Here’s a look at recent tax-related happenings on the Hill, including Trump administration officials possibly considering an exporter tax credit.
Lately on the Hill
Reciprocal Tariffs Paused & Exporter Tax Credit Is Contemplated
Last week, President Donald Trump signed an executive order instituting a freeze until 12:01 a.m. July 9, 2025 on reciprocal tariffs imposed on scores of countries, except China, which saw its tariff rate dramatically increased. The countries provided with temporary relief from the reciprocal tariffs are subject to a 10% tariff instead. Other tariffs, including higher tariffs imposed on Canada and Mexico, are still in effect. Please read our FORsights™ article, “90-Day Pause on Tariffs, Except for China,” for more information.
A Presidential Memorandum expands the exception for “semiconductors” related to the imposition of the reciprocal tariffs on China and other countries. The list in the memorandum excludes items under the Harmonized Tariff Schedule, including smartphones, LEDs, integrated circuits, and other electronics.
Reports indicate that Trump administration officials may be considering an exporter tax credit to help subsidize the cost of retaliatory tariffs on U.S. manufacturers. The credit may also apply to service exporters and would have to be enacted by Congress.1
Budget Resolution Passes, Now on to Budget Reconciliation
The House of Representatives passed the concurrent budget resolution by a slim 216 to 214 vote last Thursday. Originally scheduled for the day before, the vote on the measure was scrapped after Republican leadership failed to quell concerns about spending cuts from representatives focused on the nation’s debt situation.
The House’s original version of the budget resolution called for a minimum of $1.5 trillion in spending cuts, but the Senate’s version called for much less, totaling $4 billion. Senate Republicans generally support spending cuts but weren’t keen on House Republican desires for deep cuts to Medicaid or repealing significant parts of the Inflation Reduction Act of 2022. The measure was able to advance after Republican leadership in both the House and Senate provided firm assurances that the minimum level of cuts articulated by the House would be achieved, although it was not written into the resolution.2
With the passage of the budget resolution, the various congressional committees now have their instructions and can begin drafting provisions to allocate their budgeted amounts. After the committee work is completed, the provisions will comprise a budget reconciliation bill that will require only a simple majority to be enacted. Republicans have expressed they would like to have that done by Memorial Day.
Reactions to SALT Deduction Changes for Individuals & Businesses
Last week, “From the Hill” described new tax policy surfacing that included a $15,000 increase to the cap on deductions of state and local taxes (SALT) for individuals and a new cap on business SALT deductions (C-SALT).
Representatives from high-tax states California, New Jersey, and New York promptly rejected and vowed to withhold their votes on a forthcoming tax bill as the proposed increase on SALT deductions for individuals does not go far enough. “Negotiation and compromise that moves us in the right direction is important, however, this proposal does not do nearly enough to deliver meaningful tax relief to New Jerseyans,” said U.S. Rep. Tom Kean (R-NJ).3
Likewise, business groups are beginning to speak out against C-SALT, including the U.S. Chamber of Commerce.4 “If Congress were to preserve the current 21% statutory corporate tax rate but adopt the C-SALT proposal,” explains the Chamber, “the average U.S. corporation would face an effective corporate tax increase of 1.23%. The damage either change would do to America’s global competitiveness is clear: with an average combined federal–state corporate tax rate of approximately 27%, the United States would become the tenth highest-taxed country in the OECD—ceding our competitive advantage over the Netherlands, France, Canada, and South Korea.”5
With a paper-thin majority in the House, Republicans can ill afford to lose even a handful of votes to pass tax legislation. However, hard decisions will need to be made as significant tax cuts must be paired with significant revenue raisers (or spending cuts) to ensure that the budget reconciliation bill does not increase the deficit over the budget window, according to the Senate’s “Byrd Rule.”
President Trump Directs Federal Agencies to Cut Regulations
A Presidential Memorandum was issued directing federal agencies to repeal “unlawful” regulations. Agency heads are to follow rulings of 10 Supreme Court cases, including Loper Bright Enterprises v. Raimondo, which overturned precedent deferring to federal agency interpretation of ambiguities in laws passed by Congress.
The memorandum states, “In effectuating repeals of facially unlawful regulations, agency heads shall finalize rules without notice and comment, where doing so is consistent with the ‘good cause’ exception in the Administrative Procedure Act. That exception allows agencies to dispense with notice-and-comment rulemaking when that process would be ‘impracticable, unnecessary, or contrary to the public interest.’ Retaining and enforcing facially unlawful regulations is clearly contrary to the public interest.”
