Tax News & Views Weekly Roundup: Congress Moves Forward on Tax Administrative Overhaul

In Congress

Senate Finance Committee OKs Sweeping Tax Administration Bill - Jared Serre and Ben Valdez, Tax Notes ($):

"This bipartisan bill modernizes and streamlines IRS operations, strengthens taxpayer rights, and delivers a more taxpayer-first system,” committee Chair Mike Crapo, R-Idaho, said in his opening statement. “It reflects years of bipartisan efforts to translate stories of casework frustrations and tangible fixes designed to make the IRS work more efficiently for the American people.”

The bill, championed by both Crapo and ranking member Ron Wyden, D-Ore., proposes a wide range of tweaks to IRS customer service, return preparer oversight, watchdog independence, and more.

Notable changes affecting taxpayer service include a requirement that tax returns are processed electronically and the creation of a dashboard on the IRS website that would provide greater insight into paper backlogs and phone wait times.

See also: Thoughts from the National Taxpayer Advocate.

Trump floats pulling Blanche’s nomination for attorney general to avoid conceding to GOP demands - Michelle L. Price, Alanna Durkin Richer and Mary Clare Jalonick, Associated Press:

After failed negotiations forced the delay of a committee vote to advance Blanche’s nomination, Trump suggested he was holding firm against pressure from Republican Sens. John Cornyn and Thom Tillis. They have expressed concerns about the controversial settlement of Trump’s lawsuit against the Internal Revenue Service, which a judge denounced as an exercise in self-dealing.

The senators said the Justice Department seemed interested in reaching an agreement with them, but the White House wouldn’t budge to aid the confirmation of Trump’s loyal former personal attorney, who has aggressively pursued the administration’s priorities as acting attorney general. Instead, Trump said in a social media post that he might pull Blanche’s nomination and resubmit it after Cornyn and Tillis leave office next year.

Senators Request More Info on Qualified Stock Exclusion - Katie Lobosco, Tax Notes ($):

Senate Finance Committee member Elizabeth Warren, D-Mass., and Sen. Angus S. King Jr., I-Maine, argue in a letter sent to the Joint Committee on Taxation that the expanded exclusion provides “a windfall to venture capitalists, private equity firms, and other wealthy investors.”

The exclusion generally allows investors holding qualified stock issued by startup businesses, which are organized as C corporations, to exclude the sale of those stocks from the capital gains tax. But there are complex eligibility rules.

Treasury Deputy Secretary Nominee Advances to Senate Vote - Jared Serre, Tax Notes ($):

Nominations for four Treasury positions, including deputy secretary, have advanced to a final confirmation by the Senate.

Lawmakers voted 50-47 to consider a block of Treasury nominations July 30, including Francis Brooke, who will serve as the top deputy to Secretary Scott Bessent.Final confirmation of the nominees will occur the week of August 3. However, several high-level jobs at the department — including in tax policy — remain vacant or have an interim officeholder.

Brooke is the first Senate-confirmed Treasury deputy secretary since Michael Faulkender, who resigned in August 2025. Serving in an acting capacity since April, Brooke joined the Trump administration in June 2025 as a counselor to Bessent. He was confirmed as assistant secretary for international trade and development a short time later, assuming the role in October.

IRS and Treasury

Documents Reveal IRS Playbook for Deferred Legal Fees - Warren Rojas, Tax Notes ($):

New IRS training materials aim to get auditors up to speed on suspected tax schemes in complex deferred legal fee deals enabled by third-party loans, which are testing the boundaries of a 32-year-old Tax Court ruling.

The 240-page slideshow, obtained by Tax Notes through a Freedom of Information Act request, shows how the agency is proceeding with compliance efforts announced in December 2024 — a project expected to turn on “issue-based examinations and educational soft letters.”

At issue is when funds flowing through compensation arrangements established for plaintiff lawyers qualify as income, with much of the discussion focused on deferral companies that allow clients to access the funds immediately through loans.

Ruling May Further Erode IRS' Post-Loper Bright Authority - Natalie Olivo, Law360 Tax Authority ($):

William Colgin, a partner at Holland & Hart LLP, expects to see more controversies involving pre-Loper Bright rules, including the ones that Keysight challenged, which involve a mismatch of effective dates under the TCJA. While these disputes are still in the early stages, findings from the claims court and others regarding Section 7805(a) are likely to stick, he said.

"That's a pretty significant pushback on Treasury's or IRS' views, at least expressed publicly," Colgin said.

Weaker Minimum Book Tax Rules Save Meta, Qualcomm Billions - Michael Rapoport, Bloomberg Tax ($):

International

U.S. Tech Group Urges Trump to Step Up Fight Against DSTs - Sophie Petitjean, Tax Notes ($):

A tech industry group said that because revenues from digital services taxes and digital advertising taxes in five key markets rose by one-fifth between 2024 and 2025, the United States should impose retaliatory measures.

Digital taxes in Austria, France, Italy, Spain, and the United Kingdom generated approximately $3.6 billion in 2025, according to a July 23 report by the Computer & Communications Industry Association (CCIA). This is the highest annual total on record and a 20 percent increase over 2024, the CCIA said.

The CCIA said its report aims to convince the Trump administration to act promptly. “Every year that DSTs remain in place, more revenue earned by American workers and shareholders is siphoned off by governments that designed a burden to hit U.S. companies and almost no one else,” Jonathan McHale of the CCIA said.

See Eide Bailly International Tax

Clean Energy

Battery Tax Break Buoys Solar Despite GOP’s Credit Pullback - Owen Auston-Babcock, Bloomberg Tax ($):

Solar and wind projects that haven’t started construction no longer qualify for the 2022 law’s credits. Those projects have made up a majority of the energy sector’s growth since 2019, but the tax credit expiration will change the market’s makeup, Price said.

The US has rapidly added more solar capacity over the last few years, despite uncertainty created by tariffs, permitting hurdles, and the tax credit phase-out, US Energy Information Administration data released Thursday shows.

See Eide Bailly Business Credits and Incentives

State and Local

Mamdani’s pied-à-terre tax was designed to hit the wealthy, but it’s sending most New Yorkers to their estate lawyers - Catherina Gioino, Yahoo Finance ($):

New York City's pied-à-terre tax was designed to extract money from second-home owners wealthy enough not to live in the city full-time. A side effect no one planned for: It's pushing middle-class and working homeowners, people who already live in their houses, into estate-planning conversations they've never had before, at hourly rates they've never had to pay, for advice the wealthy have had access to for generations.

See Eide Bailly State and Local Tax

Blogs & Bits

Taxing Capital Income More Uniformly Is A Worthy Objective In The Upcoming Budget Battles, C. Eugene Steuerle, Tax Policy Center TaxVox blog. "Capital income comprises a large share of the income of the rich, and their share of market income and of wealth has increased considerably over recent decades."

The Net Investment Income Tax: What It Is and Who Pays It,Andrew Lautz, Bipartisan Tax Policy Center. "These conversations dovetail with decades-long concerns that the United States is overly reliant on labor taxes to finance general government spending and entitlement programs."

Tax whistleblowers have helped IRS recover more than $8 billion, Kay Bell, Don't Mess with Taxes. "The IRS notes that the most valuable whistleblower submissions contain specific, timely, significant, and credible information."

What Day Is It?

Avocado

It's National Avocado Day! Whether you like yours on toast or mixed into guac, it's definitely worth celebrating!