Key Takeaways
- IRS Budget
- IRS Chief Counsel
- Treasury Nomination
- Tax Legislation
- Federal Workers
- Tariffs
- Medtronic
- In the Courts
- Wildlife
IRS Budget
House Appropriations Panel Advances $2.8B IRS Funding Cut – Asha Glover, Law 360 ($):
The House Appropriations Committee approved legislation Wednesday that would cut the Internal Revenue Service's funding by $2.8 billion for the 2026 fiscal year, sending the proposal to the full House for consideration.
The committee voted 35-28 to approve the financial services and general government funding bill, which would fund the agency at $9.5 billion for the 2026 fiscal year. The agency received $12.3 billion in annual appropriations for 2025.
The committee voted 35-28 to approve the financial services and general government funding bill, which would fund the agency at $9.5 billion for the 2026 fiscal year. The agency received $12.3 billion in annual appropriations for 2025.
House Appropriators Approve Proposed Historic IRS Budget Cut – Doug Sword, Tax Notes ($):
House Appropriations Committee Republicans muscled through on a 35-28 party-line vote what would be historic funding cuts to the IRS, including nearly halving the agency’s enforcement budget.
Democratic amendments to the fiscal 2026 spending bill were rejected, although discouraged Democrats didn’t demand votes on some of them. Steny H. Hoyer, D-Md., ranking member of the Appropriations Financial Services and General Government (FSGG) Subcommittee, withdrew his amendment to strike most of the proposed IRS funding cut, saying to Republican members, “You’re all going to vote ‘No,’ I can tell that.”
Democratic amendments to the fiscal 2026 spending bill were rejected, although discouraged Democrats didn’t demand votes on some of them. Steny H. Hoyer, D-Md., ranking member of the Appropriations Financial Services and General Government (FSGG) Subcommittee, withdrew his amendment to strike most of the proposed IRS funding cut, saying to Republican members, “You’re all going to vote ‘No,’ I can tell that.”
House Panel Advances Bill to Cut IRS Enforcement Funding – Jack Fitzpatrick, Bloomberg ($):
House Republicans advanced legislation to cut funding for the Internal Revenue Service and federal buildings, drawing complaints from Democrats who have warned of a possible government shutdown on Oct. 1.
The House Appropriations Committee voted 35-28 Wednesday to approve their Financial Services and General Government funding bill for fiscal 2026. The Financial Services funding bill includes $23.3 billion overall, a $2.9 billion cut compared with current funding, according to a summary from the committee’s Democrats.
The House Appropriations Committee voted 35-28 Wednesday to approve their Financial Services and General Government funding bill for fiscal 2026. The Financial Services funding bill includes $23.3 billion overall, a $2.9 billion cut compared with current funding, according to a summary from the committee’s Democrats.
IRS Chief Counsel
Senate Schedules Hearing for IRS Chief Counsel Nominee – Cady Stanton, Tax Notes ($):
President Trump’s nominee to serve as top lawyer at the IRS is scheduled to face questions from Senate taxwriters, starting movement on his nomination to the agency.
The Senate Finance Committee will hold a September 10 nomination hearing for Donald Korb, who Trump nominated in April to serve as IRS chief counsel. Kenneth Kies, Treasury assistant secretary for tax policy, has stood in as chief counsel since June.
The Senate Finance Committee will hold a September 10 nomination hearing for Donald Korb, who Trump nominated in April to serve as IRS chief counsel. Kenneth Kies, Treasury assistant secretary for tax policy, has stood in as chief counsel since June.
Top IRS Lawyer Nominee Gets Hearing Date Before the Senate – Zach C. Cohen, Bloomberg ($):
President Donald Trump’s nominee to be the IRS’s top attorney will make his case before a group of key senators next week, putting the longtime litigator one step closer to joining the beleaguered tax collection agency.
The Senate Finance Committee will hold a hearing Sept. 10 that will include Donald Korb, Trump’s pick to be the next IRS chief counsel, panel chairman Mike Crapo (R-Idaho) announced Wednesday.
The Senate Finance Committee will hold a hearing Sept. 10 that will include Donald Korb, Trump’s pick to be the next IRS chief counsel, panel chairman Mike Crapo (R-Idaho) announced Wednesday.
Senate To Hold Treasury, IRS Nomination Hearings Next Week – Kevin Pinner, Law 360 ($). “The Senate Finance Committee said Wednesday that it has scheduled nomination hearings for high-ranking officials at the U.S. Department of the Treasury and the Internal Revenue Service for Sept. 10.”
