Key Takeaways
- IRS re-hires workers as it combines crucial offices, raising concerns among practitioners.
- Lawmakers mull new digital asset, cryptocurrency tax rules.
- Confusion on new clean energy tax credit restrictions is dampening markets, as court restores new safe harbor.
- As some billionaires free taxes, others welcome them.
- National Jerky Day!
Agency Workforce Worries
The IRS Cut Staff. Now It’s Rushing to Hire Thousands. - Eric Katz, NOTUS:
Internally, however, the agency is projecting an entirely different picture. While the Trump administration publicly stated that the IRS has suffered no ill effects from the staffing cuts, the agency was sounding the alarm that it would be unable to handle tax season, requesting special permission to hire thousands of employees on an expedited basis.
The IRS ultimately requested, and received, special authority to hire 8,000 employees on an expedited basis, according to an internal memorandum obtained by NOTUS.
The agency has “seen massive cuts to its staff in 2025 through workforce reduction initiatives” and “ongoing staffing shortages put the 2026 Filing Season at risk,” Alex Kweskin, the agency’s top human-resources official, said in the late-February memo to the Treasury Department that was later passed on to the Office of Personnel Management.
The IRS ultimately requested, and received, special authority to hire 8,000 employees on an expedited basis, according to an internal memorandum obtained by NOTUS.
The agency has “seen massive cuts to its staff in 2025 through workforce reduction initiatives” and “ongoing staffing shortages put the 2026 Filing Season at risk,” Alex Kweskin, the agency’s top human-resources official, said in the late-February memo to the Treasury Department that was later passed on to the Office of Personnel Management.
Tax Professional Groups Fear Conflicts of New IRS Office Merger - Erin Slowery, Bloomberg Tax:
Critics including former IRS officials and tax pro groups say separate offices help prevent confusion for taxpayers understanding the qualifications of their preparer and avoids potential conflict of interest for tax professionals seeking an appeal. The effort comes amid an uptick in dodgy and unethical tax preparers who falsify or inflate tax breaks.
“It sounds like they aren’t interested in enforcement at all,” said Sharyn Fisk, a former director of the Office of Professional Responsibility. She added it could cause a proliferation of tax shelters if preparers don’t think there will be consequences.
Both offices also lost over a quarter of their workforce to Elon Musk’s Department of Government Efficiency incentives to leave the government.
“It sounds like they aren’t interested in enforcement at all,” said Sharyn Fisk, a former director of the Office of Professional Responsibility. She added it could cause a proliferation of tax shelters if preparers don’t think there will be consequences.
Both offices also lost over a quarter of their workforce to Elon Musk’s Department of Government Efficiency incentives to leave the government.
Cryptic Crypto Tax News
Crypto Tax Bills Face Pushback in House Committee Hearing - Sander Lutz, Yahoo Finance:
A House hearing on six crypto tax bills revealed a lack of bipartisan consensus on the subject Tuesday, with industry leaders pushing to expand the legislation—and Democrats questioning whether the entire process should be slowed down significantly.
Unspoken at the proceedings, but playing a major role behind the scenes, is the likelihood that Democrats will retake the House in November’s midterm elections. Republicans in both chambers are racing to get crypto bills passed while their party still controls Congress and the White House. Democrats, meanwhile, are starting to coalesce around a message that passing crypto legislation is an important goal—but one that might not need to be accomplished right away.
Unspoken at the proceedings, but playing a major role behind the scenes, is the likelihood that Democrats will retake the House in November’s midterm elections. Republicans in both chambers are racing to get crypto bills passed while their party still controls Congress and the White House. Democrats, meanwhile, are starting to coalesce around a message that passing crypto legislation is an important goal—but one that might not need to be accomplished right away.
Top Democratic Tax Writer Skeptical of Pre-Midterm Crypto Action - Chris Cioffi, Bloomberg Tax ($):
Neal’s take-it-slow approach highlights the tension between some Ways and Means members who have forged ahead on digital asset taxation, while others say they’re hesitant about making tax law on a product with a value that can sometimes be hard to define.
