I have a confession to make: I’m tired. Sorting through the recently passed House tax bill–dubbed the Big, Beautiful Bill–has not been an easy task. That’s true even though I’ve been following along from afar–unlike members of Congress, I didn’t even have to make a personal appearance at the marathon House sessions (more on that in a moment) or the Senate’s confirmation hearings this past week.
One of those confirmation hearings focused on the nomination of Billy Long, a former Republican congressman, to be IRS Commissioner (there has been a revolving door of heads of the agency since January). The hearing was contentious at times, including a fiery beginning from Senator Ron Wyden (D-Ore.). The Ranking Member of the U.S. Senate Committee on Finance expressed his concerns about Long, saying, “Congressman Long’s experience with tax issues came after he left Congress, when he dove headlong into the tax scam industry.”
Long, who does not have any formal training in tax, law, or accounting and does not have a college degree, never served in Congress on a tax-writing committee. He dropped out of the University of Missouri, and instead earned a certification at an auction training program at the Missouri Auction School.
During the hearing, Democrats grilled Long about his recent history with controversial tax credits, including the non-existent “tribal tax credit” and the employee retention credit (ERC). Long admitted to marketing both–for a referral fee. The Senate Finance Committee must still vote on Long’s nomination before it goes to the full Senate. That committee vote has not yet been scheduled.
It may be that the Senate has other things on its mind, including voting on the recently passed House “big, beautiful bill.” Here’s how that bill made its way over to the Senate.
The madness kicked off earlier this week when the House Budget Committee promised to revisit the stalled tax bill. Representatives had said they would resume talks last Monday during business hours, but the plan changed. Over the weekend, the committee posted notice that it would reconvene a hearing on the matter on Sunday, May 18, at 10 p.m. ET. At that hearing, after another vote, the committee squeaked through an approval and the matter headed to the Rules Committee, which controls how the measure will move to and be debated on the House floor.
One of the issues that slowed the bill down was concern about the cost of the bill. Earlier in the month, Moody’s lowered the U.S. credit score from a Aaa (prime) to Aa1 (high grade) due to the growing burden of the federal government’s deficit and the rising costs the U.S. now faces to finance its debt due to higher interest rates.
Countries, like individual consumers, get credit ratings. The country then uses this rating to issue debt; better ratings allow countries to pay lower interest, and weaker ratings require countries to pay higher interest.
If the tax bill becomes law, it could add $3 trillion to $5 trillion to the U.S. debt. As debt continues to accumulate, the U.S. increasingly faces the risk of default, which clearly impacted Moody’s decision to downgrade the credit rating.
While the House debated the bill, the Senate passed its own version of the No Tax on Tips Act, which is different in a few key ways from the House version. The bill was originally introduced by Sen. Ted Cruz (R-Texas) to little fanfare. However, on May 20, Sen. Jacky Rosen (D-Nev.), one of seven cosponsors of the bipartisan bill, brought it to the Senate floor, where it passed by unanimous consent. Unanimous consent is a procedural tool that is exactly what it sounds like—it requires the unanimous agreement of all Senators. You don’t typically see it used in tax bills, as it’s generally used for noncontroversial resolutions and simple requests, neither of which typically falls into the tax policy basket.
Rosen noted that no tax on tips was a campaign pledge made by President Donald Trump. “And I am not afraid to embrace a good idea wherever it comes from,” she said on the Senate floor, noting that Nevada has more tipped workers per capita than any other state. The vote was unanimous.
That bill will have to line up with the House version, which is just one provision of the massive Big Beautiful Bill, which passed in a nail-biter 215-214 vote. Only two Republicans, Warren Davidson (Ohio) and Thomas Massie (Ky.) voted “no” on the grounds that the bill would add significantly to federal deficits—two others, Andrew Garbarino (N.Y.) and David Schweikert (Ariz.) didn’t vote–Garbarino reportedly fell asleep and Schweikert was too late–while Andy Harris (Md.) voted “present.” The House voted on the package without knowing the final cost, a fact that Lloyd Doggett (D-Texas) called out, saying, “The deficit hawks have become chicken hawks tonight, in submission to Trump, the self-described king of debt.”
Tucked among the trillions of tax cuts in the House’s just-passed “big, beautiful bill” was a proposed repeal of the tax on indoor tanning services. And here, I present you with a cautionary tale that’s directly tied to both the sweeping nature of the bill and the speed at which it has been pushed through.
Over the past week, the Budget committee released a draft and a chairman’s amendment as the bill went through markup. Debate on the final version began late Wednesday night and lasted through early Thursday morning–the vote was about 6:30 a.m. ET or so.
In addition to extending the 2017 tax cuts, the bill included a lot of additional provisions–like no taxes on tips, no taxes on overtime, and cuts to green energy credits. It also included a provision to repeal the excise tax on indoor tanning. That tax that had been in place since 2010 as a result of Obamacare—so I wrote about it.
