Tax News & Views Weekly Roundup: Auto-Relief, Big Beautiful Birthday and Kittens

IRS Immediate Relief

A Long-Awaited Taxpayer Win: The IRS Implements Automatic Penalty Relief - Erin Collins, The National Taxpayer Advocate:

Today, the IRS announced one such change that has been a long time in the making, and one that I am especially grateful to see: It is introducing the Automatic Exemption from Penalty (AEP)program, which will provide penalty relief automatically to many eligible taxpayers rather than requiring them to request relief.

The IRS’s implementation of AEP is a major taxpayer win. It will help hundreds of thousands of taxpayers, reduce unnecessary burden, and conserve IRS resources.

For years, too many eligible taxpayers missed out on first-time penalty relief simply because they did not know it was available, did not understand how to request it, could not get through to the IRS, or did not have a tax professional advising them. That is especially true for low-income taxpayers and taxpayers who cannot afford representation. A penalty that may seem modest to some taxpayers can be financially significant for a taxpayer struggling to pay rent, utilities, groceries, transportation, or medical expenses.

Global Developments

Claims Court Nixes GILTI Tax Rules Under Loper Bright - Natalie Olivo, Law360 Tax Authority:

The U.S. Treasury Department lacked the authority to issue regulations that disallow certain amortization deductions for companies calculating their liability under the measure for global intangible low-taxed income, Judge David A. Tapp said in an opinion issued Thursday. In holding that the regulations are "antithetical to the very core" of Loper Bright, he granted partial summary judgment to Keysight Technologies Inc., a multinational tech company that challenged the rules as part of its nearly $108 million tax refund.

In Loper Bright Enterprises v. Raimondo, the high court ruled 6-3 in June 2024 to toss Chevron deference, a 40-year-old doctrine that told judges to accept reasonable agency interpretations of ambiguous laws. The 2024 decision, written by Chief Justice John Roberts, directed courts to instead use "every tool at their disposal to determine the best reading" of a statute.

Public CbC Reporting Is ‘Dangerous,’ Treasury Official Says - Sarah Paez, Tax Notes ($):

“This is something that is very dangerous, this public country-by-country” reporting, said Rebecca Burch, Treasury deputy assistant secretary for international tax affairs. “It is not accurate.”

Burch, who spoke July 8 at a conference in Munich hosted by the International Chamber of Commerce, Business at OECD, and BusinessEurope, said the initial aim of CbC reporting — part of action 13 of the OECD's base erosion and profit-shifting project — was to provide risk assessment for tax administrators. However, she said the initial reports showed inflation of income, which made effective tax rates for MNEs look low.

Multinationals' EU Tax Disclosures Leave Billions in Blind Spots - Ryan Hogg and Michael Rapoport, Bloomberg Tax ($):

Various factors have taken some of the teeth out of the mandate, tax advocacy groups say — including fragmented reports and lack of cooperation from some companies; exemptions and other loopholes in the rules; and a limited list of countries where disclosure is required.

“We’re driving blindfolded here,” said Tove Maria Ryding, policy and advocacy manager for tax justice at the European Network on Debt and Development, known as Eurodad.

Multinationals must publicly report their tax payments — not just to tax authorities as they do now — for each of the 27 EU countries and for certain “blacklisted” jurisdictions that aren’t fully cooperating with the bloc on tax issues. But so far, useful information is slow in coming.

Big Beautiful One-Year Birthday

Q&A: Three Experts Take Stock of OBBBA's Business Provisions - Katie Lobosco, Tax Notes ($):

Tax Notes spoke with three tax policy experts about the changes the One Big Beautiful Bill Act made for U.S. businesses and multinational corporations.

The experts largely agreed that the permanent nature of so many of the provisions, like full expensing, is one of the most notable takeaways, and that changes to the international tax regime are some of the most underrated provisions. But there are some improvements the experts would make if they had their way.

