Key Takeaways
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Reported list of targets includes "major Democratic donors."
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"Pushing the boundary" of Code section banning executive branch audit targeting.
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ACA credits remain focus of record-setting shutdown.
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Tax dispute resolution complicated by shutdown.
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Intimidation strategy for tariffs.
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Magical math and the national debt.
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Clean Your Virtual Desktop Day.
Trump Team Plans IRS Overhaul to Enable Pursuit of Left-Leaning Groups - Brian Schwartz, Richard Rubin and Joel Schectman, Wall Street Journal:
A senior IRS official involved in the effort has drawn up a list of potential targets that includes major Democratic donors, some of the people said.
The undertaking aims to install allies of President Trump at the IRS criminal-investigative division, or IRS-CI, to exert firmer control over the unit and weaken the involvement of IRS lawyers in criminal investigations, officials said. The proposed changes could open the door to politically motivated probes and are being driven by Gary Shapley, an adviser to Treasury Secretary Scott Bessent.
Move to Direct IRS CI at Left-Leaning Groups Is Questioned - Benjamin Valdez and Nathan Richman, Tax Notes ($):
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Former IRS Commissioner John Koskinen, who led the agency during the Tea Party targeting scandal, said the move to install loyalists at the top of CI with the goal of targeting certain groups is pushing the boundary of what is legal under section 7217, which prevents the executive branch from launching audits or investigations into specific taxpayers.
“If, once the pieces are in place, the White House or anyone in the White House indicates in any way who should be targeted, a good case could be made that they’ve committed a criminal violation,” Koskinen said in an email.
Koskinen added that the change in policy will likely undermine taxpayer confidence in the IRS.
WSJ Article Reporting Possible Political Changes to IRS CI - Jack Townsend, Federal Tax Crimes. "Stepping back from any personal interest I may have, this is really scary if the article is anywhere near accurate. The future credibility and effectiveness of CI to serve its mission of undergirding the tax system will be severely damaged."
Hunter Biden’s Lawyer Wins Defamation Case Against IRS Agents - Tristan Navera, Bloomberg ($):
Agents Gary Shapley and Joseph Ziegler, who disclosed Biden’s tax information, claimed attorney Abbe Lowell made defamatory statements in a 2023 letter sent to a congressional committee that accused them of violating grand jury secrecy rules.
Shutdown Setting Records. ACA Credits Remain Central to Stalemate.
Shutdown’s 17th Day Marks Longest Government-Wide Funding Lapse - Maeve Sheehey, Bloomberg ($):
Hundreds of thousands of federal workers — including congressional staffers — have been furloughed (or are working without pay) for more than two weeks. The longest previous government-wide funding lapse, meaning no spending bills were signed into law before a deadline, lasted 16 days in fiscal 2014.
ACA Tax Credit Remains at Center of Shutdown Fight - Katie Lobosco, Tax Notes ($):
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Party leaders on both sides haven’t budged from their positions. Democrats demand some kind of assurance to address the expiration of the enhanced premium tax credit. Republicans refuse to negotiate the issue until the government reopens and say the program must be reformed if it is extended.
Scalise on FOD: Republicans won’t extend Obamacare credits - Jake Sherman and Andrew Desiderio, Punchbowl News:
But what’s clear is that it’s wildly wrong to believe that House Republicans would simply return to Capitol Hill and pass an extension of the subsidies without vigorous debate and a drastic overhaul of the program.
“And Democrats know that,” Scalise said. “They know that the mess they created — and I know they’re trying to dump the problems of Obamacare off on everybody, other than the people that actually passed and voted for Obamacare. Those high premiums are a result of Democrat policies. If they really wanted to work with us on lower premiums, there are a lot of bipartisan ideas that you could come to the table and bring and do, and they’ve got to stop fighting the things that have been proven to work, as well.”
It’s ‘too late’ to extend ACA subsidies without major disruptions, some states and lawmakers say - Robert King and Kelly Hooper, Politico:
State insurance officials are warning that the longer Congress waits to extend enhanced Affordable Care Act subsidies, which help low- and middle-income people afford premiums, the more difficult it will be to update rates before consumers start shopping for 2026 coverage on Nov. 1.
As a result, they said, some enrollees — particularly young and healthy people — could be frightened off by the higher rates and drop coverage, even if the rates can be adjusted later. This would further undermine Obamacare by worsening the risk pool, driving up ACA costs even more.
Tax Court’s Shutdown-Related Trial Cancellations Add to Backlog - Chris Cioffi, Bloomberg ($):
The canceled trial sessions will likely spur further delays in litigation as a skeleton crew of IRS attorneys—still on the job amid shutdown-related furloughs and several rounds of Trump administration downsizing efforts earlier this year—tries to triage cases.
“This is bad news for law-abiding citizens,” Rod Rosenstein, deputy attorney general in President Donald Trump’s first administration who’s now partner at Baker McKenzie, said in an email. “The Tax Court already has a huge case backlog that will get worse, adding to the problems created by furloughs of IRS employees.”
