Tax News & Views Hoagie Daily Roundup

Mistrust on Trusts

Trillions in Retirement Dollars Are Flowing Into Opaque Trusts - Justina Lee, Weihua Li and Denitsa Tsekova, Bloomberg Tax ($):

At the heart of the US retirement industry, underpinning the later-life plans of millions of Americans, is a set of financial products that hardly anyone can tell you a thing about.

No one knows exactly how much money they control. No one can say how it’s all allocated. No single financial regulator is in charge of them. Yet Collective Investment Trusts are now a multi-trillion dollar business to rival mutual funds or ETFs — and are poised to become the backdoor through which more private assets are added to Americans’ retirement savings.

For years now, the country’s biggest employers have been slowly migrating workers’ nest eggs toward these pooled vehicles, which are used exclusively by retirement plans. For 401(k)s with more than 100 participants, about 40% of all assets were invested in CITs by 2024, according to Department of Labor data, up from 12% in 2010 and above the share allocated to mutual funds.

Senate Dems’ Bill Would Set New Tax on High-Value Trust Assets - Cady Stanton, Tax Notes ($):

Senate Finance Committee ranking member Ron Wyden, D-Ore., and Sen. Patty Murray, D-Wash., introduced the Fair Trusts for Fiscal Responsibility Act, which would create annual withholding brackets on trust assets over $50 million with tax rates that scale up alongside the value of the trusts.

The legislation would withhold 1 percent on trust assets between $50 million and $100 million; 1.5 percent on assets between $100 million and $250 million; 2 percent on assets between $250 million and $1 billion; and 3 percent on assets above $1 billion. The bill would also make the withholding against estate tax liability fully refundable to ensure it targets trusts that are avoiding payment on the existing estate tax.

Why it pays to keep an eye on Congress....

Wealthy families regret rushing to give gifts after tax law changed - Medora Lee, USA Today:

Giving is expected during the great wealth transfer, but some families are discovering after they rushed to give away their assets to save on taxes that they may have gotten the timing wrong, some financial analysts said.

Many families in 2024 and 2025 rushed to their accountants, advisers and attorneys to set up estate plans to lock in the benefits of the soon-to-be expiring Tax Cuts and Jobs Act of 2017 (TCJA). TCJA lowered tax rates, doubled the standard deduction and doubled the lifetime gift exemption but was scheduled to sunset at the end of 2025. All that changed when President Donald Trump signed into law on July 4, 2025, his signature tax and spending package that made permanent all those provisions.

Court News

Mastercard Case Tees Up Wider Taxation of Credit Card Companies - Perry Cooper and Peyton Rhodes, Bloomberg Tax ($):

Mastercard has never paid corporate income taxes in South Carolina because it says its credit card network isn’t present in the state and that its transaction processing functions occur elsewhere. But in 2024 a state administrative law judge held that the company is on the hook for over $6 million in corporate income taxes, finding that Mastercard’s position “ignores the reality of a credit/debit card transaction,” which occurs where the cardholder purchases goods.

“This is going to be a big case and might set a precedent for other states that lack statutory provisions or guidance on how to treat this type of taxpayer,” said Denisse Moderski, partner at management consulting firm Eisner Advisory Group LLC.

Court Adds Economic Substance Penalty in Microcaptive Follow-Up - Nathan J. Richman, Tax Notes ($):

A microcaptive insurance arrangement based in Nevis will face increased penalties under the codified economic substance doctrine after the Tax Court concluded that it didn’t qualify as insurance.

The same circular flow of funds and flawed actuarial analysis that led the Tax Court to its earlier determination that the microcaptive structure at issue wasn’t insurance supported the IRS’s assertion that the deal lacked economic substance, Judge Christian N. Weiler wrote May 4 in a second memorandum decision in Kadau v. Commissioner.

A deep dive into how Justice Roberts sees Congress and taxes, in two of his biggest cases.

The Chief Justice and the Taxing Power - Alexander F. Peter, Tax Notes ($):

Is the taxing power unique? According to Chief Justice John G. Roberts Jr.’s jurisprudence, the answer appears to be yes. Or maybe “sometimes” is the better answer.

The power to tax is, in Roberts’s words, Congress’s “birth-right power.” Learning Resources Inc. v. Trump, No. 24-1287, at 15 (U.S. 2026). In two cases separated by almost 14 years, the chief justice has adjudicated a signature policy of the sitting president and looked to the taxing power as a key source of authority or lack thereof. Roberts’s jurisprudence on the taxing power suggests that he views it as special, even among core legislative powers. But the exact contours of the chief justice’s view of the taxing power are harder to ascertain.

International News

EU Countries Give Blessing to Value-Added Tax Anti-Fraud Bill - Ryan Hogg, Bloomberg Tax ($):

EU countries endorsed a bill that would force member states to share value-added tax data with the bloc’s anti-fraud agencies to help them clamp down fraud that costs it up to €33 billion annually.

The bill, agreed to at the Economic and Fiscal Affairs Council meeting in Brussels on Tuesday, would give the European Public Prosecutors Office and the European Anti-Fraud Office access to VAT information, rather than depending on bilateral exchanges of information. It’s expected to be finalized following a European Parliament vote in July.

Want a tariff exemption? One lobbyist lays out how to approach the Trump administration.

Getting Tariff Relief Involves an ‘America First’ Lobbying Pitch - Samir Kapadia, Vogel Group, Bloomberg Government:

During President Donald Trump’s first term, a process was laid out to file for exemptions or exclusions. Today, there is none. But what many don’t realize is that you can absolutely petition the government for those concessions. Just don’t use those words!

Lobbying the Trump administration on tariff relief (a much more sophisticated term) is an art—not a science. You can’t just show up with a congressional letter of support in hand talking about job losses and severe economic harm. Those traditional arguments worked well in the past, but today, they’re not enough to strike a chord with the US Trade Representative, the Commerce Department, or the White House.

See Eide Bailly's explainer on applying for tariff refunds.

Blogs & Bits

World Cup Tipping Practices Could Undercut 'No Tax on Tips' Break - Kelly Erb, Forbes. "An effort to force foreign tourists to tip may mean that servers who were slated to benefit from “no tax on tips”—a temporary tax deduction Republicans passed last year to fulfill a campaign pledge by President Donald Trump—will find more of their total compensation is taxable."

Business Owner Taxed on Life Insurance Policy Loan Used to Prop Up Business - Parker Tax Publishing. "The Tax Court held that a businessman who borrowed against a life insurance policy in order to keep his company afloat, was taxable on those distributions when the company went out of business and the policy was cancelled."

The law restored EBITDA. The deduction still shrank. - Adam Parr, TaxCoda. "This is not just a tax cut or increase. Instead, it changes where companies choose to put their debt."

What day is it?

Well, it's Cinco de Mayo--¡Viva! But it's also National Hoagie Day. Whatever your preference, lots of great options for lunch.