Treasury Nomination
Treasury Nominee Vote Stalled by Clean Energy Tax Credit Fight – Zach C. Cohen, Bloomberg ($):
Derek Theurer’s bid to to be deputy undersecretary for legislative affairs at the Treasury Department has stalled as Senate Republicans seek a gradual off-ramp of wind and solar tax credits, said Sen. Chuck Grassley (R-Iowa), a senior member of the Finance Committee.
“We’re going to keep the holds on for a while,” Grassley told Bloomberg Tax after meeting with other moderate senators and those representing renewable energy producing states. “We’re all in this together.”
Grassley, along with Sen. John Curtis (R-Utah), had previously objected to voting on some of President Donald Trump’s other Treasury picks. The senators are concerned that the Trump administration’s tightening of eligibility for commercial wind and solar tax credits won’t align with provisions winding down the credits in the tax-and-spending law enacted in July.
“We’re going to keep the holds on for a while,” Grassley told Bloomberg Tax after meeting with other moderate senators and those representing renewable energy producing states. “We’re all in this together.”
Grassley, along with Sen. John Curtis (R-Utah), had previously objected to voting on some of President Donald Trump’s other Treasury picks. The senators are concerned that the Trump administration’s tightening of eligibility for commercial wind and solar tax credits won’t align with provisions winding down the credits in the tax-and-spending law enacted in July.
Tax Legislation
Trump aides plan megabill marketing reboot for GOP lawmakers – Meredith Lee Hill & Rachael Bade, Politico:
Two months after President Donald Trump called it “the most popular bill ever signed,” congressional Republicans are facing a sputtering effort to sell their sprawling domestic policy law — and they’re getting fresh advice Wednesday from top administration officials.
During a morning briefing, White House press secretary Karoline Leavitt and James Blair, the president’s top political aide, are set to walk House Republicans, and later their staffs, through the most popular pieces of the megabill that Trump wants them to tout ahead of next year’s midterms. Tony Fabrizio, a top Trump pollster, will also present a slate of fresh polling on the tax cut and spending law that Trump signed on July 4, according to three people granted anonymity to discuss plans for the private briefing.
During a morning briefing, White House press secretary Karoline Leavitt and James Blair, the president’s top political aide, are set to walk House Republicans, and later their staffs, through the most popular pieces of the megabill that Trump wants them to tout ahead of next year’s midterms. Tony Fabrizio, a top Trump pollster, will also present a slate of fresh polling on the tax cut and spending law that Trump signed on July 4, according to three people granted anonymity to discuss plans for the private briefing.
White House Seeks ‘Big Beautiful’ Rebrand as GOP Bill Falls Flat – Maeve Sheehey & Mica Soellner, Bloomberg ($):
President Donald Trump‘s top messengers are urging House Republicans to rebrand his signature “One Big Beautiful Bill” reconciliation package as Democrats hammer the GOP over the bill’s impact.
At an off-campus meeting Wednesday morning, House Republicans heard from White House Press Secretary Karoline Leavitt, senior Trump aide James Blair, and Trump pollster Tony Fabrizio. The trio pitched lawmakers on promoting a message around “working families” when referring to the legislation.
At an off-campus meeting Wednesday morning, House Republicans heard from White House Press Secretary Karoline Leavitt, senior Trump aide James Blair, and Trump pollster Tony Fabrizio. The trio pitched lawmakers on promoting a message around “working families” when referring to the legislation.
Federal Workers
Federal Workers Denied Arbitration as Trump Takes Aim at Unions – Ian Kullgren, Bloomberg ($):
The Trump administration is denying federal workers a key tool used to resolve conflicts with management as it intensifies its drive to dismantle public sector unions.
An Environmental Protection Agency official told workers late last month that the government will no longer honor a pact to allow workers to settle certain complaints through a neutral third party, according to documents and interviews with people close to the process. Bob Coomber, a senior labor adviser at the EPA, wrote in an Aug. 22 email to staff that the agency would quit ongoing arbitration over changes to the return-to-office policy, saying the agency no longer has to participate after President Donald Trump’s March executive order to cancel labor contracts at nearly two dozen agencies.
An Environmental Protection Agency official told workers late last month that the government will no longer honor a pact to allow workers to settle certain complaints through a neutral third party, according to documents and interviews with people close to the process. Bob Coomber, a senior labor adviser at the EPA, wrote in an Aug. 22 email to staff that the agency would quit ongoing arbitration over changes to the return-to-office policy, saying the agency no longer has to participate after President Donald Trump’s March executive order to cancel labor contracts at nearly two dozen agencies.
Tariffs
Trump Asks US Supreme Court to Uphold His Global Tariffs – Greg Stohr & Zoe Tillman, Bloomberg ($):
President Donald Trump asked the US Supreme Court to uphold his global tariffs, seeking review in a case that could affect trillions of dollars in trade and give him broad new leverage over the world economy.
