Key Takeaways
- IRS Commissioner Nominee at Office of Personnel Management while nomination languishes.
- Appeals court upholds IRS employee re-hiring order.
- Do DOGE cuts encourage tax noncompliance?
- "Far larger" tariffs threatened.
- "On average, vehicle prices could rise 11% to 12% to offset tariff duties."
- Different houses, different budget numbers.
- How to create informants.
- Black Forest Cake Day, Something on a Stick Day.
IRS Commissioner Pick Working at OPM Until Confirmation - Chris Cioffi, Bloomberg ($):
President Donald Trump tapped Long to lead the tax agency late last year.
“We’re happy to add Commissioner-Designee Long to the team while he’s pending his confirmation in the Senate, and we look forward to the continued advancement of OPM’s priorities,” OPM spokesperson McLaurine Pinover said in a statement.
IRS Commissioner Nominee Working as Adviser at Personnel Agency - Benjamin Valdez, Tax Notes ($):
Koskinen also wondered whether Long’s position at OPM would allow him to influence decisions being made about the IRS before being confirmed.
Billy Long's profile on X/Twitter still says "DM me to save 40% on your taxes. We have a new traunch of tax credits just out!"
Circuit Court Upholds Order to Rehire Fired Federal Employees - Mary Katherine Browne, Tax Notes ($). "The Ninth Circuit majority upheld a district court’s preliminary injunction ordering the reinstatement of thousands of federal probationary employees, stating that the government failed to prove its chances of winning or irreparable harm."
Trump’s DOGE Cuts at IRS Are Tempting Taxpayers to Cheat - Wes Kosova, Bloomberg ($).
Not quite, says Joel Slemrod . An economist at the University of Michigan who’s spent years researching taxpayer behavior, Slemrod isn’t at all surprised that people are curious to know how much they might be able to get away with. His research shows it isn’t principle or patriotism that keeps many taxpayers honest. Instead it’s “the perceived threat that if they cheat on their taxes, they will be caught—and they’ll have to pay what they should have paid, plus some penalty.”
A weakened IRS alters that calculation.
The income tax remains in place, and increased enforcement is just one election, or one presidential whim, away.
Tariffs Teed Up for Next Week
International Consternation and Concern Over Trump Tariff Hikes - William Hoke, Tax Notes ($):
In March 26 Trump said the higher tariffs, which will apply to imported cars, auto parts, and components, will take effect April 3. Trump claimed authority to impose the tariffs, citing section 232 of the Trade Expansion Act of 1962. The tariffs are necessary “to end unfair trade practices that jeopardize U.S. national security,” according to a March 26 statement issued by the White House press office.
Trump threatens tariffs ‘far larger than currently planned’ on EU, Canada - Alex Gangitano, The Hill:
European automakers criticized the move, arguing it will hurt U.S. manufacturing while the nations are already impacted by Trump’s steel and aluminum tariffs on trading partners.
The president has also teased reciprocal tariffs set to take effect April 2 — which the president has called “liberation day” — which will hit trading partners with the same tariffs they levy on the U.S.
Stop saying a value-added tax is an export subsidy - Brian Albrecht, Economic Forces. "Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a 'ball and chain' when they go compete in foreign markets."
What Trump’s Auto Tariffs Mean for Car Buyers and Automakers - Christopher Otts, Ryan Felton, and Sean McLain, Wall Street Journal:
It is very likely. Car prices are almost certain to increase if the tariffs remain in place. Automakers and parts manufacturers can absorb some of the added costs but not all, and they are likely to pass some increases on to the consumer.
On average, vehicle prices could rise 11% to 12% to offset tariff duties, Morgan Stanley analysts wrote in a note released Thursday.
Trump Warned U.S. Automakers Not to Raise Prices in Response to Tariffs - Josh Dawsey and Ryan Felton, Wall Street Journal:
“Tariffs, at any level, cannot be offset or absorbed,” Ray Scott, chief executive of parts supplier Lear, wrote in an email Tuesday to employees that was viewed by The Wall Street Journal. “A holistic, industrywide approach will be necessary to mitigate the impact.”
For now, dealers have stockpiled a two- to three-month supply of new cars, meaning the impact of the tariffs might not start to be felt until May.
EU looks to hit US services in tariff retaliation - Andy Bounds, Barbara Moens, and Henry Foy, Financial Times:
“Services is where the US is vulnerable,” a second diplomat said. Washington ran a €109bn trade surplus with the EU in services in 2023, compared with a €157bn deficit in goods.
Trump's New Car Tariffs Are a $100 Billion Tax Increase No One Wants - Eric Boehm, Reason. "Whatever the final figure turns out to be, these new tariffs will be a significant disruption for the auto industry in the U.S., which employs more than 7 million people. Even before Wednesday's announcement, industry insiders projected lower sales and economic disruptions due to Trump's other tariffs (and tariff threats). Cox Automotive projects that there will be 700,000 fewer cars sold in America this year, a 4.3 percent decline from last year's total, as Americans pull back on spending due to the higher prices created by tariffs."
Meanwhile in Congress
Budget Vote in Senate Could Occur Next Week, but Hurdles Remain - Cady Stanton and Doug Sword, Tax Notes ($):
...
The House and Senate each adopted their own budget resolutions in recent months with wildly different instructions for a reconciliation bill. Leadership in the two chambers has appeared to agree that their compromise version — now expected to be one large bill rather than the Senate’s original two-bill plan — should include a debt limit increase.
