Key Takeaways
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Guidance provides shorter windows to qualify for solar, wind credit.
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5% safe harbor gone.
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Bessent sidelines 3 more top IRS officials.
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IRS failure to identify callers leads to multimillion dollar fraud loss.
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OBBBA and mid-term politics. "We should sell it, not be afraid."
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Tariffs go to the Iowa State Fair.
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Maryland can't tell businesses to hide digital tax.
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National Ice Cream Pie Day.
Tomorrow! Register now for the Eide Bailly Webinar "New Tax Legislation: An Overview." Coverage includes restoration of full equipment expenses, increased business interest deductions, full expensing of domestic research costs, QBI, Opportunity Zones, and energy credits. August 19, 1:30 p.m. Central time.
Trump administration deepens crackdown on solar and wind tax credits - Kelsey Tamoborrino and James Bikales, Politico:
The new Treasury Department guidance would undo years of existing practice defining when a solar or wind project has started construction, a key metric that spells out when developers can claim lucrative tax credits.
Treasury Department sets limits on remaining wind and solar tax credits - Rachel Frazin, The Hill:
It says that construction of these projects must be “continuous.” It also defines “having begun construction” as having done “physical work of a significant nature.” This includes activities like manufacturing equipment and excavating land to begin placing equipment in it. But it excludes activities like only having done surveys, test drilling or excavation for purposes of altering the landscape.
The guidance also says that even if the project meets those other requirements, it still must produce electricity by the end of the fourth calendar year after it begins construction.
IRS Strips 5% Safe Harbor In Solar, Wind Tax Credit Guidance - Kat Lucero, Law360 Tax Authority ($):
IRS Provides New Guidance on Sunsetting Solar and Wind Credits - Mary Katherine Browne, Tax Notes ($):
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However, Senate Finance Committee member Chuck Grassley, R-Iowa, seemed pleased with the guidance. Previously, Grassley along with Sen. John Ream Curtis, R-Utah, placed holds on three of Trump’s Treasury nominations until receiving assurances that the definition will align with Congress’s intent.
“Based on my initial review, Treasury’s guidance seems to offer a viable path forward for the wind and solar industries to continue to meet increased energy demand,” Grassley said in a release, adding that he appreciated the work Treasury Secretary Scott Bessent “and his team put in to issue guidance that reflects some of the concerns Congress and industry leaders have raised.”
Related: The Impact of New Tax Legislation on Energy Efficiency Incentives.
Bessent takes over the IRS
Bessent ousts 3 more IRS executives, asserting greater control - Jacob Bogage and Shannon Najmabadi, Washington Post:
Karen Howard, executive director of online services, confirmed Friday that she was placed on indefinite administrative leave with pay but declined to comment further. Bridget Roberts and Robert Choi, who led divisions for Direct File and Tax-Exempt and Government Entities, respectively, also were removed, according to the three people, who spoke on the condition of anonymity to share personnel information.
Three Top IRS Leaders Put on Leave in Second Wave of Removals - Erin Slowey, Bloomberg ($). "The personnel changes come in a second wave of sudden exits this summer after the agency put two other senior leaders—Holly Paz and Elizabeth Kastenberg—on leave for unspecified, alleged conduct against Republicans. Both worked for former IRS official Lois Lerner, the central figure of the 2013 controversy related to close scrutiny of certain tax-exempt groups."
The IRS Insecure Line
IRS Phone Authentication Failures Led to Millions in Fraud Losses - Tyrah Burris, Tax Notes ($):
The scheme succeeded because the IRS didn’t verify the identity of callers to its business specialty tax and practitioner priority service phone lines, the watchdog found.
TIGTA said it issued an alert to IRS management in October 2024 about the scheme. The Office of Investigations successfully stopped the payment of most of the checks, but the government still incurred at least $2.7 million in losses, according to the report.
From the TIGTA report:
Based on information that OI shared in its referral, we identified approximately $56 million in possible fraudulent refund checks issued from January 2023 through July 2024. The checks were associated with 150 Employer Identification Numbers.
