Tax News & Views B-Side IRS Commissioner Roundup

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Bessent’s Stint at IRS Portends Tighter Control of Agency - Benjamin Valdez, Tax Notes ($):

Treasury Secretary Scott Bessent’s transition to acting IRS commissioner is expected to bring the agency more closely under the control of the Trump administration and its vision for implementing a new tax law, according to observers.

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According to David Kautter of RSM US LLP, who was acting IRS commissioner while serving as Treasury assistant secretary of tax policy during the first Trump presidency, Bessent’s control of both Treasury and the IRS will bring a more unified vision to the implementation of the OBBBA, which will include updating forms and publications and drafting guidance.

“What having one person with jurisdiction over both the operationalizing and the issuance of regulations of the bill does is eliminate the squabbling between the Treasury building and the IRS building,” Kautter told Tax Notes. “Even though the IRS is a bureau of the Treasury Department, it has its own strong views at times on how things should be done.”

The post-Long landscape - Bernie Becker, Politico:

MORE ON LONG’S SHORT TENURE: Here’s one potential explanation — the Washington Post reported over the weekend that the IRS had not been particularly helpful in a recent data request from immigration authorities. (Treasury Secretary Scott Bessent has replaced Long as interim IRS chief.)

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The memorandum of understanding between the IRS and the Department of Homeland Security allows for confidential taxpayer data to be shared to assist in criminal investigations.

Some taxpayer advocates aren’t buying that the sharing will be that limited, particularly after multiple outlets have reported that administration officials wanted the information from seven million-plus taxpayers.

The article notes that IRS employees can face charges for unauthorized disclosure, putting them in an awkward position when the boss wants unauthorized disclosure. The IRS could also be vulnerable to class actions and monetary damages.

IRS’s Lack of Contractor Oversight Resulted in Inoperable Kiosks - Tyrah Burris, Tax Notes ($):

In 2021 the IRS awarded a firm fixed-price contract for the maintenance and monitoring of the kiosks. The agency was paying $500,000 annually even though the contractor was slow to respond to maintenance requests and left kiosks inoperable for long periods of time, according to a Treasury Inspector General for Tax Administration report released August 11.

The kiosks, which were installed in 2011, are hooked up to a laptop and connect to the IRS.gov website. The machines provide shorter wait times for taxpayers and allow taxpayers to use Free File, obtain prior year tax forms, and apply for employer identification numbers, but TIGTA said the machines appear dated and don’t use modern technology.

In April 2024 the IRS had 100 kiosks at 37 TACs. TIGTA found that 55 kiosks were operational, 40 were inoperable, and the operating status of five was unknown, said the report, dated August 8.

The Trade Front

‘Bizarre’ Nvidia, AMD chip export deal with Trump raises legal questions - Julia Shapero, The Hill:

Two major chipmakers in the U.S., Nvidia and AMD, have struck an unusual agreement with the federal government to share some of their revenue from chip sales to China — a deal that experts say raises constitutional questions and may set a concerning new precedent.

The two firms have agreed to share 15 percent of the revenue generated from selling advanced artificial intelligence (AI) chips to China in order to secure export licenses after a months-long pause, a U.S. official confirmed to The Hill on Monday.

Is It a Tax, or a Payooff? - Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced and Danielle Kaye, New York Times. "With pressure building on the Trump administration to reach a trade deal with China and with Nvidia potentially setting a precedent of companies paying for export licenses, what will the president do?"

Taxing imports and exports wasn't on my 2025 bingo card.

Trump extends China tariff truce for 90 days - Sylvan Lane, The Hill. "President Trump signed an executive order Monday extending his tariff truce with China for another 90 days as his administration and Beijing attempt to reach a permanent agreement."

Trump Says Gold Imports Won’t Be Tariffed in Reprieve for Market - Jennifer Dlouhy and Yvonne Yue Li, Bloomberg via MSN. "'Gold will not be Tariffed!' Trump posted on social media."

OBBBA Things

Trump’s tax law will mostly benefit the rich, while leaving poorer Americans with less, CBO says - Stephen Groves, Associated Press:

The CBO estimates that the 10% of poorest Americans will lose roughly $1,200 a year as they experience restrictions on government programs like Medicaid and food assistance, while the richest 10% of Americans will see their income increase by $13,600 from tax cuts. Overall, American households will see more income from the tax cuts in the legislation, including middle income households, but the largest benefit will go to the top 10% of earners.

Doubts Emerge on GOP Tax Breaks to Lure Investors in Rural Zones - Cole Reynolds, Bloomberg ($):

The first iteration has struggled to generate rural investment because urban projects maximize the program’s most lucrative aspects.

Once investors realize capital gain, they can defer their tax liability for five years if they put the funds toward projects in an opportunity zone, low-income census tracts nominated by governors. When the tax bill comes due, investors need only pay taxes on 90% of that gain. Under the new law, that drops to 70% if the investors put their money in rural zones.

But if investors manage to keep their investment—rural or otherwise—for a decade, they can keep their future gains tax-free.

