Tax News & Views Cheesecake Roundup

Programming note: Eide Bailly is hosting a webinar on New Tax Legislation: What Leaders Need to Know About the Changes to the R&D Tax Credit and Capitalization of R&D Expenses under Section 174 on Friday, August 1st. The webinar is free, and 1 hour of CPE is offered. Register here.

Unpacking the OBBBA

U.S. Exporters Get Welcome Surprise in Trump Tax Law - Richard Rubin, Wall Street Journal:

U.S. exporters—particularly capital-intensive manufacturers of aircraft, defense equipment, consumer products and semiconductors—scored significant tax cuts in President Trump’s new megalaw.

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Companies are digesting the new law’s complex details as they prepare and disclose rough estimates of its effects on tax payments and rates. The restructured deduction for Foreign-Derived Intangible Income comes as a welcome surprise to many executives. Companies poised to gain include those with research expenses and tangible U.S. assets like factories.

Trump Tax Megalaw Upends Charitable Giving - Richard Rubin & Juliet Chung, Wall Street Journal:

The tax-and-spending megabill makes five major changes affecting charitable giving, two expanding deductions and three restricting tax breaks. Some provisions will give more people a tax incentive to make charitable donations—and others are intended to make up the revenue loss from those expanded incentives.

Trump’s ‘big, beautiful bill’ could spell trouble for gamblers: What to know - Aris Folley, The Hill:

Some Democrats have already been sounding alarm over the measure, which Sen. Catherine Cortez Masto (D-Nev.) unsuccessfully sought to undo earlier this month.

“It will do irreparable harm to our nation’s gaming industry if it takes effect — especially in Nevada,” the Nevada Democrat said at the time, warning it would “disincentivize” gamblers.

The Senate Finance Committee said Chairman Mike Crapo (R-Idaho) is “open to receiving feedback from affected stakeholders and learning more about industry reporting and compliance.”

What’s In a Word? Tax Pros Puzzle Over FTC Allocations - Jonathan Curry, Tax Notes ($):

But one quirk of the new law, according to Masciangelo, is that taxpayers with complex structures that have to go through the expense allocation and apportionment process, including for interest and stewardship, are still required by the rules to determine the amount that would’ve been allocated to net CFC tested income. “That amount now gets treated as U.S.-source deductions, which still means you have the complexity of doing the calculation,” he said.

Treasury Guidance on Partnerships

Treasury Revamps Guidance on Book-Income Tax, Partnerships - Michael Rapoport, Bloomberg ($):

The new guidance will allow partnerships and partners to use alternative ways to calculate the amount of a partner’s income from the partnership that is used in calculating the corporate alternative minimum tax, Treasury and the IRS said in a notice Tuesday (Notice 2025-28). The agencies plan to withdraw part of the CAMT regulations they proposed last September as a result, and will propose new regulations to implement the alternate methods.

IRS To Permit Corp. AMT Top-Down Election For Partnerships - Kat Lucero, Law 360 Tax Authority ($):

The new election for a top-down approach would change the proposed regulations' requirement to determine a partner's distributive share of the corporate partnership's book income. This bottom-up approach involves multiple steps that would make entities — regardless of their size — with direct or indirect investment in the corporation susceptible to the Section 55 compliance.

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The notice also allows a corporate partner to opt for a taxable-income election, which would relieve the partnership from the requirement to report its modified financial statement income to the corporate partner.

Happening at the IRS

Losing The SOI Joint Statistical Research Program Would Harm Tax Administration - Barry Johnson, TaxVox:

The IRS Statistics of Income Division (SOI) has suspended its Joint Statistical Research Program (JSRP) due to resource constraints. As a result, there will be fewer independent analyses of how the US tax system is performing and how it could improve, just as significant changes from the One Big Beautiful Bill Act and an historic drop in IRS staffing go into effect.

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Staff reductions, including layoffs of probationary employees, voluntary separation programs, and a hiring freeze, have shrunk SOI staffing to an historic low, impacting the JSRP in two ways. First, there aren’t enough employees left to oversee JSRP projects that have already been approved, much less review new applications. Second, external researchers, who are usually on loan to the IRS through an OMB program, have been prevented from working on JSRP projects due to a hiring freeze.

IRS Heads of Large Business Unit, Tax Pro Oversight Put on Leave - Erin Slowy & Caleb Harshberger, Bloomberg ($):

Holly Paz, the commissioner of Large Business and International Division, and Elizabeth Kastenberg, acting director of the Office of Professional Responsibility, were put on leave while the IRS investigates their conduct against Republicans, the source said, adding that the leave doesn’t mean they are fired. It hasn’t been decided who will replace them, the source said.

The decision comes weeks after former Missouri Republican Rep. Billy Long became commissioner, and during one of the most turbulent periods at the agency in decades. Over half of the IRS’s leadership has left this year and a quarter of the agency’s staff of 100,000 is gone after President Donald Trump’s initiatives to shrink the federal government.

IRS to overhaul decades-old tax IT system that’s under DOGE scrutiny - Jory Heckman, Federal News Network:

It’s not entirely clear how far along the IRS is in modernizing its legacy IDRS system, or who will have access to its data. The Treasury Department and IRS did not respond to requests for comment.

Internal documents show the IRS plans to merge several of its systems, including those that handle the processing of tax returns for individuals and businesses, “into one tax processing engine.”

Internal documents show a modernized IDRS will allow for “national real-time tax processing,” and that the agency will be able to “establish processes to intercept or claw back erroneous payments.”

