Tax News & Views Working Cat Estimated Tax Roundup

It's an Estimated Tax Day.

In a sensible world, "quarterly" estimated taxes would be due every three months, following the end of the quarter. We do not live in such a world, so today is an estimated tax deadline for those who pay them.

That means individual taxpayers whose taxes are not fully covered by withholding. That includes taxpayers with self-employment income, significant taxable investment income, and many retirees.

Electronic payment of taxes is best. Even if you don't like e-payment, you might as well get used to it, as the Treasury plans to stop accepting paper checks.

If you have an IRS online account (you should), you can log in to make your payments. You can use the Electronic Federal Tax Payment System (EFTPS) if you are a member. The full list of payment options is here.

Or you can still use the old 1040-ES voucher, mail your check to the proper address, and hope the post office and the remaining people at IRS take care of business.

Big Bill Big Day

Senate Republicans near release of tax bill text - Naomi Jagoda, Bloomberg ($):

While the release of the text will be a key milestone to achieving the huge tax overhaul, many obstacles lie ahead for Republicans.

The Senate parliamentarian will need to review the text and decide whether provisions comply with rules for the budget reconciliation process Republicans are seeking to use to pass the bill with a simple-majority vote.

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Then, once a bill passes the Senate, the House will need to vote again, which could also be tricky given the Republicans’ narrow majority in that chamber and competing factions. Hardliners in the House may take issue with the Senate’s changes to energy tax credits, while some Republicans from high-tax states like New York may oppose any scaling back of the House bill’s $40,000 SALT cap.

Senate Finance to huddle with big tax groups ahead of text release - Benjamin Guggenheim, Politico:

The Senate Finance Committee will brief large outside tax coalitions late Monday morning ahead of the panel’s expected release later in the day of its highly anticipated tax package.

The meeting — confirmed by two people with direct knowledge of the event, granted anonymity to share details of the committee’s private plans — comes as Senate Republicans scramble to make progress before the July Fourth recess toward passing President Donald Trump’s “big, beautiful bill.” The Finance Committee’s portion of that megabill, encompassing tax cuts and extensions and an overhaul of Medicaid, is among the most consequential components.

Playing Favorites in the Bill

How the GOP Tax Bill Favors Some Workers Over Others - Chris Cioffi, Bloomberg ($):

A restaurant’s server may get a break under the GOP’s plan to exempt their tipped income from taxes, but a car mechanic getting a thank-you for a job well done likely won’t. Some business owners would be able to use workarounds on the federal cap on deducting state and local taxes under the House’s bill, while others wouldn’t.

Proposals getting rid of tax on some tipped and overtime wages “are both tax cuts for labor income, but to qualify you have to have a really specific type of labor income,” said Erica York, vice president for federal tax policy at the Tax Foundation. “It’s a silly way to structure tax relief for working families, because you have to be a specific type of working family in order to benefit.”

Accountants and lawyers team up to fight Trump tax provision - Stephen Foley, Financial Times. "The House version raises the Salt cap to $40,000 but contains other measures to limit the cost of the move, including barring the use of the workaround for partnerships classified as a “specified service trade or business”, a broad category covering accountants, lawyers, doctors and some other professional services firms."

Tax law might be coming for your free office snacks - Julie Zauzmer Weil, Washington Post:

Starting in 2026, companies will no longer be able to deduct the cost of on-site cafeterias or takeout for workers who stay late. And accountants say the change probably applies to office snacks and coffee, too.

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With congressional Republicans racing to advance President Donald Trump’s tax and immigration bill and extend his 2017 tax cuts, some accountants had expected lawmakers to retain the workplace meal deduction. But the House version made an exception only for the restaurant industry, according to Christa Bierma, vice chair of the American Institute of Certified Public Accountants’ committee on employee benefits.

Consequences of the Bill

Tax Credit Sales Would Be Difficult To Insure Under House Bill - Kat Lucero, Law360 Tax Authority ($):

H.R. 1, the One Big Beautiful Bill Act, which the House passed late last month and now is being vetted by the Senate, would disallow the clean electricity production and investment tax credits to developers that do not begin construction within 60 days of the legislation's enactment. Project owners that do business with entities in foreign governments that Washington considers hostile, such as China and Russia, also would lose their eligibility for the investment tax credit or subject the taxpayer to a 10-year recapture period and repay 100% of the credit to the government.

