Senate referee rejects key Medicaid cuts in Trump’s ‘big, beautiful bill’ - Alexander Bolton, The Hill:
The Senate’s referee rejected a plan to cap states’ use of health care provider taxes to collect more federal Medicaid funding, a proposal that would have generated hundreds of billions of dollars in savings to offset the cost of making President Trump’s corporate tax cuts permanent, according to a Democratic summary of the parliamentarian’s ruling.
Senate Medicaid Cuts Dealt Setback in Trump Megabill - Richard Rubin and Joseph Walker, Wall Street Journal:
The ruling affects several of the largest and most controversial cuts in President Trump’s “one, big, beautiful bill,” and Republicans will likely be forced to drop or rewrite them. The changes could amount to hundreds of billions of dollars, making it harder for Republicans to hit their budget targets. A person familiar with Senate Republicans’ plans said they would aim to revise the proposal, working to find a solution that meets their goals.
Senate GOP dealt major blow on Medicaid cuts in megabill - Meredith Lee Hill, Robert King, and Jordain Carney, Politico:
Republicans will try to rework the provider tax language to get it back into the Senate bill, according to two people granted anonymity to discuss internal strategy. The revised language will still have to be blessed by the parliamentarian as complying with the chamber’s rules.
Trump is hosting an event at the White House today expected to feature personal stories touting the proposed benefits of the GOP reconciliation bill. This fits in neatly with Republican leadership’s desire to more aggressively sell the upside of the complex package. Most congressional Republicans have spent this week talking about the shortcomings.
Economic Projections of Tax Bill
Budget Reconciliation: Tracking the 2025 Trump Tax Cuts - Erica York, Garrett Watson, William McBridge, Alex Muresianu, Tax Foundation:
We estimate that the Senate Finance Committee’s version of the “One Big Beautiful Bill” would increase long-run GDP by 1.1 percent and reduce federal tax revenue by $4.7 trillion from 2025-2034 on a conventional basis after incorporating JCT estimates for items not scored by Tax Foundation, updating our modeling of the SALT pass-through workarounds, and adding proposed changes to the premium tax credit, earned income tax credit and child tax credit into our distributional estimates.
TPC Finds The Senate’s Draft Tax Cut Still Mostly Favors High-Income Households - Howard Gleckman, Tax Policy Center:
The highest-income 20 percent of households—those making $217,000 or more— would receive about 57 percent of the benefit of the Senate tax cuts, while the top 5 percent, who make $460,000 and up, would get more than one-third.
By contrast, the lowest-income 20 percent of households, who make about $35,000 or less, would get about 1.5 percent of the benefit and middle-income households would receive about 14 percent.
Blogs and Bits
And now is the time to take inventory of your property and personal possessions. This will help with any insurance claims or, if the catastrophe is declared a major disaster, support your claim of uninsured losses as a tax deduction.
IRS
National Taxpayer Advocate issues mid-year report to Congress - IRS:
The IRS received nearly 141 million individual income tax returns and processed about 138 million. Over 95% of processed returns were filed electronically, and about 62% resulted in refunds.
...
One longstanding filing season challenge that remains unresolved is lengthy delays in resolving identity theft cases.
What The IRS' 2025 Filing Season Tells Us About The Future Of Taxes - Andrew Leahey, Forbes:
The more immediate concern may be the fact that the IRS currently takes an average of 20 months to resolve cases for identity theft victims—a veritable millennia for individuals that did everything right but still found their refunds frozen. Almost 70% of folks caught in that net fall below 250% of the federal poverty line. Thus, they are, likely, waiting on money they depend on for rent, utilities, and even groceries. In practical terms a 20-month delay is a public policy failure.
Newly appointed IRS Commissioner Billy Long pledged to work with stakeholders in the agency’s advisory committees to modernize the agency and implement President Trump’s tax bill.
“I may be brand new to the IRS, but my experiences in business and as a member of Congress have given me a deep understanding of the importance of listening to different points of view,” Long told members of the Electronic Tax Administration Advisory Committee (ETAAC) at a June 25 public meeting.
“I also pledge to you that I will work to implement the changes that are needed to modernize the IRS and maximize its effectiveness,” Long said.
K-2/K-3 Filing Requirements
IRS Updates K-2 and K-3 Filing Requirements FAQ, Expands Exceptions to Filing - Ed Zollars, Current Federal Tax Developments:
In addition to the expanded domestic filing exception, a new small partnership exception has been created. This exception generally aligns with the conditions found in Form 1065, Schedule B, Question 4, which exempts a partnership from completing Schedules L, M-1, and M-2, and certain items on Form 1065 and Schedule K-1.
A partnership is generally exempt from filing Schedules K-2 and K-3 if it meets all four of the following conditions:
1. The partnership’s total receipts for the tax year were less than $250,000.
2. The partnership’s total assets at the end of the tax year were less than $1 million.
3. Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return.
4. The partnership is not filing and is not required to file Schedule M-3.
Tax Trouble
NJ Accountant Admits To Role In $1.3B Easement Tax Scheme - Anna Scott Farrell, Law 360 (defendant name omitted):
A New Jersey accountant admitted to promoting fraudulent conservation easement tax shelters to wealthy clients in connection with a $1.3 billion scheme that triggered decades-long prison sentences for two ringleaders, the U.S. Department of Justice said Wednesday.
Defendant, a certified public accountant, pled guilty Tuesday to conspiring to defraud the U.S. in 2018 and 2019 by promoting what are known as fraudulent syndicated conservation easement tax shelters, the DOJ said. In such shelters, taxpayers take charitable contribution deductions in exchange for donations of easements protecting land from development.
What day is it?
It's National Handshake Day!