Remittance Tax and Ramifications! - Manasa Nadig, The Buzz About Taxes. "The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduces a new 1% excise tax on remittance transfers that will take effect on January 1, 2026, affecting millions of American families who regularly send money abroad."

The OBBBA Is Here And States Are Making Some Big Choices - Lucy Dadayan, TaxVox. "Many of the OBBBA’s provisions—especially those that expand deductions or credits—will reduce taxable income and state revenue unless state lawmakers choose not to conform their tax code or adopt offsetting measures. On the other hand, provisions that limit deductions or repeal exemptions may increase revenue by broadening the tax base."

Navigating New Tax Law Changes for Exempt Organizations - Kim Hunwardsen, Eide Bailly:

The 21% excise tax on excess compensation paid by tax-exempt organizations has been expanded. The OBBB revises the definition of “covered employee” to include any employee or former employee who was an employee during any taxable year beginning after December 31, 2016.

Before the amendment, a covered employee was defined as one of the five highest compensated employees of an applicable tax-exempt organization for the taxable year. This 21% tax applies to renumeration paid to an employee in excess of $1 million, with a specific exception for payments for medical services.

Partnerships and Tax Shelters

2nd Circ. Affirms Denial Of Partnership's $22.7M Tax Loss - Kevin Pinner, Law360 Tax Authority ($):

The U.S. Tax Court correctly found the IRS properly denied a Connecticut partnership's $22.7 million loss deduction because the underlying transactions, which involved a Brazilian company, were tantamount to a disguised property sale, the Second Circuit ruled Monday.

Pimlico LLC's case centers on the transferring of distressed trade receivables through a number of related entities and on a partner joining the company around the same time as those transactions were made, according to the Second Circuit's opinion. Pimlico had been appealing the Tax Court's determination in April 2024 that the Internal Revenue Service had properly presumed the transactions were a disguised sale.

Notes to Partnerships Did Not Increase Basis; Losses Disallowed - Parker Tax Pro Library.

The Ninth Circuit affirmed the Tax Court and held that the IRS properly disallowed losses claimed by a taxpayer as passthrough losses from an upper-tier and a lower-tier partnership as a result of promissory notes he gave to the partnerships because the notes did not increase the taxpayer's basis under Code Sec. 752. The Ninth Circuit found that a loan to the partnership did not create outside basis for the taxpayer because the taxpayer did not bear the economic risk of the loan under Reg. Sec. 1.752-2(a) and because his note would have an assumed value of zero in a constructive liquidation under Reg. Sec. 1.752-2(b).

Estate Tax Foot-Faulting

The Estate Tax Mistake That Can Cost Families Millions - Ashlea Ebeling, Wall Street Journal:

Rowland expanded his many small businesses in Lorain, Ohio, over decades, with his hand in trucking, used cars, commercial real estate and banking. He served on local charity boards and wore a “World’s Greatest Grandpa” cap.

After he died, his executor filed an estate-tax return, and the Internal Revenue Service came calling in 2021, asking about the estate return of his late wife, Fay, filed years earlier. The tax agency said it believed her return was incomplete, and that disqualified his estate from getting a share of her exclusion.

The Rowland case has lawyers and accountants who prepare estate-tax returns on edge. The Tax Court sided with the IRS last month, disallowing the estate from using the common planning technique known as portability.

Blogs and Bits

Bipartisan bill would offer abused spouses tax-filing options and protection - Kay Bell, Don't Mess Woith Taxes. "Too often, though, where a spouse is abused, that mistreatment can find its way into their annual tax filing. Abused taxpayers don't want to engage in another battle, either emotional or physical (or both), so they just go along, submitting to the demanded filing method as a way to placate their insistent spouse."

I’m Tipsy on Overtime - Russ Fox, Taxable Talk. "The new OBBBA may be good for many workers, but it absolutely adds complexity to tax preparation. It will increase the amount of time it takes to prepare a tax return. Given the OBBBA didn’t (and couldn’t) change the clock–our day still remains 24 hours–and I’m loathe to require my employees to work additional hours (nor do I really want to myself), that means the cost to prepare a 2025 tax return will rise. "

When Taxpayers Do Not Cooperate With IRS' Request For Support of Expenses on Form 433-A - Ronald Marini, The Tax Times. "If you’re seeking relief from the IRS, whether it’s an installment agreement, an offer in compromise, or another option, you have to meet them halfway. That means promptly providing all requested forms and financial documentation."

Left Pocket, Right Pocket, Hole in Your Pocket: How Transfer Pricing Impacts Consolidated Profits - Chad Martin, Eide Bailly:

As transfer pricing practitioners, we hear it so often we almost start to believe it: transfer pricing is “left pocket, right pocket,” its impact eliminated in consolidated financial statements. This assertion is not always intended dismissively, but is often used as a reason to delay, or “opt out" of, transfer pricing planning and compliance.

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Tax News & Views B-Side IRS Commissioner Roundup

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