Early Thursday morning, Amendment 412 (!) of the bill was submitted by Rep. Suhas Subramanyam (D-Virginia). The amendment read, simply, “Strike section 111106.” That amendment, one of two submitted by Subramanyam, was accepted. Section 111106 directs the repeal of excise tax on indoor tanning services. As a result, the repeal did not survive the final vote (fun fact: the header remains in the version of the bill printed in the Congressional Record).
The resulting confusion is a good reminder about how many provisions can be stuffed in a single bill, presenting challenges for writers (like this one), voters (like you), and members of Congress. I’d be surprised to learn that every member of Congress read the entire bill AND subsequent versions AND amendments before voting. The Senate now has its hands full–remember that the language in both versions must match exactly before the bill becomes law.
Speaker Johnson had promised to pass the House version by Memorial Day–that’s this weekend. Reportedly, President Trump wants to sign the final bill into law on Independence Day.
I hope you can get some rest and relaxation over the long weekend. And, if you’re lucky enough to live where there’s a little bit of sunshine, send some of those warm wishes to the northeast.
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
Questions
This week, a taxpayer asked:
Can I claim my non-resident spouse as a dependent on my taxes?
For federal income tax purposes, your spouse is never your dependent.
Depending on your circumstances, you may want to file a joint tax return. If, at the end of the tax year, your spouse is not a U.S. citizen or resident, you can choose to treat your nonresident spouse as a U.S. resident for tax purposes. This may result in a lower tax bill, but as with all things tax-related, it depends. (You can find out more about residency and reporting here.)
If you file jointly, you and your spouse are treated, for federal income tax purposes, as U.S. residents for all tax years during which the choice is in effect. However, for Social Security and Medicare tax withholding purposes, the nonresident spouse may still be considered a nonresident. By rule, you must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in subsequent years.
When you file jointly, each spouse must report their entire worldwide income for the year you make the choice and for all later years unless that choice is ended or suspended. Generally, neither you nor your spouse can claim tax treaty benefits for a tax year during which the choice is in effect, although some exceptions apply.
If you choose not to treat the nonresident spouse as a U.S. resident, you may qualify for head of household filing status. To qualify for this status, you must pay more than half the cost of maintaining a household for certain dependents or relatives, excluding your nonresident spouse (once again, your spouse is never your dependent).
Taxes can be complicated at the best of times, but international factors can make it even more complicated. It’s always a good idea to check with a tax professional.
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Do you have a tax question or matter that you think we should cover in the next newsletter? We’d love to help if we can. Check out our guidelines and submit a question here.
Statistics, Charts, And Maps (Oh My!)
Social Security has been a hot topic of late, especially as Congress considers measures to exempt Social Security retirement benefits from tax–or to simply give seniors a bigger tax break.
Social Security was never intended to be a primary source of income at retirement, but it is for many people. According to recent data, 51.8% of individuals ages 65 and older depend on Social Security for half or more of their income, and 24.7% of people in this age group rely on it for 90% or more of their income. That’s why the idea to exempt Social Security retirement benefits from taxes was popular–even though those who rely heavily on Social Security are already likely not paying federal tax on that income.
If your only source of income is your Social Security check, your benefits are generally not taxable. You may not even need to file a federal income tax return.
If you receive income from other sources, your benefits would not be taxed unless your combined income exceeds the base amount for your filing status, and then, the taxable amount is based on income. No one pays federal income tax on more than 85% of their Social Security benefits.
Many beneficiaries–or potential beneficiaries–aren’t sure what they need to know about benefits. For most retirees, the best way to find out about benefits is to set up an online account at ssa.gov.
As of April 2025, the average Social Security monthly check for retired workers was $1,999.97, according to the Social Security Administration’s (SSA) Monthly Statistical Snapshot. You can see the average monthly benefit for all categories of filers as of 2023 (the last year for which a complete data set is available) here:
Your monthly Social Security benefits depend on how much you’ve earned, how long you worked, your age when you start collecting benefits, and your marital status. To check your benefits, log in to your online account.
A Deeper Dive
For the first time ever, the Pope is a U.S. citizen. Pope Leo XIV, formerly known as Robert Francis Prevost, was born in Chicago, Illinois, and raised in the nearby suburb of Dolton. As a result, one question that has come up again and again: Does the Pope need to report foreign accounts and assets to the IRS?
As part of the Bank Secrecy Act (31 USC §5314), every U.S. person (including U.S. citizens abroad) with a financial interest in, or signature or other authority over, one or more foreign financial accounts with an aggregate value of more than $10,000 must annually report the account to the Treasury Department. You do this by filing a Report of Foreign Bank and Financial Accounts—more commonly known as an FBAR. The FBAR is an annual report due on April 15–the same deadline as Tax Day–with FinCEN, or the Financial Crimes Enforcement Network. If you can’t file by the deadline, you can get an automatic extension to October 15.
The Foreign Account Tax Compliance Act, or FATCA, enacted in 2010, is part of the U.S. tax laws under Title 26 of the U.S. Code. FATCA, like FBAR, is aimed at offshore asset transparency, but has crucial differences. One key difference: Foreign financial assets that must be reported on the Form 8938 are only those assets in which the person has a beneficial ownership interest. While signature authority alone doesn’t trigger Form 8938 reporting, it serves as an absolute and independent linchpin for FBAR disclosure.
