Tax News & Views Global Minimum Tax Carve Out for Birds Roundup

OECD Pillar 2 Agreement

Countries Carve Out US Business From Global Minimum Tax – Lauren Vella, Somesh Jha, and Ryan Hogg, Bloomberg ($):

The Trump administration notched a major win for US companies on Monday, securing a commitment from international negotiators at the OECD to exempt them from key provisions of the global minimum tax.

The tax has been vigorously opposed by multinationals, which complained that costs of complying with the complex array of rules far outstrip the levy itself. The Trump administration demanded a carve-out for American companies and for the US tax system to work alongside the global minimum tax framework without interference.

Countries Reach Agreement on Pillar 2 Side-by-Side Package – Stephanie Soong, Tax Notes ($):

After months of negotiations, the OECD inclusive framework on base erosion and profit shifting has approved several safe harbors, including one that will shield U.S. multinational enterprise groups from some global minimum tax rules.

The safe harbor, announced January 5, is part of a package of pillar 2-related guidance, including a permanent simplified effective tax rate safe harbor; extended transitional safe harbors under the pillar 2 global anti-base-erosion rules; and greater alignment between nonrefundable substance-based tax credits and refundable tax credits.

The safe harbor would exempt groups headquartered in the United States from the scope of the pillar 2 GLOBE rules — the income inclusion rule and undertaxed profits rule. The regime, known as the side-by-side system, would exclude qualified domestic minimum top-up taxes from its scope.

2026 and the IRS

The IRS’s 2026: Filing Season Rush and Workforce Uncertainty – Erin Slowey, Bloomberg ($):

Many of the IRS’s most vexing issues—leadership changes, tax policy implementation, and the filing season churn—will persist into 2026 as the second Trump administration heads into its second year. While it’ll be hard to compete with the sheer amount of changes in 2025, the administration will continue to put its stamp on tax policy and administration, likely testing the bounds of existing laws and practices.

There’s also a risk of another government shutdown after Jan. 30 right as filing season kicks off. The agency’s funding level past the end of January is still up in the air, too.

IRS Funding, Crypto, Extenders Top Congress’ 2026 Tax Agenda – Zach C. Cohen, Bloomberg ($):

IRS funding and cryptocurrency issues are some of the topics Congress may address this year, even as lawmakers have little appetite to tackle more substantial tax policy changes.

President Donald Trump and key congressional Republicans believe they accomplished most of their tax priorities in the massive law the president signed last year, limiting the desire to make big tax-code changes through regular order or the party-line budget reconciliation process.

Still, lawmakers will need to pass appropriations legislation in the coming weeks, and could also take on more targeted tax-policy issues. Deadlines to extend expiring bespoke tax breaks that were left out of the GOP tax law and government funding give narrower bills their best chance to wend their way through Congress.

Threats to US Economy?

Yellen Warns of Growing ‘Fiscal Dominance’ Threat to US Economy – Maria Eloisa Capurro, Bloomberg ($):

A panel of economic luminaries said the long-run risk posed by mounting federal debt represented a paramount problem facing the US economy.

Those risks include the scenario in which the size of the debt prompts the central bank to keep rates low to minimize debt servicing costs, rather than contain inflation — a concept known as fiscal dominance.

“The preconditions for fiscal dominance are clearly strengthening,” former Treasury Secretary and Federal Reserve Chair Janet Yellen said Sunday during a panel discussion at the American Economic Association’s annual meeting in Philadelphia.

OBBBA Reception

Stakes Are High in Messaging War Over OBBBA Tax Provisions – Doug Sword & Cady Stanton, Tax Notes ($):

Republicans say their tax code overhaul is being well received by businesses but acknowledge more work needs to be done to reach individuals about the law’s merits.

Meanwhile, Democrats are confident that the complaints they are voicing and hearing from constituents are carrying the day, which is a view supported by polling on the One Big Beautiful Bill Act (P.L. 119-21).

