Key Takeaways
- Remember to remit your 4th quarter estimated tax payment today.
- Why electronic payments are more reliable than the mail.
- House advances IRS funding cuts.
- ACA tax credit deal near death in Senate.
- IRS issues 100% bonus depreciation guidance.
- BREAKING: Some people on the Internet are wrong about taxes.
- National Bagel Day.
Tomorrow! Tune in Friday, January 16, at 10:30 a.m. Central time, for a Tax Update Webinar for critical reminders and new developments heading into the tax filing season. This session will feature Alex Parker, our man in D.C., on the current situation in Washington. Also participating are firm experts in accounting methods, international tax, transfer pricing, and information reporting. No charge, 2 hours CPE available. Register here.
It's Estimated Tax Day! Today is the due date for fourth-quarter 2025 individual estimated income tax payments. There are a number of ways to make the payment online, including by setting up an online personal IRS account. Taxpayers with an online account can use it to check on payments they have made, look into refunds, look for W-2s and 1099s, and respond to IRS notices.
Or you can send a Form 1040-ES by mail - but under new postal regulations, mail dropped into a box today is unlikely to have today's postmark, unless you use certified mail and get your postmark hand-stamped at the post office.
House Advances Funding Cut; IRS Advisory Panel Has Thoughts
House Passes Package With $1.1 Billion IRS Funding Cut - Cady Stanton, Tax Notes ($):
The bipartisan and preconferenced fiscal 2026 financial services and general government bill passed the House on a 341-79 vote January 14 as part of a two-bill appropriations minibus package. Lawmakers are working to pass a total of nine appropriations bills before the January 30 government funding deadline.
The legislation would cut the fiscal 2026 IRS annual budget to $11.2 billion — 9 percent less than the $12.3 billion agency budget for fiscal 2025.
IRS Advisory Panel Suggests Campaign To Boost Funding - Asha Glover, Law360 Tax Authority ($):
Debates about Internal Revenue Service funding have become contentious, and the agency must combat misinformation about its operations while reminding the public about its important role, the council said in its annual public report. Inadequate funding makes it harder for the agency to combat falsehoods on social media and carefully screen returns for fraud while timely processing flagged returns that are determined to be legitimate, according to the report.
ACA Deal Dying in Senate
The Senate is nowhere near an Obamacare deal - Laura Weiss, Andrew Desiderio and Samantha Handler, Punchbowl News:
Senators involved in bipartisan health care talks are struggling to reach agreement among themselves. Even if they can, the group would need to build consensus among senators on both sides of the aisle in order to pass a bill, somehow push the measure through the House and then convince President Donald Trump to sign it.
All of those steps are incredibly difficult. Meanwhile, the clock is close to running out. Open enrollment for marketplace plans ends today.
Stepping Up To The Bar(code)
Ways and Means Advances Paper Tax Return Barcode Bill - Katie Lobosco, Tax Notes ($):
Under the BARCODE Act, tax returns prepared electronically but printed and filed on paper would include a scannable code that converts data into an electronic format. The IRS would also use optical character recognition technology — used by the U.S. Postal Service to read handwritten addresses — to scan paper tax returns that are not prepared electronically.
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While less than 7 percent of individual tax returns were filed on paper in 2023, that still accounts for about 10 million returns and amended returns, Joint Committee on Taxation Chief of Staff Thomas A. Barthold said at the markup.
Tariffs: More Novelty, More Uncertainty, Less Manufacturing
White House sets tariffs to take 25% cut of Nvidia and AMD sales in China - Aime Williams, Michael Acton, Camilla Hadgson, and Elanor Olcott, Financial Times:
In December, the White House said it would allow Nvidia to start shipping its H200 chips to China, reversing a policy that prohibited the export of advanced AI hardware. However, it demanded a 25 per cent cut of the sales.
The new US tariffs on certain chips, announced on Wednesday, were designed to implement these payments and protect the unusual arrangement from legal challenges, according to several industry executives.
Trump Holds Off on Critical Minerals Tariffs After Probe - Joe Deaux and Jennifer Dlouhy, Bloomberg via MSN:
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Industry watchers for months have awaited the decision from the investigation, begun last April under Section 232 of the Trade Expansion Act, which concluded that imports of processed critical minerals and their derivative products imperiled US national security, citing their importance to a wide swath of defense industries.
