Key Takeaways
- Big Bill
- Trump Budget
- Tariffs
- IRS
- In the Courts
- Leave Work Early
Big Bill
House GOP’s Tax-Cut Bonanza Comes With $50 Billion SALT Surprise – Ben Steverman, Bloomberg ($):
But a key subset of rich Americans were pointedly excluded from that potential bonanza. In fact, thousands of business owners are facing the prospect of billions of dollars of higher taxes. Their sin: Earning their money in the wrong industry.
Now or Later: GOP Bill Addresses Tax Cliff with More Drop-Offs – Cady Stanton, Tax Notes ($):
A wide swath of items from the 2017 tax cuts are set to expire at the end of 2025—a time crunch that has been cited by House Ways and Means Committee Chair Jason Smith, R-Mo., as a motivating factor for quick movement on the party’s reconciliation package with those extensions among its $3.9 trillion tax title.
Proposed U.S. Remittance Tax Could Be Administrative Nightmare – Jonathan Curry, Tax Notes ($):
Policy observers warn that the proposal will likely create headaches for a wide range of individuals who are not the intended targets of the policy and put burdensome new requirements on the banks, money transmitters, and other financial institutions that enable the transfers.
Republicans Pan Federal Scorekeepers’ Tax Bill Analysis – Cady Stanton, Tax Notes ($). “President Trump joined two top House Republicans in criticizing the Congressional Budget Office and Joint Committee on Taxation analyses of their party’s reconciliation bill as the measure moves toward Senate consideration.”
Wall Street warns Trump aides the GOP tax bill could jolt bond markets – Andrew Ackerman & Jeff Stein, Washington Post:
House Republicans this month approved a measure projected to add $2.3 trillion to the national debt over the next decade, primarily by extending tax cuts from 2017 — and it would add more than $5 trillion in debt including interest costs and likely future extensions, according to the nonpartisan Committee for a Responsible Federal Budget. That legislation, which would also beef up immigration enforcement and defense spending, is President Donald Trump’s top legislative priority. The Senate is due to take it up soon.
U.S. Retaliatory Taxes Would Be Bad for Business, Observers Warn – Stephanie Soong, Tax Notes ($):
As the Senate considers the Republicans’ sweeping reconciliation bill, which passed the House May 22, one part of the draft legislation has the international business community on high alert: proposed IRC section 899.
The new code section would empower the United States to increase taxes on “applicable persons” from jurisdictions that have what it views as extraterritorial or discriminatory taxes. The bill explicitly calls out digital services taxes, diverted profits taxes, and the undertaxed profits rule, an enforcement provision that is part of the OECD’s pillar 2 global minimum tax regime. However, Treasury could identify other measures.
GOP Tax Bill Could ‘Imperil’ Battery Factory, Ford Chair Says – Katie Lobosco, Tax Notes ($):
The rollback of production tax credits included in the reconciliation package (H.R. 1) could threaten an electric vehicle battery manufacturing plant that Ford Motor Co. is building in Marshall, Michigan.
House Bill Tax Tweaks Would Hinder Renewable Projects – Michael Haun, Auburn Wise, and Lena Son, Law 360 ($):
In particular, H.R. 1 shortens the window for new wind, solar and other clean electricity projects to qualify for federal tax incentives, and it denies tax credits for certain residential and community projects structured as wind or solar leasing arrangements.
Trump Budget
Detailed Trump Budget Request Would Slash IRS Enforcement Funds – Cady Stanton & Benjamin Valdez, Tax Notes ($):
The document, released May 30, breaks down the Trump administration’s previously announced framework for fiscal 2026 government funding, which set a $9.8 billion top-line budget for the agency, a 20 percent funding cut that would reduce the tax collector’s funding to its lowest level since 2002.
Trump Seeks to Slash IRS Funding, Cut Enforcement, Tech Upgrades – Erin Slowey & Erin Schilling, Bloomberg ($):
The proposed IRS annual funding for fiscal 2026 is a drop from Biden’s $12.3 billion proposal last year. The proposal includes $3.6 billion in taxpayer services, $3.6 billion for enforcement, $2.6 billion in operations support.
Trump Seeks to Shrink IRS Watchdog’s Budget Amid Anti-Fraud Push – Erin Slowey, Bloomberg ($):
This move in the White House’s proposed 2026 fiscal year budget would “substantially inhibit” the watchdog’s mission and require the agency to significantly drop audit, inspection, and evaluation staff which would result in about 35 fewer reviews that year, the Acting Treasury Inspector General for Tax Administration Heather Hill said in response the proposal. Funding would be reduced to $138 million from over $172 million.
Debt Ceiling
Bessent Says US Will Never Default as Congress Faces Endgame – Tony Czuczka, Bloomberg ($):
“That is never going to happen,” Bessent said Sunday in an interview with CBS’s Face the Nation. “We are on the warning track and we will never hit the wall.”