The Year Ahead

State And Local Tax Cases To Watch In 2nd Half Of 2026 - Maria Koklanaris, Law360 Tax Authority ($):

From Mastercard's appeal of a South Carolina decision that income-producing activity occurred within the state to JetBlue's argument that Florida's method of taxing airline income unconstitutionally leads to double taxation, there will be plenty of state and local tax cases to watch in the second half of 2026.

OBBBA Odds and Ends Dominate Treasury, IRS Regulatory Agenda - Ben Valdez, Tax Notes ($):

OBBBA guidance is a chief priority during fiscal 2026, Treasury said in a statement on the agenda. “The IRS and Office of Tax Policy also have identified deregulatory actions in response to Executive Order 14219 and are working diligently to undertake these actions,” the department added.

The agenda, published July 3 on the website of the Office of Management and Budget’s Office of Information and Regulatory Affairs, contains several OBBBA-related provisions that were also included in the priority guidance plan released last year. Among them are regs addressing the section 168(n) deduction, the restored bonus depreciation deduction under section 168(k), and regs under section 59A on modifications to the base erosion minimum tax amount.

AI and Taxes

How Data Centers Preserved Their $2 Billion Virginia Tax Break - Daniel Moore, Bloomberg Tax:

Through on-the-ground interviews with lobbyists, lawmakers, and data center skeptics in Richmond, Bloomberg Tax chronicled the monthslong behind-the-scenes battle over a multibillion-dollar tax break that has both fueled the surge in data centers in the state in the last decade and become a rallying cry for critics. Many spoke on the condition of anonymity because they weren’t authorized to speak to the news media.

The industry is “not readily understood, and it’s on us that it’s not readily understood,” said Josh Levi, president and CEO of the Data Center Coalition, a Virginia-based trade association whose members include Amazon, Google, Microsoft and Meta. The coalition, which has become the hub for much of the industry’s rush to save its tax incentives nationwide, coordinated the lobbying pitch in Richmond.

Tax Pros Use AI in Race to Prepare Pandemic IRS Refund Claims - Erin Schilling, Bloomberg Tax ($):

Some tax firms have used new AI tools built specifically to evaluate whether taxpayers could be eligible for a refund on interest and penalties paid during the pandemic.

Accounting firm Withum Smith+Brown used AI to mine its client files and tax preparation software to see who could qualify for a refund, partner Daniel Mayo said. Tax controversy firm Kostelanetz similarly used AI to evaluate tax clients, finding a few hundred clients that could be owed refunds, partner Melissa Wiley said.

“Except in the most straightforward of cases, there’s always something that AI misses or doesn’t interpret correctly, but it’s a nice first cut,” Wiley said.

Trump's Taxes

Top Senate Democrats push Trump-affiliated companies for answers about IRS settlement - Jacob Rosen, CBS News:

Top Senate Democrats are pushing for answers on whether a provision in a controversial settlement agreement between President Trump and his own administration applies to companies co-founded by or affiliated with the Trump family.

As part of a deal struck in May by the Justice Department to resolve a lawsuit brought by Mr. Trump, the Internal Revenue Service is permanently barred from pursuing claims against Mr. Trump, his oldest sons Don Jr. and Eric, and the Trump Organization based on prior tax returns.

Blogs & Bits

IRS Announces Automatic Penalty Relief For Eligible Taxpayers - Kelly Erb, Forbes. "Taxpayers generally had to know the relief existed and ask the IRS for it, which meant the benefit often depended on awareness, access, or professional help rather than eligibility alone."

A Few Problems with Targeting Energy Companies with a Stock Buyback Tax - Alex Muresianu, The Tax Foundation. "The oil and gas stock buybacks tax violates several core principles of sound policymaking."

The Moreno/Warren Social Security Fix Is Flawed - Jessica Riedl, Tax Policy Center TaxVox blog. "Social Security’s sacred public standing rests on its “earned benefit” structure: a pension-style system in which tax contributions determine future benefits."

What Day Is It?

Kittens

It's National Kitten Day! Whether or not you're a cat person, a good day to celebrate these most cuddly creatures. And to remember to spay/neuter your cats (and other pets), and consider adopting a kitten if you're so inclined.