Key Takeaways
- Congress back in session.
- Tariff plans on imported drugs.
- Appeals court decision on tariffs.
- Preliminary tipped occupation list.
- IRS budget cuts.
- Sports betting.
- National Skyscraper Day!
Join us today at 1:00 CST for the free Eide Bailly CPE Webinar, "New Tax Legislation: Key Considerations for Your Business - Continued". Register here.
On Capitol Hill
Federal Tax Policy To Watch In The Rest Of 2025 - Asha Glover, Law 360 Tax Authority ($):
Immediately upon its return, Congress must determine the spending levels for government agencies, including Treasury and the IRS, if it wants to avert a government shutdown.
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Tax observers should also expect Treasury and IRS guidance through the end of the year on the provisions that the budget reconciliation bill changed or created, Snyderman said.
The IRS has begun providing taxpayers with information about the new deductions for tips and overtime pay, and a deduction for car loan interest, saying that expected guidance will include transition relief for taxpayers and employers.
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Senators are also expected to resume voting on Trump administration nominees when they return.
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Tax observers should also expect Treasury and IRS guidance through the end of the year on the provisions that the budget reconciliation bill changed or created, Snyderman said.
The IRS has begun providing taxpayers with information about the new deductions for tips and overtime pay, and a deduction for car loan interest, saying that expected guidance will include transition relief for taxpayers and employers.
...
Senators are also expected to resume voting on Trump administration nominees when they return.
Tariffs
Trump plans a hefty tax on imported drugs, risking higher prices and shortages - Paul Wiseman & Tom Murphy, AP News:
Trump has promised to impose hefty import taxes on pharmaceuticals, a category of products he’s largely spared in his trade war. For decades, in fact, imported medicine has mostly been allowed to enter the United States duty free.
That’s starting to change. U.S. and European leaders recently detailed a trade deal that includes a 15% tariff rate on some European goods brought into the United States, including pharmaceuticals. Trump is threatening duties of 200% more on drugs made elsewhere.
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But Trump has said he’d delay the tariffs for a year or a year and a half, giving companies a chance to stockpile medicine and shift manufacturing to the United States — something some have already begun to do.
That’s starting to change. U.S. and European leaders recently detailed a trade deal that includes a 15% tariff rate on some European goods brought into the United States, including pharmaceuticals. Trump is threatening duties of 200% more on drugs made elsewhere.
...
But Trump has said he’d delay the tariffs for a year or a year and a half, giving companies a chance to stockpile medicine and shift manufacturing to the United States — something some have already begun to do.
Trump hits court decisions on tariffs, aims to appeal by Wednesday - Alex Gangitano, The Hill:
President Trump said Tuesday the administration will appeal the latest appeals court decision that rejected his assertion that emergency powers justify his worldwide tariffs as soon as Wednesday, calling the situation an “emergency.”
The president warned about the impact of Friday’s U.S. Court of Appeals for the Federal Circuit decision, which affirmed a lower court opinion that the tariffs were not authorized under the International Emergency Economic Powers Act (IEEPA).
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Trump was the first president to impose tariffs under the IEEPA when he cited the emergency law earlier this year to put tariffs on Canada, China and Mexico because of the fentanyl crisis. But, in Friday’s decision, the appeals court found that the administration had “no clear congressional authorization” for duties of the “magnitude” that the president imposed.
The president warned about the impact of Friday’s U.S. Court of Appeals for the Federal Circuit decision, which affirmed a lower court opinion that the tariffs were not authorized under the International Emergency Economic Powers Act (IEEPA).
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Trump was the first president to impose tariffs under the IEEPA when he cited the emergency law earlier this year to put tariffs on Canada, China and Mexico because of the fentanyl crisis. But, in Friday’s decision, the appeals court found that the administration had “no clear congressional authorization” for duties of the “magnitude” that the president imposed.
Tipped Occupation List Released
Summary of the Treasury Department’s Preliminary List of Tipped Occupations - Ed Zollars, Current Federal Tax Developments:
This document was released to provide initial guidance on which occupations are eligible for the tip tax deduction under the OBBB Act. The primary use of this list is to define which workers can claim the "no tax on tips" deduction. To be eligible, an individual's tips must have been received in one of the occupations that customarily received them by the cutoff date of December 31, 2024. The official list, once finalized after public comment, will be part of the formal regulations from the Treasury and IRS that govern this tax provision.
