Key Takeaways
- “We are standing down the Transformation and Strategy Office."
- 50 IRS IT employees placed on leave.
- IRS Global High Wealth unit employee count down 38% - report.
- "Liberation Day" tariffs remain unclear.
- "Trump pushes aides to go bigger on tariffs."
- Tariff price increases for screws, cars, beer.
- Emailing your tax documents is a Bozo no-no.
- National Tater Day.
IRS to Close Modernization Office - Benjamin Valdez, Tax Notes ($):
“We are standing down the Transformation and Strategy Office (TSO),” Krause said in a March 28 email to IRS employees. “During this transition, we are reviewing projects and initiatives under the IRS Strategic Operating Plan to determine their status and ensure alignment with future priorities.”
The transformation office, formed following enactment of the IRA, was responsible for coordinating the implementation of modernization projects funded by the IRA and was staffed by employees detailed from various IRS business units. Those employees are expected to return to their original teams.
Dozens of IRS Information Technology Workers Are Put on Leave - Erin Slowey, Bloomberg ($):
The move comes ahead of more sweeping prospective agency cuts. Initial administration plans called for an overall cutback of 18% of the IRS’s workforce by May 15.
If they are replacing IRS humans with technology, this is a bold approach.
The IRS unit that audits billionaires has lost 38% of its employees since January, new data shows - Spencer Woodman, ICIJ. "The Global High Wealth unit is a relatively small IRS office — now composed of 220 employees — and is a destination for highly experienced agents. The unit is tasked with some of the agency’s hardest work: auditing individuals whose income or assets reach into the tens of millions of dollars and beyond. The unit appears to have been hit particularly hard by last month’s terminations because it had been a hiring priority under the Biden administration and had a large share of newer employees who were still on probationary status, the new data shows."
"Liberation Day" Looms.
Trump officials, allies grow anxious about April 2 tariffs - Rachael Bade, Daniel Desrochers, and Victoria Guida, Politico:
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Part of that is because Trump continues to threaten to plow ahead with an expansive tariff rollout, siding with the trade protectionists in his administration despite warnings from other advisers of the negative economic impacts. Inflation rose at a higher-than-expected rate last month, the Commerce Department disclosed on Friday, even before the potential onslaught of higher prices from the sweeping tariffs.
Tariffs test Trump relationships - Morgan Chalfant and Burgess Everett, Semafor. "Trump has set a Wednesday deadline for reciprocal tariffs, while the first auto imports tariffs are slated to take effect the following day. When it comes to their scope, uncertainty reigns: Trump had suggested the tariffs would have some exemptions, but told reporters Sunday the levies would hit “all countries.” The Washington Post also reported that he has revived his idea of a universal tariff. A maximally aggressive approach would set Trump on a collision course with US allies, businesses, and congressional Republicans."
Trump pushes aides to go bigger on tariffs as key deadline nears - Jeff Stein and Theodoric Meyer, Washington Post:
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The option viewed as most likely, publicly outlined by Treasury Secretary Scott Bessent this month, would set tariffs on products from the 15 percent of countries the administration deems the worst U.S. trading partners, which account for almost 90 percent of imports. Trump has also moved forward with other tariffs that apply to imports from every country, but only on specific sectors. Trump applied 25 percent tariffs to all automobile imports on Wednesday and has suggested similar measures for the pharmaceutical and lumber industries, among others.
Tightening the Tariff Screws
Tariffs on Screws Are Already Hitting Manufacturers - Bob Tita and Ryan Felton, Wall Street Journal. "That has set off a hunt to find domestic supplies of some of manufacturing’s smallest components. Tariffs on imported steel and aluminum are already driving up the costs of foreign and domestic metal used to make those components. Manufacturing executives said the U.S. doesn’t have the plants to churn out the amount of steel wire or screws and other fasteners needed to displace imports."
Affordable compact cars could be first to see rising prices from tariffs - Abha Bhattarai, Washington Post:
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“Even if you’re thinking, ‘I’ll just go buy the most American car I can think of — a Ford F-150,’ it’s really not that simple,” said Joseph Yoon, consumer insights analyst at the automotive research site Edmunds. “Half the parts on that truck are from Canada or Mexico.”
Trump says he ‘couldn’t care less’ if auto prices rise because of his tariffs - Cleve Wootson Jr., Washington Post:
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According to a fact sheet released by the White House on Wednesday, the tariffs “will be applied to imported passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans) and light trucks, as well as key automobile parts (engines, transmissions, powertrain parts, and electrical components), with processes to expand tariffs on additional parts if necessary.” Vehicles that are subject to the free trade agreement with Mexico and Canada will be taxed only on the non-U. S. portion of their components.
