Tax News & Views Thawed Freezes and Croissants Roundup

Buyouts Expected to Step Up IRS Staff Flight, Spur Legal Fight - Benjamin Valdez, Tax Notes ($):

President Trump’s offer to buy out federal employees who don’t return to the office as long as they agree to quit could worsen an existing attrition problem in the IRS ranks, according to observers.

Democratic lawmakers and others are also warning that the offer of full pay and benefits through September as long as employees tender their resignation by February 8 may not be legal.

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The IRS had 100,433 employees on board at the end of fiscal 2024, according to the national taxpayer advocate’s annual report — an increase of 10,097 since the beginning of fiscal 2024. Nearly half of IRS employees work remotely in some capacity.

Despite Trump Hiring Freeze And Anti-IRS Talk, Your Taxes Are Still Due - Kelly Phillips Erb, Forbes ($). "There are no realistic plans to put the brakes on tax season. You must file by April 15th, unless you qualify for an automatic delay (because say, you’re in the zone of a" recent disaster) or apply for an extension."

Freeze, or Not?

White House Rescinds Order to Freeze Federal Assistance, Grants - Natalie Andrews, Liz Essley Whyte, and Michelle Hackman, Wall Street Journal. "The Trump administration rescinded its memo calling for federal agencies to pause potentially trillions of dollars in federal grants, loans and other financial-assistance programs, a day after a federal judge temporarily blocked the directive that had sowed widespread confusion."

IRA Credits Remain in Place Despite Mixed Signals - Alex Parker and Trina Pinneau, Eide Bailly. "Any outright repeal of these tax credits would require Congressional action."

The freeze is rescinded, but a review to eliminate spending on ‘woke’ ideologies will proceed. - Zolan Kanno-Youngs, Maggie Haberman, and Annie Karni, New York Times:

Karoline Leavitt, the White House press secretary, wrote on social media that “This is NOT a rescission of the federal funding freeze.” She said the president’s executive orders on federal funding “remain in full force and effect, and will be rigorously implemented.”

She appeared to be referring to the fact that the executive orders Mr. Trump signed last week — which directed government agencies to review and eliminate spending on so-called woke ideologies — remain in force.

White House Says Funding Freeze Remains Despite Pulling Memo - Tyrah Burris, Tax Notes ($):

The Office of Management and Budget rescinded its memo freezing federal funding that put the fate of many tax credits at risk, but the White House says the executive order calling for the freeze will remain in full effect despite legal challenges.

Judge Loren AliKhan of the U.S. District Court of the District of Columbia postponed the planned freeze on January 28. Another OMB memorandum rescinded the previous memo, White House spokesperson Karoline Leavitt said in a social platform X post. The second memo, M-25-14, was first reported by The Washington Post.

Funding Halt Upends IRS Low-Income Services at Tax Season Start - Erin Slowey and Erin Schilling, Bloomberg ($):

“To have this kind of uncertainty for nonprofits is devastating,” said Nina Olson, executive director of the Center for Taxpayer Rights. “Just like a private business, you can’t plan and this happening the day after the filing season really upsets plans.”

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Olson’s group has already lost access: Her organization was awarded $200,000 in 2024 and when she tried pulling roughly $40,000 the group had left, she couldn’t draw it. The grant for 2025 can’t be withdrawn either.

Meanwhile in Congress

Here’s What Stands in the Way of Trump’s ‘Big, Beautiful’ Tax and Border Bill - Richard Rubin and Olivia Beavers, Wall Street Journal:

President Trump wants Congress to pass “one big, beautiful bill” that would extend expiring tax cuts and provide money for border enforcement. As House Republicans concluded a three-day meeting at a Trump resort in Florida, that legislation is nowhere near done. Lawmakers are wrestling with their slim majority and internal disputes over the size of spending cuts.

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Many House members and Trump want to combine everything—border money, military spending, cuts to social-safety programs, tax reductions—into one piece of legislation. The idea is that the House, with a slim majority currently at 218-215, works best if everyone’s priorities ride together in a pass-fail test.

