Transcript
Speaker: Music
Speaker: Today Tuesday, July 21st, 2026, and this is one of those weeks where the calendar tells the whole story. In two days, the House heads home for the August recess.
Speaker: On Friday, three days from now, the 10% Section 122 tariffs are set to expire. Next Monday and Tuesday, the Federal Reserve meets to decide what to do about interest rates, and the midterm elections are now just 105 days away Congress has a shrinking calendar and expanded to-do lists in the election that is getting closer by the day, which is a very Washington combination, if I may say so.
Speaker: um Well, welcome to the Tax News Now podcast, where we break down the latest tax developments and more importantly, explain what they mean for tax professionals, business, and their clients. I'm Mark Alegos, and I'm very pleased to welcome back returning guests and my friend, Casey Pittman.
Speaker: Casey is a CPA and Managing Director of Tax Policy at Sherry Beckert. Her work focuses on tax policy, strategic tax planning, tax consulting, and helping organizations understand what is happening and in Washington and what they should actually do about it.
Speaker: She's also deeply involved with the AICPA, including the Tax Executive Committee and the Strategic Tax Reform Advisor Group, which means she is not just watching this from the outside. She's actually in the room.
Speaker: So, Casey, it's great to have you back on the podcast. Yeah, thank you for having me. Always happy to be here. Absolutely. So let's begin with big picture, right? um You know, we we see a lot going on in Washington. We know we follow that daily.
Speaker: Sometimes each day looks a little different. But layer on top all the disruption that seems to be going on, a standoff in the House over the Save America Act that has effectively flows, throws floor activity and sent lawmakers home early for the July 4th recess.
Speaker: um We've had absences in the Senate and obviously an unexpected death of Senator Graham. um With all this going on, the political environment, and everything already competing for floor time. What can Congress realistically accomplish before Election Day when you look at it from that standpoint?
Speaker: Yeah, so so as you mentioned, it's the morning of um July 21st, and we have 106 days until the midterms. And so of those 106 days, the House is scheduled to be in session, and including today, 19 days, and the Senate, 28 days. um So what can they accomplish in that amount of time is largely going to depend on the cooperation the um For the partisan bills, such as, you know, we'll talk about what they're trying to pass here, reconciliation and and a couple other items.
Speaker: The cooperation of Republicans, we've found that sometimes they've really banded together to push through the broader Republican um and sometimes Trump agenda.
Speaker: And sometimes we've seen, like you were talking about, dysfunction on the floor because of the small margins that they have, right? They have control of the House and the Senate, but but by very small margins. They're also obviously plagued by absences um and and illnesses and deaths. So at the moment, Republicans Almost literally almost every single one of them are going to have to band together to get their priorities through. And then the question is, are there going to be any bipartisan priorities between now and then in these 19 days? We've seen the House lose more than 19 days, be sent home early collectively over the year um over. I mean, over the first year and a half of this Congress.
Speaker: more than 19 days because of dysfunction, because Speaker Johnson was unable to get a rule passed. So we will see. They have a really bold agenda. And I say they, it's Republicans, because they get, you know, if they've got, they're in the majority, they get to control the chambers. And so right now, the House has three days, including today,
Speaker: And they are going to, in in this amount of time, attempt to pass a stopgap measure for government funding. Government funding runs out on September 30th. So they're are looking to do a continuing resolution, just same amount of money that we have for this fiscal year, continuing it till a month after the midterms, till December 4th.
Speaker: They're going to look to pass The budget resolution that they're working on for Reconciliation 3.0, and we can talk a little bit more about that in a bit if you'd like, they're going to try to pass um the NDAA, which is the government government.
Speaker: authorization for military operations. um And and these are these are huge, bold agendas for three days of working. So the thing that everybody's watching, I think right now, is this Reconciliation 3.0. It is going to come to the floor ah to pass as a rule today.
Speaker: and if it passes as a rule, it will go up for vote tomorrow. If it passes the House, that does not mean it will pass the Senate. Right. The Senate has is its own body with its own items. So in addition to those items that they're trying to pass House Republicans before they leave town, they are going to need to pass or they're going to attempt to pass Congress overall. um The FISA, we we lost FISA authority. Right. The Foreign Surveillance Authority ah over a month ago.
Speaker: They're going to try to reauthorize FISA. They are going to try to pass the Clarity Act, which is a cryptocurrency structure act. The Senate is going to have to try to get through nominations. There's a little bit of a backlog there. um And then House Republicans are really determined to pass the Save America Act right now in their budget resolution. They've got portions of it funded, but there are really strict rules around, I think, as we've discussed on this podcast before. Really strict rules around reconciliation, particularly in the Senate, and and we don't know how much of that will survive, even even if senators want it to survive, to stay in the language, and then if they would like it to, that it would pass sort of muster with the Senate parliamentarian who who oversees, um I would say, the the decisions on whether something complies with reconciliation or not.
Speaker: As lawmakers get close to an election, does the substance of tax policymaking actually change, Casey? Yeah, it's really interesting. So um sort of go into this reconciliation 3.0 first, maybe chat a little bit about that.
Speaker: yeah So reconciliation 3.0, obviously 1.0 was the one big, beautiful bill act. Um, And 2.0 didn't have any tax measures at all. and It was really narrow in scope. And then 3.0, we saw Chairman Smith, chairman of the Ways and Means Committee, say there's not going to be a third reconciliation unless there's tax.
Speaker: But this reconciliation 3.0 is coming together sort of at the very last second, the last moment. it could pass before midterm elections. And so the way reconciliation works again is you have to pass a budget resolution, which says like, Hey, here's the structure. Here's how much each committee will spend or save.
Speaker: um The Senate has to pass the same structure and then they have to write the law. They both have to pass it, et cetera. And so and there's a lot of moving parts and pieces. Obviously there's not a lot of legislative days, which we just recently discussed. ah But yeah,
Speaker: It is mostly because we are running out of defense funding for this year because of the war in Iran. And so that is the main driver for why this bill has to happen right now.
Speaker: Also, to appease a little bit more of the hardline conservative caucus, the House Freedom Caucus, ah they are trying to push through portions of the SAVE Act. Now, the SAVE Act is obviously the Voter ID Act. It will not pass in the Senate,
Speaker: ah it will never pass in this current Senate, right? the Senate needs 60 votes unless you have a um a privileged legislation like reconciliation, and that can't change voting, you know, voter ID laws. ah Reconciliation can only change essentially the budget, right? It's supposed to increase or decrease federal revenues.
Speaker: So what they're doing or what they're attempting to do is provide funding to states in order to incentivize the implementation of these idea laws. Now, again, we don't know if the Senate will go for it. There's not a huge appetite in the Senate for it. um And a couple senators have come out saying, you know, i'm I'm tired of seeing the Save America Act take over this chamber.
