Key Takeaways
- Tax Legislation
- IRS
- Energy Credits
- Pillar 2
- Transfer Pricing
- TIGTA
- Corporate Reorgs
- In the Courts
- Praline Day
Tax Legislation
Republicans Struggle to Finalize Trump Megabill Mix – Richard Rubin & Siobhan Hughes, Wall Street Journal:
Senate GOP leaders are revising their version in advance of potential votes later this week, searching for a mix that can garner a majority in the chamber, which is divided 53-47. Anything that gets through the Senate must pass the House, which is divided 220-212 in Republicans’ favor; any subsequent House changes would require another Senate vote. Lawmakers are scheduled to leave Washington for a recess next week but could stay to finish the bill.
The House and Senate bills are broadly similar. Both would extend tax cuts scheduled to expire at the end of the year, preventing tax increases on most households. They would also create versions of Trump’s promises to remove income taxes on tips, overtime and Social Security benefits while lowering projected spending on Medicaid and nutrition assistance. The legislation would provide more money for border security and national defense.
Democrats set to target multiple Senate GOP tax provisions – Benjamin Guggenhein, Politico:
That means the critical debate over trillions of dollars worth of proposed GOP tax cuts won’t happen with MacDonough until Tuesday, according to a Senate Democratic aide who was granted anonymity to share details of the private meetings.
Senate GOP to Offer $40,000 SALT Cap With Lower Income Threshold – Erik Wasson & Steven T. Dennis, Bloomberg ($):
Senator Markwayne Mullin of Oklahoma, a key negotiator, said he plans to make the offer late Monday to House Republicans from New York, New Jersey and California.
The House bill, which passed the chamber on a single vote last month, would phase down the break for those with incomes of more than $500,000 in 2025, with the income limit increasing by 1% per year as well. Mullin would not say what his proposed income limit was.
Senate SALT Offer Would Change Income Threshold, Not Cap – Cady Stanton & Doug Sword, Tax Notes ($):
Sen. Markwayne Mullin, R-Okla., who has been serving as the informal negotiating bridge between his caucus and GOP members of the House SALT Caucus on the party’s tax bill, said the changes to the provision won’t be to the $40,000 cap on the deduction.
Senate Limits on Trump’s Tax Priorities Would Save $71 Billion – Katie Lobosco, Tax Notes ($):
A draft text of the Senate bill released June 16 includes caps on the deductions for tipped income and overtime pay and would exclude used cars from the auto loan interest deduction.
The resulting savings would be partially offset by an increase in the expanded deduction for seniors — another tax provision on Trump’s wish list. When considering the four provisions together, the Senate’s proposal would cost $46 billion less than the House-passed version of the bill (H.R. 1) over the 10-year budget window, according to a Joint Committee on Taxation analysis (JXC-29-25) released June 21.
GOP’s Proposed Changes to Low-Income Credit Poised to Swamp IRS – Cole Reynolds, Bloomberg ($):
Both House and Senate versions of the bill would direct the IRS to create a pre-certification program for taxpayers seeking to claim a child for the earned income tax credit and receive a refund of nearly $8,000 in some cases. Taxpayers with and without children in 2024 received about $64 billion worth of EITCs through their 2023 returns, according to the IRS.
JCT More Than Halves Senate Revenge Tax’s Revenue Score – Jonathan Curry, Tax Notes ($):
Estimates of the Senate’s version of the One Big Beautiful Bill Act released by the Joint Committee on Taxation June 21 show section 899 would now bring in just $52.2 billion — a substantial drop from the $116.3 billion originally projected in the House-passed version.
Senate Referee Rejects Federal Workforce Measures in GOP Bill – Ian Kullgren, Bloomberg ($):
The decision by the Senate parliamentarian complicates Republican efforts to weaken some federal workforce protections. Measures that would have raised pension contribution rates for workers who don’t agree to become at-will employees and would have charged federal labor unions cannot pass as part of the larger bill without Democratic support.
Litigation Funders Fight 'Kill Shot' In 'Big Beautiful Bill' – Ryan Boysen, Law 360 ($). “Litigation funders are in panic mode over a provision in the massive federal spending bill that would impose a 41% punitive tax on the $16 billion industry, with one executive calling it a "kill shot" and an academic warning it amounts to "unprecedented" weaponization of the U.S. tax code.”
IRS
New IRS Chief Calls for Culture Change at Agency – Anna Scott Farrell, Law 360 ($):
Long, a former auctioneer and congressman from Missouri who was sworn in June 16, said in a message to workers that he's "big on culture" and "anxious to develop one that makes your lives and the taxpayers' lives better," according to the announcement.
Energy Credits
US Clean-Energy Project Cancellations Hit GOP Districts Hardest – Tope Alake, Bloomberg ($):
Businesses canceled or delayed more than $1.4 billion in new factories and clean energy projects last month, bringing the total since January to $15.5 billion, according to an analysis by E2, a non-partisan group that advocates for renewables and policies to protect the environment. The canceled projects across battery, electric vehicles and solar, were expected to create nearly 12,000 new jobs.
Republican districts have seen the most contraction. More than half of the canceled, delayed or closed factories and electricity projects, or some $9 billion worth of investments, have been in GOP districts so far this year, the report said. So too were some 10,000 jobs that have disappeared.
