Tax News & Views Asteroid Vote-a Rama Roundup

Senate Starts Marathon of Votes as GOP Works to Pass Megabill - Olivia Beavers and Richard Rubin, Wall Street Journal:

Senate Republicans charged forward Monday with a marathon session to pass President Trump’s “big, beautiful bill,” as the party races to get the legislation to the president’s desk by their self-imposed July 4 deadline.

The voting on amendments and procedural motions is expected to last many hours as the various GOP factions seek to push the bill in their favored direction on charged political issues like Medicaid, food-assistance programs and tax cuts. Centrists are fighting to limit cuts to benefit programs and potentially reel back changes to clean-energy tax credits. Fiscal conservatives argue that this bill is a prime opportunity to address the nation’s rising debt, and they are pushing for deeper spending cuts.

Broadly, the bill is an attempt to squeeze as many of Trump’s priorities into one piece of legislation. It extends expiring tax cuts permanently and adds new tax cuts for tipped workers, overtime pay and factory construction.

Trump Tax Bill Advances in Senate as GOP Scrounges for Votes - Erik Wasson and Steven Dennis, Bloomberg via MSN:

Republicans scored a win when the Senate rules-keeper decided that a revised version of Medicaid cut proposal complied with the chamber’s rules. Senate Parliamentarian Elizabeth MacDonough had previously struck down health-benefit reduction plan with $250 billion in spending cuts fiscal conservatives had sought.

But that victory is double-sided. That decision could make it harder for key senators seeking for fewer Medicaid cuts — Susan Collins of Maine, Lisa Murkowski of Alaska and Tillis — to support the bill.

Everything is Free

Republicans Agree to Mask $3.8 Trillion of Trump Tax Bill Costs - Jarrell Dillard, Erik Wasson, and Chris Cioffi, Bloomberg:

GOP senators voted Monday in favor of the plan to count the extension of Trump’s 2017 tax cuts as costing nothing, over objections from Democrats and despite concerns raised by economists about the US debt trajectory.

...

The nonpartisan Congressional Budget Office Sunday estimated the Senate bill would add $3.3 trillion to deficits over 10 years compared to current law. The price tag compared to the GOP baseline is a $508 billion savings.

GOP Declares Tax-Cut Extensions ‘Free’ to Obscure Megabill’s Cost - Richard Rubin, Wall Street Journal:

To dodge the Senate filibuster rule, which typically requires 60 votes to advance legislation, Republicans are using the fast-track reconciliation process, which forbids bills from increasing deficits beyond the 10-year budget window and needs only a simple majority.

Rather than use standard congressional accounting, Republicans are saying that extensions of tax cuts set to lapse Dec. 31 don’t count toward budget deficits the same way that new tax cuts do, because they are just continuing current policies. According to the Congressional Budget Office, that assumption turns the Senate’s bill from a $3.3 trillion deficit increase that can’t pass through reconciliation into a $508 billion deficit decrease that can.

Capitol Hill Recap: Peril with the Parliamentarian - Alex Parker, Eide Bailly. "Republicans admit the July 4th deadline could be hard to meet, but they're still committed to it."

Surprise Tax on Wind, Solar

Surprise Tax in G.O.P. Bill Could Cripple Wind and Solar Power - Brad Plumer, New York Times:

Senate Republicans have quietly inserted provisions in President Trump’s domestic policy bill that would not only end federal support for wind and solar energy but would impose an entirely new tax on future projects, a move that industry groups say could devastate the renewable power industry.

The tax provision, tucked inside the 940-page bill that the Senate made public just after midnight on Friday, stunned observers.

Senate Megabill Stuns the Clean Energy Industry With New Tax on Wind and Solar - Jennifer Hiller, Wall Street Journal:

This weekend, clean energy companies were surprised by the sudden appearance of a tax that they hadn’t realized was under consideration. It would apply to wind and solar projects completed after 2027 if they use a certain percentage of components from China, the industry’s primary supplier of everything from critical minerals to batteries.

...

Elon Musk, whose relationship as a key adviser to the president recently unraveled, called the Senate’s latest version of the bill “utterly insane and destructive” on social media.

Weekend Changes in the Tax Bill

Senators Spare SALT Workarounds, Adopt Temporary Hike to Cap - Cady Stanton, Tax Notes ($):

Republican senators settled on a proposal to temporarily increase the cap on the state and local tax deduction as they raced to finalize their version of the bill and put a reconciliation package on the chamber floor.

