Tax Notes

NEW: Billy Long is leaving his position as IRS commissioner less than two months after joining the agency. A White House official confirmed the move to Tax Notes August 8 and said Treasury Secretary Scott Bessent will serve as acting commissioner. The announcement adds another chapter in what has been a tumultuous year at the IRS, with the agency now having seven different commissioners since January amid a mass exodus of employees. While President Trump hasn’t officially called for the abolition of the agency, administration officials have openly mused about eliminating the IRS. Long was was criticized by Senate Democrats during his confirmation hearing for promoting several schemes involving the employee retention tax credit and so-called tribal tax credits. (Photo of Billy Long by Gage Skidmore via Flickr)

The IRS won’t modify individual information returns or update federal income tax withholding tables for tax year 2025 to reflect President Trump’s new tax law, giving the agency more time to implement the changes. In an August 7 release, the IRS announced it will refrain from changing tax year 2025 Form W-2, forms 1099, Form 941, and other payroll return forms to incorporate the retroactive tax changes from the One Big Beautiful Bill Act (P.L. 119-21), which created new deductions for tips, overtime pay, and car loan interest. The agency will also keep withholding tables the same and advised employers and payroll providers to use current reporting and withholding procedures, effectively staving off any tax breaks under the new law until next filing season. Read more from Ben Valdez 👇 (Photo by mphillips007 from Getty Images Signature)

Here is a link to an article of mine published in Tax Notes State recently on Preparing for the Journey from Status Quo to Better Tax Systems. It focuses on various problems with our tax systems that are overlooked even to the point where we might all think they are normal parts of a tax system. I hope you'll take a look. http://taxnotes.co/4l8Hp1v #taxpolicy

👉 Keep up with Sarah Paez's latest reporting here: https://lnkd.in/es_nYrbd

"The biggest unfinished business is in the area of how the U.S. international income tax system will coexist with pillar 2," Alan Cole said. "The G7 deal didn't say that pillar 2 is fully going away, although that's still an outside possibility. More likely, Europe continues to implement its version of CFC rules, its effective equivalent of GILTI or now NCTI. That's all likely to still happen. "The U.S. wants to be independent of pillar 2, not have pillar 2 go over and touch things that have previously been touched by the U.S. tax code. In many cases, that's relatively simple. "You can think of companies that are American and companies that are German, and obviously at the very top level, you'll have one or the other of the two systems. "But it starts to get more complicated when you have nested acquisitions. That's something you see in, for example, the pharmaceutical industry a lot because there are both tax and operations reasons that pharmaceutical companies have long chains of acquisitions." Check out the full conversation 👇

A small group of private colleges and universities is facing a modified tax on certain royalty income and student loan interest because of an expanded definition of net investment income in the new tax law. The One Big Beautiful Bill Act, signed by President Trump on July 4, will replace a 1.4 percent tax on NII with a three-tiered rate structure based on the size of the school’s endowment and the number of tuition-paying students. Starting next year, schools with student-adjusted endowments between $500,000 and $750,000 will still face a 1.4 percent excise tax. But those with endowments worth between $750,000 and $2 million per student will see a 4 percent tax on their NII. And an 8 percent tax will be levied on schools with endowments worth more than $2 million per student. The new, expanded definition of NII has drawn less attention than the rate change. Under the new law, it will include interest income paid on institutional loans the school made to its students. Read more from Katie Lobosco 👇

💡 On the cover of Tax Notes International: Oliver R. Hoor explains why the abandonment of the European Commission’s proposal targeting the misuse of shell entities is a welcome development.

IRS guidance seeking to eliminate the acknowledgment-of-facts (AOF) step of large business exams will speed resolutions and ease taxpayers’ burdens, according to tax professionals. Interim guidance (LB&I-04-0725-0008) issued by the IRS Large Business and International Division on July 25 will eliminate the AOF information document request — a process toward the end of an exam in which the IRS can ask a taxpayer to agree with a set of facts it believes to be true before taking the case to Appeals. According to tax professionals, the change is overdue. “It became an extraordinary exercise for the taxpayer to go through,” Rochelle Hodes of Crowe LLP told Tax Notes, noting that “the taxpayer wasn’t required to respond, but there was this whole sort of brinkmanship about responding or not responding.” Ending the program “will prove to be a welcome development,” she added. Read more from Ben Valdez 👇 (Photo by tzahiV from Getty Images Signature)

"After a suspenseful few months, on July Fourth President Trump signed the One Big Beautiful Bill Act into law. "Among the bill’s many changes are amendments to the global intangible low-taxed income provisions in IRC sections 951A and 250, provisions enacted by the Tax Cuts and Jobs Act during the first Trump administration. "States have grappled with whether and how to tax GILTI since the TCJA was passed in 2017, and several jurisdictions do tax a material portion of GILTI." 💡 On the cover of Tax Notes State: Alysse McLoughlin and Kathleen Quinn examine how the One Big Beautiful Bill Act’s changes to global intangible low-taxed income provisions of the IRC will affect states.