Ford Will Keep Battery Factory Even if Republicans Ax Tax Break – Neal E. Boudette, New York Times:
The $3 billion plant, in Marshall, Mich., 100 miles west of Detroit, uses battery and manufacturing technology that Ford licensed from a Chinese company, Contemporary Amperex Technology Ltd., known as CATL.
IRS Updates Guidance for Energy Community Bonus Tax Credit – Erin Schilling, Bloomberg ($):
Notice 2025-31 released Monday details the requirements taxpayers must meet under the statistical area and coal closures categories to claim the credit. The energy community bonus tax credit, part of the Democrats’ 2022 climate law called the Inflation Reduction Act, increases the clean electricity production and investment tax breaks for projects in areas impacted by the transition to renewable energy.
IRS Updates Coal Closure Areas for Energy Community Perk – Kat Lucero, Law 360 ($). “The IRS released Monday an updated list of counties with shuttered coal manufacturing operations and other locations used to determine a clean energy development project's eligibility to get a boost in tax credits for being in communities that historically relied on the fossil fuel industry.”
Pillar 2
Treasury Official Defends US Record on Fighting Profit Shifting – Caleb Harshberger, Bloomberg ($):
The American track record justifies the Trump administration’s refusal to adopt the 15% global minimum tax regime, Pillar Two of an OECD-led agreement, according to Rebecca Burch, deputy assistant Treasury secretary for international tax affairs.
Time Running Out for Deal on U.S. Tax System and Pillar 2 – Stephanie Soong, Tax Notes ($):
The United States continues to prioritize an agreement within the OECD inclusive framework on base erosion and profit shifting to ensure the U.S. tax system sits alongside the OECD’s pillar 2 system, said Rebecca Burch, Treasury deputy assistant secretary for international tax affairs. She spoke June 23 at a conference in Washington organized by the OECD and the U.S. Council for International Business.
OECD Official Signals Skepticism About US-Pillar 2 Harmony – Natalie Olivo, Law 360 ($):
It's encouraging that the U.S. wants to negotiate a way for its tax system to stand side by side with Pillar Two's 15% global corporate minimum tax, but uncertainties remain, according to Tim Power, chair of the OECD's committee on fiscal affairs. This dynamic is "not straightforward," he said, speaking during an international tax conference hosted by the United States Council for International Business in Washington, D.C.
Transfer Pricing
Amount B Rules ‘Going to Take Some Time,’ Treasury Official Says – Caleb Harshberger, Bloomberg ($):
“There’s a reg drafting team that has already begun to think about the comments that we received,” Chris Bello, senior counsel for tax legislation at the department, said at a Washington conference sponsored by the OECD and the US Council for International Business. “And that work is slowly starting to begin. I cannot predict how long it’ll take, but I have a feeling that it’s going to take some time.”
US Rules On Amount B 'May Take Some Time,' Official Says – Molly Moses, Law 360 ($):
Christopher Bello, senior tax counsel in Treasury's Office of Tax Policy, noted that unlike most tax guidance common to the U.S. and the Organization for Economic Cooperation and Development, Amount B — the subject of an IRS notice issued in December — originated with the OECD rather than U.S. Treasury. U.S. officials historically have taken a leading role negotiating OECD guidance.
Related: Stock Based Compensation: A Global Transfer Pricing Headache
TIGTA
IRS Crime Unit Sees Drop in Tax Investigations, Watchdog Finds – Erin Slowey, Bloomberg ($):
While tax law violations are a top priority for the crime unit, the share of tax-related investigations dropped to 53% from 60% from fiscal year 2019 through 2023, according to the Treasury Inspector General for Tax Administration. At the same time, probes into fraud rose by 32% over that period, largely due to false claims related to pandemic-era relief.
IRS Watchdog Dings Taxpayer Service for Lags in Response Time – Cole Reynolds, Bloomberg ($):
TAS case advocates didn’t timely contact taxpayers or their representatives in 63% (103) of the 163 closed cases sampled, according to the Treasury Inspector General for Tax Administration report released June 11 but made public Monday. Taxpayers can ask the independent service inside the IRS to help resolve problems with the agency, and TAS is required to respond within 10 business days. But for almost two-thirds of cases in fiscal 2023, the service didn’t make initial or followup contact within proper time frames, the report found.
Corporate Reorgs
Tax Lawyers to Government: Try Again on Spin Rules – Chandra Wallace, Tax Notes ($):
In its June 20 comment letter, the tax section provided detailed commentary on proposed regulations (REG-112261-24) the government issued in January. The group recommended that the government revise the regulations and repropose them to give stakeholders a chance to comment on the revisions.
In the Courts
Court Upholds Validity of IRS Notice on Credit Eligibility – Kristen A. Parillo, Tax Notes ($). “An IRS notice providing guidance on eligibility for the employee retention credit merely interpreted the statute and was therefore properly issued without notice and comment, an Arizona district court held.”
Second Circuit Upholds Dismissal of Long-Delayed Tax Court Case – Mary Katherine Browne, Tax Notes ($). “The Second Circuit found that the Tax Court properly dismissed a case after the taxpayers delayed the trial for over three years and refused to proceed despite receiving several accommodations from the court.”
What Day is it?
Its National Praline Day! Or, to work off these sugary sweets you can also celebrate Swim a Lap Day.
