Key Takeaways
- Trump: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
- Bessent defiant.
- Tumult "roils GOP agenda."
- "Fewer choices and higher prices."
- Senate budget plan faces chilly reception in House.
- IRS plans to eliminate 20,000 positions.
- Disaster areas in 12 states have May 1 deadline for 2024.
- National Coffee Cake Day.
Trump Says Tariffs Will Stay Until Trade Deficit Disappears - Tony Romm and Ana Swanson, New York Times:
His comments indicated that the steep import taxes that have panicked global businesses and investors would be in place for the long run.
“Hundreds of billions of dollars a year we lose with China,” Mr. Trump told reporters on Air Force One. “And unless we solve that problem, I’m not going to make a deal.” He added that he was “willing to deal with China, but they have to solve their surplus.”
Bessent Defiant on Tariffs as He Rejects a US Recession - Shawn Donnan, Bloomberg via MSN. "Bessent — along with Commerce Secretary Howard Lutnick and White House trade czar Peter Navarro in separate comments — gave no indication that President Donald Trump was willing to back down on the sweeping new tariffs he introduced last week. He said more than 50 countries had called the administration seeking negotiations, but any talks are going to take time. "
Golfing while the world burns - Jack Blanchard, Politico:
The question everyone’s asking: Is there a level of market pain that would make Trump pause the tariff rollout? “I think your question is so stupid,” Trump told a reporter on Air Force One who asked that last night. “I don’t want anything to go down, but sometimes you have to take medicine to fix something.” Watch (and maybe bookmark) the clip.
Reaction
Trump’s Tariffs Generate Tons of Criticism as Uncertainty Abounds - Michael Smith and Sarah Paez, Tax Notes ($):
The report said the tariffs are “economic self-immolation" that will “inevitably harm the economy.” It compared them to the rates “imposed by the infamous Smoot-Hawley Act, which is widely blamed for prolonging the Great Depression."
Tariff tumult roils GOP agenda - Mia McCarthy and Lisa Kashinsky, Politico. "Republican Rep. Don Bacon is set to introduce legislation today that would wrest back Congress’ authority to approve tariffs. Rep. David Valadao, a California Republican, is signaling he’ll support it. In the Senate, six Republicans have signed onto the companion bill led by Sen. Chuck Grassley."
Chaos on tariffs. Doubts on Trump’s agenda. - Jake Sherman and Andrew Desiderio, Punchbowl News:
Trump wants to eliminate trade deficits with the world. That’s his goal. It may be time to listen to what he says and believe it.
Tariff Effects
China Issues Tariffs, WTO Challenge To Hit Back At Trump - Alex Lawson, Law360 Tax Authority ($): "Beijing is set to be hit with a 34% across-the-board tariff under Trump's plan unveiled Wednesday, on top of a slew of levies the country is facing under prior policy announcements. As part of its response, China's State Council announced a 34% tariff on "all imported goods originating from the United States," slated to take effect on April 10."
‘Fewer Choices and Higher Prices’: The Supply Chain of the Future - Liza Lin and Tom Fairless, Wall Street Journal. "'One thing is clear: Moving back to the U.S. at scale to avoid tariffs is not an option,' said Steve Lamar, president of the American Apparel and Footwear Association."
Surging Costs Complicate Plans for New U.S. Factories - John Keilman and Owen Tucker-Smith, Wall Street Journal:
Trump Tariffs: The Economic Impact of the Trump Trade War - Erica York and Alex Durante, Tax Foundation. "The Trump tariffs will reduce after-tax income by an average of 1.9 percent and amount to an average tax increase of more than $1,900 per US household in 2025."
Related: 'Reciprocal' Tariffs Disrupt Transfer Pricing
Senate Passes Budget Resolution; Over to the House.
Republicans Advance Trump’s Tax Cuts After Late-Night Session - Richard Rubin and Siobhan Hughes, Wall Street Journal:
...
But the Senate plan defers important decisions about the depth of spending cuts, and Republicans must eventually hash them out in binding legislation. The framework postpones a reckoning in the tug of war between House conservatives who say spending cuts should be tied to tax cuts and Senate Republicans who are wary of how the House plans might harm rural hospitals and Medicaid beneficiaries.
Senate Adopts Budget Resolution on Tax, Teeing Up House Vote - Doug Sword and Katie Lobasco, Tax Notes ($):
The resolution might face tough sledding in the House, where Republicans’ 220-213 edge allows the loss of no more than three votes to pass legislation. Several House Republicans have taken issue with the Senate’s nontraditional method of scoring the cost of its resolution, and budget hawks have complained that Senate Republicans, while talking about spending cuts, didn’t formally commit to them in the resolution.
