Key Takeaways
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Second-Ranking Treasury Official Faulkender resigns after brief tenure.
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Faulkender ran IRS from April 19 to June 16 this year; was 5th IRS chief of 7 so far this year.
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IRS Crypto boss leaves.
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IRS tries to lure back some employees lost in DOGE cuts.
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Reaction to energy credit FAQ.
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Foreign postal services stop parcel shipments in reaction to U.S. tariff changes.
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Rookie mistakes in tax crime.
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National Banana Split Day.
Treasury Department’s No. 2 official is leaving - Michael Stratford and Megan Messerly, Politico:
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Faulkender, the deputy Treasury Secretary, oversees the agency’s operations and has a broad policy portfolio that spans tax, international finance, sanctions and financial regulation. He previously was a finance professor at the University of Maryland’s business school and served as chief economist at the Trump-aligned America First Policy Institute.
Trump Soured on Faulkender, Leading to Exit From Treasury - Brian Schwartz, Alexander Ward and Richard Rubin, Wall Street Journal:
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Starting almost a month ago, Trump was in discussions with administration officials and outside advisers about his growing disdain of Faulkender, the people familiar with the matter said. He was made aware that Faulkender was battling with then-Internal Revenue Service commissioner Billy Long, a Trump ally, over how to run the agency after the former Republican lawmaker was officially sworn into the job in June, these people said.
As Trump soured on Faulkender, he began to press Bessent to put him on administrative leave with the president’s end goal of the Treasury secretary firing his deputy, these people said. And this week, after hearing from Trump again on the issue, Bessent informed Faulkender his time at the agency was at an end and he had to leave. Faulkender resigned from the Treasury on Thursday.
So Treasury Secretary Bessent Fired Michael Faulkender because he didn't get along with IRS Commissioner Billy Long, who Bessent fired. Everything makes sense now.
IRS Crypto Leader to Leave Amid Agency Executive Departures - Erin Schilling, Bloomberg ($):
Turner took over the digital assets unit after Sulolit “Raj” Mukherjee and Seth Wilks, two private-sector leaders hired during the Biden administration, left in May. She previously worked as a senior adviser within the digital assets office.
Turner confirmed her departure. She said in an interview she will become tax director at Crypto Tax Girl, which specializes in cryptocurrency tax services.
IRS: Please Come Back, We Didn't Mean It
IRS plans to bring back workers it pushed out but now needs - Meryl Kornfield, Shannon Najmabadi and Jacob Bogage, Washington Post:
Treasury Looks to Undo Some IRS Resignations - Benjamin Valdez, Tax Notes ($):
The email, sent to an employee from the Small Business/Self-Employed Division who opted into the program, explains that “the IRS has identified critical vacancies that need to be filled and is exercising its discretion to offer you the opportunity to rescind your Deferred Resignation Program/Treasury Deferred Resignation Program (DRP/TDRP) agreement.”
The offer signals that the Trump administration likely overshot its workforce reduction goals for the IRS, which has lost 25 percent of its 100,000-employee workforce in large part because of the resignations. The agency has also begun to inform employees that further reduction-in-force actions aren’t in the offing, according to a source in the agency.
IRS halts layoff plans, looks to rehire some fired employees - Amalia Huot-Marchand, The Hill. "In February, Kevin Hassett, chair of the White House Council of Economic Advisers, said the administration believed too many people were employed by the government to collect taxes."
OBBBA - Now What?
IRS Guidance Sparks Mixed Reaction For Solar, Wind Projects - Kat Lucero, Law360 Tax Authority ($):
Early stage projects cannot use the safe harbor that would have otherwise given them the option to establish a construction start date by incurring at least 5% of the project costs to meet 45Y and 48E's new accelerated phasedown for solar and wind energy facilities, according to the guidance. The budget reconciliation law, H.R. 1, which was enacted July 4, shortened the window for solar and wind energy projects' access to those credits.
That leaves developers with only one method: They must show that their projects are already undergoing or ready to undergo significant building activity, such as pouring concrete on the foundation and setting anchor bolts for wind facilities. Practitioners have relied for many years on this method, known as the physical work test, along with the 5% safe harbor option, as part of the beginning-of-construction guidance for renewable energy tax credits.
Capitol Hill Recap: Treasury’s Middle Path on Energy Credits - Alex Parker, Eide Bailly:
The tricky balancing act reflects dynamics which played into the writing of the law itself, and will likely continue as it is implemented in the coming months and years. While President Trump himself has altogether opposed the Inflation Reduction Act’s energy credits—what he calls the “Green New Scam”—some Republicans fought to ensure that the lucrative incentives weren’t removed entirely. Aside from the projects they support in both Republican and Democratic districts, lawmakers have also expressed concerns that full repeal could leave the U.S. behind China and other competitors in clean energy technologies.
