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IRS

Trump Picks Investigator Behind Hunter Biden Tax Case as IRS Acting Leader – Richard Rubin & C. Ryan Barber, Wall Street Journal:

President Trump named Gary Shapley—the IRS criminal investigator who criticized the government for its handling of Hunter Biden’s tax filings—as the tax agency’s acting commissioner, according to a memo viewed by The Wall Street Journal.

Shapley is the Internal Revenue Service’s fourth leader in less than four months as the Trump administration rapidly shrinks the agency. During the Biden administration, Shapley rose to prominence as an IRS supervisory criminal agent who came forward to Congress and contended that the Justice Department had slow-walked its tax investigation into Hunter Biden.

Biden Whistleblower Tapped as Acting IRS Commissioner – Benjamin Valdez, Tax Notes ($):

Former IRS special agent Gary Shapley, recently promoted by the Trump administration, will be the next acting commissioner of the IRS, according to the Treasury Department.

…

Shapley, along with IRS special agent Joseph Ziegler, drew national attention in 2023 for alleging that the Justice Department was stonewalling a tax evasion investigation into Hunter Biden for political reasons. He also accused the IRS of retaliation against him for his testimony.

IRS’s Latest Acting Chief Cut His Teeth on Swiss Banking Probes – Kim Dixon, Bloomberg ($):

The IRS is set to have its fourth leader since the beginning of the year after the Trump administration named Gary Shapley as acting commissioner
Current Acting Commissioner Melanie Krause will step down in mid-May after a clash over the IRS sharing tax information with the Department of Homeland Security in a bid to deputize the agency for immigration enforcement. Krause took over for longtime IRS executive Doug O’Donnell, who stepped in for former Commissioner Danny Werfel, who resigned after President Donald Trump said he’d nominate his own chief, breaking precedent.

Hunter Biden Tax Probe Critic Named Acting IRS Chief – Kat Lucero, Law360 ($):

An Internal Revenue Service special agent who accused the U.S. Department of Justice of misconduct in an investigation of former President Joe Biden's son Hunter has been named the acting IRS commissioner, a U.S. Treasury Department spokesperson confirmed Wednesday.

Tribal Credits Sponsor Says Lawmakers Aim to Sabotage IRS Pick – Erin Schilling, Bloomberg ($). “A company that has sold tax credits the Treasury Department and IRS have said don’t exist says the program is legitimate, and that Democrats are trying to sabotage Billy Long’s nomination as IRS commissioner by calling for a criminal investigation.”

Tariffs

California Officials Sue Trump Administration Over Tariffs – Paul Jones, Tax Notes ($):

California’s governor and attorney general have filed a lawsuit to overturn the Trump administration’s tariffs on the grounds that Trump lacked the authority to impose them.

“The President’s chaotic and haphazard implementation of tariffs is not only deeply troubling, it’s illegal,” said California Attorney General Rob Bonta (D) in an April 16 news release from Gov. Gavin Newsom (D) announcing the lawsuit, California v. Trump. “As the fifth largest economy in the world, California understands global trade policy is not just a game.”

China's Long-Term Prospects Unfazed by Tariffs, Official Says – Kevin Pinner, Law360 ($). “China's long-term prospects are unfazed by U.S. tariffs because of its industrial resilience, diversified trade and shift toward domestic consumption, a Chinese government official said Wednesday as the country posted 5.4% year-on-year growth in gross domestic product during the first quarter of 2025.”

Direct File

Plans To Shelve IRS Direct File Draw Democrats' Ire – Asha Glover, Law360 ($):

The Trump administration's decision to shutter the Internal Revenue Service's Direct File pilot program was criticized heavily by congressional Democrats, who argued on Wednesday that the program was remarkably successful.

The end of the IRS' free online tax-filing program, known as Direct File, represents the intention of President Donald Trump's administration to make tax filing more expensive and difficult, said Senate Finance Committee ranking member Ron Wyden, D-Ore. He was responding to news first reported by the Associated Press that the program will not be available for the 2026 tax season.

Shuttering Direct File Is a Loss for Taxpayers, Advocates Say – Benjamin Valdez, Tax Notes ($). “Treasury’s decision to shut down Direct File, which allows some taxpayers to file for free through the IRS, is taking away a cost-effective filing option for taxpayers, according to proponents of the tool.”

Harvard’s Tax-Exempt Status

Can Trump revoke Harvard’s tax-exempt status? What to know about the law. – Praveena Somasundaram, Washington Post:

The Trump administration is moving to revoke Harvard University’s tax-exempt status, a designation that has allowed the Ivy League school, like the vast majority of universities, churches and charities, to avoid paying federal income tax.

President Donald Trump first made the suggestion in a Truth Social post Tuesday, proposing that “perhaps” Harvard should lose the status and instead be taxed as a “Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting ‘Sickness?’ ”

Trump administration asks IRS to revoke Harvard’s tax-exempt status – Jacob Bogage & Jeff Stein, Washington Post:

The Trump administration has asked the Internal Revenue Service’s top attorney to revoke Harvard University’s tax-exempt status, according to three people familiar with the situation, amid President Donald Trump’s row with the institution over its handling of antisemitism and diversity practices.

The directive is a significant escalation of the president’s feud with Ivy League institutions and other nonprofit groups his administration views as “woke,” according to the people, who spoke on the condition of anonymity because they were not authorized to discuss the topic.

