Tax News & Views Plants a Big Beautiful Flower Roundup

Trump IRS Pick Defends Work Pushing Pandemic-era Tax Credits - Zach Cohen, Bloomberg ($):

Democrats have targeted [IRS Commissioner-designate Billy] Long’s work since he left Congress in 2023 shopping the employee retention tax credit, which rewarded businesses that kept their staff on payroll during the Covid-19 recession.

The IRS halted processing claims of the credit after finding evidence of fraud in a majority of cases in part due to its aggressive sale to employers.

But Long defended his work, citing widespread Republican support for the 2020 law that created the program at the onset of the pandemic known as the CARES Act.

Former IRS Officials Warn of Consequences to Staff Cuts - Benjamin Valdez, Tax Notes ($):

Should further terminations of IRS employees occur at the conclusion of the filing season, the agency’s post-filing-season operations would face an outsize impact, said Jeff Eppler, a recently retired former IRS official.

...

Identity theft case resolution processing times — already criticized by the national taxpayer advocate after the average resolution time spiked to nearly two years — will also be affected by the firings, according to Eppler.

The IRS says it is now taking 493 days to resolve cases. “We can all expect that number to go up,” said Eppler, who held several IRS leadership roles, including senior manager in the automated collection system.

One Day in Tariff Land

Trump caps wild day, reversing threat to double tariffs on Canadian steel - David Lynch and Amanda Coletta, Washington Post:

President Donald Trump said Tuesday that he had ordered a doubling of the tariff on Canadian steel and aluminum, setting off a new wave of selling on Wall Street and raising fears that his insistence on overhauling the global trading system may involve significant costs.

Then a few hours later, after financial markets convulsed, he told reporters he “probably” would not double down on the industrial metals tax after all.

House GOP blocks Democrats from forcing vote on repealing Trump tariffs - Emily Brooks, The Hill:

Trump utilized the International Emergency Economic Powers Act in order to implement the tariffs. The National Emergencies Act outlines an expedited process for congressional action on repealing a national emergency if it is not acted on in 15 days.

Democrats already had legislation teed up: House Foreign Affairs Committee ranking member Gregory Meeks (D-N.Y.) introduced such resolutions on March 6, starting that 15-day clock.

But the new language approved by the House essentially pauses that clock, saying that days from now until the end of the year do not count.

EU Hits Back as U.S. Steel and Aluminum Tariffs Take Effect - Gavin Bade and Paul Viera, Wall Street Journal:

The European Union announced retaliatory tariffs against the U.S. early Wednesday. Its levies will take effect at the beginning of April and target a range of U.S. products including bourbon whiskey, boats and motorcycles, the EU said. A second set is due in mid-April and will come after the bloc has consulted with EU countries and stakeholders.

The countermeasures could affect U.S. exports valued at about $28 billion, the bloc said, matching the value of EU exports affected by U.S. metals tariffs.

China’s Tariffs on U.S. Agricultural Products Take Effect - Noam Scheiber and Keith Bradsher, New York Times. "The Chinese government announced the tariffs last week, shortly after President Trump raised tariffs on Chinese products for the second time since he took office in January. The Chinese tariffs will include a levy of 15 percent on U.S. products like chicken, wheat and corn, as well as 10 percent on products like soybeans, pork, beef and fruit."

Tax Bill Update

Trump Has Pay-Fors, Too: Carried Interest, Sports Teams - Doug Sword, Tax Notes ($):

President Trump is adamant about closing the so-called carried interest loophole and repealing tax incentives enjoyed by sports team owners, according to a White House deputy chief of staff.

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Although the White House hasn’t specified which “special tax breaks” for team owners it would eliminate, one way those owners are able to save on their taxes is through amortization rules that allow them to deduct the cost of a team’s purchase over 15 years.

Congress Likely Will Opt for One Tax Bill, Senate Taxwriters Say - Doug Sword and Cady Stanton, Tax Notes ($):

“We’ll probably do a big reconciliation bill, try to be able to pull the two things together,” said Senate Finance Committee member James Lankford, R-Okla., who is on the GOP leadership team as vice chair of the Senate Republican Conference.

Lankford also said he was hoping a tax package could pass in both chambers before the August recess “or we lose the entire year” because businesses need time to plan, and the IRS and Treasury need time to write regulations before the end of 2025. Lankford was speaking at a March 11 event held by Punchbowl News.

Lankford talks reconciliation timeline - Punchbowl News:

Priorities: Lankford’s priorities for reconciliation include bringing back full bonus depreciation, which allows businesses to immediately deduct costs for short-term assets like equipment and machinery, and expanding the deduction for charitable giving so anyone could take advantage of the incentive.

Lankford also provided some insight into how lawmakers are working to include President Donald Trump’s long list of tax priorities, such as getting rid of taxes on tips. For no taxes on tips, it depends on how many people will be able to benefit from the policy and how lawmakers define what a “tip” is, Lankford said.

Shutdown Countdown

House GOP Passes Stopgap, Daring Senate Democrats on Shutdown - Eric Wasson and Billy House, Bloomberg via MSN:

The bill will likely need the support of at least eight Democrats in the Republican-controlled Senate to become law, given opposition from Republican Rand Paul to the bill.

...