OBBBA Politics and Implementation
A $715 billion tax cut turns into a $4.5 trillion sales job - Brian Faler, Politico:
But now a new mantra is emerging from lawmakers: Their tax cuts were huge.
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Implicit in the shift: Republicans are embracing the conventional budgeting “baseline” they scorned during legislative debate because that now makes their tax cuts appear more impressive.
‘We should sell it, not be afraid’: Republicans double down on Trump’s megabill - Eleanor Mueller, Semafor:
It’s all designed to solve a real problem: Democrats hit the GOP hard over the party-line megabill’s treatment of health care, chiefly its setup of almost $1 trillion in Medicaid cutbacks to help pay for tax cuts and more national security spending. And the public appears to have listened; one July poll found six in 10 voters oppose the law, in part because of its cuts to social safety nets.
Tax Reform and its Impact on Funds and Portfolio Companies - Adam Sweet, Eide Bailly. "any new provisions will encourage additional capital investment, generate increased cash flow for portfolio companies, and provide tax certainty for investors. Some of the proposed punitive measures, like increases to capital gains tax rates and changes to the taxation of carried interest, were not enacted in the final law."
OB3 Residential Energy Tax Credit Changes - Matt Gaylor, Matt's Tax Firm Insights. "Among its many provision, the OB3 included provisions to eliminate the residential energy tax credits for property placed in service after December 31, 2025."
Tariffs
Midterm Fight Over Trump Bill, Tariffs Starts Early at Iowa Fair - Erik Wasson, Bloomberg via MSN. "For many Iowans, the more immediate concern — and one that permeated the fair — is Trump’s trade policies. The president has threatened high tariffs on Chinese imports, prompting Chinese buyers to look elsewhere for US farm products, particularly soybeans. Iowa is the nation’s second-largest producer of soybeans, after Illinois."
Trump Says Semiconductor Tariffs Coming Soon, Could Reach 300% - Hadriana Lowenkron and Kate Sullivan, Bloomberg ($):
The White House hasn’t offered a subsequent explanation for how that exemption would work, but Trump implied that Apple — which has pledged a $600 billion domestic manufacturing initiative — could be exempt.
On Friday, Trump suggested the charge on imported semiconductors could be even higher.
EU push to protect digital rules holds up trade statement with US -Alice Hancock, Paola Tamma and James Politi, Financial Times:
EU officials said disagreements over language relating to “non-tariff barriers” — which the US has previously said includes the bloc’s ambitious digital rules — are among reasons for the hold-up of the joint statement.
It was originally expected days after European Commission president Ursula von der Leyen and US President Donald Trump announced a tariff agreement on July 27 in Scotland.
Don't Tell Them About the Tax
Md.'s Digital Ad Tax Violates 1st Amendment, 4th Circ. Says - Michael Nunes, Law360 Tax Authority ($):
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In an opinion written by Judge Julius N. Richardson, who likened Maryland's tax to the colonial-era Stamp Act, said that "complaining about taxes remains a grand American political tradition" and Maryland lawmakers may have feared such complaints when creating the provision.
"If companies pass on the cost of the tax, they must do so in silence — keeping customers in the dark about why prices have gone up and thereby insulating Maryland from political responsibility," Judge Richardson said.
Blogs and Bits
Taxes owed by NIL's student athlete millionaires - Kay Bell, Don't Mess With Taxes. "Not surprisingly, 17 of the top 20 NIL valuations are deals with quarterbacks."
Tax Breaks: The Scammers And Schemers Are Upping Their Fraud Game Edition - Kelly Phillips Erb, Forbes. "The FBI is warning about a new scam involving fraudsters posing as lawyers representing fictitious law firms. Using social media or other messaging platforms, scammers offer their services, claiming to have authority to investigate fund recovery cases."
Will E.J. Antoni Raise Your Taxes? - Daniel Bunn and Kyle Pomerleau, Wall Street Journal. "That’s what will happen if he produces overly optimistic inflation numbers."
OBBBA Accelerates Social Security Insolvency - Romina Boccia and Ritvick Thakur, The Debt Dispatch. "Congress should act now to stabilize the system—not procrastinate any longer, which only ensures that inevitable changes will be more drastic and economically harmful."
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