Senators haven’t bought in, however, and Trump has stayed open to their two-bill plan, telling House Republicans this week that he didn’t care how they did it. The two-bill idea: Move quickly on border money, defense expenditures and energy policy and save messy tax-and-spending debates for later in the year.

Fast Budget Timeline Faces Reality of Small House GOP Margin - Cady Stanton and Doug Sword, Tax Notes ($):

After three days at a policy retreat in Florida focused on their reconciliation plan, House Republicans appeared no closer on a path to passing a budget resolution through their slim majority on the quickly approaching timeline set by House Speaker Mike Johnson, R-La. The plan is set to center on extending an estimated $4.6 trillion in expiring tax provisions in the Tax Cuts and Jobs Act.

House leaders said January 29 that they still plan for the House Budget Committee to mark up a budget resolution the week of February 3, with the goal of House passage by February 24.

International Terminal

Eide Bailly's International Tax Team and our affiliates at HLB, the Global Advisory and Accounting Network stand ready to help with your worldwide tax planning and compliance needs.

EU Will Keep Minimum Tax Despite US, Commissioner Says - Josh White, Law360 Tax Authority ($):

Teresa Ribera, executive vice president of the European Commission, confirmed that the EU will continue to enforce a 15% minimum corporate rate for large companies. The Organization for Economic Cooperation and Development designed the minimum tax rate as part of a global agreement secured in October 2021, which President Donald Trump has just withdrawn the U.S. from.

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Trump announced last week that the U.S. would no longer participate in the OECD-brokered agreement. He issued an executive order Jan. 20 that effectively withdrew the U.S. from the two-pillar agreement. In addition to the minimum tax, the agreement includes changes to international taxing rights to redistribute revenue.

UK Treasury Minister Backs Global Tax Deal Amid Trump's Threats - Somesh Jha, Bloomberg ($):

“Pillar Two is … a historic and important initiative in countering multinational base erosion and profit shifting, and it helps to ensure a fair approach to how countries compete for cross-border investment,” James Murray, the exchequer secretary to the Treasury, said in a UK Parliamentary committee meeting held on Tuesday.

Murray was responding to the Public Bill Committee on the impact of Trump’s position on the global tax deal, including the UK’s ability to levy top-up taxes on multinational companies.

Trump Issues Executive Order Dealing Blow to OECD Global Tax Cartel - Adam Michel, Liberty Taxed. "Although Congress had not adopted any of the OECD rules, the Biden administration was actively coercing other countries to adopt them to create the sense that the deal was a fait accompli. Trump’s EO will help turn the tide, allowing other reticent countries to delay implementation or follow America’s lead in abandoning the entire project."

Tax Execs Plot Response to Fallout from Trump's Trade Threats - Lauren Vella, Bloomberg ($):

Companies are marshaling tariff experts, bolstering their political networks and seeking out countries with stable tax systems—all in a bid to inoculate themselves from the tax policy uncertainty ushered in by the new Trump administration.

President Donald Trump and Republicans’ zeal for tariffs and retaliatory taxes has the US on the path to a global trade war. The president promises 25% tariffs on Canada and Mexico starting Feb. 1, and previously floated the idea of blanket tariffs on all US imports.

Argentina To Slash Car Sales Taxes, EV Tariffs - Jack McLoone, Law360 Tax Authority ($):

Argentina will zero out sales taxes on some cars and eliminate tariffs on low-cost electric and hybrid vehicles starting next week, the country's minister of economy said Tuesday.

The current 20% tax on cars worth between 41 million Argentine pesos ($39,000) and 75 million pesos will be eliminated, while the rate for cars worth more than 75 million pesos will drop to 18% from 35%, Luis Caputo said in a post on X. He said this is expected to lower car prices by 15% to 20%, driving an increase in demand.

