Tax News & Views Roast Leg of Lamb Roundup

IRS Administration--Hits and Misfires

Filing Season Draws Mixed Reviews as IRS Looks to Redefine Service - Ben Valdez, Tax Notes ($):

Tax professionals said they found it difficult to deal with untrained IRS staff during a filing season characterized by new tax provisions, and some are wondering how data will be captured by the agency’s new service metrics.

It wasn’t hard to reach the IRS during the first filing season after enactment of the One Big Beautiful Bill Act (P.L. 119-21), but finding an employee who was prepared to help was another story, enrolled agents and CPAs told Tax Notes during a Federal Tax Updates podcast recorded at a meeting hosted by the National Association of Enrolled Agents May 5.

IRS Finds Over a Dozen Cases That Lacked Supervisory Approval - Erin Slowery, Bloomberg Tax:

The IRS found 13 cases where it wasn’t following rules for approving penalties in the wake of the agency’s settlement over a multimillion-dollar penalty with a conservation easement donor, a watchdog said in a report released Tuesday.

The IRS reviewed over 1,200 cases—both docketed and nondocketed—and found 13 cases that lacked supervisory approval. Of those cases, seven involved backdated penalty approvals where the IRS conceded over $68 million in penalties, the Treasury Inspector General for Tax administration said in a report.

The IRS and a conservation easement donor reached an agreement to settle after a battle over the approval of a $15.2 million penalty in September 2023. The deal came after the IRS previously admitted that an employee backdated the approval signature on a penalty form in the LakePoint Land II, LLC v. Commissioner easement case and misled the Tax Court about it.

IRS ‘Significant-Issue’ Move Hailed as Boost for Letter Rulings - Michael Rapoport, Bloomberg Tax ($):

The IRS plan to resume providing individual private letter rulings to taxpayers on “significant issues” within corporate transactions will be a shot in the arm for the agency’s entire letter-ruling process, practitioners said.

The move, which the IRS announced in guidance May 5, will encourage more companies to seek rulings approving tax-free status for their spin-offs and reorganizations, the practitioners said. It also should help reassure companies after the IRS’s back-and-forth moves in the area in recent years led to uncertainty.

It’s “a welcome development for taxpayers planning spin-offs and other corporate transactions,” said Rachel Reisberg, a partner at Wachtel Lipton Rosen & Katz. The expansion of the PLR program should “encourage taxpayers to re-engage with the IRS more frequently,” she said.

Tax Professionals Flag Complexities in IRS Foreign E-Filer TCC Fix - Kiarra M. Strocko, Tax Notes ($):

Following the IRS's announcement of a new transmitter control code (TCC) registration system for foreign filers, tax professionals said the complexity of the process could push some taxpayers to rely on third-party intermediaries.

The IRS's new process is intended to address concerns from foreign filers struggling to obtain new TCCs under the Information Returns Intake System (IRIS), which will replace the Filing Information Returns Electronically (FIRE) system in 2027. More specifically, it is aimed at foreign filers whose authorized users don’t have a U.S. taxpayer identification number or Social Security number to electronically file information returns like Form 1042-S, “Foreign Person’s U.S. Source Income Subject to Withholding,” and Forms 1099.

Related: Eide Bailly Tax Compliance.

Easement Wins

IRS Touts Conservation Easement Wins and Coming Settlement Offer - Kristen Parillo, Tax Notes ($):

The IRS will soon release details of a settlement initiative for partnerships that engaged in syndicated conservation easement transactions, according to a statement touting the agency’s court wins in easement cases.

Following the release of those details, the IRS “will extend settlement offers to eligible partnerships to provide an opportunity to resolve the federal tax consequences of these transactions with certainty,” the agency said in a May 6 release.

“The courts have repeatedly rejected abusive conservation easement arrangements, often sustaining major reductions in claimed deductions and significant penalties,” Kenneth Kies, Treasury assistant secretary for tax policy and acting IRS chief counsel, said in the release.

On the Hill

Benefit Cuts, Looming Midterms Make Next Budget Bill No Sure Bet - Zach C. Cohen, Ken Tran and Chris Cioffi, Bloomberg Tax ($):

The leadership of the Republican Study Committee, a caucus made up of almost 190 House Republicans, has called for another sweeping budget reconciliation bill that would reduce the deficit by over $1 trillion built in part on curbing Medicaid spending.

Meanwhile, vulnerable incumbents fear deep cuts to popular entitlement programs would hurt their re-election chances. Already facing down political headwinds and opinion polls suggesting control of the House is about to flip in November, House Republicans have more to fight about than usual.

It all adds up to a difficult balancing act and ultimately puts at-risk members in a position to deprive their majority of the votes necessary to get the legislation across the finish line.

Bill Due

Shell Posts $163 Million Quarterly Global Minimum Tax Charge - Ryan Hogg, Bloomberg Tax ($):

Shell booked a global minimum tax charge of $163 million in the first three months of 2026, the company disclosed in its quarterly earnings Thursday.

The tax charge, which aims to ensure that Shell pays a minimum 15% corporate income tax wherever it books income, represents a steep rise on the $59 million the oil and gas company paid in the first quarter of 2025.

State News

New York’s $268 Billion Budget Deal Includes New Second-Home Tax - Grace Ashford and Benjamin Oreskes, The New York Times:

But the most significant change to fiscal policy will be the new tax surcharge on multimillion-dollar second homes in New York City — a move that the governor supported despite her frequently stated aversion to raising taxes.

The tax on so-called pieds-à-terre comes as Democrats across the country are increasingly looking to increase taxes on the wealthy as a means of addressing the affordability concerns that remain top of mind for many voters ahead of the midterm elections.

Gov. Sanders signs income tax cuts into law - Worth Sparkman, Axios:

Gov. Sarah Huckabee Sanders lowered the income tax rate Wednesday for the fourth time since she took office and ceremonially signed a bill to increase the homestead property tax credit by $75.

How it works: For individuals, the new law keeps a graduated structure, with lower-income brackets taxed from 0% to 3.7% and a bracket adjustment for taxpayers with net income between $94,701 and $97,600.

Tax Cuts Aren’t Always Tax Cuts: How States Are Quietly Broadening the Tax Base - Colette Sutton and Melissa Menter, Eide Bailly:

State tax headlines love a good rate cut—flat taxes, phaseouts, “historic” income tax reductions.

But behind the scenes, many states are telling a very different—and far less publicized—story.

Across the country, states are pairing income tax rate cuts with tax base expansions, particularly in sales and use tax, excise taxes, and digital-economy transactions. The result? Taxpayers expect savings, but many end up with flat—or higher—tax burdens once all the changes are accounted for.

Blogs & Bits

How Well Do Carbon Taxes Match Their Promise? Evidence from 2023 - Alex Muresianu, The Tax Foundation. "The carbon tax is often considered the ideal climate policy. However, existing carbon taxes do not match the ideal theoretical policy."

Final Regs Expand List of Occupations for Qualified Tips Deduction - Parker Tax Publishing. A rundown of new Treasury rules on who can or can't claim the tips deduction, and what questions are still unanswered.

Court applies 40% economic substance penalty to microcaptive insurance arrangement - Adam Parr, TaxCoda. "The Court continued its broader skepticism toward captive arrangements built around circular cash flows, inflated premiums, and owner-controlled claims administration."

3 May tax moves that could make for merry savings - Kay Bell, Don't Mess With Taxes. "May is the perfect time to get your 2026 tax situation on a money-saving track."

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