Tax News & Views No Toppings on Pizza or IRS Roundup

Mark your calendars for next Tuesday for "New Tax Legislation: Impacts on Section 1202 Qualified Small Business Stock," an Eide Bailly webinar. September 9, 11:00 a.m. Central time, no charge, 1 hour CPE available. Register here.

Acting IRS Large Business Unit Head Becomes Latest to Depart - Erin Slowey and Erin Schilling, Bloomberg ($):

The IRS division that audits the biggest multinational companies and wealthy individuals is losing another veteran leader.

Jennifer Best, the acting IRS commissioner of the Large Business and International Division, will leave the agency Friday, according to an email seen by Bloomberg Tax. She will be replaced by Mabeline Baldwin, who will also continue her permanent job as director of the eastern compliance practice area.

Best took over the position after Holly Paz, a longtime IRS executive was put on administrative leave in July for for unspecified, alleged conduct against Republicans.

The article notes that over half of the top 30 positions in IRS are either vacant or run by an "acting" head. The IRS Commissioner post is currently held in an acting capacity by Treasury Secretary Bessent.

Former IRS Executive Calls Immigrant Tax Data Deal ‘Illegal’ - Peyton Rhodes and Benjamin Valdez, Tax Notes ($):

The IRS’s agreement to share immigrants’ tax return information with the Department of Homeland Security violated taxpayer privacy laws, according to a former top IRS official.

Former IRS Chief Privacy Officer Kathleen Walters, in an interview with Tax Notes August 27, said the agency’s chief counsel attorney who reviewed DHS’s initial data request told executives that the request didn’t meet the legal guidelines the IRS follows for sharing taxpayer data.

...

Walters, one of a string of leaders who have departed the agency this year, stepped down in April after she became aware that Treasury was set to sign a memorandum of understanding with DHS.

Trump Administration Reposts Treasury, IRS Regulatory Agenda - Erin Slowey and Naomi Jagoda, Bloomberg ($):

Rules related to the massive GOP tax bill enacted on July 4 weren’t included in the regulatory plan though new regulations on digital assets, international tax measures included in Republicans’ 2017 tax overhaul, and transfer pricing were added.

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In tandem with the agenda, the IRS typically will release its priority guidance plan, which isn’t public yet. That includes a more expansive look at the agency’s regulatory direction listing regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.

The agenda includes proposed rules on clean energy credits, disguised sales of partnership interests, and partnership-level treatment of partnership interest options.

IRS to Close Nine Taxpayer Assistance Centers - Benjamin Valdez, Tax Notes ($). "According to a memo that the IRS sent to lawmakers, centers in the following locations will be closed: Altoona, Pennsylvania; Wilkes-Barre, Pennsylvania; Cedar Rapids, Iowa; Elmira, New York; West Nyack, New York; Owensboro, Kentucky; Paducah, Kentucky; Walnut Creek, California; and Wheeling, West Virginia."

OBBBA Nuggets

A Win for (Some) Teachers and Coaches in the New Tax Law - Ashlea Ebeling, Wall Street Journal:

Educators can now deduct up to $300 of unreimbursed expenses for books, supplies and other materials. This is available whether they take the standard deduction or itemize deductions.

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The new benefit will only be available for educators who itemize their deductions. For expenses starting on Jan. 1, those educators will be able to deduct unlimited classroom expenses beyond the $300 they already get.

One example: Teachers who have $1,200 in qualifying expenses in 2026 could first take the $300 deduction, which lowers their adjusted gross income and potentially increases their eligibility for other tax breaks. Then they could itemize the remaining $900 in expenses.

Podcasters and influencers: The unexpected jobs covered under Trump’s ‘no tax on tips’ plan - Fatima Hussein, Associated Press:

Golf caddies, blackjack dealers and house painters are among the jobs covered under the Trump administration’s preliminary list of occupations not required to pay income tax on their tips under Republicans’ new tax cuts and spending bill.

A bit more unexpected? Podcasters and social media influencers will also be excluded from forking over a portion of their tips, according to the list released Tuesday by the Treasury Department.

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Only tips reported to the employer and noted on a worker’s W-2, their end-of-year tax summary, will qualify. Payroll taxes, which pay for Social Security and Medicare, would still be collected along with state and local taxes.

How the Megabill Boosts a Charitable Tax Break for Seniors - Laura Saunders, Wall Street Journal:

Such donations are called qualified charitable distributions, or QCDs, and the rules for them didn’t change in the megabill. But because of our tortuous tax code, QCDs are more advantageous than ever for many senior donors.

Starting this year, IRA owners who donate via QCDs could reap greater benefits from megabill provisions such as expanded state and local tax deductions or the new $6,000 senior deduction, among others. Next year they’ll also avoid cuts to “itemized” charitable deductions on Schedule A.

An added bonus is that the Internal Revenue Service recently issued rules that could simplify tax reporting for these donations, which has caused trouble for many givers. Donors can start reaping the benefits of QCDs at age 70 ½.

One Big Beautiful Bill Act’s Corporate Tax Changes Benefit US Manufacturing the Most - Garrett Watson, Tax Policy Blog. "As measured by the change in tax liability in 2026 and over the budget window, the OBBBA provides the biggest benefit to corporations in manufacturing and less to those in service industries."

2 Big 2 Beautiful Bill 2?

Plans for second GOP megabill face growing skepticism - Meredith Lee Hill and Jordain Carney, Politico:

Still, House GOP leaders are forging ahead for now. They tasked their committee chairs earlier in the summer with assembling lists of proposals for a second budget reconciliation package, as well as program cuts to pay for them.