How Republicans are planning to structure their budget resolution - Jake Sherman, Laura Weiss, Andrew Desiderio, and John Bresnahan, Punchbowl News:
...
GOP congressional leaders want to set the Senate’s spending cut target low enough to make rank-and-file Senate Republicans comfortable and give them lots of options down the line. The Senate is stressing the need for wiggle room which, crucially, will help ensure compliance with the so-called Byrd Rule in the next — and more complicated — phase of the arcane reconciliation process.
At the same time, Republican leaders need to make the House instructions high enough to give conservatives hope that Congress will somehow enact trillions of dollars in spending reductions.
Repealing Only Two Biden-Era Tax Credits Could Cement Permanent Pro-Growth Tax Cuts - Adam Michel and Joshua L Loucks, Liberty Taxed. "As Republicans work to repeal or revise the IRA credits in reconciliation, it is critical that the JCT properly accounts for the full cost of the credits outside the budget window. By 2034, the ITC and PTC alone will cost about $130 billion per year—enough to permanently finance four of the most pro-growth tax cuts under consideration.
Related: IRA Credits Remain in Place Despite Mixed Signals
Employee Retention Credit Update
As time runs out for pandemic-era ERC, IRS adds 5 FAQs - Martha Waggoner, The Tax Adviser. "While the IRS goes into more detail, the short answer to the first question, about whether the ERC can affect an income tax return, is yes."
Related: IRS provides new flexibility in reporting ERC income adjustments
Blogs and Bits
How to file when missing your earnings' statements - Kay Bell, Don't Mess With Taxes:
Most of these documents — notably W-2 and/or myriad 1099 forms — were required to be issued by Jan. 31. Even given issues with the U.S. Postal Service, it’s well past time for the material to have arrived.
So, what now?
What to do if you can’t pay the taxes you owe - Cora Lewis, The Hill. "If you don’t file a return or ask for an extension, then interest and penalties begin to accrue immediately. Those costs are largely avoidable if you share the information about your circumstances with the IRS in a timely way. Filing a return without paying taxes owed in full is preferable to not filing."
Related: Eide Bailly IRS Collection Issues Services
District Court: Willful FBAR Penalties Are Excessive As To Surviving Spouse - Parker Tax Pro Library. "A district court held that $2 million in penalties assessed against a taxpayer for willfully failing to file Reports of Foreign Bank Accounts (FBARs) survived the taxpayer's death and were not unconstitutional excessive fines with respect to the deceased taxpayer. However, the court further held that the penalties were excessive with respect to the deceased taxpayer's surviving spouse and therefore, government was entitled to recover them only from the deceased taxpayer's estate."
Tax News & Views International Weekly: Waiting for Retaliation - Alex Parker, Eide Bailly. "Last Friday marked 60 days since President Trump took office. That was the deadline for the U.S. Treasury Department to draw up a report on potential retaliatory measures against the Organization for Economic Cooperation and Development’s 15% Pillar Two global minimum tax, according to an executive order Trump issued on his first day."
We May Be Watching The Death Of The Federal Income Tax - Howard Gleckman, TaxVox. "The actions of President Trump combined with early policy initiatives in Congress threaten to kill the federal income tax. If these efforts continue unabated, the current revenue system could collapse, opening the door to two stated goals of many Trump supporters—deep federal spending cuts and some form of consumption tax."
IRS Seeks to Enjoin Monetized Installment Sale Promoter
IRS Sues Idaho Firm to Stop Abusive Monetized Installment Sales - John Woolley, Bloomberg ($). "Stanley Crow and his firm, S. Crow Collateral Corp., must stop selling monetized installment sales to customers because they unlawfully defer capital gains tax due on the sale of appreciated assets like real estate, the IRS told the US District Court for the District of Idaho."
Related: Eide Bailly Transaction Advisory Services
How to get caught
Operator of Fraudulent Investment Vehicle Sentenced to Over 15 Years in Prison for Securities Fraud, Tax Fraud and Other Charges - US Department of Justice (Defendant name omitted, emphasis added):
According to court documents and statements made in court, Defendant, of Philadelphia, engaged in a scheme to defraud investors using a fraudulent investment vehicle known as Par Funding. In total, Defendant and his co-conspirators caused an actual loss to investors exceeding $288 million.
Defendant also engaged in a series of federal tax crimes. Defendant and co-conspirators diverted approximately $20 million in taxable income from Par Funding to another entity controlled by Defendant and nominally owned by another, then filed false tax returns that did not report this income. He also received more than $9 million in cash kickbacks from a customer of Par Funding and did not report this income to the IRS on his individual tax returns. As a result, Defendant’s individual tax returns for the years 2016 through 2018 were false. He also paid off-the-books, cash wages to some employees of Par Funding. He did not report these wages to the IRS and did not pay employment taxes on wages paid to employees in cash. The total federal tax loss stemming from Defendant’s crimes exceeds $8 million. He also caused $1.6 million in state tax loss to the Pennsylvania Department of Revenue by falsely reporting that he and his wife were residents of Florida from 2013 through 2019, when in fact they resided in Pennsylvania.
Every time you pay an employee in cash "off the books," you create a potential informant.
What day is it?
It's National Black Forest Cake Day and National Something on a Stick Day. Bonus points for deep-fried black forest cake on a stick.
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