Speaker: um And then Again, we don't know that it would pass reconciliation, even if they they did choose to include it. So are there tax measures in this bill? There are not. um And none of the tax measures that you could put in place right now, even though there is some broad consensus on some Republican priorities, would have an impact on anybody's financial situation ahead of the midterms. That's why it was so important for them to pass OB-3 when they did and to have it be effective, right? lot of the provisions be retroactive, taxpayer favorable provisions be retroactively effective to 2005 because you file your 2005 return in 2020.
Speaker: I mean, 2025, when you you file your 2025 return in 2026, you receive your 2026 refund, what spring, summer of 2026. And then you're headed into the midterms. So there are some Republican, they got a huge swath of their tax tax. Agenda passed with OB3. There are some other items, but it's it's unlikely that anything would anything partisan would pass this close to the midterms. Also, this close to the midterms, there's not a lot of bipartisanship, right? We're hopefully going to see some bipartisanship on government funding so that we don't have a shutdown. um But absent sent normal operations, there's
Speaker: There's not always, there's not a ton of bipartisanship heading into ah the elections. Each party is trying to distinguish themselves from the other, right? This is what we're about. And that bipartisanship doesn't weave as maybe as as ah effective of a story as to why you should pick one party over the other. um So I don't expect anything before the midterms in terms of of tax measures. Yeah.
Speaker: Now, are we talking without any bipartisan appeal in any major you tax issues or rules? Do you think taxpayer rights and IRS modernization could be part of a ah broader tax change in the package?
Speaker: In the Republican package or in a possible? So well ah here's what I'll say. After the midterms in the lame duck session, right, which is yeah which is this the session that is after the midterms and and before the inauguration.
Speaker: of the new Congress. um In the lame duck session, we could see two different things. In order to try to get this ah reconciliation 3.0 passed, Speaker Johnson, as of yesterday, is saying, hey, I'd like to pass a fourth reconciliation bill in the lame duck session, and that will cut waste, fraud, and abuse. That bill, if they have one, could contain partisan tax provisions.
Speaker: right? um There's also a lot of interest in a bipartisan tax package. We've seen Ways and Means clear a handful, i mean, a dozen um ah ah bipartisan tax bills through their committee. And we see a really robust bipartisan tax administration proposal from Senate Finance that is led by the the chair, Crapo, and the ranking member, Wyden, right? So it's a broad, bipartisan appeal there. What's what's interesting is um whether, and the House and the Senate are are sometimes in some ways saying the same thing, obviously packaged differently with a little different priorities. I'd be interested to see how those, those, um
Speaker: I would guess proposals marry together into a broader package, but also if there is the political will following the midterm elections and in order to push that through. Not everything that has broad bipartisan agreement becomes law. In fact, there are many items where there is broad bipartisan agreement and and they never make it into a a final legislation.
Speaker: Yeah, no, that's that's so true. Now, a lot of times tax professionals, CPAs out there hear a lot about proposals that generate headlines, you know, from members of Congress, the executive branch, and they never become law, obviously.
Speaker: From your perspective working with this, what signals tell you that a proposal is actually gaining momentum on the Hill and has real legs to get moving?
Speaker: You know, i have been wrong so many times before. we um and So I'll go back to 2024. At the beginning of 2024, we saw a bipartisan proposal pass the House with a vote margin of like 83 percent, we'll say.
Speaker: And it what it did was it corrected. The ah changes to 163J, bonus depreciation, and 174, the research and experiment um experimentation amortization provision.
Speaker: And so broad bipartisan support came out of the House. It was going to retroactively fix those things. And it made it over to the Senate and it died. you know The Senate would not take it up. ah Chairman Crapo said, no, essentially, I need this. ah to be part of the next reconciliation bill. This is one of the main things that we're intending to fix. And so even when that came out and I was like, oh yes, this is like, this has legs and and it didn't. So sometimes, uh,
Speaker: you think something's got momentum and it doesn't. And sometimes you think that it doesn't. and And all of a sudden it's, it's really in the midst of a conversation. So right now, what I'll say is Trump support is really important for Republicans. When Trump comes out and, and posts on social media or makes a phone call and says, I want this, that really seems to motivate the base at this moment.
Speaker: And then, So for partisan proposals, for bipartisan proposals, there's a lot of need. Like we have to fix this. This is like, this is going to, we don't have government funding. We're not funding these agencies. um A lot of times it is a a need or running up against a critical issue that forces their hand. um Sometimes we see bipartisan items come together, right? ah but But they take a lot of willpower, I think, to push them through the, um push them to the finish line.
Speaker: So let's play it out a little bit. Say the House gets a budget resolution through, they mark up a package, and they pass something, let's say, by September. And then it goes to the Senate.
Speaker: do you really What do you think actually happens at that point time once the Senate gets it, let's say, September-ish timeframe? Right. So this reconciliation bill, right, that has defense spending, has like ah some farm assistance, um and then it it's got the the Money for Save America Act. That's essentially the whole bill.
Speaker: ah So we'll say the House gets a budget resolution passed before they leave town. I don't know if the Senate gets the same House, ah gets the same or a similar budget resolution passed. We've got, obviously, Mitch McConnell is still absent from...
Speaker: Congress. And then we've got some senators, particularly some on their way out. Right. Cassidy, who lost his primary. um Cornyn, who lost his primary. Tillis, who decided not to run ah earlier in this Congress, who are.
Speaker: are a little more willing to sort of go against the grain in addition to you've got some Republicans in the Senate who have Collins and Murkowski ah who sometimes ah are willing to sort of push against um the the Republican agenda. I don't know that it comes together. And that and if it does, because we say, hey, we we really need to keep the defense ah department funded, they could strip the save provisions and it could essentially be a defense spending bill, which is
Speaker: you know, entirely, i think, unexciting to the electorate other than we get to keep our defense funded. um So i don't I don't know that a a lot happens here. There's nothing in this package that helps with what Republicans are getting hammered on, which is affordability, right? They're The population is sort of throwing their hands up and saying um times are tough and this is becoming more difficult. And and that's not what ah the broader agenda is focusing on. And I think to the dismay of of some of these senators and and some House members, some Republican House members who really want to say, we see you, we we feel your pain and and we're going to try to do something to make it um a little bit better.
Speaker: Right. and And I know that, you know, talking to practitioners around the country and my travels, you know, the reconciliation 3.0 question comes up quite a bit. i get that asked that quite a bit.
Speaker: My concern, I want to tell you if I'm being unfair or not here, but we just spent a year implementing, and you know, the H.R. 1, O.B. 3 reconciliation with bill that would pass last July 4th. Treasury and the IRS still have a guidance backlog. They have not cleared. Practitioners are still working through provisions that took effect. And, you know, adding even if the reconciliation 3.0 would have tax provisions added into it, doesn't that just create more uncertainty and and slows down the process in some aspects?
