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Columns at the Delaware County Court of Common Pleas, Media, Pennsylvania

From the Hill: February 4, 2025

Recent activities on the Hill include the Senate confirming Scott Bessent as Treasury secretary.

Here’s a look at recent tax-related happenings on the Hill, including Scott Bessent’s Senate confirmation as secretary of the Treasury and President Donald Trump issuing executive orders to impose tariffs on goods from Canada, Mexico, and China.

Lately on the Hill

On January 27, the U.S. Senate confirmed Scott Bessent as secretary of the Treasury. As secretary, Bessent is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in the determination of broad fiscal policies that impact the U.S. economy, and managing the public debt through oversight of the U.S. Department of the Treasury.

On February 1, Trump issued a series of executive orders to impose tariffs on goods from Canada, Mexico, and China under the authority of the International Emergency Economic Powers Act:

  1. Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border” imposes a 25%1 tariff on all Canadian products effective February 4, 2025. In 2022, total trade in goods and services with Canada amounted to $909 billion, resulting in a U.S. trade deficit with Canada of $54 billion.2 In response, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs of 25% on $100 billion of U.S. goods the following day. The tariffs will be delayed for at least one month after Trudeau and Trump reached an agreement as they work on border security.3
  2. Imposing Duties to Address the Situation at Our Southern Border” imposes a 25% tariff on all Mexican products effective February 4, 2025. In 2022, U.S. trade in goods and services with Mexico totaled $855 billion and resulted in a U.S. trade deficit with Mexico of $131 billion.4 The tariffs will be delayed for one month after Mexican President Claudia Sheinbaum agreed to send 10,000 troops to the U.S.-Mexico border to fight drug trafficking and illegal immigration.5
  3. Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China” establishes a 10% tariff on all products of the People’s Republic of China effective February 4, 2025. In 2022, the U.S. had a trade deficit with China of approximately $367 billion, nearly all of which was related to the import of Chinese goods.6

On January 31, the White House announced an executive order in a statement titled “Fact Sheet: President Donald J. Trump Launches Massive 10-to-1 Deregulation Initiative.” The order would mandate the repeal of 10 existing rules, regulations, or guidance documents for each new regulation or rule issued. In addition, the order requires that the total incremental cost of all new regulations issued in 2025 be significantly less than zero, with the goal of improving the lives of the American people by reducing “unnecessary, burdensome, and costly” regulations. The order also reinstates a memorandum of understanding between Treasury and the Office of Management and Budget in which the Office of Information and Regulatory Affairs is to review certain regulations.

Draft Legislation Overview

The Taxpayer Assistance and Service (TAS) Act: Presented as a bipartisan effort to enhance the taxpayer experience, this act seeks to impose competency standards on all paid tax return preparers, introducing stricter penalties for those found incompetent. The act specifically targets non-credentialed tax return preparers, mandating criminal background and tax compliance checks, and establishing a requirement for up to 18 hours of continuing education annually. Licensed preparers would be exempt from the suitability and continuing education requirements, which may be targeted in relation to return errors as designated by the Treasury secretary. Failure to furnish a preparer tax identification number may result in fines of $50,000 ($100,000 for corporations) and up to two years of imprisonment. Senate Finance Committee Chair Mike Crapo (R-ID) and ranking member Ron Wyden (D-OR) have championed the draft bill to “facilitate communication between agency and taxpayers, streamline processes for tax compliance and disputes, and ensure taxpayers have access to timely expert assistance.”

Main Street Tax Certainty Act: Sponsored by Rep. Lloyd Smucker (R-PA) and Sen. Steve Daines (R-MT) and supported by Senate Majority Leader John Thune (R-SD), this act aims to make the 20% pass-through business tax deduction permanent. Under Section 199A, noncorporate taxpayers are allowed to deduct against their federal taxable income the lesser of their combined qualified business income or 20% of the excess of their taxable income over net capital gain. The §199A Qualified Business Income Deduction, or pass-through business tax deduction, is currently set to expire at the end of 2025.

Judicial Report

On January 28, the White House Issued a memorandum entitled “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs”7 to direct agencies to pause all activities related to the obligation or disbursement of federal financial assistance, including—but not limited to—financial assistance for foreign aid, nongovernment organizations, and the Green New Deal, but excluding Social Security and Medicare from the broad scope of programs affected. An additional memorandum was later issued to provide clarification on the programs affected by the pause.

Concerns over the breadth of the programs affected by the memorandum, including the applicability to certain tax credits, led to a stay on the order by Judge Loren AliKhan of the U.S. District Court for the District of Columbia. The stay is expected to remain in effect until February 3. Despite rescinding the memorandum, the White House maintains that the funding freeze is still in effect. As a result, numerous lawsuits were filed this past week by state attorneys general to highlight concern over the impact this freeze could have on federal grants and loans that would indirectly impact individual constituents in their states.

From the Treasury & IRS

Switzerland and the U.S. have signed a Competent Authority Arrangement (CCA) to encompass certain payments from U.S. and Swiss pensions, or other retirement arrangements, including individual retirement plans, as eligible for benefits under Article 10 of the Tax Convention with Swiss Confederation. The CCA includes retirement arrangements such as a trust providing benefits or a group trust as described in Revenue Ruling 81-100 (if operating exclusively or almost exclusively to earn income for the benefit of pension funds) as eligible for benefits. The CCA also provides specific procedures for a U.S. Group Trust to follow when submitting a claim for refund.

The IRS announced the start of the 2025 tax filing season on January 27 in IR-2025-18. The announcement provided key guidance for taxpayers needing assistance with their 2024 tax returns. Additional tips related to the 2025 tax filing season were provided in IR-2025-19.

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. 

  • 1Excepting energy or energy resources to which a 10% tariff applies.
  • 2Canada Trade & Investment Summary, www.ustr.gov.
  • 3Trump's Border Deals With Canada, Mexico Avert Trade War For Now," bloomberg.com, February 3, 2025.
  • 4Mexico Trade & Investment Summary, www.ustr.gov.
  • 5“Trump puts Mexico tariffs on hold for 1 month after a call with the Mexican president,” www.npr.org, February 3, 2025.
  • 6China Trade & Investment Summary, www.ustr.gov.
  • 7This Memorandum has been rescinded, however the additional Memorandum later issued to address frequently asked questions can be found in the Fact Sheets section on whitehouse.gov.

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