Key Takeaways
- House GOP again bows to Trump pressure.
- Deal sets up DHS funding fight in 10 days.
- ACA tax credit extension: "90 percent this is not gonna happen."
- IRS changes to corporate audit procedures.
- Indian tariff cuts.
- National Carrot Cake Day.
- The Day the Music Died in Clear Lake, Iowa.
Key House conservatives bow to Trump ahead of government funding vote, signaling swift end to shutdown - Sarah Ferris, Manu Raju, and Ellis Kim, CNN:
Key House conservative holdouts appeared ready to stand down after threatening to catapult Washington into a bitter standoff over a sprawling government spending bill that funds three-quarters of federal agencies. It took Trump personally twisting the arms of GOP lawmakers — and even bringing some to the White House — to support the bill for those Republicans to signal a willingness to back down.
Trump wins over GOP holdouts – for now - Jake Sherman, Andrew Desiderio, Laura Weiss and Samantha Handler, Punchbowl News:
In 10 days from now — right up against the Presidents Day recess — DHS funding will run out once again. That’s fine with lots of Democrats, who point out the department got tens of billions of dollars under the GOP’s One Big Beautiful Bill last year. They think it can keep going for a while if needed, maybe the rest of FY2026.
...
The obvious hurdle here is that the two sides are nowhere near any kind of consensus on potential ICE reforms. Senate Majority Leader John Thune said he’s only had “preliminary conversations” on Democrats’ proposed changes to ICE operations. The White House will be taking the lead on the negotiation with Senate Minority Leader Chuck Schumer.
Health Insurance Tax Credits Deal: "90% this is not gonna happen"
Moreno Throws Cold Water on Imminent Obamacare Tax Credit Deal - Erin Durkin, Bloomberg ($):
Sen. Bernie Moreno (R-Ohio), who has been working across the aisle to extend generous Covid-era versions of the tax credits, said he doesn’t think the rest of the Democratic conference is interested in finding a deal. The tax credits expired at the end of 2025, with enrollees already seeing a rise in premiums.
“My sense is that we’re 90% this is not gonna happen,” Moreno told reporters.
Trump IRS Lawsuit and Veto Bait
Trump’s $10 Billion IRS Lawsuit Spurs Legislative Response - Kristen Parillo, Tax Notes ($):
The Prevent Presidential Profiteering Act, announced by House Ways and Means Committee member Mike Thompson, D-Calif., would add a new provision to the IRC imposing a 100 percent tax on any civil judgment or settlement paid by the United States to a sitting president or the president’s immediate family if the legal action was filed while the president was in office.
It's possible that President Trump would decline to sign this one.
Stablecoins as Cash?
Treasury Official Casts Doubt on Money Treatment of Stablecoins - Mary Kathrine Browne, Tax Notes ($):
...
Stablecoins are digital assets generally pegged to currency so that they maintain a relatively stable value. They often function as a bridge between traditional finance and digital assets. The most common use for stablecoins is to facilitate trading in other, more volatile digital assets. Increasingly, however, they’ve been used for payment and settlement purposes because they facilitate near-instant low-cost transfers.
Like other digital assets, stablecoins are subject to reporting requirements established in the Infrastructure Investment and Jobs Act, in which Congress broadened section 6045 by changing the definition of broker to capture any entity “regularly providing any service effectuating transfers of digital assets on behalf of another person.”
IRS Exams: New Corporate Procedures, Old Taxpayer Tactics
3 Things To Keep In Mind About IRS' Corporate Audit Changes - Natalie Olivo, Law360 Tax Authority ($):
The LB&I division's decision to broaden the fast-track settlement, or FTS, process has also been positively received, but practitioners have noted that clarity is needed now that settlement discussions are expanded. For example, uncertainties remain about the specific types of disputes that may be excluded from these talks and whether companies can rely on a federal evidence rule that insulates settlement discussions from appearing in any subsequent litigation.
The Revenue Agent’s Unlucky Seven - Joel Cohen, Tax Notes ($). This is an article by a former revenue agent on common taxpayer tactics in an IRS exam. They range from the lame ("I don't have the records here") to the sneaky:
Related: Eide Bailly IRS Dispute Resolution and Collections Services.
Tariffs, Deals, and Discontents
U.S. Will Cut Tariffs on India to 18% in Trade Deal - Gavin Bade and Anthony DeBarros, Wall Street Journal:
Trump last year levied a 25% tariff on India for its purchases of Russian oil, on top of a 25% “reciprocal” tariff that Trump imposed on the nation.