Tariffs

Trump announces 25% tariff on India and unspecified penalties for buying Russian oil - Josh Boak & Rajesh Roy, AP News:

Trump said on his Truth Social platform that India “is our friend” but its “Tariffs are far too high” on U.S. goods.

The Republican president added that India buys military equipment and oil from Russia, which he said has enabled the war in Ukraine. As a result, he intends to charge an additional “penalty” starting on Friday as part of the launch of his administration’s revised tariffs on multiple countries.

Trump Tariffs Will Raise the Cost of Food for Americans - Alex Durante & Rabecca Walker, Tax Foundation:

President Trump has often defended tariffs on the grounds that they will boost domestic production and create jobs. However, in the case of food imports, it is often difficult or impossible to onshore production due to land scarcity and a lack of suitable climates for certain goods. Consumers also often prefer the foreign alternative to American-grown products. This means tariffs on food imports will likely lead to higher food prices, making consumers worse off.

07-30-2025 Tax Foundation

Trump Says He Won’t Extend Tariff Pause Past Aug. 1—Sets 25% Rate For India - Sara Dorn, Forbes:

The U.S. will reinstate so-called reciprocal tariffs against any country that does not strike a new deal with the U.S. by Friday, President Donald Trump reiterated Wednesday, confirming he wouldn’t offer another extension for the pause on the “Liberation Day” tariffs he announced in April.

Tariff Rebates?

New Bill Would Provide Rebate Checks Funded by Tariff Revenue - Tyrah Burris, Tax Notes ($):

The American Worker Rebate Act, introduced July 28 by Sen. Josh Hawley, R-Mo., would provide a rebate check, funded by tariff revenue, of at least $600 to every U.S. adult and child. The checks would be similar to the stimulus checks approved by Congress in 2020, according to a release announcing the bill.

Under the bill, the allowable rebate amount would be reduced by 5 percent of taxpayer adjusted gross income that exceeds $150,000 for joint filers, $112,500 for heads of household, and $75,000 for individual filers. The bill would also allow for a larger credit per person if tariff revenue exceeds current projections for 2025.

Don't believe the hype about tariff rebate checks just yet - Bryan Metzger, Business Insider:

Sen. Rand Paul of Kentucky said the idea was "ridiculous" given the size of the national debt, which currently stands at more than $37 trillion.

"We're gonna basically borrow money to send it to the American people? There is no rebate if there's no money," Paul said. "I mean, it's the dumbest idea I've ever heard."

"Well, when we have a surplus, I'd be all for it," said Sen. Ron Johnson of Wisconsin said of the tariff rebate checks. "But we're $37 trillion in debt, running a deficit that's about $2 trillion as far as the eye can see. I would oppose it."

Sen. Cynthia Lummis of Wyoming told BI she'd also prefer to see any tariff revenue be used to pay down the debt — or to fund a strategic Bitcoin reserve.

Blogs and Bits

IRS, Security Summit remind tax pros they must have a Written Information Security Plan to protect client data - IRS:

IRS offers WISP tools and resources. IRS Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice PDF is a 28-page template designed to:

- Help tax professionals, especially smaller practices, develop a WISP.

- Guide users through starting a plan, including understanding security compliance requirements and professional responsibilities.

13 sales tax holidays are scheduled for August - Kay Bell, Don't Mess with Taxes:

Shop wisely: While shoppers love tax holidays (who doesn’t want to get the best of the tax collector, especially legally?), the word tax is a dead giveaway that the events might not be that simple.

As with tax filing, dates matter. While an event might be advertised as a weekend tax holiday, it could be in effect on just Saturday and Sunday, or Friday could make it a long weekend. Or Friday and Saturday if your state discourages shopping on what is the sabbath for many. Make sure you know when the holiday applies.

Streamlining Corporate Alternative Minimum Tax for Partnership Investments: An Examination of Notice 2025-28 - Ed Zollars, Current Federal Tax Developments:

Notice 2025-28 represents a critical step by the Treasury Department and IRS to address the complexity and compliance burdens associated with applying the CAMT to partnerships. By offering elective top-down and taxable-income approaches, providing flexibility in determining distributive shares, and introducing alternative methods for partnership contributions and distributions, the notice aims to provide much-needed relief to tax professionals and their clients. Understanding these interim rules and elections is paramount for accurate CAMT compliance as the regulatory landscape evolves.

AICPA Letter in Support of S. 2129, the Survivors Assistance for Fear-free and Easy Tax Filing Act of 2025 - AICPA. "The AICPA sent a letter to John Fetterman (D-PA) commending the introduction of S. 2129, the Survivors Assistance for Fear-free and Easy Tax Filing Act of 2025 (SAFE Act). The AICPA supports the SAFE Act would allow survivors of domestic abuse or spousal abandonment to file their taxes as if they were not married."

Tax Trouble

US, Japanese Businessman Settle $11.6M FBAR Dispute - Anna Scott Farrell, Law 360 Tax Authority (defendant name omitted) ($):

A Japanese businessman and the federal government have settled their $11.6 million tax filing dispute after the man claimed a language barrier was to blame and the U.S. tried to push past a jury's verdict, according to a Hawaii federal court filing.

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Defendant argued that the jury had taken its duty seriously and spent several days deliberating before returning a verdict, according to a March filing in the case. It heard evidence presented by both sides, allowing it every opportunity to weigh the plaintiff's credibility, Defendant said.

In the end, the jury chose to agree with Defendant's account of his understanding of American financial filing requirements, his reliance on accountants for tax preparation and the relevant Japanese language translations from his accountant's office, he said.

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