Key Takeaways
- The Shepley Era at IRS ends after three days.
- Deputy Treasury Secretary Faulkender will do double duty as acting IRS head.
- DOGE figure Kliger loses IRS access.
- Trump battle with Harvard is really over ability to direct IRS.
- Tariffs and farmers.
- A Trump tax hike?
- The tax law and baseball salaries.
- Keep off the grass. And the hemp.
Head of I.R.S. Is Ousted in Treasury’s Power Struggle With Elon Musk - Jonathan Swan, Andrew Duehren, Alan Rappeport and Maggie Haberman, New York Times:
Mr. Bessent’s deputy, Michael Faulkender, will be the new acting leader, replacing Gary Shapley, the Treasury Department confirmed on Friday. Mr. Faulkender will be the third acting leader of the agency this week.
Bessent Replaces Acting IRS Commissioner in Musk Power Struggle - Stephanie Lai, Bloomberg via MSN:
The switch means that the IRS will now have its fifth acting commissioner since Trump took office less than 100 days ago — and its third in less than a week. The agency’s previous head, Melanie Krause, resigned after the Treasury Department agreed to provide taxpayer data to help Immigration and Customs Enforcement facilitate deportation efforts, despite longstanding privacy rules.
Trump to Replace Acting IRS Commissioner - Richard Rubin, Brian Schwartz and Tarini Parti, Wall Street Journal:
Faulkender to Serve as Both IRS Commissioner and Deputy Secretary - Benjamin Valdez, Tax Notes ($). Treasury Deputy Secretary Michael Faulkender, who’s set to take over as acting IRS commissioner, will have a lot on his plate while serving in both roles, according to a former commissioner who once did the same."
Other Tax Administration News
With Harvard Threat, Trump Tries to Bend the I.R.S. to His Will - Andrew Duehren, Alan Rappeport and Russ Buettner, New York Times:
But President Trump has moved swiftly to suppress that independence in the first few months of his second term and, tax experts and former agency officials warn, return the I.R.S. to darker days when it was used as a political tool of the president.
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Federal law bars the president from ordering the I.R.S. to conduct specific tax investigations. A White House spokesman has said the agency’s scrutiny of Harvard began before the president’s social media post. Mr. Trump said Thursday that he did not believe the I.R.S. had “made a final ruling.”
Trump’s war on Harvard - Matthew Yglesias, Slow Boring. "Part of Trump’s point with these threats, though, is that if you lose a bunch of money in the short term and then need to fight costly legal battles to get your money back, that’s still significant financial losses for you and your stakeholders."
Related: Eide Bailly Exempt Organization Tax Services.
Trump’s Deregulatory Moon Shot Stretches Rulemaking Authority - Robert Iafolla, Bloomberg ($):
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The White House’s argument—that agencies finding rules unlawful provides the good cause needed under the Administrative Procedure Act to skip notice-and-comment rulemaking requirements—would go beyond what courts have allowed, administrative law professors and former agency lawyers said.
“You’re talking about gutting the Administrative Procedure Act,” said Kristin Hickman, a University of Minnesota administrative law scholar.
Trump Publicly Questions Tax-Exempt Status of Ethics Watchdog - Fred Stokeld, Tax Notes ($):
During an April 17 exchange with reporters at the White House, Trump suggested that it might be time for the IRS to review the exempt status of Citizens for Responsibility and Ethics in Washington (CREW), which has filed lawsuits against the administration, including one to block the president’s plan to fire government workers.
IRS Whistleblower Office Issues Operating Plan - Tyrah Burris and Benjamin Valdez, Tax Notes ($). "The operating plan, released April 18, is centered around six priorities: enhancing the claim submission process; using whistleblower information effectively; issuing whistleblower awards fairly and quickly; keeping whistleblowers updated on their claims; safeguarding whistleblower and taxpayer data; and supporting IRS employees with program tools, technology, and training."
Today in Tariffs
China Is Finding Ways to Replace American Farmers - Kevin Draper and Jack Nicas, New York Times:
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The only thing that prevented ruin for American farmers during the last trade war was a $23 billion government bailout program. The Trump administration is again contemplating an agriculture bailout — a tacit acknowledgment that retaliatory tariffs will hurt farmers — but there is no guarantee it would make up for all losses.