Speaker: I mean, yes, uncertainty is the name of the game right now, right? Both in this administration, but also previously. And I think how we've, I think we've spoken before, right? We're passing tax law um in in a more partisan fashion over the last decade or two. And so it means that tax law is inherently less permanent than it would be if it was passed in a bipartisan fashion, right? Tax law evolves. um You know, when we we got to TCJA, right?
Speaker: The 35% corporate tax rate was non-competitive globally. Obviously, it was closer to competitive when it was put in place originally, but but things change. And we're not just but we're not just changing tax law because, ah you know, um outside conditions change. We're also changing them because there are fundamentally... you know, different parties come in power and they have fundamentally different theories on what is the best way to ensure American prosperity. So I think that we see a lot of of switches back and forth. Now, this administration has brought ah sort of new levels of uncertainty, right? Because we've got
Speaker: tariffs, which I think we're probably going to talk about in a little bit. um We've got changes in trade policy and we had this big change in the tax law. I mean, yes, we have it. We had a big tax law. Some of it was continuation of previous provisions, right? TCJA provisions that were going to expire, but some of them were novel or some of them were, you know, sort of those changes or 174. Yeah.
Speaker: QPP was was novel. There were a few novel provisions and we haven't gotten through the implementation of those. We just got our initial notice on OZ 2.0 guidance, right? And and we have we've already announced OZ 2.0 zones that's already begun. So there's a lot of work to do with a with a ah treasury and IRS that is staffed at a significantly lower level than it was um before this bill was written. And so, yeah, there's there's plenty, plenty of uncertainty out there. I don't know.
Speaker: Again, if something were to pass with tax, it would create potentially a more uncertainty. but But I just don't think anything is going to pass before the midterms. right um And I don't know that anything that passes after the midterms is particularly controversial. Right. We've got some tax administration. All these bills that are coming out of ways and means are fairly narrow in scope and or focused on tax administration, right? We may see a correction to the gambling, the 90%, you know, threshold for gambling losses. um
Speaker: But I don't think we see any broad strokes in this Congress or or maybe honestly, even in the 120th Congress, potentially if if Republicans ah have the trifecta again, we could see something. But if we have a divided government as a result of this, ah the midterm elections, which seems to be based on data we have now, the most likely outcome,
Speaker: I just, I don't know that we have massive swings, which is good because we can start to plan and look at the landscape and what would happen in and the 2028 election if this party were in power or that party were in power or there was a divided government. What other external factors do we have? It's one of the things that Mark, like I'm really, i think, focused on is at this moment is what are the events that are coming up that could essentially force or create conditions for a a significant shift in tax policy. So we would have some breathing room, some time to implement.
Speaker: Yeah, some breathing room, some time to implement. And then um we would, I guess, look mainly 2028. to twenty twenty eight Although when we hit our debt limit again. So Yes, a lot going on there. And I think it was one of the questions, I think, when you hit it, it was that you know the data tells us there potentially is going to be a shift post-election here. um and And with that, you know thinking about what is tax policy going to look like in 2027, and twenty seven and you know back to tax advisors out there, what conversations should they be having with their clients now and into the fall? um and And I think you answered it as far as like, you know
Speaker: Doesn't appear to be any major significant changes you know heading our way from a tax policy standpoint. That doesn't mean we can't just ignore what's going on and keep our head in the sand either, right?
Speaker: Yeah. I mean, we should always be forward-looking. This is –
Speaker: This is where we can really be that trusted advisor, where we can really lean in and help our clients ah and sort of ride sidecar with them in their business journey.
Speaker: Because we can all put numbers on a tax return and we can all do, um you know, tax planning with what we expect this year's income to be. um But when we're making decisions, because these businesses are making long term decisions, ah you know, not three year decisions, but When we're looking at that, what do we think or what are the possibilities for for what may happen? what What do we know each party is focused on What sort of external or, you know, sort of independent factors are we looking at that may may force change? So some of the things sort of just broadly, and i and i know we're sort of mishmashing all of this stuff together right now, Mark, but we're looking at a couple
Speaker: potential triggering events, right? We hit our debt ceiling limit in 2027. And that is a massive debate about the, the state of government borrowing. We are borrowing at a wild rate, almost 6% of GDP, 3% of GDP is what is considered to be sort of a stable rate. And I'll say Democrats and Republicans are semi-united and saying like, this is, this is a runaway train. Um, We are going to spend over a trillion dollars of the $7.5 trillion dollars we spend this year servicing our debt. By the end of 2036, the projections are, so 10 years from now, FY 2036, the projections are that we will spend $2.1 trillion dollars
Speaker: which is which is over 20% of our budget, just paying the interest on our debt. That is basically the amount of money that we are projected to have to fund the government that is not Medicare, Medicaid, you know, um or um Social Security.
Speaker: So other than those sort of like entitlement programs, everything that Congress appropriates that year is expected to be $2.2 trillion. dollars And we're about to spend the exact same amount of money just paying the interest of on our debt.
Speaker: ah So once we hit, once we approach the ceiling, it's not just the ceiling. Do we want to raise it? Of course we want to raise it because we don't want to default on our debt, but it becomes an argument on how do we rein in our spending habits, right? we're We're a little bit on a runaway train there. So that's 2027. In we are going to see the expiration of the senior deduction, the no tax on tips, the no tax on overtime. Over 75 million Americans claimed those.
Speaker: Right. Those are going to be hard to claw back, um even if they're not ah as beneficial as as some other items. They are going to be politically difficult to claw back. In 2029, we see the salt, the temporary salt cap expire. In 2032, see the and this one for me is is sort of like everything. Right. 2032, we see the depletion of Social Security Trust Fund.
Speaker: And that means we've actually used all our money. That means it's a pay as you go system at that point. We have no reserves to pull from. And based on what we project coming in and what we the demands we project that we will have going out, we will be able to pay 78% of benefits. So imagine you're a retiree and you're on a fixed income and we say, sorry, you're going to get a 22% cut because that's what that is going to go over $2.
Speaker: Terribly, right? Correct. For those retirees, but also the people who have said, I paid into the system for how long? Like, I want to be able to see benefits one day. So it is going to be, there are a number of things coming up and and they feel, 2032 feels like a long way away, right?
Speaker: But the senators who are elected in this election will oversee the depletion of of the Social Security Trust Fund for um old age and survivor benefits, not for disability. There's so two different buckets, but um the OASI benefits.
Speaker: And so the people being elected in this election will will oversee that. um And I don't hear a lot about it right now in in terms of like campaigns, but we're seeing that that conversation, I would say, begin to gain steam in Washington. what What are we going to do? How is this going to be fixed? There are some small term fixes you can do, but they just kick the can down the road a year or two. um So we'll see what happens.