Republicans say they’re eager to move on trying to get crypto tax legislation passed while there’s a Republican in the White House.
“If you get an administration like the Biden administration, which was hostile to crypto, you’re not going to be able to have administrability,” said Rep. Max Miller (R-Ohio). “And that should be a huge concern of driving away revenue from this country.”
Republicans say they’re eager to move on trying to get crypto tax legislation passed while there’s a Republican in the White House.
“If you get an administration like the Biden administration, which was hostile to crypto, you’re not going to be able to have administrability,” said Rep. Max Miller (R-Ohio). “And that should be a huge concern of driving away revenue from this country.”
Investing Early
The Unanswered Questions About Trump Accounts That Parents Need to Know - Ashlea Ebeling and Richard Rubin, The Wall Street Journal ($):
For those who signed up for an account with Internal Revenue Service Form 4547 when they filed their 2025 taxes this year, things should go smoothly as they activate accounts on the Trump Accounts app or at Trumpaccount.com, the web version of the app.
Others will likely face additional steps if they signed up using a basic form that was available on a different site, Trumpaccounts.gov, from February to late May. Those people will still get emails saying they can activate their accounts, a Treasury spokeswoman said. But they will likely have to go through additional security verification. This could include creating an online IRS account if they don’t already have one and verifying their identities using ID.me.
“Every additional step, people drop out,” said Nina Olson, executive director of the Center for Taxpayer Rights, one of the groups that advocated for automatically enrolling children in the accounts.
Others will likely face additional steps if they signed up using a basic form that was available on a different site, Trumpaccounts.gov, from February to late May. Those people will still get emails saying they can activate their accounts, a Treasury spokeswoman said. But they will likely have to go through additional security verification. This could include creating an online IRS account if they don’t already have one and verifying their identities using ID.me.
“Every additional step, people drop out,” said Nina Olson, executive director of the Center for Taxpayer Rights, one of the groups that advocated for automatically enrolling children in the accounts.
Eide Bailly Tax Consultation & Planning
Clean Energy
Court Vacates IRS Notice on Wind and Solar Energy Credits - Kristen Parillo, Tax Notes ($):
An IRS notice that eliminated a beginning of construction safe harbor for claiming expiring wind and solar energy tax credits is arbitrary and capricious and must be vacated in full, a U.S. district court held.
The IRS didn’t adequately explain how taxpayers could misuse the safe harbor to circumvent statutory deadlines or engage in “artificial manipulation of eligibility,” nor did it explain why it didn’t adopt alternative anticircumvention and antimanipulation measures proposed by commenters, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia wrote in a June 6 memorandum opinion in Oregon Environmental Council v. IRS.
Kollar-Kotelly agreed with the plaintiffs that the correct remedy is to vacate Notice 2025-42, 2025-36 IRB 351, in full and remand the matter to the IRS for further consideration.
The IRS didn’t adequately explain how taxpayers could misuse the safe harbor to circumvent statutory deadlines or engage in “artificial manipulation of eligibility,” nor did it explain why it didn’t adopt alternative anticircumvention and antimanipulation measures proposed by commenters, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia wrote in a June 6 memorandum opinion in Oregon Environmental Council v. IRS.
Kollar-Kotelly agreed with the plaintiffs that the correct remedy is to vacate Notice 2025-42, 2025-36 IRB 351, in full and remand the matter to the IRS for further consideration.
Developers Stumped By Energy Credits' Foreign Debt Limits - Kat Lucero, Law360 Tax Authority ($):
The challenge stemmed from a new restriction that can disqualify project owners from claiming the credits if at least 15% of their project's total debt is issued to one or more entities with strong ties to foreign governments that U.S. law considers adversarial.
The challenge stemmed from a new restriction that can disqualify project owners from claiming the credits if at least 15% of their project's total debt is issued to one or more entities with strong ties to foreign governments that U.S. law considers adversarial.