The SALT provision retroactively boosts the deduction limitation from $10,000 to $40,000 for 2025 and $40,400 for 2026, followed by 1 percent increases for 2027, 2028, and 2029. Beginning in 2030, the cap would revert to $10,000. The limitation on state SALT workarounds that was in the June 16 version was dropped amid lobbying from the business community.

Controversial remittance tax shrinks again in new megabill draft - Brian Faler, Politico:

A proposed tax on remittances that’s kicked up a good amount of controversy would further shrink to 1 percent under the latest draft of Senate Republicans’ megabill.

That’s down from the 3.5 percent they had previously considered, and well off the 5 percent charge House Republicans approved last month as part of their version of the plan.

Senate Bill Could Complicate Charitable Giving Deductions - Chandra Wallace, Tax Notes ($):

Individual taxpayers who itemize won’t be able to deduct their first dollars of charitable giving each year, but non-itemizers will, under bill text proposed by the Senate Finance Committee.

Provisions in the Senate proposals impose “floors” that would disallow deductions for charitable contributions of up to 0.5 percent of an individual taxpayer’s adjusted gross income and up to 1 percent of a corporation’s taxable income.

What’s in Trump and Senate Republicans’ tax and immigration bill? - Jacob Bogage, Washington Post. "New tax breaks. Massive spending on border security. Cuts to social safety net programs. Pullbacks on investments to fight climate change. New limits on student loans. If it becomes law, President Donald Trump and congressional Republicans’ massive budget bill will reshape much of the federal government — and the U.S. economy."

SALT, College Tax, Energy: Winners and Losers in New GOP Bill - Kim Dixon, Bloomberg ($). "Senate tax writers are still waiting for additional rulings from the chamber’s parliamentarian, and fine tuning their text. The tax section released early Saturday morning does have some changes, but isn’t the final version, according to a source familiar with the process."

Byrd Rule Casualties

Rule Keeper Nixes Some Tax Provisions in Senate GOP Bill - Katie Lobasco, Tax Notes ($):

Several tax provisions included in the Republicans’ reconciliation package that would affect exempt organizations and taxpayers who claim the earned income tax credit run afoul of Senate rules and were dropped from the final bill.

Senate Parliamentarian Elizabeth MacDonough advised that the provisions violate the so-called Byrd rule and would be subject to a 60-vote threshold if they remain in the bill, according to a June 27 release from Senate Budget Committee Democrats.

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A new private school choice program is one provision that violates the Byrd rule, according to the parliamentarian. As written, it would create a new tax credit for charitable contributions made to organizations that grant scholarships to parents of elementary and secondary school students.

GOP handed more megabill setbacks as numerous tax provisions get sidelined - Brian Faler, Politico. "Parliamentarian Elizabeth MacDonough is also said to be objecting to a section in the sprawling tax, energy, immigration and defense bill aimed at reducing improper payments of the Earned Income Tax Credit, a wage supplement for the working poor. She also struck plans to up penalties for leaking private taxpayer information — a provision inspired by the leak of President Donald Trump’s and other wealthy people’s tax information to the news media."

Tax Administration

IRS Cybersecurity Program Fumbles Federal Standards - Anna Scott Farrell, Law360 Tax Authority ($):

The cybersecurity program at the Internal Revenue Service does not meet federal standards, the Treasury Inspector General for Tax Administration said in a report released Friday that also flagged problems in the agency's handling of privacy of taxpayer data.

In the watchdog's report on information technology during 2024, TIGTA found the cybersecurity program was "not fully effective," a rating on the low end of a scoring system developed in connection with the Federal Information Security Modernization Act of 2014.

New Policies Starting to Influence Criminal Tax Enforcement - Nathan Richman, Tax Notes ($). "CI has recently seen some enforcement gains and that level is stable for now, but over the past few months there has been an unusual number of departures, Justin Campbell, CI acting deputy chief, said June 27 at a conference sponsored by the New York University School of Professional Studies."

Across the Borders

G7 Deal Shields U.S. Firms From Some Pillar 2 Minimum Tax Rules - Stephanie Soong and Sophie Petitjean, Tax Notes ($):

The United States’ G7 counterparts have agreed to not apply their pillar 2 global anti-base-erosion (GLOBE) rules to U.S.-parented groups, but those companies would still be in scope of qualified domestic minimum top-up taxes.