The restrictions would likely strangle the robust market for the clean energy tax credits that quickly emerged after the 2022 Inflation Reduction Act enacted a new tax credit monetization method, called transferability, that allows businesses to sell or transfer their credits for cash at a discount to unrelated third parties. Transferability spurred a market for small to midsize clean energy businesses with limited tax liability to efficiently sell their development's earned credits for cash to buyers, often large corporations from various industries seeking to use the credits to pay down their own taxes.

GOP Megabill Boosts Wealthy Households While Hurting Poor, CBO Says - Richard Rubin, Wall Street Journal:

The bill’s benefits increase steadily with income. Households near the middle of the income distribution would see their resources increase because of the bill by an annual average of $500 to $1,000, providing a boost worth 0.5% to 0.8% of their income. The top 10% of households would see a gain of about $12,000, or about 2.3% of income, largely because of tax cuts. That is all compared with current law, a scenario in which Trump’s 2017 tax cuts expire as scheduled Dec. 31.

On average, according to CBO, the bottom 30% of households would come out worse off, losing household resources. Income groups above that get more resources than they would under current law, on average. The bottom 10% of households would lose about $1,600 because of benefit cuts, equal to about 3.9% of income.

IRS Update

Tax Breaks: The New Chapter Is Beginning At The IRS Edition - Kelly Phillips Erb, Forbes. "How Long’s tenure might impact the future of the IRS and tax administration is still a question, but far from the only one. Still to be determined? What the tax picture might look like during the next filing season for millions of taxpayers."

Tariff Update

Port of LA Imports Drop 19% in May as Tariffs Hit US Businesses - Laura Curtis and Isabela Fleischmann, Bloomberg via MSN. "While import flows may pick up again as importers rush to bring goods in during a temporary agreement between the US and China to lower the highest of the tariffs, import levies on goods from China remain prohibitively high for many businesses."

Blogs and Bits

Added summer income means more tax considerations - Kay Bell, Don't Mess With Taxes. "Regardless of your age, if you make enough money, the Internal Revenue Service will want a piece of it."

Jones Day Argues New Approach To Valuation In Recent Tax Court Cases- Peter Reilly, Forbes:

Tax Court Judge Goeke's opinion in Beaverdam Creek Holdings LLC pairs nicely with Judge Lauber's opinion in Ranch Springs LLC, which I recently covered. Both involve syndicated conservation easements on mining property in the South (Georgia and Alabama respectively) and extensive discussion of the discounted cash flow method of valuation. Another thing they have in common is the law firm representing the petitioner - Jones Day - and an innovative approach to valuation that they have developed and once again failed to sell a Tax Court judge on. Charles E. Hodges II of Jones Day has written me that both cases will be appealed. Most significantly both cases present a theory of valuation that would be game changing if it prevails on appeal.

Illinois Policymakers Should Think Twice Before Taxing GILTI - Katherine Loughead, Tax Policy Blog. "If Illinois’ budget is enacted as-is, Illinois will newly tax 50 percent of Global Intangible Low-Taxed Income (GILTI) as of tax year 2025, retroactively increasing tax burdens for US businesses and further hindering Illinois’ business tax competitiveness. To understand why state taxation of GILTI is inappropriate and economically harmful, it is first helpful to understand the role GILTI plays within the federal corporate income tax code."

House’s One Big Beautiful Bill Modestly Boosts Short-Term Growth, Hurts Long-Term Outlook - Benjamin Page, TaxVox. "The budgetary impact of the bill’s economic effects is limited because those effects are modest. TPC estimates that OBBBA would increase gross domestic product (GDP) by about 0.4 percent, on average, from 2026 through 2034. However, in later years, those benefits would fade as growing federal deficits reduce business investment."

Sorry, Wrong Number.

Appeals Hearing Saved After IRS Misdials Fax Number - Erin McManus, Tax Notes ($):

Taxpayers will get another chance for an IRS Appeals Office hearing after the office faxed their representative’s power of attorney to the wrong area code and didn’t attempt to give notice of a rescheduled conference.

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On October 11, 2022, [the taxpayer representative] faxed to Appeals a request to reschedule the conference to a later date and included Forms 2848, “Power of Attorney and Declaration of Representative,” which included his fax number beginning in area code 412. However, Appeals responded using the 419 area code.

Here in 2025 we still are talking about misdialed faxes. Only in the IRS.

What day is it?

It's Take Your Cat To Work Day! Declawing recommended.

Tax News & Views Working Cat Estimated Tax Roundup

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Joe B. Kristan, CPA