These are the opposing views being heard by lawmakers interviewed over the four weeks they were in session between the prolonged government shutdown and Congress’s December 18, 2025, adjournment. In the coming months the two parties will try to convince Americans that the giant tax package is taking the country in either the right direction or the wrong direction, with the stakes being control of Congress.

Stablecoin Treatment

Tax Professionals Hope for New Stablecoin Stance in 2026 – Mary Katherine Browne, Tax Notes ($). “Tax professionals are advocating for Treasury to release guidance that would allow taxpayers to treat payment stablecoins as cash to avoid overly burdensome recordkeeping, reporting, and tracing rules.”

Regulations: Car-Loan Tax Break Test

IRS Floats 50% Personal-Use Test For Car-Loan Tax Break – Kat Lucero, Law360 ($):

Individuals, trusts and estates could claim up to $10,000 for the new auto-loan interest deduction only if the vehicle was used more than 50% of the time for personal purposes under proposed regulations published Friday by the IRS.

The personal use of the vehicle would be based on the buyer's expected use over the period of ownership when the loan is taken out, according to the regulations, implementing the tax break on car loan interest payments enacted in July as part of the massive Republican budget law.

The Internal Revenue Service proposed 50% as the threshold to acknowledge that many people buy vehicles and expect to have personal and nonpersonal uses for them, the agency said in the regulations.

Link to proposed regulations: REG-113515-25

Regulations: Drug Maker Fee

IRS Floats Updates To Fee Paid By Brand Drugmakers – Anna Scott Farrell, Law360 ($):

The Internal Revenue Service floated updates to regulations governing how branded prescription drug manufacturers or importers should calculate an annual fee established by the Affordable Care Act, a move the agency said aims to incorporate changes in drug discount programs and clarify tax reporting.

In a notice of proposed rulemaking Wednesday, the agency said its proposed regulations were consistent with how drugmakers have been calculating their fee under the ACA since subsequent legislation has affected the process.

Link to proposed regulations: REG-103430-24

Tariffs

Why Haven’t Trump’s Tariffs Had a Bigger Impact? – Ana Swanson, New York Times:

President Trump raised the taxes that the United States charges on imports last year to levels not seen in a century.

Prices of goods have increased as a result, and businesses that depend on imported products and supplies have struggled, with some closing their doors. Still, the effects have not been felt as strongly as some experts predicted after early April when Mr. Trump announced double-digit tariffs on imports from countries worldwide.

Deficiency Petitions Subject to Equitable Tolling?

IRS Seeks Rehearing in Second Circuit Deficiency Deadline Case – Mary Katherine Browne, Tax Notes ($). “The government is challenging the Second Circuit’s determination that the deadline for filing deficiency petitions in the Tax Court is a claims processing rule subject to equitable tolling.”

Disaster Filing Deadline Extension

Trump Signs Into Law Bill Extending Disaster Filing Deadline – Cady Stanton, Tax Notes ($). “President Trump signed a bill in the waning days of 2025 to give taxpayers affected by natural disasters more time to meet filing and payment deadlines in 2026.”

In the Courts

Hawaii’s ‘Green Fee’ on Cruise Ships Blocked Pending Appeal – Richard Tzul, Bloomberg ($). “Hawaii’s environmental tax on cruise ships is on hold pending resolution of a Ninth Circuit appeal from a federal judge’s order allowing the state to collect the tax.”

Trump Lawyers Drop Appeal in Legal Battle Over Shutdown Layoffs – Ian Kullgren, Bloomberg ($):

The Trump administration abandoned its appeal to a federal judge’s decision halting government staff cuts stemming from last year’s government shutdown.

The US Court of Appeals for the Ninth Circuit on Friday granted the government’s motion to dismiss. The lower court had found that the government violated a congressional funding agreement by laying off workers at several agencies, including the departments of State and Education.

What Day is it?

It’s National Bird Day!! To my nephew Will, my favorite bird lover, today is your day!

Tax News & Views Global Minimum Tax Carve Out for Birds Roundup

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Trina Pinneau