Those proposals are due by the end of this week, and Johnson and other top Republicans are expected to kick off a process to circulate and evaluate them across the conference. But after the fight for President Donald Trump’s “big, beautiful bill” sparked intense policy fights among GOP factions, there’s a growing realization the party likely can’t pass a new package before the end of the year — if at all — according to interviews with more than a dozen House and Senate Republicans.

Reconciliation 2.0: Fix or Fiasco? - Adam Michel and Dominik Lett, The Debt Dispatch. "If it becomes a Christmas tree of new spending and special-interest deals, it will be a fiasco."

Tariffs, My Deere, Tariffs.

John Deere, a U.S. Icon, Is Undermined by Tariffs and Struggling Farmers - Kevin Draper, New York Times:

One of the country’s largest manufacturers is worse off now than it was six months ago. Last month, John Deere said net income in its most recent quarter was down 29 percent from a year earlier. Higher tariffs, primarily on steel but also on aluminum, have cost the company $300 million so far, with nearly another $300 million expected by the end of the year. This summer the company laid off 238 employees across factories in Illinois and Iowa.

Trump Signs Order Sealing Japan Tariff Deal With 15% Rate - Josh Wingrove, Hadriana Lowenkron, Skylar Woodhouse, and Yoshiaki Nohara, Bloomberg via MSN. "Trump’s directive prevents the stacking of Trump’s country-specific duties on top of existing levies. The 15% charge will apply retroactively to most products shipped starting Aug. 7, the date on which the US president’s escalated tariffs on dozens of trading partners took effect."

Wall Street’s Bet Against the Trump Tariffs - Andrew Ross Sorkin, et. al, New York Times Dealbook:

Financial firms have made a proposition to importers: They would buy companies’ legal claims over refund rights.

“We have a lot of clients asking about it,” Lenny Feldman, a managing partner of Sandler, Travis & Rosenberg, a law firm specializing in international trade, told DealBook. (His firm is not involved in such transactions.)

For importers, selling refund rights is a potential way to cushion tariff losses, even if some offers have been valued at pennies on the dollar. DealBook hears that large U.S. companies are among those weighing such proposals.

Blogs and Bits

Claim these clean energy credits before OBBB ends them - Kay Bell, Don't Mess With Taxes. "But EV tax breaks aren’t the only climate-change related laws being eliminated sooner than originally planned."

IRS FAQs Clarify Early Terminations of Clean Energy Credits - Parker Tax Pro Library. "The FAQs provide guidance on the expiration of these credits and deductions and provide clarification on the availability of the new clean vehicle credit, the energy efficient home improvement credit, and the residential clean energy credit, among others."

OB3 Act: Research Expense Guidance is Released - Thomas Gorczynski, Tom Talks Taxes. "New §174A applies to expenses paid or incurred in tax years beginning after December 31, 2024; however, transition rules provide many options (and planning opportunities)."

State Tax News & Views: Results of Colorado's Special Legislative Session - Melissa Menter and Colette Sutton, Eide Bailly. Many state tax items, including this on Washington State:

In a few short weeks Washington State will begin enforcing SB 5814. This will expand the taxation, for sales and use tax, of many previously untaxed services. You may remember the insight we posted a few months ago, alerting you to this broad legislation. If you are doing business in Washington, and previously were subject to the state’s Business & Occupation Tax for services, you will want to verify if your services will be subject to sales tax on October 1st, 2025. Preparing now to appropriately calculate and tax these services will allow the burden to fall where it is supposed to, on your Washington customers, not your bottom line.

Investment Scam Fraud Watch(es)

Man indicted on federal fraud and tax charges for allegedly defrauding individuals out of $2.6 million and evading income taxes - IRS (Defendant name omitted, emphasis added):

According to the indictment, Defendant is a foreign national who recently resided in the Chicago area. In 2022, Defendant fraudulently obtained approximately $2.45 million from an individual by falsely representing that Defendant would invest the money in a shipping container business and a marijuana growing operation, the indictment states. Instead of investing the money, Defendant used nearly all of it for his personal purposes, including purchasing a residence in Lemont, Ill., paying rent for a residence in New York, funding restaurant and shopping trips in New York City, purchasing a 2022 Cadillac Escalade, and buying multiple high-end watches, the indictment states.

It's always cars and watches.

The indictment alleges that Defendant engaged in similar fraud schemes between 2023 and 2025. One scheme involved Defendant obtaining $150,000 from a victim by falsely representing that Defendant would invest the money in a coffee shop or Mexican restaurant. Defendant allegedly caused this victim to sign a lease on Defendant’s behalf for a residence in Michigan City, Ind., based upon Defendant’s false representations that, in exchange for signing the lease, Defendant would repay the victim $300,000 in connection with the purported coffee shop or Mexican restaurant investment. In fact, Defendant did not repay any of the victim’s money, the indictment states.

The tax charges accuse Defendant of attempting to evade income taxes and willfully failing to file income taxes for the calendar years 2020 through 2023.

Thoughts:

- Somehow that didn't end up on his tax return?

- $2.45 million is a pretty big investment in a non-public business for one individual. It would seem the investor might have profitably spent more on due diligence here.

- Signing a lease on a house is a strange way to get your investment money back.

Be careful out there.

What day is it?

It's both National Cheese Pizza Day and National 401(k) Day! Max out your 401(k) contribution now and you can afford more pizza toppings later.

Tax News & Views No Toppings on Pizza or IRS Roundup

Make a habit of sustained success.

Joe B. Kristan, CPA