistence that recent government announcements bolster their case against the act.

In a May 6 order, the Fourth Circuit granted the government’s April 18 motion to hold the proceedings in Community Associations Institute v. Treasury in abeyance “pending the issuance of a Final Rule regarding the [CTA's] reporting requirements.”

Court Freezes a Corporate Transparency Act Appeal for Final Rule – John Woolley, Bloomberg ($). “A homeowner and community organization advocacy group must wait for a finalized rule later this year before its challenge to the Corporate Transparency Act may proceed, a federal appeals court ruled.”

Basis Shifting

Basis-Shifting Guidance Repeal May Force IRS to Adjust Strategy – Kristen A. Parillo, Tax Notes ($). “The IRS will have to revamp its audit and litigation strategy for partnership related-party basis-shifting transactions following the Trump administration’s repeal of a guidance package, according to a former Treasury official.”

Taxpayer Data

Questions Regarding DOGE Access to Taxpayer Information Persist – Nathan J. Richman & Alexander Rifaat, Tax Notes ($):

Treasury Secretary Scott Bessent faced questions about Department of Government Efficiency (DOGE) personnel access to taxpayer information a day after a nonprofit challenging that access amended its complaint.

On May 6 the Electronic Privacy Information Center (EPIC) filed an amended complaint in Electronic Privacy Information Center v. U.S. Office of Personnel Management challenging DOGE’s access to information at the Treasury Bureau of the Fiscal Service (BFS) and the Office of Personnel Management.

In the Courts

6th Circ. Skeptical of US In Tax Court Deadline Case – Anna Scott Farrell, Law 360 ($). “Sixth Circuit judges expressed skepticism of the U.S. government's claim that the 90-day deadline to petition the U.S. Tax Court is inflexible, with one judge saying during oral arguments Wednesday in a woman's case challenging the rule that the U.S. Supreme Court seemed to back her.”

Feds Seek 13 Years in Avenatti's California Resentencing – Emily Sawicki, Law 360 ($). “California federal prosecutors asked a judge Wednesday to sentence Michael Avenatti to 160 months in prison for tax fraud and stealing from clients, to be served atop the five-year term imposed in a pair of New York cases where Avenatti was convicted of trying to extort Nike Inc. and defrauding former client Stormy Daniels.”

IRS Finalizing Settlement on $2B Loss Dispute with Bausch Health – Tyrah Burris, Tax Notes ($). “The IRS has decided to proceed with a settlement with pharmaceutical company Bausch Health Cos. Inc. on a capital loss arising from a Granite Trust transaction, according to the company’s first-quarter financial report.”

11th Circ. Backs Frivolous Argument Ruling Against Teacher – Anna Scott Farrell, Law 360 ($). “A Georgia high school teacher who claimed that he didn't have to pay taxes on his salary and that income taxes are unconstitutional must pay $25,000 in court sanctions under an Eleventh Circuit ruling affirming a U.S. Tax Court decision.”

Tax Court Rejects Couple's Case for Lacking Evidence – Anna Scott Farrell, Law 360 ($). “A couple who challenged what the Internal Revenue Service said was their more than $650,000 in tax debt provided no evidence that the number was wrong, the U.S. Tax Court said in a bench opinion released Wednesday.”

What Day is it?

Its National Coconut Cream Pie day, but if you’re not into coconut, its also National Give Someone a Cupcake Day. My favorite holiday!

Tax News & Views Tax Legislation and Coconut Cream Pies Roundup

Trina Pinneau