The appeal calls for putting the case on a highly expedited schedule with arguments in early November, according to filings reviewed by Bloomberg. It follows a federal appeals court decision that said Trump can’t impose wide-scale import taxes by invoking a 1977 law designed to address national emergencies.
The appeal calls for putting the case on a highly expedited schedule with arguments in early November, according to filings reviewed by Bloomberg. It follows a federal appeals court decision that said Trump can’t impose wide-scale import taxes by invoking a 1977 law designed to address national emergencies.
Medtronic
Medtronic IP Deal Assigned Transfer Pricing Standard on Appeal – Tristan Navera & John Woolley, Bloomberg ($):
Medtronic Inc.‘s intellectual property deal with its Puerto Rican subsidiary is best priced using the IRS’s proposed method for determining arm’s-length consideration, the Eighth Circuit said Wednesday.
The US Court of Appeals for the Eighth Circuit remanded the case back to the US Tax Court, rejecting how the court applied its own specified method to calculate Medtronic’s intellectual property transfers with a Puerto Rican subsidiary. Chief Judge Steve M. Colloton said the Tax Court “applied an incorrect standard” when it rejected the IRS’s favored comparable profits method, which requires the IRS to examine if the transaction’s price and terms is “sufficiently similar” to an arm’s length consideration.
The US Court of Appeals for the Eighth Circuit remanded the case back to the US Tax Court, rejecting how the court applied its own specified method to calculate Medtronic’s intellectual property transfers with a Puerto Rican subsidiary. Chief Judge Steve M. Colloton said the Tax Court “applied an incorrect standard” when it rejected the IRS’s favored comparable profits method, which requires the IRS to examine if the transaction’s price and terms is “sufficiently similar” to an arm’s length consideration.
Eighth Circuit Vacates Medtronic II, Gives IRS Preliminary Win – Alexander F. Peter, Tax Notes ($):
On remand, the Tax Court will have to rectify its legal errors in rejecting the IRS’s preferred comparable profits method and skipping necessary fact-finding to determine the arm’s-length price for the license of intangibles to Medtronic's Puerto Rican subsidiary.
In its September 3 judgment in Medtronic v. Commissioner (No. 23-3063), the Eighth Circuit sent the case back to the Tax Court for a second time, throwing out the unspecified method that the court applied in its decision of 2022 (T.C. Memo. 2022-84).
In its September 3 judgment in Medtronic v. Commissioner (No. 23-3063), the Eighth Circuit sent the case back to the Tax Court for a second time, throwing out the unspecified method that the court applied in its decision of 2022 (T.C. Memo. 2022-84).
Tax Court Must Reconsider Medtronic Pricing, 8th Circ. Says – Natalie Olivo, Law 360 ($):
The U.S. Tax Court should reconsider its use of a hybrid approach for pricing intangibles that Medtronic licensed to a Puerto Rican affiliate, the Eighth Circuit said Wednesday, vacating the ruling and directing the court to revisit the IRS' pricing method.
A three-judge panel tossed Judge Kathleen Kerrigan's August 2022 ruling, which deviated from a traditional method for pricing intangibles that Minnesota-based Medtronic Inc. licensed to its Puerto Rican affiliate in 2005 and 2006. In using an approach that combined elements of different methods, Judge Kerrigan rejected the IRS' arguments for using the comparable profits method, or CPM, which takes into account profits from various companies.
A three-judge panel tossed Judge Kathleen Kerrigan's August 2022 ruling, which deviated from a traditional method for pricing intangibles that Minnesota-based Medtronic Inc. licensed to its Puerto Rican affiliate in 2005 and 2006. In using an approach that combined elements of different methods, Judge Kerrigan rejected the IRS' arguments for using the comparable profits method, or CPM, which takes into account profits from various companies.
In the Courts
Harvard $2 Billion Funding Freeze Found Illegal by Judge – David Voreacos, Bloomberg ($):
Harvard University scored a major legal victory in its battle with the Trump administration after a court ruled that the US illegally froze more than $2 billion in research funding.
The US government violated Harvard’s free speech rights and didn’t follow proper procedures when it suspended a wide range of research grants in April, according to a federal judge. The ruling on Wednesday paves the way for the funding to be released to the school, but the judge didn’t order it.
The US government violated Harvard’s free speech rights and didn’t follow proper procedures when it suspended a wide range of research grants in April, according to a federal judge. The ruling on Wednesday paves the way for the funding to be released to the school, but the judge didn’t order it.
Texas Couple Loses Property for $2.1 Million in Unpaid Taxes – Tristan Navera, Bloomberg ($). “The US can take the real property of a Texas married couple who have a decade of unpaid taxes, after they failed to defend the case against them, a federal court said.”
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