Key Takeaways
- "First Time Abatement" penalty relief to be really automatic.
- Who misses out on overtime deduction.
- Trump ACA tax credit plan fails to emerge from White House.
- IRS faces more budget cuts.
- GOP senator pans tariff rebates.
- Shopping Reminder Day.
Today! Tune in at 1:00 p.m. Central for a free Wealth Transition webinar featuring Devin Hecht, director of the Eide Bailly Wealth Transition Services team. Topics will include the increased opportunities for income tax planning under OBBBA, the use of non-grantor trusts, trust flexibility, and portability planning. No charge, 1 hour CPE available. November 25, 1:00 p.m. Central Time. Register here.
About 1 million taxpayers to get automatic penalty relief next year - Martha Waggoner, The Tax Adviser:
Previously, the information about FTAs was only in the Internal Revenue Manual (IRM), which contains internal guidelines for IRS personnel to follow. They’re neither statutory nor regulatory, so a taxpayer, CPA, or attorney calling the IRS on behalf of a client had to know they’re in the IRM.
Collins estimated that about 1 million taxpayers, most of whom are lower-income, qualify for the FTA annually, but don’t know that they must ask for it. That will change as of April 15, 2026, the deadline for filing 2025 returns.
Related: Eide Bailly IRS Dispute Resolution and Collections Services.
Overtime Rules Winners and Losers
Millions Miss Out on Overtime Tax Breaks Under Trump Labor Rules - Parker Purifoy, Bloomberg ($):
It also could spur new wage-and-hour lawsuits from employees arguing they qualify for overtime under the Fair Labor Standards Act. If they succeed in court—a challenging, fact-specific, and often slow endeavor—more workers would be able to claim thousands in deductions in their annual tax returns.
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Blue-collar workers—including electricians, plumbers, and carpenters—are eligible for overtime pay no matter how much they make. Law enforcement, firefighters, and paramedics also could benefit from the tax deductions, as FLSA overtime exemptions don’t apply to them.
But white-collar eligibility for FLSA overtime protections has been in flux over the last several years. Those workers will be exempt from overtime pay if they are salaried, make more than a certain amount each year, and work in a “bona fide executive, administrative, or professional capacity.”
Rumored Trump ACA Tax Credit Extension Quashed Before Release
Rumored White House Health Plan Remains Under Wraps - Alexander Rifaat, Tax Notes ($):
White House press secretary Karoline Leavitt, during a press gaggle November 24, said discussions on healthcare are “happening very frequently and robustly inside the West Wing right now” but didn’t elaborate on when a plan will be released or whether it would include an extension of the enhanced premium tax credit.
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Leavitt’s comments came after MS NOW reported that the administration decided to delay the unveiling of President Trump’s plan, the Healthcare Price Cuts Act, after pushback from members of Congress.
Speaker Johnson Warns White House GOP Is Wary of Trump’s Healthcare Push - Olivia Beavers and Natalie Andrews, Wall Street Journal:
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The emerging White House plan would extend the subsidies temporarily, while imposing income caps for ACA enrollees to qualify, as well as measures to crack down on healthcare fraud, according to people familiar with the matter. Several Republicans want to pair the subsidy wind-down with the creation of health savings accounts, an approach Trump has praised.
Trump’s perilous path on health care - Andrew Desiderio and Samantha Handler, Punchbowl News:
But the White House’s decision to press pause on the rollout Monday just as quickly as they floated it underscores how difficult it’ll be, especially at this late stage, to get a bill over the finish line.
The fact that the White House was even seriously working on a plan caught Hill Republicans by surprise when news of it leaked on Sunday. By Monday morning, the White House was preparing to unveil the proposal — before eventually backtracking amid resistance from conservatives and a general sense among Republicans that the White House was mismanaging the issue.
Senate Appropriators Seek More IRS Cuts
Senate Funding Bill Would Bring 4 Percent IRS Funding Cut - Cady Stanton, Tax Notes ($):
The Senate Appropriations Committee’s fiscal 2026 financial services and general government (FSGG) bill, released November 24, would include $11.8 billion for the IRS, down 4 percent from the agency’s fiscal 2025 funding but much higher than the $9.8 billion for fiscal 2026 requested by Treasury in its budget request released May 30.
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The biggest difference between the two bills is how they treat enforcement: The House legislation would include a 45 percent cut, while the Senate bill would keep its funding flat.
Key Issues Facing The IRS Amid Looming Budget Cuts - Natalie Olivo, Law360 Tax Authority ($):
When an agent who attorneys have been working with leaves, a case may be "just hanging in the balance, and you're trying to figure out who it's assigned to," Garber said.
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The possibility of high-income individuals attempting to slip through the cracks could be particularly acute due to cuts to the agency's Global High Wealth group, which handles complex and resource-demanding audits.