Speaker: Um, so yeah, some, some impetus, right? And so understanding certain things about the landscape, understanding how we're going to hit these measures and and, and what each party's priorities are help us project, right? When, when we're saying, Hey, we want to expand, we want to sell, we want to restructure, we want to, you know,
Speaker: take advantage of 1202, understanding the the longevity of the provisions that we're counting on for this tax planning, I think is really important. Yeah, no, I agree. And i there's just constant change. And I think we have to keep our head moving. and you you brought up some, you know, in the next six years, some massive decisions that have to start happening. And we'll start to see legislation most likely move towards how do we How do we fix some of the problems or or broaden it, I guess, in the same scope?
Speaker: Speaking of that, there there were things that kind of got passed this past month that I i find kind of fall fall fly under the radar at times, right? So on July 1st, the House Ways and Means Committee advanced seven tax administrative bills.
Speaker: And five of them were unanimously. And again, these are just through you know administrative bills that went through the House Ways and Means. But i I find it interesting if I'll list some of them, right? The End Tax Penalties on American Hostages Act, Tax Relief for Fraud Victims Act, the Taxpayer Advocate Participation Act, the AI Integrity Act,
Speaker: The Protecting Taxpayers from Ghost Preparers Act, all of these are even the Taxpayer Workforce Modernization Act. They all have all kinds of framework you know that that had support in the House Ways and Means. And obviously, that's where it sits. But i I bring it up to you when you kind of look at that, does that just start to set a roadmap?
Speaker: you know If someone's listening to this going, well, what happens to that then? is this Does this all have to come together in a larger legislative vehicle? Is this something that we may see down the road? Does it start to structure framework? What are your thoughts on that?
Speaker: Yeah. So there were seven bills that came out um just a few weeks ago ah that were five of which were bipartisan, unanimous bipartisan, and ah two of which were not.
Speaker: And then there were also, i want to say, eight or nine that came out in May. um Those were Items that have that broad bipartisan support, they're not going to move individually, right? We're looking at likely ah a broad bipartisan tax package if there is if there is bipartisan movement.
Speaker: Some of the items that came out of Ways and Means are also contained in this larger Senate package that honestly, Crapo and Wyden had worked on for months, if not years. Right.
Speaker: Right. And so it's going to be really interesting. It's, it's, to see which of those and which set of language survives. Now, again, everybody's broadly on the same page, but each chamber has a little bit different view on it.
Speaker: Right now, the Senate is very reluctant to do anything to hold a markup of any tax packages. So we're not seeing any movement there. And that's because they're concerned about, Republicans are concerned about Democrats putting up amendments, that discussed Trump's immunity deal, right, that came out of the defunct $1.776 billion dollars fund.
Speaker: So ah there's a little bit of a stall in the Senate at the moment. ah Ways and Means is obviously churning through. um It's got to go through both chambers. There's going to have to be coordination between House Ways and Means and Senate Finance Committee. to come up with a comprehensive package if if we get, if we're a in order to to pass anything um in the lame duck. And so I think there is a general desire. i just don't know what happens between now and then. and and if that desire ah is amplified or if it, you know, there's a little bit of cold water poured on it based on outside events and or election results.
Speaker: Well, I think i think there's there's a lot there. And I think at the end of the day, though, we we just have to continue to pay attention to see where this goes and and obviously what the midterm elections may bring us. um and And from there, you know i think there's a lot coming down the pipeline that we will see from a policy standpoint that will change. um but Let's just shift from Capitol Hill to Treasury for a minute. So we are now more than a year removed from the HR1, one big bit of a One big, beautiful bill act, public law 119-21.
Speaker: Treasury and the IRS has released guidance in a number of areas since then, but the implementation list is still very long. And we've seen even this month on July 3rd, Treasury the IRS unveiled a 2026 regulatory agenda that has to balance deregulation initiatives on the other side against the guidance needed to implement this law. completely So two different directions at once. um So from your perspective, what has the government made meaningful progress on regarding OB-3 and where do taxpayers and practitioners still need to be operating and still need some clarity on, do you see?
Speaker: So I'll say the pace of guidance that has come out of of an IRS with a significantly reduced workforce has been impressive. It's, you know, we've gotten a good number of pieces of guidance that we need in the amount of time we need them. Now, some of them have come out like by the skin of their teeth in the time we needed them, right? So um you remember the 174...
Speaker: It came out, ah I don't know, I i believe 17 days before the filing deadline. That's right. in order In order to make that election. So a couple times they came out pretty close, but you can tell that the department is working feverishly ah on producing this guidance. Now, the guidance that we've received, ah we've received some regulation packages, but by and large, it's been that easier to produce, quicker to get out the door without, you know, without as many review steps in in the review procedure.
Speaker: ah guidance, including notices. And so it's been transitional guidance. We'll get a notice that says, hey, we intend to issue regulations. And basically, here is what we want them to say, you know, big picture. Those have been really helpful in guiding sort of big picture decisions. Now, as we all know, the devil is in the details. And so getting those regulation packages is going to be really important, including ah for those bigger decisions. And so While we have received a lot of guidance, there are a couple areas where where we need more. um i I think that, you know, there's a a little bit of a clamoring for additional 174 guidance. And and yeah I think it's important to announce here, Keyes has left um the IRS. He was the
Speaker: ah deputy, ah he was the acting chief counsel for the IRS and he was the assistant secretary for tax policy, you know, under Scott Besant. And so his deputy, Kevin Salinger, is there and and he's made some comments about, hey, we expect these things to come out this summer. ah We heard him speak in May in DC and say, look, um we put out this priority guidance plan and we intend to issue guidance on everything. It's not a wish list anymore. Like that's not the approach we're taking. We intend to issue guidance. Now it won't all be full reg packages, but we intend to issue guidance on all of these items before the end of the year. And so that, that was, I think, interesting and heartening um to hear. So
Speaker: But we are waiting on 174, right? we We do need more information on Trump accounts. The overtime deduction... was was taken by so many taxpayers. and And what I'm really academically interested in is how many of them will qualify when we don't have this sort of, you know, do your best ah to figure out what your overtime is. If you're an employer, try to give them the information. If not, you know, try to figure it out. It's actually very limited. It's only FSLA overtime. And so there may have been some ininten inadvertent misstatements,
Speaker: of the overtime deduction because people didn't understand, hey, this shift premium or this overtime isn't FSLA overtime and isn't qualifying and and their employer didn't have to give it them the actual amount. So we need guidance on that. And I'm interested to see how broad and how how effective that deduction is after we do sort of narrow the scope to to what is in the statute. Yeah.
Speaker: There's a whole host of energy provisions that need guidance. um What I'm also really interested in is, and Mark, I don't know if you are, is 1202, because we we had changes to 1202. We've never received regulations on 1202, and we've not received a comprehensive package. And so there is a comprehensive package in the works.
Speaker: And I'm really eager to read that. And and we've seen Treasury officials, including Salinger and Keyes, come out and say, hey, one of the things, one of the tax planning tools people have been using may may have reached an abusive level and we may claw that back, which is stacking of 1202 benefits. And so very eager, again, devils in the details. um So these reg packages are going to be really important for implementation, particularly for for significant transactions.
