Key Takeaways
- China tariffs.
- Deficits plague taxwriters.
- House taxwriter calls Senate approach "a fraud."
- IRS hiring freeze and tax season.
- IRS says back to office, accounting firms stay hybrid.
- DOGE payment data access "read only," says Treasury.
- IRS Commissioner Nominee stonewalling Senate Dems?
- National Chocolate Fondue Day meets National Pork Rind Day.
China Slaps Retaliatory Tariffs on U.S. Imports - Michael Smith, Tax Notes ($):
On February 10 China will impose additional tariffs on U.S. imports: 15 percent for coal and liquefied natural gas and 10 percent for crude oil, agricultural machinery, and pickup trucks.
On the Hill
Republicans stare down massive deficits to extend Trump tax cuts - Tobias Burns, The Hill:
Using that baseline would keep the cost of extending expiring provisions of the 2017 Tax Cuts and Jobs Act out of the bill’s budgetary score, but include the potential benefits of renewing those provisions. Doing so would likely produce a much smaller number by which the tax legislation would add to the deficit.
Top House Taxwriter Calls Current-Policy Approach ‘A Fraud’ - Doug Sword, Tax Notes ($):
“It’s intellectually a fraud,” Schweikert said of the current-policy approach. “It is an intellectual fraud to say, ‘Let’s ignore the actual law and let’s just keep doing what we’re doing because it’s convenient,’” he told reporters February 4.
The 2026 expiration of the TCJA tax cuts was used to keep the budget cost of the bill in a permissible range under congressional "reconciliation" rules.
House GOP is in a jam on Trump’s agenda. Here’s how they can get out - Jake Sherman, John Bresnahan, and Laura Weiss, Punchbowl News.
Of course, a Freedom Caucus-favored package may not get through the Budget Committee. If it does, it could fail on the House floor. And it will certainly get ripped to shreds in the Senate.
But there’s utility in that exercise to show that hardliners need to drop their draconian spending-cut demands and embrace a bill that can actually become law. That’s the real goal of legislating, right?
Trump, Musk, and Tax Administration
Will Trump’s federal hiring freeze affect IRS tax returns? - Cassie Buchman, The Hill:
The memorandum is set to expire in 90 days for every department and agency besides the Internal Revenue Service.
...
In another LinkedIn post, former IRS Commissioner Charles Rettig said, “Every facet of IRS operations will be significantly impacted by the current hiring freeze.”
IRS Workers Weigh Choice to Stay or Go With Tax Season Underway - Erin Slowey, Bloomberg ($):
Forcing workers back into the office five days a week or forcing them to leave will only amplify the legal battle brewing between unions and the executive branch. The National Treasury Employees Union, which represents about two-thirds of the approximately 100,000 IRS employees, filed suit Jan. 20 over President Donald Trump’s order ending job protections.
Big Four Shun Return-to-Office Push, Stick With Hybrid Instead - Jorja Siemons, Bloomberg ($):
Younger workers are looking for organizations with less rigid work environments, said Mike DePrisco, president and CEO of the Institute of Management Accountants.
Treasury Department Says DOGE’s Access to Payment Data Is ‘Read Only’ - Richard Rubin, Wall Street Journal:
“This is similar to the kind of access that Treasury provides to individuals reviewing Treasury systems, such as auditors, and that follows practices associated with protecting the integrity of the systems and business processes,” said the letter, which was signed by Jonathan Blum, principal deputy assistant secretary for legislative affairs at Treasury.
IRS Direct File Still Working This Tax Season Despite Musk’s Comments - Kelly Phillips Erb, Forbes ($). "Musk posted on X (formerly Twitter) that he had 'deleted' 18F, the group responsible for creating the technology behind projects like the IRS’ Direct File program, in response to a post suggesting that 'the far left government wide computer office' was recently taken over by Musk allies. That caused some users on social media to incorrectly report that the program itself had been axed."
Whither the Commissioner
Wyden’s Office Has Heard Back ‘Zilch’ on IRS Nominee - Cady Stanton and Benjamin Valdez, Tax Notes ($):
After former Missouri Rep. Billy Long was picked to serve as IRS commissioner by incoming President Trump in December 2024, Sen. Ron Wyden, D-Ore., then serving as Finance Committee chair, requested details on Long’s work related to the employee retention credit, a complex pandemic-relief credit that has frequently come under fire by lawmakers for fraud. A month has passed and Wyden has yet to receive a response.
“The committee has nothing, zilch, from the administration on Billy Long, and the organizations Senator Wyden wrote to with questions about his ERTC work have not responded,” Wyden spokesperson Ryan Carey said in an email to Tax Notes. “It’s highly unusual for a high-profile nomination.”
It will be fun when the DOGE waste warriors turn their gimlet-eyed gaze to the ERC, which costs far more than a lot of their current targets.
Disaster update
Tax breaks are becoming more generous for natural-disaster victims — just in time for Los Angeles wildfire victims, experts say - Andrew Keshner, Market Watch:
The legislation had wide bipartisan support despite once getting tangled with other stalled bills. President Joe Biden signed it into law on Dec. 12 and less than one month later, he declared a major disaster in California beginning Jan. 7.
The law applies to “any presidentially declared disaster occurring Feb. 27, 2021–Feb. 12, 2025,” according to Rep. Greg Steube, a Republican from Florida who was the bill’s lead sponsor in the House.
Blogs and Bits
24 tax deductions that don’t require itemizing - Don't Mess With Taxes. "These tax breaks officially are known as Adjustments to Income. They are listed in Part II of Schedule 1, which is on the reverse, page 2 side of the schedule if you’re looking at a paper form."
Taxpayers Lack of Organized Records Doomed Their Tax Court Case - Ed Zollars, Current Federal Tax Developments. "This case underscores the critical importance of maintaining meticulous records to support tax deductions."
Only in Washington could this fiscal vandalism be called tax ‘relief’ - George Will, Washington Post:
Cato Tax Bootcamp: An International Tax Primer - Adam Michel, Liberty Taxed. "Paper profit shifting, whereby firms manipulate the rules to reduce taxes, often takes two forms: aggressive pricing agreements between subsidiaries and financial techniques, such as strategically allocating debt. However, determining the legitimate transactions from the rest can be difficult."
Related: Eide Bailly Transfer Pricing Services.
Impounded
Gardner business owner sentenced to prison for failing to pay taxes - IRS (Defendant name omitted):
According to court documents, Defendant, of Gardner pleaded guilty to one count of failure to account for and pay over employment taxes.
As the owner and operator of Marvin's Tow Service, Inc. in Gardner, Kansas, Defendant failed to pay employment taxes for at least 23 calendar quarters between 2012-2017. Employers are required to withhold Federal Insurance Contribution Act (FICA) taxes and income taxes from the wages paid to their employees then forward the withheld amounts to the IRS. IRS-Criminal Investigation agents interviewed the office administrator for Marvin's Tow Service and were told Defendant wouldn’t allow the office administrator to pay the owed federal taxes.
As part of his sentence, a federal judge ordered Defendant to pay the IRS $1,512,283 in restitution.
17 months in the impound lot and a stiff storage fee on release. Withholding and not remitting taxes may be the tax crime most likely to get caught. When employees file for their refunds, the IRS eventually figures out that the employer hasn't paid over their withholdings.
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