The debt threshold is among a set of new requirements under the prohibited foreign entities of concern, or FEOC, restrictions, which have the stated goals of strengthening domestic supply chains, protecting national security and preventing foreign control or material assistance in critical U.S. infrastructure and energy markets.
The challenge stemmed from a new restriction that can disqualify project owners from claiming the credits if at least 15% of their project's total debt is issued to one or more entities with strong ties to foreign governments that U.S. law considers adversarial.
The debt threshold is among a set of new requirements under the prohibited foreign entities of concern, or FEOC, restrictions, which have the stated goals of strengthening domestic supply chains, protecting national security and preventing foreign control or material assistance in critical U.S. infrastructure and energy markets.
Clean Energy Market Stalled on Foreign Entity Guidance - Mary Katherine Browne, Tax Notes ($):
The clean energy industry is being held up by a lack of guidance on the One Big Beautiful Bill Act’s prohibited foreign entity provisions, with insurance companies unwilling to touch implicated transactions and taxpayers unable to establish compliance.
Speaking at the Texas Federal Tax Institute June 5, Casey S. August of Morgan, Lewis & Bockius LLP described the foreign entity of concern provisions for clean energy credits as "the most pervasive question" that has "really kind of held up some aspects of the market until we receive guidance," adding that taxpayers are effectively being asked to prove a negative to establish compliance.
The OBBBA (P.L. 119-21) added a credit disallowance provision that bars companies owned by, controlled by, or receiving material assistance from entities tied to prohibited foreign entities from claiming credits under sections 45X, 45Y, and 48E. The provision took effect on July 4, 2025.
Speaking at the Texas Federal Tax Institute June 5, Casey S. August of Morgan, Lewis & Bockius LLP described the foreign entity of concern provisions for clean energy credits as "the most pervasive question" that has "really kind of held up some aspects of the market until we receive guidance," adding that taxpayers are effectively being asked to prove a negative to establish compliance.
The OBBBA (P.L. 119-21) added a credit disallowance provision that bars companies owned by, controlled by, or receiving material assistance from entities tied to prohibited foreign entities from claiming credits under sections 45X, 45Y, and 48E. The provision took effect on July 4, 2025.
Tax News and Views Highlight: The New Foreign Entity Restrictions on Clean Energy Credits - Alex Parker, Eide Bailly:
One rule that has recently received increased focus is a provision that can connect a taxpayer to one of the prohibited countries through the taxpayer’s debt. Under the OBBBA’s framework, a taxpayer who has issued at least 15% of its debt to an entity connected to a jurisdiction designated as hostile–or a foreign national from one of those countries–is considered a “foreign-influenced entity” and is blocked from using the tax credits. This applies even if the debt is unconnected to the specific energy project using the incentive.
Given the complexity of many lending and debt arrangements, an expansive reading of the law could implicate many companies with little reason to suspect they’re connected to problematic foreign organizations. And in many cases, the taxpayers could have no realistic way to determine whether or not the debt might be tainted.
Given the complexity of many lending and debt arrangements, an expansive reading of the law could implicate many companies with little reason to suspect they’re connected to problematic foreign organizations. And in many cases, the taxpayers could have no realistic way to determine whether or not the debt might be tainted.
Eide Bailly Business Credits & Incentives
Goal!
IRS, Canada Agree on World Cup Participants’ Income Allocation - Michael Rapoport, Bloomberg Tax ($):
Participants of the 2026 FIFA World Cup can use a proportional formula to allocate the prize money and other compensation they receive among the countries hosting the tournament, the IRS said Wednesday.
The IRS and the Canada Revenue Agency have agreed on a “reasonable” allocation method based on the number of matches played in each of the three World Cup host countries—the US, Canada, and Mexico—relative to the total number of matches the team plays, the IRS said in an emailed statement.
The IRS and the Canada Revenue Agency have agreed on a “reasonable” allocation method based on the number of matches played in each of the three World Cup host countries—the US, Canada, and Mexico—relative to the total number of matches the team plays, the IRS said in an emailed statement.