At the IRS
IRS will cut 25% of its employees, eliminating its civil rights office - Jacob Bogage and Shannon Najmabadi, Washington Post:
...
The downsizing has raised concerns among tax officials that the government could see a sharp drop in tax revenue this year as tax cheats see opportunities to take advantage of the diminished IRS.
Treasury Department and IRS officials last month projected that tax receipts would show a more than 10 percent decrease by the April 15 filing deadline, compared with the same period in 2024, The Post reported. That would amount to more than $500 billion in lost federal revenue.
Two More IRS Officials Clean Out Their Desks - Fred Stokeld, Tax Notes ($). Rachel Leiser Levy, IRS associate chief counsel (employee benefits, exempt organizations, and employment taxes), announced on her LinkedIn page that her last day at the agency was March 28. Emily Kornegay, chief of staff to acting IRS Commissioner Melanie Krause, also announced she was leaving the agency on April 4 after nearly 21 years of service."
Disaster victims in twelve states have automatic extensions to file and pay their 2024 taxes - IRS:
...
The May 1, 2025, deadline applies to taxpayers affected by FEMA disaster declarations issued during 2024. These include:
- Taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina
- Alaska – The City and Borough of Juneau
- New Mexico – Chaves County
- Tennessee – Carter, Claiborne, Cocke, Grainger, Greene, Hamblen, Hancock, Hawkins, Jefferson, Johnson, Sevier, Sullivan, Unicoi and Washington counties
- Virginia – Albemarle, Appomattox, Bedford, Bland and Botetourt counties; Bristol City; Buchanan, Buckingham, Carroll and Charlotte counties; Covington City; Craig County; Danville City; Dickenson and Floyd counties; Galax City; Giles, Grayson, Greene, Lee, Madison, Montgomery and Nelson counties; Norton City; Patrick, Pittsylvania and Pulaski counties; Radford City; Roanoke City; Roanoke, Russell, Scott, Smyth, Tazewell, Washington, Wise and Wythe counties
Blogs and Bits
File for an extension if you can’t finish your taxes by April 15 - Kay Bell, Don't Mess With Taxes. "All you have to do is file IRS Form 4868, and the tax agency will automatically give you six more months to send in your return."
Lack of Risk Distribution Dooms Microcaptive Insurance Arrangement - Parker Tax Pro Library. "The Tax Court held that an S corporation's microcaptive insurance arrangement did not constitute insurance for federal income tax purposes because (1) the purported microcaptive insurer did not achieve risk distribution and (2) the arrangement did not resemble insurance in the commonly accepted sense."
On the “Reciprocal” Tariff Plan - Jon Murphy, Econlog. "Reader, it is difficult to overstate just how incredibly bad the “Liberation Day” tariff scheme is. Top to bottom, it is incoherent."
Bozo Tax Tip #5: Procrastinate! - Russ Fox, Taxable Talk. "By the way, I strongly suggest you electronically file the extension. The IRS will happily take your extension electronically; many (but not all) states will, too. If you make an extension payment on IRS Direct Pay, the IRS will automatically file an extension for you."
So how was Italy?
Former Palm Beach County Resident Sentenced to Three Years in Prison for Not Filing Tax Returns and Naturalization Fraud - US Department of Justice (Defendant name omitted, emphasis added):
According to court documents and statements made in court, Defendant was an Italian citizen, born in Chile. In 2001, Defendant moved to and began residing in the United States, and in 2012 she became a naturalized U.S. citizen.
Starting with tax year 2005, Defendant stopped filing tax returns or paying taxes on her income to the IRS. From 2011 to 2013, Defendant possessed millions of dollars in assets held in a foreign bank account in Switzerland that earned her hundreds of thousands in interest and dividend income every year. U.S. citizens and permanent residents are required to file with the U.S. Treasury Department a FinCEN Form 114 - Report of Foreign Bank and Financial Accounts (FBAR) if the combined balance of all foreign accounts they own, have a financial interest in or signature authority over is more than $10,000 at any point during a calendar year. For those years, Defendant did not file an annual FBAR reporting her interest in her Swiss bank account.
...
Once Defendant knew she was under criminal investigation, she left the United States for Italy and contested her extradition for over 18 months. But in August 2023, the Italian government ordered Defendant’s extradition to the United States to face charges for her willful failure to file tax returns for tax years 2011 through 2013 and naturalization fraud.
Don't stop filing returns. Even old IRS technology figures that out. And if you have interest and dividend income in six figures, it's a safe assumption that the IRS will eventually notice. File timely, every year.
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It's National Coffee Cake Day! Be a hero, bring me a piece.
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