Legislation Ending Crypto Broker Rules Signed by Trump
IRS regulations issued shortly before Trump took office defining decentralized cryptocurrency exchanges as brokers subject to reporting requirements were overturned after Trump signed legislation passed by Congress.
The Judicial Report
ERC Today, LLC v. McInelly, No. 2:24-cv-03178
Judge Stephen M. McNamee of the U.S. District Court for the District of Arizona denied a motion for a preliminary injunction allowing the IRS to continue using a risk scoring analytic process to deny claims of the Employee Retention Credit (ERC).
The COVID-19-era credit incentivized employers to retain their employees but was exploited by aggressive promoters who inundated the IRS with illegitimate claims. Processing procedures were employed by the IRS to identify high-risk claims, which were subsequently denied the credit. The plaintiffs argued the IRS’ approach of processing ERC claims violates the Administrative Procedure Act and due process rights under the Fifth Amendment.
The court determined that the plaintiff lacked standing under Article III of the Constitution “because Plaintiffs have not shown that their injuries would be redressed by the relief sought.”6
U.S. Office of Personnel Management v. AFGE, No. 24A904
On April 8, 2025, the U.S. Supreme Court stayed an injunction requiring the U.S. Department of the Treasury and five other government departments to reinstate fired probationary employees. The injunction had been issued by Judge William H. Alsup of the U.S. District Court for the Northern District of California.7
The ruling reads, “The District Court’s injunction was based solely on the allegations of the nine non-profit-organization plaintiffs in this case. But under established law, those allegations are presently insufficient to support the organizations’ standing.”
From the Treasury & IRS
Leadership Changes
Melanie Krause, acting IRS commissioner, has accepted the agency’s deferred resignation offer. Krause has been serving in the role since early March and is the third person to fill the role this year. The announcement came shortly after Treasury agreed to share taxpayer data with the U.S. Department of Homeland Security relating to individuals under criminal investigation.8
Treasury issued a press release announcing new appointments to various positions as follows:
- Rebecca Oakes Burch, deputy assistant secretary for international tax affairs
- Kevin Salinger, deputy assistant secretary for tax policy
- Derek Theurer, upon confirmation of his current nomination as deputy under secretary of the Treasury for legislative affairs, will be designated as assistant secretary for legislative affairs
Released Guidance
Notice 2025-24 provides penalty relief to participants in micro-captive reportable transactions that fail to file Form 8886, Reportable Transaction Disclosure Statement, by the April 14, 2025 due date. Relief is extended if participants file by July 31, 2025. Furthermore, relief is provided for material advisors to certain micro-captive transactions required to file disclosures by April 30, 2025. Material advisors may receive penalty relief if such disclosures are filed by July 31, 2025.
IR-2025-27 announces relief to individuals and businesses in Tennessee affected by severe storms, straight-line winds, tornadoes, and flooding that began on April 2, 2025. Affected taxpayers have until November 3, 2025 to file individual and business tax returns and make tax payments.
Notice 2025-22 eliminates nine guidance documents that have been found obsolete. The notice follows directives stemming from an executive order issued by Trump to reduce and eliminate regulations and other guidance documents. A list of the obsoleted guidance can be found within the notice.
IR-2025-49 announces relief to individuals and businesses in Arkansas affected by severe storms, tornadoes, and flooding that began on April 2, 2025. Affected taxpayers have until November 3, 2025 to file individual and business tax returns and make tax payments.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“Trump Team Mulls Exporter Tax Credit as Tariff Counterweight,” bloomberglaw.com, April 7, 2025.
- 2“How House Budget Hawks Went From ‘No’ to ‘Yes’ in Under 24 Hours,” taxnotes.com, April 11, 2025.
- 3“GOP House Swing Votes Balk at $25,000 SALT Cap Tax Pitch,” bloomberglaw.com, April 4, 2025.
- 4“Businesses Pounce as GOP Weighs Limiting Corporate SALT Break,” bloomberglaw.com, April 4, 2025.
- 5“How Higher Corporate Taxes Would Affect Your Local Economy,” uschamber.com, April 9, 2025.
- 6Court Dockets, bloomberglaw.com, April 7, 2025.
- 7“Supreme Court Backs Trump for Now on Federal Worker Firings,” bloomberglaw.com, April 8, 2025.
- 8“Acting IRS Commissioner Krause to Depart Agency,” taxnotes.com, April 9, 2025.