...
Trump said the lower reciprocal tariffs on India would take effect immediately, although the White House hasn’t yet published any official action to change tariff rates.
The Key to Managing Tariffs: Be Big and Have the President’s Ear - Farah Stockman, New York Times:
American manufacturers made $249.2 billion after taxes in the third quarter of 2025, up $73.1 billion from the same quarter in 2024, according to the latest data from the Census Bureau. The emerging picture suggests a bifurcated industrial landscape. Many small businesses are struggling with soaring component costs while multinational firms are reporting an increase in sales and profits.
“Large companies are all talking about how they are mitigating tariffs,” said Todd Dubner, industrials deal advisory leader at KPMG. “Small companies are all talking about how tariffs are impacting their bottom line.”
Tariffs, like regulations, favor the big.
When “tariffs work” they work at a cost - Erica York, Supernormal Returns:
Each year on average, domestic steel production increased by 1.9 percent (about $1.5 billion) and domestic aluminum production increased by 3.6 percent (about $1.3 billion).
But that is not the full story. Across 33 industries that intensively use these metals as inputs, the USITC estimated that production fell by an average of $3.4 billion per year as a result of the tariffs.
In other words, while the tariffs boosted production for protected firms by $2.8 billion, they reduced production for downstream firms by an even larger $3.4 billion.
U.S. Manufacturing Is in Retreat and Trump’s Tariffs Aren’t Helping - David Uberti, Wall Street Journal:
Manufacturers shed workers in each of the eight months after Trump unveiled “Liberation Day” tariffs, according to federal figures, extending a contraction that has seen more than 200,000 roles disappear since 2023.
Do's and Don'ts for Gifting Financial Assets
What you need to know before making financial gifts - Christine Benz, AP via Washington Post:
Related: Eide Bailly Wealth Transition Services.
Blogs and Bits
When Tax Groundhog Day, aka fixing a prior return by filing Form 1040-X, is wise - Kay Bell, Don't Mess With Taxes. "When you find the mistake before the IRS does, you’ll put an end to penalty and interest charges that technically started adding up when you filed your incorrect return. If you wait for the tax agency to find the error, which it usually does, and alert you, the longer time before discovery means more added charges have accrued."
IRS Provides More Overtime Deduction Guidance - Kristine Tidgren, Ag Docket. "Overtime pay is not deductible if the overtime compensation received by an individual is not required by the FLSA."
Error On Your IRS Form 1099? What To Do Before You File Taxes - Robert Wood, Forbes. "However, most of the time when you say 'my 1099 is wrong' the IRS already has it. So if the issuer of the Form 1099 has already sent it to the IRS, ask for a “corrected” Form 1099."
Not Enough Milk For The Starving Children To Justify Tax Exemption - Peter Reilly, Your Tax Matters Partner, quoting the Tax Court: "The IRS found that petitioner’s primary activity was operating a coffee shop, Café Beignet, and petitioner’s primary sources of revenue were from renting the Property and its addition, as well as its golf fundraiser."
Related: Eide Bailly Exempt Organization Tax Services.
It's Tuesday. Do You Know Where Your Payroll Tax Remittance Is?
Kansas bookkeeper indicted for failing to pay payroll taxes for clients - IRS (Defendant name omitted, emphasis added):
According to court documents, Defendant... was indicted on 19 counts of wire fraud, seven counts of money laundering, three counts of aggravated identity theft, and 21 counts of failure to pay employment taxes.
Defendant, as owner of a business named Bookkeeping N Beyond, is tasked with collecting funds from her clients to pay their employee payroll taxes to the federal government and state government. From November 2017 to June 2024, Defendant is accused of either making no tax payments or partial tax payments on behalf of her clients and allegedly using the money for her own personal use.
The worst part of this is that the IRS expects the clients whose remittances were allegedly stolen to pay up. That's why it's good financial hygiene for business taxpayers to regularly log into their Electronic Federal Tax Payment System account or IRS Online Business Tax Account to make sure the IRS is properly crediting their payroll tax payments. This is true whether the payments are made by a trusted employee or a payroll service.
What day is it?
It's National Carrot Cake Day! And, for rockers of a certain age, it's The Day The Music Died - the anniversary of the plane crash near Clear Lake, Iowa that killed Buddy Holly, Ritchie Valens, and J.P. "The Big Bopper" Richardson. I knew an Iowa attorney who as a child saw the wreck site the next day. He went to Harvard for law school, but I don't think the events were connected.
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