The absence of any immediate tariffs is a signal that the administration is seeking to avoid destabilizing a trade truce Trump and Chinese President Xi Jinping agreed to last fall, under which the sides pledged to lower import-tax rates and ease export controls.
Trump’s promised manufacturing boom is a bust so far - David Lynch, Washington Post:
Bonus Depreciation Guidance Issued; Qualified Production Property Not Covered.
IRS Clarifies 1st-Year 100% Depreciation Deduction Eligibility - Kat Lucero, Law360 Tax Authority ($):
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The budget law restored the Section 168(k) provision and made it a permanent incentive to allow businesses to immediately deduct 100% of the cost of acquiring or producing eligible property in the year it was placed in service to account for the property's loss in value over time.
Treasury, IRS Issue Guidance on Bonus Depreciation Tax Break - Michael Rapoport, Bloomberg ($):
Treasury and IRS said they expect their forthcoming proposed regulations to be consistent with the notice.
The notice doesn’t cover the law’s expansion of bonus depreciation under Section 168(n)to cover “qualified production property,” such as property used in manufacturing or refining. That provision of the law likely will be addressed in separate guidance.
Related: Eide Bailly Fixed Asset Planning Services.
Sorting Through the Global Minimum Tax Deal
Tax News & Views International Weekly: Giving Credits Where Due - Alex Parker, Eide Bailly:
Under the original framework announced in 2021, refundable credits were treated more favorably than nonrefundable ones in the calculation of whether companies have an effective tax rate of 15% or below. That reflected basic thinking among the delegates that refundable credits are closer to government subsidies than the types of tax benefits that contribute to the “race to the bottom” that they hoped to stem.
Many U.S. companies feared that use of the R&D credit would result in Pillar Two taxes, and the issue was one of the main reasons the Trump administration threatened to retaliate against countries which used the system against U.S. taxpayers.
That issue is now mostly moot following last week’s announcement of a side-by-side agreement between the OECD and the U.S., which exempts U.S.-based multinational companies from the Pillar Two system.
Blogs and Bits
7 reasons to file your 2025 tax return early - Kay Bell, Don't Mess With Taxes. "Filing as early as you can be the best way to get your tax cash quickly. But it’s only step one. You also should file electronically and tell the IRS to directly deposit the money into a bank or other financial institution account."
Section 280E Expenses Disallowed in Calculating Reasonable Collection Potential - Parker Tax Pro Library. "The Tax Court held that, in rejecting a marijuana dispensary's offer-in-compromise, an IRS settlement officer did not abuse her discretion by relying on Internal Revenue Manual provisions for calculating the dispensary's reasonable collection potential (RCP). The court also concluded that the IRS did not abuse its discretion in adopting a policy of disregarding expenses rendered nondeductible by Code Sec. 280E for purposes of calculating a taxpayer's RCP."
How To Open A Trump Account In 2026: What To Know About IRS Form 4547 - Kelly Phillips Erb, Forbes. "You’ll make the election using Form 4547, which is now available on the IRS website."
Voluntary Compliance at the Christmas Tree Farm
“Voluntary Compliance”: A Holiday Conversation That Followed Me Home - Erin Collins, NTA Blog (my emphasis):
As small talk goes, the young man asked where I worked. I told him I was the National Taxpayer Advocate at the Internal Revenue Service – an independent role within the IRS focused on helping taxpayers resolve problems and improving the tax system when it isn’t working as it should. I didn’t expect him to know what that meant – and I definitely didn’t expect what came next.
He paused and said, “I’ve seen videos online where people are saying filing taxes is voluntary. Is that actually true?”
He then pulled out his phone. To my surprise, one of the videos he had bookmarked was of me testifying before the House Ways and Means Committee in 2020.
Nothing says holiday cheer quite like watching yourself testify before Congress while standing between fir trees. Trying not to dampen the festive mood, I smiled and explained one of the most familiar – and widely misunderstood – concepts in tax administration: voluntary compliance.
In plain terms, it doesn’t mean taxes are optional. It means taxpayers are expected to calculate and report what they owe themselves.
As Abraham Lincoln famously said at his Third Inaugural, don't believe everything you see on the Internet about taxes.
What day is it?
It's National Bagel Day! Remember to bring enough to work to share!
Make a habit of sustained success.