Speaker: Yeah. Oh, that's a good points there. And let's talk about the blue book, because I think this is one of the more under discussed practitioner tools that come out. um yeah The Joint Committee on Taxation released its general explanation of H.R. 1, the blue book on May 28th, nearly 11 months after enactment. Right. So JCT worked with the Senate Finance, Ways and Means, Treasury's Office of Tax Policy to produce it.
Speaker: It gives Congress an explanation of the legislative legislation and how provisions were intended to operate. Right. So if I'm a practitioner, from your perspective, how valuable is that document when you're interpreting, and bag him you know, provisions and trying to figure out what this means? Should we referring to it?
Speaker: I mean, it's of interest. and And I think in the absence of literally anything else, I i would i would probably go to it. i I find it interesting, right? Why did we write this and and what was the intended effect? But it is not the statute. um And it does not...
Speaker: it it is not authoritative, right? we We had actually a Supreme Court ruling um that said it shows congressional intent, but it is it is not part of the legislative history. ah So i would be very reluctant to rely upon that, to take a position ah that I don't feel secure in because of the statute or because of, you know, interpretation, you know, similar provisions. if i In the absence of guidance, right, I look to ah ah analogous provisions in the law. um
Speaker: i would I would be very reticent to take a bold position. and Yeah, and I think, you you know, like you said, I think it's great to read. I find it, you know, very informative. But again, it's not Treasury regulation. So, you know, that that authority does not sit with it. so But I do believe it's a great way to to get your knowledge base and really get a flavor of what's happening in there.
Speaker: Do you remember the um drafting error for Quip in TCJA? Yes. Yeah. So TCJA came out ah ah mid-December and was enacted December 22nd of 2017, right? And there's this drafting error for ah for Quip, right? and And we wind up with, i mean, it's fairly pervasive, you know, right through taxpayers, through business taxpayers. And so we're having...
Speaker: We've got the blue book and the blue book with TCJA came out at the same time, like ah simultaneous, essentially. um And so we know that it wasn't congressional intent to this, that this was a drafting error. And, and treasury IRS said there, but there's nothing we can do about it.
Speaker: The statute says what the statute says, and and we have no basis for taking any other position. And we got, The remedy for that in the CARES Act, right which was spring of 2022 or 2020, spring of 2020. Right. So we had to wait two and a half years to get that remedy, knowing all the while this was not what Congress intended.
Speaker: Right. Yeah, I think those are things. And that was very frustrating um as a practitioner. I'm sure it was frustrating for other clients too. And to explain like, here is what the statute says and here is what the intent was. And we're at this, you know, and the constant questions I would get, um I felt like it was a daily basis, whether it's internally from the firm or from clients or from other practitioners out there. When's this going to change? When's this going to change? And you kind of had the same broken record speech of,
Speaker: how this would have to change. And obviously, it took a pandemic and the CARES Act in order to fix it, but a few years later, but. Let's talk about some specific guidance in this. So we we know with qualified opportunity zones, notice two thousand and twenty six forty came out with transitional guidance from Treasury. um And the framing I keep hearing is that the next 18 to 24 months represents a critical planning window, obviously, for investors, developers, fund managers with this qualified opportunity zone 2.0. When you see what's coming out from that, and obviously there'll be plenty more, I would hope, what does this open up for people that should be paying attention to this from a tax policy standpoint?
Speaker: Yeah, this is this is a great provision. This is, you know, e a gain deferral provision and and we've got other ones, right? We have 1031s, which were now limited to to real estate. um We have other gain deferral provisions, but this one i think is really cool and unique because it is targeted at improving some of the communities we have in America that really need, could use capital investment, right? To help create jobs. um So,
Speaker: What's changed with OZ from OZ 1.0 to OZ 2.0 is it's now on your schedule. It is now a permanent program, right? So OZ 1.0, we were able to defer gains till the end of 2026, right? And everybody has a recognition event at that time, no matter no matter when they invested. ah Now the recognition event is five years, essentially, and unless there's a triggering event beforehand that that would cause a recognition. But you get a five-year deferral sort of sort of on your timeframe. Yeah.
Speaker: The guidance was good. it was helpful. um it It did bring a couple of things to light, including ah sort of discussing how that OZ 1.0, 2.0 will overlap. Because while we have that recognition event at the end of this year, OZ 1.0 continues for two years after. And then OZ 2.0 obviously begins um ah on January 1st.
Speaker: So it sort of defined the interactions and the limitations between the new investments and and where money could go there. And it also clarified, i think, what we largely expected, but some people were hoping ah would be different, was that that recognition event, that December 31st recognition event for OZ 1.0.
Speaker: you cannot re-defer those gains by taking it and putting it into 2.0, which again was expected, but some people were still crossing fingers and toes hoping for a different, different outcome. um So it was, it was helpful in answering some big questions, but again, devil is in the details. And this is,
Speaker: This is a permanent provision. And so it it needs to be ah thoughtfully and durably crafted, right? um And so I think that will take some time. That being said, we do need to start implementing. You can have a gain recognition today because you have a 180-day window to invest. Right. You can have a gain recognition event today and and still you're you're close enough to the beginning of OZ 2.0 to invest those gains and and have that gain deferral. And so I i think that that's, again, that planning window is
Speaker: How is this program going to be structured? What sort of investments are we going to be able to make? What we're we're beginning to see, right, the localities where OZ 2.0 will begin. And so I think those are all, we are in a critical planning, planning window. Yeah.
Speaker: ah And it will change every 10 years. Every 10 years, we're going to get new OZs or new Opportunity Zone designations. um These five-year rolling, you know, timelines are are going to continue in perpetuity. So it's always going to be a significant planning event. ah But yeah, right now with the uncertainty, some uncertainty and and just generally getting your hands around the structure and the locations, i think I think it is a critical time ah for Opportunity Zone planning.
Speaker: Right. No. And another one was the Trump accounts, the 538 accounts, um revenue procedure 2026-25. yeah Recently came out. It provides a safe harbor for gift tax consequences associated with the the Trump accounts, assuming certain requirements are met.
Speaker: um Can you talk about the safe harbor and what was really going on with it and why it was needed? Yeah. So- You and I can each gift, you know, a certain amount of money per year. What is it now? $19,000? Yes.
Speaker: yes um We can gift a certain amount of money ah and we don't have to pay gift tax on it. And we don't have to use up our exemption in order to to avoid gift tax, right? We can give that. But it's because we're giving present interests, right? It has to be a present interest in order to qualify.