Taking the Taxman to Court Is Complicated by Government Shutdown - Guinevere Moore, Bloomberg ($):
This creates a unique challenge: Taxpayers may continue to receive collection letters or automated notices, but their ability to reach an IRS representative to resolve the issue may be limited. In other words, the system keeps moving, but the people behind the notices are no more accessible (or helpful) than the Wizard of Oz.
Related: Eide Bailly IRS Dispute Resolution and Collections Services
Government Shuts Down, Life Doesn't
Employers Need to Prepare Now for ‘No Tax on Tips’ Compliance - Jason Feingertz, Ryan Glasgow, and Elizabeth King, Bloomberg ($):
These changes are retroactive to Jan. 1, 2025, so employers should be focused on these issues now.
Tax News & Views International Weekly: The Global Tax Shutdown Dilemma - Alex Parker, Eide Bailly:
One matter has gotten less attention, but could still be crucial for many taxpayers—will Treasury and the Organization for Economic Cooperation and Development be able to hash out details for the 15% global minimum tax agreement in time, as the U.S. officials remaining at work struggle to keep everything running?
Tariffs - The Intimidation Strategy
Trump’s first Supreme Court argument - Washington Post Editorial Board:
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The U.S. Court of Appeals for the Federal Circuit ruled against Trump in August, but its order is on hold until the justices decide. Trump has already signaled to the justices that the case is of huge importance to him. The government’s brief submitted last month contains colorful language that is highly unusual in Supreme Court litigation. “With tariffs, we are a rich nation; without tariffs, we are a poor nation,” it says.
Truckers Are Struggling. Trump’s New Tariff Could Make Things Worse. - Peter Eavis, New York Times:
If few exemptions are granted, industry analysts say, the tariff could raise the cost of manufacturing trucks and repairing old ones.
Mr. Trump is imposing the tariff under a national security provision, known as Section 232, that he has also used to tax imports of steel, aluminum, cars, medical devices and lumber.
College Athletes and State Taxes
High Earning, Higher Stakes: Tax Challenges for Athletes - Melissa Menter and Colette Sutton, Eide Bailly, quoting Amy Hodges of Tax Notes: "Now that student-athletes can be paid, states can tax that compensation. But if states like Florida or Texas don’t tax income at all, why should a sports wunderkind choose to attend university — and play and earn — in a state with an income tax? Legislators are taking notice."
Blogs and Bits
Medical tax break inflation adjustments in 2026 could be a great Rx - Kay Bell on Substack. "For the 2026 tax year, you can put up to $3,400 in your FSA. That’s a $100 increase from this year’s $3,300 FSA contribution limit."
IRS Issues Applicable Federal Rates (AFR) for November 2025 - Bailey Finney, Eide Bailly. "The Section 382 long-term tax-exempt rate used to compute the loss carryforward limits for corporation ownership changes during November 2025 is 3.65%."
Trump's New Tariffs on Furniture Will Be Costly, and Americans Will Pay - Veronique De Rugy, Reason. "U.S. tariffs are taxes on Americans, and stealthy ones."
U.S. Partnership Tax Planning for Nonresident Aliens: A Complete Guide - Manasa Nadig, The Buzz About Taxes. "Picture this: You're a successful entrepreneur living abroad, and you've just made what seems like a straightforward investment in a U.S. real estate partnership. Fast forward twelve months, and you're staring at yet another IRS notice in your mailbox—the third one in as many years. Sound familiar?"
Related: Eide Bailly Global Mobility Services.
Fiscal Follies Friday
Most Americans say taxing the rich is best way to reduce federal debt: Gallup - Sara Fortinsky, The Hill:
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Raising income taxes for wealthy Americans is the most popular way of reducing the federal debt, according to the latest Gallup poll. The survey, conducted in September, asks Americans whether they support a range of methods aimed at reducing the federal debt, which has ballooned in recent years to more than $37 trillion. Only two proposals receive a majority support of U.S. adults: 63 percent back “increasing income tax rates for upper-income Americans,” and 54 percent support “increasing tax revenues by making major changes to the current federal tax code.”
Only two proposals receive a majority support of U.S. adults: 63 percent back “increasing income tax rates for upper-income Americans,” and 54 percent support “increasing tax revenues by making major changes to the current federal tax code.”
The survey also shows that only 39% of respondents favor changing Social Security and Medicare to reduce their cost.
The poll is a neat summary of the flawed thinking behind the current federal fiscal mess.
The biggest driver of federal spending now is Social Security and Medicare:
Can we tax the rich enough to solve our problems? The budget deficit for fiscal year 2024 was $1.83 trillion, out of $6.8 billion in spending. The net worth of all billionaires put together comes to about $5.5 trillion, which is less than what the government spends in a year, let alone the $38 trillion national debt. A comprehensive study of revenue maximizing taxes on the rich estimates that these would max out at about $560 billion annually, well under 1/3 of the annual deficit. So, short answer: no.
Addressing the fiscal imbalance would mean some combination of reducing Social Security and Medicare spending and increasing taxes in a broad way. But if the poll is accurate, the voters insist on arithmetic-defying solutions.
What day is it?
It's National Clean Your Virtual Desktop Day! I hope that doesn't mean I have to close my 27 open browser tabs.
Make a habit of sustained success.