Buzzkill: Trump’s trade wars threaten America’s craft brewers already reeling from changing tastes - Dee-Ann Durbin and Paul Wiseman, Associated Press. "For Port City, the biggest threat comes from the looming tariff on Canadian imports. Every three weeks, the brewery receives a 40,000-pound truckload of pilsner malt from Canada, which goes into a 55,000-pound silo on the brewery’s grounds. Butcher said he can’t find malt of comparable quality anywhere else."
In Congress
House to Vote on Tax Administration, Disaster Deadline Bills - Cady Stanton, Tax Notes ($):
H.R. 517, introduced by Ways and Means Committee member David Kustoff, R-Tenn., would extend filing relief for states affected by natural disasters once a governor declares a disaster or state of emergency alongside the Federal Emergency Management Agency. The bill also would extend the mandatory filing extension from 60 days to 120 days.
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A bill, H.R. 1152, by Ways and Means member Darin LaHood, R-Ill., would add electronic transmission of payments to the IRS’s “mailbox rule,” which says a document or payment is deemed to be filed or paid on the date of the postmark stamped on the envelope. The legislation would allow for the date on electronic returns or payments to be considered the date of delivery and permit the payment to be considered timely regardless of when the IRS receives the return or payment.
Senate Aims to Advance Trump Tax Agenda While Postponing Spending-Cut Fight - Richard Rubin, Wall Street Journal:
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The GOP is also awaiting a key ruling by the Senate parliamentarian on whether lawmakers can count extensions of expiring tax cuts as cost-free. That move could make it easier, procedurally, to make tax cuts permanent. Democrats decry that maneuver as “magic math,” and they criticize Republicans’ plans to extend tax cuts that aid higher-income Americans while paring back health programs such as Medicaid.
Uber, DoorDash Want ‘No Tax on Tips’ to Include Their Drivers - Richard Rubin, Wall Street Journal. "The leading tax-free tips proposal, from Sen. Ted Cruz (R., Texas) and Rep. Vern Buchanan (R., Fla.), would let many restaurant and casino workers claim the deduction. But Uber and other ride-share drivers are typically independent contractors, not employees, and they receive Form 1099, not Form W-2, to detail their income and then report that money—minus expenses—as business profits. They wouldn’t be eligible under the bill."
Blogs and Bits
IRS-CI continues pursuit of COVID-connected tax criminals - Kay Bell, Don't Mess With Taxes. "The tax agency’s law enforcement arm announced this week that so far it has launched 2,039 tax and money laundering cases related to COVID fraud, with attempted fraud in these cases totaling $10 billion."
Tax Breaks: The End To Tax Season Is Just Around The Corner Edition - Kelly Phillips Erb, Forbes. "Speaking of paying taxes, there are just two weeks left in Tax Season. I imagine that many of you are scrambling to finish up. Not ready? Don’t panic, simply file for an extension–but remember to make a payment with your request since an extension only extends the time to file and not the time to pay."
Ninth Circuit Affirms Willful Failure to Pay Trust Fund Taxes: A Case Study for CPAs - Ed Zollars, Current Federal Tax Developments. "This case underscores the stringent standards for demonstrating a lack of willfulness in failing to pay over employee withholding taxes."
Eleventh Circuit Finds Taxpayer's Payments to Ex-Spouse Were Not Deductible Alimony - Parker Tax Pro Library. "For divorce or separation instruments executed before 2019, the Code distinguished between alimony payments and transfers pursuant to a division of property."
Bozo Tax Tip #10: Email You Social Security Number, ITIN, or EIN! - Russ Fox, Taxable Talk:
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A friend told me, “Well, I’m not emailing my social, I’m just attaching my W-2 to the email.” An attachment is just as likely to be read as an email. Just say no to emailing your social security number. And if you have an ITIN, emailing that is bad, too.
The Trouble With Cash
IRS Criminal Investigation Division Releases New Bank Secrecy Act Data - Tyrah Burris, Tax Notes ($):
Between fiscal years 2022 and 2024, the agency reported that 87.3 percent of the investigations recommended for prosecution were related to BSA filings, according to a March 28 CI release.
Cash transactions of $10,000 or more trigger Form 8300 filings. Banks are required to flag as "suspicious" transactions that appear to be designed to dodge the $10,000 threshold.
From the IRS report:
BSA data has also proven effective in helping IRS-CI combat narcotics trafficking and pandemic-era tax fraud. Since FY20, IRS-CI used BSA data to initiate nearly 1,300 investigations with ties to fentanyl and investigate alleged employee retention credit fraud totaling $5.5 billion.
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