Speaker: Because contributions to Trump accounts, because it can't be touched by the beneficiaries at the moment, ah the way the law was written and and just the general structure, ah the consensus is that these are not present interests. These are future interests, right? ah The the ah ah the gift, I would say, to Trump accounts. So that would mean everybody who gave to a Trump account would need to file a tax return, a gift tax return, and would have to essentially use their exemption if they wanted to avoid gift tax. um And
Speaker: At the moment, everyone's got $15 million dollars of exemption. So this $5,000 contribution isn't is a drop in the bucket, but but it's another filing. And it's a filing that people were not expecting. And that really would hinder, i think, hinder participation in the program. So we got and we got a safe harbor that says, hey, these are going to be treated public. as as as ah present interests rather than future interests. And as long as you don't exceed, you meet certain criteria, which means one of which is you do not exceed the gift tax threshold, right? So if I, um you know, Mark, if if i there was a child I wanted to gift to, if I put $5,000 into their Trump account, I could then only gift them $14,000 of cash or stock or whatever, vacations, anything I'm gifting them.
Speaker: So if I were to exceed that $14,000 and say $15,000 of cash, then I would have a filing requirement. But anyway, the donations to the Trump accounts in and of themselves, if you meet, again, those other certain criteria, would not necessitate a filing, um which which should help with plan participation.
Speaker: Oh, that's good. And I think I think this is something that is a positive. So if you're listening and you're not aware of this, it's something to pay attention to. And and it's still like Casey had mentioned, they're still on the five thirty a Trump accounts. There's still plenty of guidance that's needed um that we're going to have to see. and Hopefully this upcoming year we see more of it come out.
Speaker: Also, Casey, an item I think that is worth noting is on July 8th, the IRS announced the new automatic exemption from penalty program, AEP. um And in essence, it was eligible taxpayers with a compliant history. So, you know, they've been in good standing, will automatically receive relief from certain failure to file, failure to pay and failure deposit penalties.
Speaker: So taxpayers that have been a good standing for the previous three years qualify for this program. And so this would be for eligible returns starting for 2025 plus 2026 quarterly returns in future periods.
Speaker: um It's an automatic relief, no requests required, which seems like a very meaningful change, right? So from your perspective, what is your reaction to that? And is this something that is taxpayer service improvement or what are your thoughts?
Speaker: Yeah, you have to think the average taxpayer um is either going to call the IRS and and may find it difficult to navigate or will pay their CPA to call the IRS, which is a cost, right, to relieve this penalty. So um I do think that the automatic penalty relief is a great thing.
Speaker: um It is going to replace the first-time abatement program. are are the which we used on and off. um There are some intricacies on on how we like to use that. and And it's not always used in the way that is most advantageous, but relieves taxpayers of the ah burden of of penalties. But I think this will be a great thing. It will reduce ah friction. It'll reduce the amount of times people need to contact IRS. Yeah. And that being said, if there is another reason for abatement for the penalty, um I would say sometimes it is worth pursuing that in order to preserve your ability to take advantage of um the automatic program, you know, which is what we used to do under the the.
Speaker: ah First time abate program, right? if If there was a reason that it should be abated other than it was the first time, we wanted to use that so we could preserve the protection of the first time abate. And so I do think that in certain instances, it will be beneficial to still contact the IRS and have it have it removed essentially for a different reason.
Speaker: um but We will see. it I think the program details are are forthcoming. um And so we'll dig into those when we have them. I think I've only seen an announcement so far. Have you seen any any details yet?
Speaker: No details yet, no. Yeah.
Speaker: And then in a litigation matter, we you know this was a hot topic 30 days ago, but was the Kuang versus United States in the related decision in ABDO versus commissioner.
Speaker: These cases expanded potential relief for taxpayers who paid or were assessed penalties or interest during the COVID-19 federally declared disaster period, right? And the reasoning behind that the IRS may not have given taxpayers that full benefit of pandemic era deadline extensions.
Speaker: And so there was this relevant period of January 20th of 2020 that ran through July 10th of 2023. And then essentially you could have filed a protective claim for your client um by July 10th of 2026. Now that the July 10th date for this Quang filing has been put behind us,
Speaker: you know, and people have filed protective claims. What is the posture we should be sitting on? Or I continue to get questions for people that have filed protective claims. Where is this headed and what does that look like?
Speaker: Any thoughts on that? Yeah, Mark. So obviously we've got the the filing deadline has passed. This was another one where the IRS came out. Oh, gosh, I don't know, less than two weeks before and said, we have a special process for filing these. Um,
Speaker: So hopefully everybody got their filing or their or their protective claim in. i don't know what is going to happen with this. Obviously, we've got the Kwan case, the Abdo case. There are other cases in motion challenging the exact same case.
Speaker: provision If IRS does not prevail and and it is decided that taxpayers are in front are entitled to refunds of you know penalties and interest, I think it's possibly going to be a long payout period, hopefully not quite.
Speaker: ah along the lines of yeah ERC, but but I do see it taking some time. So none of this, I think, is going to result in in quick refunds. um That being said, people who paid meaningful penalties and interest, um I'm sure will be delighted to receive their refunds whenever the time comes.
Speaker: Yeah. No, i think I think we'll see. And I – it's a question that comes up quite a bit, and I think people – it will not you know completely go away. I think just as we get – as we move away from July 10th of this month, um I think will become less of a news story until something new of it comes up. but So – Now, talking about tariffs, which we mentioned earlier, um this this episode could have its – I mean, this topic has its own episode in essence. you know so
Speaker: But I think couple things that are important about this theory on tariffs is that on July 1st, you announced – the US announced it would not renew the current version of the USMCA.
Speaker: Under the existing terms, the three countries will now conduct annual reviews to determine whether a revised agreement can be reached. The current agreement is set to expire, i believe, on July 1st, 2036, unless something changes or replaces it and in in the process, right? And 10%.
Speaker: The 10% Section 122 tariffs expire on July 24th of this month, which is days from now. So they remain in litigation with the Court of International Trade, finding them unlawful and the federal circuit stay in the the rule while the appeals proceed. So there's a lot going on on the tariff section, as we know. um You know, for longtime professionals and tax people out there that viewed tariffs for years is just kind of like a custom issue. i don't have to worry about it. i don't talk to my clients about it and vice versa. Now we see that this is a constant conversation within practice, right? So,
Speaker: Tell us from your perspective with everything that's happened in the past year, what should you know practitioners be thinking when it comes to tariffs and and how should they be you know advising clients or or at least just having conversations about this?
Speaker: Yeah. So this is, i mean, and and tariffs are a tax. This is a tax planning issue. and And it is one where a lot of practitioners do not have a lot of knowledge because we we've not had to before, right? um It's sort of been viewed as a cost, I think, that that goes into inventory. um And it it still really is, right? But- the numbers have changed substantially and they are impacting pricing decisions and expansion decisions and supplier decisions, supply chains. I mean, it is affecting businesses from from top to bottom.
