Tax News & Views Tax Package and Random Acts of Kindness Roundup

The House Budget Committee at press time was headed to an expected late-night vote on a budget plan that would assign $4.5 trillion to taxwriters, mainly to extend the individual provisions in the 2017 tax code overhaul.

If the budget resolution is advanced, Ways and Means Committee Republicans said they expect it could come to the floor the week of February 24 and that taxwriters would be ready to delve into writing the legislative text for a tax bill soon thereafter.

The House’s budget resolution appears headed for a markup despite possible internal opposition as budget writers crafted a $4.5 trillion tax package limit and are taking a decidedly different tack from the Senate on paying for it.

House Budget Committee Chair Jodey C. Arrington, R-Texas, stole the Senate’s thunder February 12 when he released a budget resolution covering a large swath of Republican priorities, including taxes, just as the Senate Budget Committee began its markup of a $342 billion budget resolution limited to border, defense, and energy issues.

Since their party swept to power, Republicans have entertained visions of an all-inclusive tax cut — one that could permanently lower rates for individuals, shower corporations with new incentives and deliver President Trump’s sprawling suite of campaign promises.

If only it were so easy.

House Republicans are preparing to adopt a budget plan that puts a $4.5 trillion upper limit on the size of the tax cut. Even such a huge sum is not nearly enough for all of their ideas, and so lawmakers must now decide which policy commitments are essential and which ones they can live without.

The Internal Revenue Service is preparing to give a team member working with Elon Musk’s so-called Department of Government Efficiency access to sensitive taxpayer data, people familiar with the matter said.

The systems at the I.R.S. contain the private financial data tied to millions of Americans, including their tax returns, Social Security numbers, addresses, banking details and employment information.

Elon Musk’s U.S. DOGE Service is seeking access to a heavily guarded Internal Revenue Service system that includes detailed financial information about every taxpayer, business and nonprofit in the country, according to three people familiar with the activities, sparking alarm within the tax agency.

Under pressure from the White House, the IRS is considering a memorandum of understanding that would give officials from DOGE — which stands for Department of Government Efficiency — broad access to tax-agency systems, property and datasets. Among them is the Integrated Data Retrieval System, or IDRS, which enables tax agency employees to access IRS accounts — including personal identification numbers — and bank information. It also lets them enter and adjust transaction data and automatically generate notices, collection documents and other records.

Musk adviser Gavin Kliger, a special adviser to the director at the Office of Personnel Management, visited the agency Thursday to meet with IT and compliance staff, according to two people familiar with the visit.

Kliger asked questions on how functions at the IRS could be automated and why the agency grew in particular compliance areas, the people familiar with the visit said. Following the infusion of cash from the 2022 tax-and-climate law, the IRS made strides to ramp up automation and expand its enforcement efforts.

The IRS is poised to hand over unlimited access to taxpayer data to an adviser from Elon Musk’s government efficiency group, according to a draft agreement seen by Bloomberg Tax.

The IRS would give a temporary detail at the agency to provide software engineering expertise to Gavin Kliger, a special adviser to the director at the Office of Personnel Management, according to a draft memo between IRS and OPM that has not yet been finalized. The draft memo was circulating within the agency this weekend, two people familiar with the memo said.

President Donald Trump is embarking on what may be his most disruptive action yet for the global economy by broadening his grievances to how other countries choose to tax and regulate.

Trump on Thursday ordered top economic officials to calculate new US tariffs based on the total tariffs and tax, regulatory, currency and any other barriers that US exports face. The new “reciprocal” duties would be calculated country by country. They will be laid out in a series of reports due by April 1 that officials said would first examine the economies with which the US has the largest trade deficits.

President Trump on Thursday ordered his advisers to determine new tariff rates on America’s trading partners, a move that he said would “correct longstanding imbalances in international trade.”

As part of his plan, Mr. Trump has taken aim at the value-added tax, a system used widely in Europe and elsewhere to tax the consumption of goods and services. The president and his team describe the tax as giving other countries an unfair trade advantage over the United States.

The government won’t be able to cut down the $84.6 million tax credit judgment that FedEx Corp. won at the US District Court for the Western District of Tennessee.

Judge Samuel H. Mays Jr. denied a “haircut” that would grant FedEx the refund but in a reduced amount. The government had asserted that the company misinterpreted the rules and that the credits it was seeking still didn’t apply to the income it was using them on.

Lawsuits against the Trump administration have put four US courts with a majority of Democrat-appointed judges at the center of fights over the onslaught of executive actions roiling the US government.

In the first four weeks of the new administration, at least 74 lawsuits were filed, and of those, 58 were brought in federal district courts in Washington, Boston, Seattle and suburban Maryland, according to a Bloomberg News analysis. Each of those districts has a majority of active judges nominated by Democratic presidents and each feeds into appeals courts with a similar ideological balance.

The cases have challenged President Donald Trump’s hard-line immigration policies, efforts to slash the size and reach of federal agencies and roll back civil rights protections and diversity programs. Others have focused on Tesla Inc. and SpaceX Chief Executive Officer Elon Musk’s Department of Government Efficiency and its constitutionality and access to agency computer systems.

Clothing and accessories retailer The Gap Inc. overstated its $52 million tax credit claim because the company sought a refund for periods over which the US Tax Court lacks jurisdiction, the IRS said.

The Gap, which also controls brands such as Old Navy and Banana Republic, sued the IRS alleging the company was wrongfully denied research and development tax credits, as well as foreign tax credits relating to its Hong Kong business, from 2009 through 2013. The Gap performed research inside the US to develop improved materials, qualifying it for a credit under IRC Sections 41 and 280C(c), its December lawsuit said.