Key Takeaways
- IRS
- Tariffs
- Energy Credits
- Medicaid Cuts
- Johnson Amendment
- In the Courts
- Lasagna
IRS
IRS warns federal workers about tax debts. Will it cost them their jobs? – Julie Zauzamer Weil & Shannon Najmabadi, Washington Post:
The letters, mailed last month, begin with the words “Urgent: You have an outstanding tax issue,” in bold, large type.
They started arriving in people’s mailboxes shortly after the Office of Personnel Management proposed a rule that would make it easier to dismiss employees who don’t meet certain “suitability criteria,” including “failure to comply with generally applicable legal obligations, including timely filing of tax returns.”
New IRS Chief Rejects 'Wizard Of Oz'-Style Leadership – Kat Lucero, Law 360 ($):
Greater engagement with Internal Revenue Service employees, especially those who interact with taxpayers, would improve the workplace and enhance customer service, Long said during an enrolled agents conference in Salt Lake City.
IRS Chief Says Direct File Is ‘Gone,’ Other Audit Tech Is Coming – Erin Slowey, Bloomberg ($):
“You’ve heard of Direct File,” Long said Monday at the National Association of Enrolled Agents Tax Summit, one of his first public appearances since taking the agency’s helm. “That’s gone. Big beautiful Billy wiped that out. I don’t care about Direct File. I care about direct audit.”
Instead of the free filing system that was first piloted in 2024 but has faced fierce GOP opposition, Long said he wants to turn his attention to making it easier for businesses and individuals to see where they are in the process while under audit.
Long Predicts Later Start to Filing Season – Benjamin Valdez, Tax Notes ($):
Long, speaking during the National Association of Enrolled Agents Tax Summit July 28, said the IRS is aiming to start the 2026 filing season around Presidents Day, which lands on February 17.
Tariffs
Who Pays for U.S. Tariffs, and Where Does the Money Go? – New York Times:
…
The president and his advisers say their goal is to make the tariffs so painful that they force companies to make their products in the United States. They argue that this will create more jobs in America and push up wages.
But Mr. Trump has also described tariffs as an all-purpose tool to extract concessions from other countries. The president also maintains that tariffs will rake in huge sums of revenue that the government can use to pay for domestic tax cuts.
EU, US Rush to Clinch Final Details and Lock in Trade Deal – Jorge Valero, Bloomberg ($):
The euro fell to a five-week low of $1.1527 on Tuesday, having fallen about 1.8% since the trade deal was announced. That’s after the common currency had surged to a near three-year high last week on the prospect of an agreement with the US.
EU-U.S. Tariff Deal Saddles Promised Relief With Open Questions – Sophie Petitjean, Tax Notes ($):
After months of negotiations and several warning shots from U.S. President Donald Trump, the EU and the United States finally agreed on the main terms of a trade deal July 27. The new relationship includes three main pillars: a single 15 percent tariff ceiling for most EU exports, $750 billion in strategic purchases, and an additional $600 billion in anticipated private investments into the U.S. economy.
Three-Quarters of U.S. Food Imports Under Tariff Pressure – Jonathan Curry, Tax Notes ($). “As the August 1 trade deal deadline rapidly approaches, tariff rates on most imported foods are set to spike, raising the cost of groceries for the average American, the Tax Foundation warned.”
Court Declines US Tariff Relief on Low-Cost Goods, for Now – Zoe Tillman, Bloomberg ($):
The decision from the Court of International Trade on Monday in the fight over what’s known as the “de minimis” tariff exemption is the latest favorable order for the Trump administration in its defense against multiple lawsuits over his move to raise global tariffs.
Energy Credits
Trump Cuts Billions as Climate Nonprofits Scramble to Survive – Emma Court & Olivia Raimonde, Bloomberg ($):
Founded in 2020 shortly before former President Joe Biden was elected, the organization focuses on shifting US homes from fossil fuel-powered appliances to electric ones like heat pumps — a prime goal of Biden’s Inflation Reduction Act when it was passed in 2022. Rewiring America was poised to receive nearly $500 million from a $27 billion program created by that law.
Medicaid Cuts
Judge Pauses Medicaid Cuts to All Planned Parenthood Clinics – Celine Castronuovo, Bloomberg ($). “All Planned Parenthood locations are protected for now from sweeping Medicaid cuts in the Trump administration’s tax law under a federal judge’s order Monday expanding a previous injunction that paused enforcement for some affiliates.”
Johnson Amendment
IRS Attempting End-Run on Johnson Amendment, Group Says – Kristen A. Parillo, Tax Notes ($):
The proposed consent decree “represents the Parties’ attempt to eliminate the Johnson Amendment through litigation, improperly bypassing Congress,” Americans United for Separation of Church and State (AU) said in a July 25 amicus brief in National Religious Broadcasters v. Long.
In the Courts
Trump Hits Court Shopping Roadblock in Federal Union Pact Fights – Jacqueline Thomsen & Parker Purifoy, Bloomberg ($):
The administration has now twice lost bids to cancel Biden-era collective bargaining agreements with federal unions. The first lawsuit was filed in the Eastern District of Kentucky, home to all Republican appointees, and was dismissed by Senior US District Judge Danny Reeves, a George W. Bush appointee.
President Donald Trump’s Justice Department was dealt another blow in a ruling last week from US District Judge Alan Albright, a Trump appointee and currently the only district judge hearing cases in Waco, Texas.
Second Circuit Litigant Defends Tax Court on Reporting Penalties – Amanda Athanasiou, Tax Notes ($). “The Tax Court correctly concluded that the IRS can’t assess foreign business information reporting penalties and that the D.C. Circuit’s reasoning to the contrary lacks merit, a taxpayer has told the Second Circuit.”
Trailer Maker's Bid to Escape $4M Excise Taxes Dismissed – Kevin Pinner, Law 360 ($). “A trailer manufacturer can't avoid more than $4 million in excise taxes, interest and penalties, a South Dakota federal court ruled, finding it couldn't rely on an exemption from a technical advice memorandum after Congress altered the definition of off-highway vehicles.”
Fired Worker Owes Tax On $1.5M Settlement, Tax Court Says – Anna Scott Farrell, Law 360 ($). “A former PNC Investments LLC employee who won a defamation settlement after being fired must pay tax on the $1.5 million award, the U.S. Tax Court said Monday, rejecting the ex-worker's argument that the money didn't count as income.”
What Day is it?
Get out your pasta machine and your ricotta! Its National Lasagna Day! Hooray!