Tomatoes Become One of the First Everyday Casualties of Trade War - Kristina Peterson, Wall Street Journal:
Agricultural economists said the Trump administration’s move is likely to increase prices for consumers, since roughly 70% of tomatoes sold in the U.S. are currently brought in from Mexico. Officials in Mexico said this week they hope to renegotiate the agreement before it goes into effect.
Congress is Still A Thing
Capitol Hill Recap: The Trump Tax Hike? - Alex Parker, Eide Bailly:
So it’s been a bit of a surprise to see many indications that the White House and President Trump are considering letting the top individual income tax rate rise next year, even as they draw up legislation to stop the rest of the Tax Cuts and Jobs Act expirations from going into force. The rate, set to 37% right now, will rise to 39.6% in 2026 unless Congress changes the current law.
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But there still are a lot of reasons to be skeptical that this could end up in the final bill.
Republicans eye 4-year extension for key Trump tax priorities - Punchbowl News The Vault ($). "The White House is looking at a four-year timespan for President Donald Trump’s promise to get rid of taxes on tips, overtime pay and Social Security benefits."
Trump economic chief predicts tax bill will pass by summer - Benjamin Guggenheim, Politico:
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The timeline set by Hassett lines up approximately with House Speaker Mike Johnson’s aspirations to pass President Donald Trump’s policy agenda by Memorial Day. It’s a very ambitious goal, though, given that there are major outstanding differences between how Senate and House Republicans have proposed extending trillions of dollars in expiring tax cuts from Trump’s first term.
Tariffs add a new twist to the tax fight for blue-state Republicans - Kadia Goba, Semafor. "If Congress’ tax debate drags out past Republican leaders’ Memorial Day deadline, it risks bumping up against the expiration of the 90-day pause Trump put on many of his tariffs. The more negative economic effects are felt from Trump’s tariffs, tax analysts say, the more uncertain his grip on congressional Republicans will become."
Blogs and Bits
The long history, and future of, tax cheating - Kay Bell, Don't Mess With Taxes. "The latest example of tax cheating’s long history is a manuscript discovered in the Judean desert decades ago, but only recently analyzed."
The Millions Breathe A Sigh Of Relief After Tax Day Edition - Kelly Phillips Erb, Forbes. "No matter how you filed your taxes this season, you need to keep great records–but for how long?"
School Board Chair Is Personally Liable for School's Unpaid Payroll Taxes and Penalties - Parker Tax Pro Library. "The Ninth Circuit affirmed a district court and held that the chairperson of a private school was a responsible person and thus personally liable for $187,900 in unpaid trust fund taxes and related penalties."
Remit the payroll taxes. No other creditor is harder to shake.
Micromanaging Salaries via the Tax Code - Baseball Edition.
Atlanta Braves Face $19 Million Tax-Hike Battle Over Player Pay - Bill Allison, Bloomberg via MSN:
Privately held teams like the New York Mets, owned by Point72 Asset Management founder Steve Cohen, and billionaire John Middleton’s Philadelphia Phillies, won’t get hit by the tax. The Mets, for example, can deduct every dime paid to outfielder Juan Soto, a free agent lured from the New York Yankees with a record-setting $765 million, 15-year contract.
This results from an expansion of Code Section 162(m), first enacted in 1993 to limit deductions for public company executive compensation to $1 million. This had an unintended, but easily predicted, effect of moving compensation to forms not covered by the limit, such as stock options. As non-public companies were not covered by Sec. 163(m), it skews the market for executive compensation. The $1 million cap hasn't been adjusted for inflation, so it is now about $456,000 in 1993 dollars.
When a corporation gets a deduction for executive compensation at a 21% tax benefit, the executive pays tax on the amount at a 39.35% rate. It's perverse for the tax law to discourage this.
Any sports fan knows some players are worth a lot more than others. That's also true of executives. Congress has no more business managing public company executive pay via the tax law than it does setting Ronald Acuña Jr.'s salary.
What day is it?
Today is both International Hemp Day and Keep off the Grass Day. Talk about mixed messages.
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