Speaker: There is... Only, you know, there's some planning we can do. And obviously the average practitioner it's not going to be in their wheelhouse. And what I would say is if you've got a client that has a meaningful tariff burden, i would refer them to, you know, a, a, a,
Speaker: trade or customs shop or attorney in order to help with structuring and planning and finding any exemptions that are available for any of the products and and that will help with decision making. I think decision making has been one of the most difficult, I guess, issues we'll say that businesses have faced because the grant ground has been ever shifting. so Trump administration came in and they, there is no secret OB three plays to this, the trade policy and economic policy broadly ah plays to this. And it is that the Trump administration is looking to bring manufacturing on shore. We are a net importer. We have been a net importer since ah the entire time. I think I've been alive. We've been an a net importer and we're not producing as many physical goods
Speaker: ah in the United States as other countries are. ah For a whole host of reasons, right? Like we can go into like decades of economic decisions that have led to this, but but that's ultimately where we are. And the Trump administration would like to see some of these come on shore. And so we've got all of these different tariffs happening. So we had AIPA come up and those were based on trade imbalances. They were found to be unconstitutional. They were refunded or they're in the process of being refunded rather. um And so and and in that time. that they were in place, they changed over 50 times, right, in less than a year. And so it's it's hard to make decisions when you've got things coming over on a boat and you don't know what the tariff rate is going to be when it gets here.
Speaker: So that was a just difficult decision-making process. So we've got to e the IEPA tariffs, trade imbalances, those didn't work. Those were declared unconstitutional. And so we got this patch of the 122 tariffs, which We're 10%. We were told they were going to be 15%, but they they actually never went there. They they stayed at 10%.
Speaker: And they are expiring, but like you said, at the at the end of this week. Statutorily, they can only be in place for 150 days. So we get those ah sort of as a like, hey, this is part of our broader economic and and trade agenda. And so we're going to put these in place until we can go through these Section 301 investigations. Right.
Speaker: And so we have two major, we have a couple smaller ones, but we have two major Section 301 investigations that were declared very shortly after, you know, the the implementation of one the Section 122 tariffs.
Speaker: And I view AEPA and 122 sort of like in one bucket. And we've got the 301s that ah are coming about to come to fruition. So we have one on 60 trading partners. And 60 trading partners is is sort of misleading because one of the trading partners is the EU, right? And so that's that's more than one country. So you've got 60 trading partners, and we're investigating them for violations of of fair labor standards, right, that they're using materials that were produced in ah via forced labor. So we found essentially that all 60 countries violate it and we're intending to implement tariffs of between 10 and 12.5%, I guess, based based on the level of violation.
Speaker: We have another Section 301 investigation where we haven't seen the results yet. It's into 16 of our trading partners and that is on ah excess manufacturing, you know creating excess manufacturing capacity.
Speaker: Those are likely essentially to replace The IEPA and 122, you know, we're down that chain. IEPA, 122, these section 301s. These are likely to essentially replace those. Now, good and bad news.
Speaker: I think that the obviously i don't think many American businesses are excited about paying tariffs. However, these may be more stable, right? The other Section 301 tariffs that we saw the Trump administration put into place in the first administration on China, went through an investigation, found them guilty, put in, those were more stable. So they were better for decision making, at least, ah in in the short to midterm. And so we may see some a little more stability there. that's That's, I guess, what I'm hopeful for is that there's a little more stability.
Speaker: And then we also have the Section 232 tariffs. Those are on products, specific product classes that we say endanger our national security. And so we had them on steel in the first administration. And when we've just sort of expanded those, we've done investigations and we've got them on steel, pharmaceuticals, auto parts, soft lumber, yeah things like that. And so those are inherently, they have been more stable than the others. Some changes, but not many.
Speaker: A little bit more stable, so better for decision making. And then actually yesterday we saw a Section 338 tariff come out against ah certain Canadian goods that will go in place on August 19. I'm interested to see what happens with those. i'm I haven't been able to to dig in too deeply yet.
Speaker: But what I'll say is sort of to your point of planning, you know, in FY16, which was Obama's last year in office, we collected $35 billion dollars of tariff revenue.
Speaker: And then FY24, which is, you know, ended um ah right before Trump ah took office, we had $77 billion dollars of tariff revenue.
Speaker: In FY25, we saw IEPA go into place and we had 195 billion in tariff revenue. you so more than double, right? Right. Like 2.5 times in the amount. Right. Now, half of that is being refunded because it was Section 232 and IEPA. The IEPA portion is is obviously, it's in the process of being refunded.
Speaker: But we look now to, like, obviously we're in the middle of FY26, we don't know. We look to the presidential budget request to sort of say, like, hey, what what, because these are administrative actions, right? These aren't congressional actions. And we say, like, what are they... What are we predicting here? Like, what is the administration looking for? And so what I've got, I've got this printed out here. It's the smallest numbering ever.
Speaker: We expected, now I don't know that we're going to hit this in FY26, but the Trump administration expected $406 billion revenue. compare that. of tariff revenue so compare that to the $77 billion in FY24. That's a ton more. And then it goes from FY26, 406. It goes up each year until in FY36, it hits $681 billion dollars in tariff revenue. In every single one of the years in the presidential budget request, what they're predicting, tra ah tariff revenue, customs duties,
Speaker: are more than the corporate income tax collections. So that is a big shift in tax policy and fiscal policy and where our money comes from. And what I find interesting is, again, these are executive actions. We could see we're going to get a new president, either way, Republican or Democrat, right, on and January 20th, 2029. And whether, as I talk about this all the time, whether, whether,
Speaker: It's Vance or whether it's Buttigieg or Harris or, you know, Marco Rubio, doesn't matter. They could all have a different agenda, right?
Speaker: You could see Vance come in and say, OK, great, but I think these tariffs should be higher, should be lower, should be, you know, we we need adjustments. Things have changed. And so while while I'm hopeful the 301 and the 232s provide at least some certainty, right?
Speaker: In order for planning, we all have to know that this could change in an instant, in the blink of an eye, come January 2029. twenty twenty nine Yeah, I think there's a lot there. And I think, you know, but the key that you mentioned is tariffs is no longer just something you ignore at customs. This has become tax policy. And where we see it head um is something just continue to pay attention to. As a tax practitioner, you have to continue to have these conversations with your clients because it is real cash flow. It is real planning. It it has to do more deeply with how they're running their business. So I think there's a lot there.
Speaker: And real quickly, before as we kind of head towards the end here, you mentioned earlier on, I just kind of want to circle back to that. Yeah. The latest Social Security Trustees report projects that the old age and survivors insurance trust fund would reach that the depletion in the fourth quarter of 2032, right, ish.
Speaker: um And without any kind of legislative action, scheduled benefits would be reduced. And, you know, in that's something that, you know, I think people hear about, but they just kind of ignore because it's like, well, it will in their people's mind, it's always going to be there. There's no way it's not going to be, right? And I talk to clients and they always say the same thing.