Republican congressional leaders have attached an increase in the debt limit to President Donald Trump’s tax and spending bill, which potentially puts avoiding a default at the mercy of complex negotiations over the legislation. The US Senate returns this week to take up the bill.
Tariffs
US-China Trade Talks Could Resume After Stall Over Minerals – Dylan Moroses, Law 360 ($):
National Economic Council Director Kevin Hassett told ABC's "This Week" he expects the conversation between President Donald Trump and Chinese President Xi Jinping will be "wonderful," but he noted that no such communication has been scheduled.
U.S. Government Lodges Appeal in Another IEEPA Tariff Defeat – Amanda Athanasiou, Tax Notes ($). “One day after the international trade court claimed exclusive jurisdiction in a challenge to tariffs issued under the International Emergency Economic Powers Act (IEEPA), a federal district court said it has jurisdiction in a similar action.”
Supreme Court Rulings Against Biden Now Threaten Trump Tariffs – Greg Stohr, Bloomberg ($):
During Biden’s presidency, the court’s conservative majority ruled that federal agencies can’t decide sweeping political and economic matters without clear congressional authorization. That blocked the Environmental Protection Agency from setting deep limits on power-plant pollution and the Education Department from slashing student loans for 40 million people.
The concept — known as the “major questions doctrine” — is now playing a central role in the case against Trump’s unilateral imposition of worldwide import taxes. With Supreme Court review all but inevitable, the justices’ willingness to employ the doctrine against Trump may determine the fate of his signature economic initiative.
Tariffs Unlikely to Disappear Despite Judicial Setback – Jonathan Curry, Tax Notes ($):
The U.S. Court of International Trade’s conclusion that Trump lacks authority under the International Emergency Economic Powers Act (IEEPA) to levy tariffs means the Trump administration will have to turn to alternative sources of legal authority to continue unilaterally imposing tariffs. And while there are several different statutes available, none of them offer the flexibility the administration has grown accustomed to under the IEEPA.
Trump to Hike Steel, Aluminum Tariffs to Aid Nippon-US Steel – Josh Wingrove & Joe Deaux, Bloomberg ($). “President Donald Trump said he would be increasing tariffs on steel and aluminum to 50% from 25%, saying the move would help protect American workers, as he visited a United States Steel Corp. plant on Friday.”
GE Passing Along Some Tariff Fees to ‘Buffer Out’ Against Costs – Guy Johnson & Benedikt Kammel, Bloomberg ($). “General Electric Co. is exercising some cost increases to pass on additional charges caused by US President Donald Trump’s tariffs, as the world’s largest aircraft engine maker advocates for a return to a duty-free regime that long underpinned the industry.”
IRS
IRS Touts ‘Successful’ Tax Season Amid Slashed Workforce, Chaos – Erin Slowey, Bloomberg ($). “The IRS said 87% of taxpayers who called the agency for help during the recent filing season reached a representative, and that it continued seeing success in shortening phone wait times.”
Thousands of Littlejohn Breach Victims Missed IRS Notices – Benjamin Valdez, Tax Notes ($). “Over 12,000 taxpayers affected by the tax data leak by former IRS contractor Charles Littlejohn didn’t receive initial letters notifying them that their information was compromised, according to an agency watchdog.”
In the Courts
Ninth Circuit Allows Pause on Trump’s Federal Worker Layoffs – Isaiah Poritz & Ian Kullgren, Bloomberg ($):
The US Court of Appeals for the Ninth Circuit in a 2-1 decision Friday rejected Trump’s emergency request to stay a preliminary injunction issued by a lower court judge, who said the president’s order was likely unconstitutional without the cooperation of Congress.
Tax 'Magician' Gets 4 Years For $145M Return Fraud – Anna Scott Farrell, Law 360 ($). “A tax preparer who falsified returns to the tune of $145 million in tax losses to the federal government was sentenced to four years in prison — half of what prosecutors had pushed for — after telling a New York federal court that he meant to help poor customers.”
Ohio Judge Slams Eaton for Ongoing IRS Disclosure Fight – Natalie Olivo, Law 360 ($). “An Ohio federal judge denied Eaton Corp.'s bid to withhold foreign employee evaluations from the IRS, ruling Friday that the power management multinational's "astounding amount of effort" to fight disclosure has been a poor use of judicial resources.”
Convicted Crypto Investor's Wife Says Gov't Can't Seize Funds – Anna Scott Farrell, Law 360 ($). “The wife of a bitcoin investor sentenced to prison for concealing millions of dollars from the IRS asked a Texas federal court Friday to stop the federal government from taking her money to help make up for $1 million in restitution stemming from his cryptocurrency sales.”
What Day is it?
Its National Leave Work Early Day! Something that should truly be celebrated every day.