Tailors, Plumbers Among 68 Jobs to Be Eligible for Tip Deduction - Alexander Rifaat, Tax Notes ($):
Tax policy watchers are cautiously optimistic following the release of a preliminary Treasury list of occupations that will be eligible to deduct tipped income.
The list, dated August 27 and made public September 2, contains 68 separate job titles divided into eight separate industry categories: beverage and food service; entertainment and events; hospitality and guest services; home services; personal services; personal appearance and wellness; recreation and instruction; and transportation and delivery.
The list, dated August 27 and made public September 2, contains 68 separate job titles divided into eight separate industry categories: beverage and food service; entertainment and events; hospitality and guest services; home services; personal services; personal appearance and wellness; recreation and instruction; and transportation and delivery.
IRS Gets New Instructions to Go With Its Budget Cuts - Doug Sword, Tax Notes ($):
House appropriators and the White House are seeking budget cuts that would slash the IRS’s annual spending to its lowest level since 2001, including a $2.8 billion reduction proposed by the House and a $2.5 billion reduction proposed by the administration.
Each proposal would cut enforcement funding by more than a third, but the administration is seeking an even bigger cut to the operations support account while pushing for a boost in taxpayer services funding. The House proposal calls for a milder 9 percent cut to operations support and a flat taxpayer services budget.
Each proposal would cut enforcement funding by more than a third, but the administration is seeking an even bigger cut to the operations support account while pushing for a boost in taxpayer services funding. The House proposal calls for a milder 9 percent cut to operations support and a flat taxpayer services budget.
Blogs and Bits
Eleventh Circuit Upholds Gross Valuation Misstatement Penalty in Conservation Easement Case - Ed Zollars, Federal Tax Development:
The Eleventh Circuit’s decision in Buckelew Farm reinforces several foundational principles for tax practitioners involved in conservation easement cases and valuation disputes. First, appraisals must be grounded in credible, comparable market data. A discounted-cash-flow analysis based on speculative development plans and non-comparable luxury properties is unlikely to withstand scrutiny, especially when contradicted by local market realities and the availability of cheaper, substitutable properties.
Claim these clean energy tax credits before OBBB ends them - Kay Bell, Don't Mess with Taxes:
The ending dates for all the climate-connected tax credits are the dates by which the qualifying vehicles or real properties much be acquired, placed in service, or construction must begin.
But pay attention, especially as the tax breaks’ expiration dates near, of just what Uncle Sam means by acquired.
The IRS, for example, issued guidance last month that gave EV buyers more leeway on what counts as acquired when it comes to the Sept. 30 deadline. Now, a buyer must simply sign a valid contract and place a down payment on the eligible vehicle.
But pay attention, especially as the tax breaks’ expiration dates near, of just what Uncle Sam means by acquired.
The IRS, for example, issued guidance last month that gave EV buyers more leeway on what counts as acquired when it comes to the Sept. 30 deadline. Now, a buyer must simply sign a valid contract and place a down payment on the eligible vehicle.
Tax-Exempt Munis vs. Taxable Bonds: Which Has Higher Returns? - Derek Hortsmeyer, Wall Street Journal:
When we adjust the tax-rate assumption, however, we find that investors in the 32% marginal tax-rate bracket would see roughly equal returns in muni funds as in short-term taxable funds on an after-tax basis. Therefore, if you are below the 32% marginal tax-rate level, then it is usually better to invest in a taxable bond fund and pay the taxes.
Tax Trouble
Jury Misled On Tax Fraud Conspiracy Charge, 10th Circ. Rules - Kat Lucero, Law 360 Tax Authority (defendant name omitted) ($):
The Tenth Circuit overturned Tuesday a conviction against a man who did not report trust income on his personal tax returns, saying the New Mexico district court erred in presenting instructions on the conspiracy charges to both the jury and defendant's counsel.
Even though a grand jury indicted Defendant on two counts — filing a false tax return and conspiring with his tax attorney to defraud the U.S. — the district court did not mention fraud in the instructions, according to the Tenth Circuit panel.
Even though a grand jury indicted Defendant on two counts — filing a false tax return and conspiring with his tax attorney to defraud the U.S. — the district court did not mention fraud in the instructions, according to the Tenth Circuit panel.
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