Seven Charts Showing How Canada/Mexico Tariffs Would Harm the US Auto Industry (and American Car Buyers) - Scott Lincicome and Alfredo Carrillo Obregon, Cato at Liberty:

According to a 2023 report from the US International Trade Commission, the Section 232 steel and aluminum tariffs disproportionately harmed six US motor vehicle and parts manufacturing sub-industries, thus significantly reducing their production. Several auto industry representatives also reported to the Commission that “section 232 tariffs on steel have led to decreased supplies of automotive steel products and increased input costs for automotive manufacturers,” as well as longer lead times due to “limited availability of steel inputs.” And the Center for Automotive Research calculated in 2019 that Section 232 tariffs on steel and aluminum from Canada and Mexico alone cost US light vehicle manufacturers almost $500 million per year (in 2019 dollars). New tariffs on these metals would thus cost American automotive manufacturers dearly.

VAT Rates in Europe, 2025 - Alex Mengden, Tax Foundation. "The VAT is a consumption tax assessed on the value added in each production stage of a good or service. Every business along the value chain receives a tax credit for the VAT already paid. The end consumer does not, making it a tax on final consumption."

Blogs and bits

IRS implements filing season changes to detect tax scams and return fraud - Kay Bell, Don't Mess With Taxes. "Stay vigilant: While tax scams increase during tax filing season, they never stop. Crooks come up with tax-related ways to steal your money or identity or both year-round. So take care any time a tax law is invoked."

What Can Taxpayers Do to Protect Themselves from Identity Theft? - Erin Collins, NTA Blog. "Learn to recognize and avoid unsolicited or threatening communications from identity thieves (phishing emails, texts, and social media posts). Do not click on links or downloads from communications that seem suspicious, even if they appear to be from a known sender. Scammers can pose as legitimate organizations such as banks, credit card companies, law enforcement, and even the IRS. If you have doubts, contact the agency or company."

Key Tax Numbers That Have—and Haven’t—Changed for 2025 - Laura Saunders, Wall Street Journal. "A cheat sheet for new brackets, deductions and credits you need to know for filing 2024 taxes and for this year’s tax planning"

Economical Bookkeeping Alert

Plea Deal May Be Best Strategy For SCOTUSBlog Publisher - Asha Glover, Law360 Tax Authority ($):

Given the severity of the charges against SCOTUSblog publisher Tom Goldstein, an expert U.S. Supreme Court lawyer accused of paying gambling debts with funds from his law firm and dodging taxes, a plea deal is likely his best shot at avoiding decades of prison time, attorneys told Law360.

To an accountant, this bit is the most eye-opening. It quotes former federal prosecutor Keven Sweeney:

Goldstein could also try to divert blame from himself to those who prepared his taxes, Sweeney said. Goldstein's firm did not employ an in-house accountant or bookkeeper to prepare its tax returns, according to the indictment. Instead, it typically relied on recent college graduates who held the title "firm manager" but did not have formal accounting experience and also ran errands for Goldstein, the indictment said.

If true, and if I were on the jury, that would focus blame, rather than divert it, as the article notes:

However, such an argument could be a double-edged sword, Sweeney said. The government could argue that Goldstein should have spent more time and care to ensure his tax filings were accurate since he didn't have a real bookkeeper, according to Sweeney. Alternatively, a defense lawyer could point to that same set of facts as an indication that someone made a mistake, he said.

The article notes that the defendant denies the charges, and it quotes his attorneys as saying "Our client intends to vigorously contest these charges, and we expect he will be exonerated at trial."

The moral? First, the defendant gets to contest the charges, and we have only heard the prosecution side. If, however, the item about using the office gofer to do the books and the tax returns is true, it really highlights the importance of paying what you need to for good accounting and tax help.

What day is it?

It's National Croissant Day! Which may be more popular around the office than Yodel for Your Neighbors Day.

Tax News & Views Thawed Freezes and Croissants Roundup

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Joe B. Kristan, CPA