In a joint statement issued June 28, the G7 said its members have agreed that the U.S. tax system and pillar 2 of the OECD’s two-pillar global tax reform plan will sit “side-by-side.”

Canada drops tech tax to restart US trade talks - Lucy Hooker, BBC:

On Friday, US President Donald Trump called off negotiations over a trade deal, describing the tax as a "blatant attack", and threatened higher tariffs on imports from Canada.

In response, Canada has said it will introduce legislation to remove the tax and would halt the collection of payments, which were due on Monday.

Blogs and Bits

Miami man gets prison time for $2.3 million COVID unemployment scheme - Kay Bell, Don't Mess With Taxes. "Those false claims netted resulted in $2.3 million fraudulently paid benefits, according to court filings."

Litigation Funders And Lawyers Face 40.8% Tax In One, Big, Beautiful Bill - Robert Wood, Forbes. "The bill imposes a steep 40.8% excise tax on 'qualified litigation proceeds' received by 'covered parties' under a 'litigation financing agreement.' Qualified litigation proceeds include all realized gains, net income or other profits derived from any litigation financing agreement. So, it would be more accurate to describe the new tax as a tax on qualified litigation income."

OBBBA Effective Dates Caution - Annette Nellen, 21st Century Taxation. "So, it's important to watch for the effective date in the final bill. But, if someone is eligible and really wants the clean vehicle credit, best to assume it ends 9/30/25."

Great Moments in Public Service

Former Santa Cruz County treasurer sentenced to 10 years in prison for stealing over $38 million in county funds - IRS (emphsis added):

Elizabeth Gutfahr, of Rio Rico, Arizona, was sentenced on June 23, 2025, by United States District Judge Rosemary C. Márquez to 120 months in prison, followed by three years of supervised release. Gutfahr previously pleaded guilty to Embezzlement by a Public Official, Money Laundering, and Tax Evasion. Gutfahr was also ordered to pay approximately $51.8 million in restitution to Santa Cruz County and the United States Treasury.

According to a November Justice Department press release, she pleaded guilty to embezzlement, money laundering, and tax evasion.

According to court documents, Gutfahr, who served as Santa Cruz County Treasurer from 2012 through 2024, embezzled and laundered approximately $38.7 million by wiring public funds from Santa Cruz County’s account to accounts in the names of fake companies she had created that performed no legitimate business. Gutfahr then used the money to purchase real estate, to renovate her family ranch, to pay expenses for her cattle business, and to buy at least 20 vehicles.

Gutfahr’s 10-year scheme involved approximately 187 wire transfers, which she was able to complete by undermining the two-step approval process required for transfers. Gutfahr used the token of a subordinate Santa Cruz County employee so that she could both initiate and approve the wire transfers. To cover up the scheme, Gutfahr falsified accounting records, cash reconciliation records, and reports of the County’s investment accounts, thereby hiding the millions of dollars that she had stolen from Santa Cruz County. Gutfahr also failed to report any of the stolen funds as income for tax purposes.

How did the 10-year embezzlement run come to an end? According to an Arizona State Auditor report, Chase Bank flagged wire transfers as suspicious:

The Treasurer was also the organizer, member, manager, and statutory agent for a domestic limited liability company and had bank accounts associated with that business at Wells Fargo Bank and at BMO Harris (BMO). On April 3, 2024, JPMorgan Chase Bank, N.A. (Chase), the County’s servicing bank, notified the County that its anti-money laundering team had flagged the County Treasurer’s Office money market savings account due to multiple outgoing wire transfers to 2 business bank accounts connected to the Treasurer (the Wells Fargo Bank and BMO business bank accounts described above). Specifically, they reported that 12 wire transfers totaling $4,550,000 had been deposited in business bank accounts connected to the Treasurer. The County took corrective action the next day by removing the County Treasurer’s Office authorized signatories from all County Treasurer’s Office bank accounts, replacing them with the County manager and County board of supervisors chairman.

In other words, without outside help the thefts might have continued. It's remarkable that a local government wouldn't miss $38 million, but it's happened before.

What day is it?

It's International Asteroid Day, marking the one event that seems like it could derail the tax bill at this point.

Tax News & Views Asteroid Vote-a Rama Roundup

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Joe B. Kristan, CPA