High Net Worth Individuals and Taxes
Billionaires Flee to Tax Haven Just Across the California Border - Eliyahu Kamisher, Bloomberg Tax ($):
The sales volume for single-family homes in Incline Village and Crystal Bay surged to roughly $232 million in the first quarter, compared with about $30.6 million a year earlier, according to Sotheby’s. Twenty-two homes sold for more than $2 million, up from seven in the same period last year.
The gains have coincided with a proposed California ballot measure that would tax wealth over $1 billion, angering Brin and other billionaires. Meanwhile, this week’s massive SpaceX initial public offering, as well as upcoming ones from Anthropic PBC and OpenAI, stand to create new riches for tech investors and employees.
In a town of fewer than 10,000 residents, the latest influx of wealth is raising eyebrows among the retirees and renters who call the area home. They worry the already pricey destination is transforming into a luxury ZIP code with room for ultrarich tech titans and few others.
The gains have coincided with a proposed California ballot measure that would tax wealth over $1 billion, angering Brin and other billionaires. Meanwhile, this week’s massive SpaceX initial public offering, as well as upcoming ones from Anthropic PBC and OpenAI, stand to create new riches for tech investors and employees.
In a town of fewer than 10,000 residents, the latest influx of wealth is raising eyebrows among the retirees and renters who call the area home. They worry the already pricey destination is transforming into a luxury ZIP code with room for ultrarich tech titans and few others.
The Pro-Tax Socialite - Jacob Bernstein, The New York Times ($):
Last month, Bezos, who has a Manhattan pied-à-terre himself, said that the tax was a “fine thing” to do.
Macklowe happened to agree, despite ordinarily being opposed to raising taxes on the wealthy.
“This isn’t a Republican or a Democrat thing,” she said. “It is that people are getting a free ride off those who choose to live here and be New Yorkers, and the others pop in and pretend they are New Yorkers but don’t actually pay any significant taxes.”
Macklowe happened to agree, despite ordinarily being opposed to raising taxes on the wealthy.
“This isn’t a Republican or a Democrat thing,” she said. “It is that people are getting a free ride off those who choose to live here and be New Yorkers, and the others pop in and pretend they are New Yorkers but don’t actually pay any significant taxes.”
Refunds Due
Clean Energy Market Stalled on Foreign Entity Guidance - Daniel Flatley and Laura Curtis, Bloomberg Tax ($):
The US Treasury refunded nearly $22 billion in tariff revenue collected from importers in May, the first swath of such repayments since the Supreme Court struck down a major component of President Donald Trump’s trade policy.
The amount was roughly equal to tariffs taken in during the month, according to a Treasury Department statement Wednesday, meaning that refunds essentially canceled out the government’s duties revenue.
The amount was roughly equal to tariffs taken in during the month, according to a Treasury Department statement Wednesday, meaning that refunds essentially canceled out the government’s duties revenue.
Blogs & Bits
Some thoughts from Anthropic co-founder Dario Amodei on how the advancement of artificial intelligence and disruptions in the workforce could require big tax changes, including incentives for job retention and new corporate or capital gains taxes.to fund universal basic income. Meanwhile, the Tax Foundation also weighs in on potential AI changes to the tax code.
In addition...
Families Suggest Three Ways To Redesign The Child Tax Credit - Diana Guelespe, Luisa Godinez-Puig, Elaine Maag, Theresa Anderson, Tax Policy Center Taxvox blog. "The child tax credit (CTC) can be a powerful tool to alleviate poverty and often receives bi-partisan support. What if families could help design one that meets their needs?"
$1 billion (and counting) in prediction market revenue is going untaxed, says gaming association - Kay Bell, Don't Mess With Taxes. "All of us taxpayers should be concerned about another industry getting a tax pass."
What day is it?
It's National Jerky Day, courtesy of the Wisconsin Beef Council. For when trail mix just isn't enough.
Every organization deserves to realize its full potential. Let us help you find yours.
Learn More