Related: The Impact of New Tax Legislation on Energy Efficiency Incentives
The One Big Beautiful Bill Act Creates Unequal Tax Treatment for Gambling Losses - Adam Hoffer, Garrett Watson, and Jacob Macumber-Rosin, Tax Policy Blog:
The OBBBA provision limiting the deduction of gambling losses might cause individuals to owe taxes on imaginary income, incentivizing gamblers succeeding on thin margins to exit the US or participate in illicit markets. While the Joint Committee on Taxation estimated that the deduction limit would generate $1.1 billion in tax revenue over eight years, behavioral responses and tax avoidance could quickly reverse that effect. If only a fraction of professional gamers take their bets outside of legal US markets, the effect will be a net loss to tax collections and an increase in illegal activity.
Tariffs and Trade Policy
Postal services to stop sending low-cost parcels to US as duty exemption ends - Alice Hancock and Raphael Minder, Financial Times:
President Donald Trump announced in July that the US would expand its suspension of the “de minimis” exemption for parcels valued at less than $800, which it had already applied to China and Hong Kong, to the rest of the world, beginning on August 29.
State-owned postal services and private operators from Germany to Singapore said they would suspend services because US authorities had yet to provide sufficient information on how the duties would be collected.
Canada To Toss Tariffs On US Goods Under USMCA - Kevin Pinner, Law360 Tax Authority ($): "The Canadian government will remove retaliatory tariffs on U.S. goods that comply with the United States-Mexico-Canada Agreement, excluding steel, aluminum and automobiles, in a move aimed at jump-starting trade talks akin to an exemption made by the U.S. government, Canada's prime minister said Friday."
Blogs and Bits
IRS releases draft 2026 Form W-2, incorporating no tax on tips or overtime income - Kay Bell, Don't Mess With Taxes:
But the tax agency is working on how the OBBB information will be reported for the 2026 tax year. To that end, the IRS has released a draft of next year’s Form 2026 W-2, reproduced below.
IRS Closes Cincinnati Lockboxes; New Addresses In Effect Immediately - Russ Fox, Taxable Talk: "The major change for residents of Alaska, California, Colorado, Hawaii, Idaho, Kansas, Michigan, Montana, Nebraska, Nevada, Ohio, Oregon, North Dakota, South Dakota, Utah, Washington, and Wyoming is that there are new addresses to mail Forms 1040-V and 1040-ES. (Paper-filed forms 1040 with a payment go to the 1040-V address.)"
One more reason to pay electronically, as Russ notes.
Tax-Free Qualified Small Business Stock Break Jumps From $10M To $15M - Robert Wood, Forbes. "Tax-free treatment only applies to shares acquired upon original issuance by a C corporation. This tax break causes some to reject S corporations and LLCs. But some types of business don’t qualify, including those in the fields of health, engineering, architecture, law, farming, banking, consulting, and operating hotels. There’s a size limit too."
An Overview of the Filing Relief for Natural Disasters Act - Thomas Gorczynski, Tom Talks Taxes. "On July 24, 2025, a tax bill quietly became law: the Filing Relief for Natural Disasters Act, also known as Public Law 119-29. In addition, the One Big Beautiful Bill Act (OB3 Act) made disaster-related changes that complement this new law."
Rookie Mistakes in Tax Crime
West Virginia business owner sentenced for employment tax crimes - IRS (Defendant name omitted, emphasis added):
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Between 2015 and 2022, Defendant did not pay to the IRS the taxes withheld from his employees’ paychecks. He also used RPC Group’s business accounts to pay for personal expenses, including personal credit cards and his wife’s home mortgage. He also issued checks to his wife from RPC Group even though she was not an employee of the business. In addition, from 2018 to 2023, Defendant did not file personal tax returns or pay income taxes.
In total, Defendant caused a tax loss to the IRS of about $525,000.
Key rookie mistakes here:
1. He didn't pay over withheld taxes. The employees will claim their withholding when they file their tax returns. Even the antiquated IRS computers notice if that withheld money hasn't been paid in by the employers. And the IRS really hates when that happens.
2. He didn't file his own 1040. The IRS may or may not notice a return that is filed with bad information. A taxpayer with a business is unlikely to avoid having 1099s and other information returns that indicate taxable income. IRS computers notice that too.
Don't do that.
What day is it?
It's National Banana Split Day! And if you are a messy eater, it's also National Secondhand Wardrobe Day.
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