Harvard Sees ‘Grave Consequences’ as Trump Pushes IRS Action – Janet Lorin, Bloomberg ($):

Harvard University pushed back against the US government after President Donald Trump said the school should lose its tax-exempt status, warning that such a move would endanger its ability to carry out its mission and threaten higher education in America.

“There is no legal basis to rescind Harvard’s tax-exempt status,” university spokesman Jason Newton said in a statement, adding that such a move would damage Harvard’s medical research efforts and ability to offer financial aid for students. He also cautioned that using this “instrument” would have “grave consequences for the future of higher education in America.”

I.R.S. Is Said to Be Considering Whether to Revoke Harvard’s Tax-Exempt Status – Andrew Duehren & Maggie Haberman, New York Times:

The Internal Revenue Service is weighing whether to revoke Harvard’s tax exemption, according to three people familiar with the matter, which would be a significant escalation of the Trump administration’s attempts to choke off federal money and support for the leading research university.

President Trump on Tuesday publicly called for Harvard to pay taxes, continuing a standoff in which the administration has demanded the university revamp its hiring and admissions practices and its curriculum.

Trump Administration Asks IRS to Start Process to Revoke Harvard’s Tax-Exempt Status – Brian Schwartz & Douglas Belkin, Wall Street Journal:

The Trump administration has requested that the Internal Revenue Service start the process of revoking Harvard University’s tax-exempt status, according to people familiar with the matter.

Officials at the Treasury Department asked the IRS’s acting chief legal counsel, Andrew De Mello, to move ahead with a plan to revoke Harvard’s key status, which lets donors get tax deductions for contributions and keeps the university from paying taxes on any net earnings. Harvard is exempt from federal income tax as it operates as a 501(c)(3) educational institution.

What Is Tax-Exempt Status and Can the I.R.S. Revoke It From Harvard? – Matthew Mpoke Bigg & John Yoon, New York Times:

Harvard, like many American colleges and charities, enjoys a federal tax exemption, a status granted by the Internal Revenue Service that allows the wealthy Ivy League university to forgo paying perhaps hundreds of millions of dollars a year in taxes.

The I.R.S. is now weighing whether to revoke Harvard’s tax exemption, according to three people familiar with the matter, as the Trump administration demands that the university make changes to its hiring, admissions and curriculum policies.

Millionaire Tax Hike

GOP Senator McCormick Says Millionaire Tax Hike Won’t Fly – Alicia Diaz & David Westin, Bloomberg ($). “Republican Senator Dave McCormick predicted a higher tax rate on millionaires won’t fly with the GOP-controlled Congress, throwing cold water on a proposal gaining support in the White House and among some of his fellow lawmakers.”

SALT Deduction

Congress Is Prioritizing SALT Break That Few Americans Claim – Mathieu Benhamou & Erik Wasson, Bloomberg ($):

The state and local tax deduction — the subject of one of the most contentious fiscal fights in Congress — is a write-off that most Americans will never claim, even in the districts of the lawmakers fighting hardest to increase the tax break, data analyzed by Bloomberg News shows.

Congress will draft its multitrillion tax cut proposal in the coming weeks, and the priorities of a small minority of high-earning constituents in a handful of districts in New York, New Jersey and California will almost certainly be reflected in the final version.

Energy Credits

Home Energy Tax Credit Crucial for Managing Grid, Analysis Finds – Kellie Lunney, Bloomberg ($):

A tax credit providing incentives for more energy-efficient homes can free up the crowded electricity grid, as energy-hungry data centers proliferate across the US, a nonprofit group says.

States like Arizona and Texas, among the most popular hubs for artificial intelligence data centers, would experience a yearly reduction in peak energy demand from more use of the 25C Energy Efficient Home Improvement Tax Credit, Rewiring America found in research released Thursday and obtained exclusively by Bloomberg Government. The group advocates for more electrification in the US.

In the Courts

Hedge Fund Loses Basket Option Fight in Tax Court – Mary Katherine Browne, Tax Notes ($). “A hedge fund mischaracterized its basket option contracts as call options to defer paying tax and allow its options to be taxed at the lower long-term capital gains rate, the Tax Court held.”

Tax Court Says Hedge Fund Basket Options Abused Tax Perks – Kat Lucero, Law360 ($). “A Connecticut-based hedge fund has engaged in a complex stock-selling strategy using option contracts that the Internal Revenue Service had determined to be an abusive scheme to avoid paying high taxes on the capital gains, the U.S. Tax Court said Wednesday.”

DC Judge Considers Bid to Block IRS Info Sharing With ICE – Ali Sullivan, Law360 ($). “A D.C. federal judge on Wednesday questioned whether immigrant advocacy groups have standing to block a tax information-sharing agreement between the IRS and immigration enforcement agencies, but she also outlined concerns that the agreement could be abused.”

3rd Circ. Affirms 51 Months for False Tax Return Filings – Asha Glover, Law360 ($). “The Third Circuit affirmed Wednesday a 51-month sentence of a woman who embezzled more than $1.6 million from her employer and pled guilty to wire fraud and filing false tax returns, rejecting her claim that the U.S. government breached her plea agreement.”

Hedge Fund Liable for Deutsche Bank Securities Tax Deferment – John Woolley, Bloomberg ($). “A hedge fund’s treatment of securities nominally owned by Deutsche Bank AG should be disregarded because the fund directed their trade, validating US income adjustments imposed on the fund, the US Tax Court ruled Wednesday.”

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Tax News & Views IRS Cheese Ball Roundup

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