Why One Senator Might Favor IRS Enforcement Cuts
Sen. Jim Justice, wife to pay $5 million in back taxes to settle IRS suit - Leo Sands, Washington Post:
According to court filings Monday, the agreement was struck hours after the Justice Department filed a lawsuit against Justice and his wife, Cathy, seeking $5,164,739.75 in unpaid federal income tax assessments owed as of August. The civil complaint said the debt originated from the 2009 tax year and included penalties and interest accrued since.
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Politico reported last month that the IRS filed notices of a tax lien against Justice and his wife, saying they owed more than $8 million. In a news briefing last month, Justice suggested that the IRS’s claims against him were politically motivated and said that much of the owed money was due to interest and penalties accruing on a “few dollars” that the IRS said he owed.
Tuesday Tariff Troubles
Senate Republican: ‘We can’t afford’ $2,000 tariff checks - Alexander Bolton, The Hill:
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“President Trump had deficits about $800 billion. Obama, in his last four years, $550 billion a year. Now we’re $2 trillion? Completely unacceptable. We have to start focusing on that and doing something about it,” Johnson said.
Trump has proposed paying out $2,000 tariff dividend checks to millions of Americans and funding it with the hundreds of billions of dollars in revenue projected to enter federal coffers because of higher tariffs.
Tariffs Tame Inflation at a High Price, 150 Years of Data Suggests - Joseph Thorndike, Tax Notes ($):
White House officials welcomed the findings. Press secretary Karoline Leavitt posted a link to Breitbart on the social platform X, as did Rapid Response 47, another official White House account. Numerous online commentators followed suit, provoking some lively debate across social media.
But here’s the thing: The Fed study is not exactly good news for anyone trying to defend Trump’s tariff policies, or even high tariffs more generally. As authors Régis Barnichon and Aayush Singh point out, tariffs can indeed reduce inflation. But they manage this feat by slowing economic growth and boosting unemployment.
Trump's Bad Day At The Supreme Court - Robert Goulder, Forbes:
He might emerge victorious if a majority of justices were to treat the case as a political exercise. As everyone knows, the Court’s conservatives outnumber its liberals. Trump is emotionally invested in this contest, not merely as a named litigant but because tariffs are his signature economic policy. No U.S. president since William McKinley has been more closely associated with tariffs.
If the justices confine their deliberations to a strict application of law and precedent, shunning political temptations, it’s likely the taxpayers will prevail.
Tax Court Rejects Loper-Bright Challenge to Hobby Loss Rules
Tax Court Upholds Nix Of $1.9M Deduction Post-Chevron - Anna Scott Farrell, Law360 Tax Authority ($):
The court had agreed to reconsider its ruling after the high court's June 2024 ruling in Loper Bright Enterprises v. Raimondo, which ended the Chevron doctrine of judicial deference to agencies' interpretations of ambiguous laws. But it ultimately found that the relevant portions of the at-issue regulations were mostly based on case law.
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The court said Monday it didn't need to address the couple's arguments about the regulations' validity because the portions needed to decide the case were based on case law that existed at the time Section 183 and the regulations were adopted.
Blogs and Bits
Holiday Tax Deduction Myths: Sorting Fact from Fiction - Jill Kenady, Tax School Blog:
Nice try. Clothing is only deductible if it’s required for work and not suitable for everyday wear. Unless your Thanksgiving outfit is a branded uniform or costume for a performance, it’s not deductible—even if it’s really festive.
How to Preserve the Senior Deduction: A Practical Planning Guide for 2025 - Matt Gaylor, Matt's Tax Firm Insights. "Lower IRA withdrawals reduce AGI and preserve more—potentially all—of the Senior Deduction."
California 5% Wealth Tax On Billionaires Could Pass This Time - Robert Wood, Forbes: "A proposed ballot measure known for the 2026 Billionaire Tax Act would impose a one-time 5% tax on billionaires living in the Golden State, said to be about 200 people."
Tax Court Sustains Penalties in Microcaptive Insurance Case - Parker Tax Pro Library. "The Tax Court held that the owner of a medical practice who formed a microcaptive insurance company which was previously held by the Tax Court not to constitute insurance for tax purposes was liable for a penalty under Code Sec. 6662(a) and (b)(6) on underpayments of tax attributable to a transaction lacking economic substance within the meaning Code Sec. 7701(o) (the codified economic substance doctrine)."
Taxpayers Have to Return Real Refund From "Intangible" Withholding
Couple Can't Defend Against Refund Clawback After Fraud Finding - Tax Notes Research:
From the court opinion: (taxpayer names and citations omitted, emphasis added):
The court cast some shade on the IRS:
With additional IRS enforcement cuts, more taxpayers may be tempted to take a chance that the IRS will let a bogus refund slide through. Other honest taxpayers will be defrauded due to reduced tax scam enforcement. Be careful out there.
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