Speaker: When you think about how the Social Security and broader fiscal outlook, how will that influence tax policy over the next several years? And you know where do you see this headed? Because I believe we see we just talked about tariffs being part of the tax policy. I believe this is going to be a strong conversation, like you said, starting um this upcoming midterm election for the Senate and going forward.
Speaker: Well, think about your tax burden, right? And let's think about a high-income taxpayer. they've got They're paying 37% federal. Right. And so ah they're paying. Twelve point six percent in either they or their employer depends. Are they a W-2 or are they self-employed? Essentially, twelve point six percent of their. um ah Wages are up to hundred and eighty thousand dollars are going in to.
Speaker: It's a tax, even though it's a payroll tax, it's a tax. And then we're seeing what the 2.9% Medicare. And then we've got the Medicare surtax. And these are all taxes that we pay. They are part of our financial tax burden. And so while we don't think of them quite the same way as we do a headline rate, we do, they are taxes and they add to our total tax liability and what our take-home pay is or what at the end of the day. And and these are these are individual taxes, right? well The employer will pay, obviously, the employer portion for their employees. But but this is something that that hits of every single individual who has an earned income and and hits every single employer who has an employee.
Speaker: or every every single business who has an employee. So these are part of the tax burden. And and I don't know that they get as much focus as they do as they should because FICA collections always exceed corporate income tax, always. They are a massive part of the of the federal revenue that comes in every year. So they are going to be, there's obviously going to have to be changes in order to keep this solvent. I don't think that,
Speaker: I think it's going to be very difficult to get elected in 2028, 2030. Obviously, 2032 is probably going to be too late, right? Because they take seat in 2033. It's going to be very difficult to get elected and say, yeah, I'm good with your benefits being cut by 22%. That's where we are.
Speaker: That's what we should do. so and And the fiscal reality is that if we just say we're going to pay them out without bringing in additional revenue or without making significant changes, we are going to exacerbate this massive deficit position that we are in right now, um which is not particularly tenable to either party either. um And not great, right? Obviously, you know, as it's not a great strategy overall. So i I think there are going to have to be some difficult decisions and whether they're reductions in benefits or changes in the program or increases in taxes, whether they're payroll or individual or or there's –
Speaker: um ah redirection of some type of tax to go into the Social so Security Trust Fund. I don't know what it is, but it no matter what, there's x amount of dollars that come in and X amount of dollars that go out. And every single, I have to go find it, but I read something recently that was like, for every dollar of debt,
Speaker: We issue we are going to have right now, you know, of deficit we create, we are going to have to pay like something like 70 or 80 cents or 80 percent in interest over light like that's wild. It is, you know, over the life of it. So i think, you know, we're we're just sort of kicking the can down the road. and and And these things are all going to come to a head at some point. And whether it is the Social Security Trust Fund or whether it is the bond market moving and saying, like, essentially, we think U.S. debt is a going concern and interest rates rising because of that or You know, we we whatever the impetus is, or maybe it's a change in power in Washington, or maybe there's another covid that we're not projecting, you know, like some of these things come out of left field.
Speaker: well I think what i what I tell, you know, as I go through and teach some of these things is it would be irresponsible for me to say that that I believe in any fashion today's tax law will be the tax law in 10 years. that That what we have today will be the system, the exact system that we have in 10 years.
Speaker: its I just don't see how that's possible given all of the things we have ahead of us. No, thank you for that. I think it's stuff to keep on our headlines for sure. um Before we close, I want to finish with really short Quick questions, quick answer, policy lighting around here.
Speaker: Okay. um So just whatever comes top of your mind here. So what's what tax policy is currently receiving more attention than it deserves?
Speaker: Pillar two. Pillar two. Yep. What issue is not receiving nearly enough attention? Social security. I agree. ah The piece of treasury or IRS guidance you would most likely like to see tomorrow morning if you were in charge.
Speaker: Personally, over time because of the pervasive nature, i think that will affect the most taxpayers. Yep. What is more likely, another reconciliation bill, a bipartisan tax administration package, or no meaningful tax legislation before the next Congress?
Speaker: I think no meaningful tax legislation before the next Congress. Got it. And then after midterms, when we invite you back, what do you predict we'll be discussing?
Speaker: I think we'll be discussing, are we talking about in the lame duck session? Correct. Yeah. I think we'll be discussing the composition of the 120th Congress and and what legislation we think is possible um in the 120th Congress, where we will either have a Republican trifecta again or a divided government. Obviously, the White House is not up for election. So those are only two potential outcomes and those will be vastly different. So I think saying, hey, here's what we think the next two years can bring up.
Speaker: will probably be the most valuable portion of the conversation um we can have, but maybe also the the status of bipartisan extenders and and government funding um and just overall fiscal trajectory as well.
Speaker: Awesome. Thank you. Casey, this has been an excellent discussion as always. But before we let you go, where can people find you and follow you and your team's work? Yeah, I mean, i I produce a monthly newsletter um on CBH.com. It's called the Tax Policy Review. um i sometimes, when I think about it, post on LinkedIn.
Speaker: um But yes, please feel free to follow me on LinkedIn. I'm i'm trying to be a little better about that. um Sign up for our our newsletters. um And then, you know, i I try to stay around all of the relevant items. I think, as I told you, I'm headed up to D.C. here just ah in a few minutes. Yeah.
Speaker: There's a yeah National Association of Manufacturers event with Ways and Means Committee. And so I try to stay in touch with ah what policymakers are are sort of looking ahead on. And so I can be found at some of those events, tax conferences, AICPA tax conferences. um Yeah.
Speaker: I'm always happy to connect, though. Please ah feel free to reach out. Awesome. Thank you. And, you know, for our listeners, the major takeaway from today is this, the legislative calendar may be getting shorter, but tax policy agenda is not slowing down, as Casey can has told us about. Congress is turning toward the midterms. Treasury and the IRS are still implementing major tax legislation, and the IRS is changing how penalty penalty relief is being administered.
Speaker: So there's a lot going on there that we need to keep our minds focused on and keep looking for. For tax professionals, this is not a period to sit and wait for Washington. My opinion, it's a period to monitor developments, communicate with our clients, document the assumptions and stay flexible as additional guidance is released. As we all know, guidance doesn't always come at our timetable. It comes ah at ah policymakers timetable. And it's usually not when we always want it. So in a year,
Speaker: of uncertainty and this is an uncertain year right the advisors who win are the ones with the best predictions they're the ones with the best questions so keep asking them casey pitman managing director of tax policy at sherry beckert thank you for returning to tax news now we always appreciate your perspective and your ability to make that washington tax policy easily understandable for all of us and thank you to everyone for listening please remember that the information discussed today is for educational purposes and should not be considered tax or legal advice Taxpayers should consult with their professional advisors regarding their specific facts and circumstances.
Speaker: I'm Mark Gallegos. This has been a Tax News Now podcast. Please subscribe, share this episode episode with your colleagues and join us again for our next tax episode. Thanks for joining us.