To win over Republicans, the measure increases security spending by $4.4 billion, according to the Congressional Budget Office. It has a $440 million boost for immigration enforcement, while cutting the Internal Revenue Service by $20 billion and blocking the District of Columbia from spending $1 billion of its own tax dollars. It also gives the Pentagon flexibility to buy new weapons, an unusual provision in a stopgap bill demanded by GOP defense hawks.

House Passes Repeal of Crypto Broker Reporting Rule - Tyrah Burris, Tax Notes ($). "The House voted 292 to 132 on March 11 to pass H.J. Res. 25, which would nullify final regulations (T.D. 10021) issued in December 2024 during the Biden administration. The rules require some DeFi brokers to report gross proceeds from cryptocurrency sales and other digital asset transactions through Form 1099-DA, 'Digital Asset Proceeds From Broker Transactions.'"

International Terminal

Capital Gains Tax Rates in Europe, 2025 - Alex Mengden, Tax Foundation. "Several European countries do not levy capital gains taxes on the sale of long-held shares. These include Belgium, Cyprus, the Czech Republic, Georgia, Greece, Luxembourg, Malta, Slovakia, Slovenia, Switzerland, and Turkey. Of the countries that do levy a capital gains tax, Romania levies the lowest rate, at 1 percent, followed by Moldova at 6 percent and Bulgaria at 10 percent."

EU Tax Chief Disputes Trump’s Claim That VAT Is a Trade Barrier - Saim Saeed, Bloomberg via Yahoo!News. "Trump’s determination to target the VAT is a significant complication for the bloc. All 27 EU member states use the value-added tax, with each setting its own levels. The tax applies equally to all goods, whether they originate from inside or outside the bloc."

Businesses bemoan Indian ‘tax terrorism’ and red tape - Andres Schipani and Chris Kay, Financial Times:

Just before his appointment as governor of India’s central bank, former revenue secretary Sanjay Malhotra in December warned government tax officers that they should “not kill the golden goose” with their demands.

Already, many blame falling investment on red tape and erratic enforcement of taxation. Net foreign investment flows fell to about $1.2bn during April to December, from $7.8bn during the same period in the previous year, according to the central bank’s February economic bulletin.

Threshold for filing ‘side hustle’ tax return to rise to £3,000 in UK - Emma Agyemang, Financial Times:

About 300,000 people in the UK with lucrative “side hustles” such as selling goods online will be freed from filing tax returns under government plans to treble the tax-free trading allowance from £1,000 to £3,000.

Under the current rules, anyone with additional income of more than £1,000 from side roles must file a self-assessment tax return.

Blogs and Bits

IRS announces 2025 tax year allowances for international locales with expensive housing - Kay Bell, Don't Mess With Taxes.

Does The IRS Have Your Money? There’s More Than $1 Billion In Unclaimed Refunds For Tax Year 2021 - Kelly Phillips Erb, Forbes. "If you are due a refund, typically, you must file a federal income tax return to get your money. Taxpayers usually have three years to file and claim their tax refunds—if you don't file within three years, the money becomes the property of the U.S. Treasury."

Building Designer Can't Claim Sec. 179D Deductions for Prior Years on Form 3115 - Parker Tax Pro Library. "The Second Circuit affirmed the Tax Court and held that a designer of energy efficient buildings placed in service by government clients was not entitled to claim approximately $3.9 million in Code Sec. 179D deductions for its 2007-2010 tax years on its 2011 tax return and accompanying Form 3115 because it did not change its accounting method. The court also concluded that the plain language of Rev. Proc. 2011-14 requires that the Code Sec. 179D deductions be claimed in the tax year in which the property is placed into service."

Related: Navigating the Energy-Efficient Tax Landscape: A Comprehensive Guide to Section 179D Deductions

Can a US Citizen Living Abroad Claim the Child Tax Credit? - Olivier Wagner, 1040 Abroad. "While expats may not receive the full Child Tax Credit benefit, they are eligible for the refundable portion, known as the Additional Child Tax Credit."

Does this mean I won't get a thank-you note?

Tax Court Warns Couple Who Call Taxes Voluntary Gifts - Anna Scott Farell, Law360 Tax Authority ($). "A Utah couple who claimed they would not make a "gift" to the U.S. Treasury Department by paying their taxes owe about $21,000 to the IRS, plus penalties, the U.S. Tax Court ruled Monday, warning them against making frivolous arguments."

The couple made some interesting arguments. From the Tax Court opinion (my emphasis):

Petitioners have not advanced any nonfrivolous arguments or offered any credible evidence showing that the wages and unemployment compensation received are not taxable. Petitioners maintain that (1) the federal income tax system is one of “voluntary self-assessment” and they will not make a “gift” to the U.S. Treasury for any liabilities determined; (2) no federal statute exists that makes them, as married individuals, liable for the income tax imposed; (3) respondent failed to obtain OMB approval requiring them to report wage information and unemployment compensation on Form 1040; and (4) OMB approval is required before respondent can use information reported on Form W-2 to examine their Form 1040 returns. Petitioners further contend that respondent lacks the authority to determine unreported income or to determine petitioners' income tax liabilities.

These arguments and those like them have been rejected by our Court and others as frivolous.

If marriage did provide a tax exemption, it might help some folks with commitment issues.

More to the point, while the law does allow you to make a gift to the government, it requires you to pay taxes.

What Day is it?

It's National Plant a Flower Day! And hope the frost is done.

Tax News & Views Plants a Big Beautiful Flower Roundup

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Joe B. Kristan, CPA