Pope Leo XIV’s vow of poverty likely shields him from income tax filing and FATCA’s Form 8938 requirements. However, his potential control over the Vatican Bank raises important questions about FBAR filing duties. Since the Pope is a U.S. citizen and potentially exercises signature authority over foreign financial accounts that undoubtedly exceed $10,000 in aggregate, he may well have an FBAR obligation, regardless of his personal lack of wealth.
While not everyone can be the Pope, this situation is a startling reminder that all U.S. citizens and residents must abide by FBAR mandates. It also serves as a warning to foreign employers who do not want company accounts to be disclosed to the IRS that they should rethink giving U.S. persons control over such accounts.
Tax Filings And Deadlines
📅 June 16, 2025. Due date for individuals living and working abroad to file their 2024 federal income tax return and pay any tax due.
📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel.
📅 October 15, 2025. Due date for individuals and businesses affected by wildfires and straight-line winds in southern California that began on January 7, 2025.
📅 November 3, 2025. Due date for individuals and businesses affected by storms in Arkansas and Tennessee that began on April 2, 2025.
Tax Conferences And Events
📅 June 16-19, 2025. Latino Tax Fest. MGM Grand Hotel & Casino, Las Vegas, Nevada. Registration required.
📅 June 18, 2025. Avalara CRUSH on Tour. Bridgeport Art Center (Skyline Loft), 1200 W. 35th Street, Chicago, IL 60609. Registration required.
📅 June 26, 2025. Avalara CRUSH on Tour. Iron23 (Flatiron District), 29 West 23rd Street, New York, NY 10010. Registration required.
📅 July 18-19, 2025. Tax Retreat “Anti Conference.” Denver, Colorado. Registration required.
📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025. Caesars Palace, Las Vegas, Nevada. Registration required.
📅 July 22-24, 2025. Bridging the Gap Conference. Denver Marriott Tech Center, 4900 S. Syracuse Street, Denver, Colorado. Registration required.
📅 July 28-30, 2025. Tax Summit 2025. Grand America Hotel, Salt Lake City. Registration required.
Trivia
In 1987, the IRS began requiring taxpayers to list the Social Security numbers (SSNs) of their dependents. How many dependents were claimed on tax returns that year compared to the previous year?
(A) Five million MORE.
(B) There was no real difference.
(C) Three million FEWER.
(D) Seven million FEWER.
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS has published Internal Revenue Bulletin No. 2025–21.
The ABA Section of Taxation submitted comments to the IRS regarding the Low-Income Taxpayer Clinics grant application package and guidelines.
The American Institute of CPAs (AICPA) sent a letter to the Senate Finance and House Ways & Means Committees with concerns over several tax proposals impacting the accounting profession in the One Big Beautiful Bill Act, which was advanced by the House Ways & Means Committee on May 14, 2025.
The AICPA submitted comments to the Department of the Treasury and the IRS regarding proposed regulations regarding the Previously Taxed Earnings and Profits (PTEP) and related basis adjustments under Sections 959 and 961.
The AICPA and National Association of State Boards of Accountancy (NASBA) have approved model legislation providing an alternative path to a CPA license. The optional path aims to maintain public protection while offering additional flexibility and options for CPA candidates. The changes add a pathway to CPA licensure requiring a baccalaureate degree, including an accounting concentration, plus two years of experience, and passage of the Uniform CPA Examination.
Noteworthy
Spain is pushing ahead with a controversial proposal to hit non-European Union residents with a 100% tax when buying homes, as it seeks to tackle a brewing housing crisis.
Washington Governor Bob Ferguson signed Bill 5801 into law. The law tacks on a 10% “luxury” tax on the sale of “noncommercial” aircraft that exceed $500,000 in purchase price. A similar tax also applies “for the privilege of using within the state as a consumer any noncommercial aircraft if its value exceeds $500,000.” The taxes are slated to go into effect on April 1, 2026.
National Taxpayer Advocate Erin Collins told attendees at the Council for Electronic Revenue Communication Advancement (CERCA) conference in Washington, DC, that the IRS Taxpayer Advocate Service is losing about 400 employees, nearly a quarter of its workforce.
I have some exciting news! Years ago, folks used to remark that I didn’t seem like someone who would be a tax attorney. I wondered, “Who is that exactly?” And it dawned on me that while there may be stereotypes, the landscape of tax professionals is vast and varied. I started featuring mini-interviews to get to know those of us who work in the tax profession. This year, I’m giving the series a reboot. If you’d like to recommend a tax professional to be featured, send your suggestions to kerb@forbes.com with the subject: Getting To Know You Tuesday. Self-nominations are totally okay and encouraged.
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If you have tax and accounting career or industry news, submit it for consideration here or email me directly.
In Case You Missed It
Here’s what readers clicked through most often in the newsletter last week:
You can find the entire newsletter here.
Trivia Answer
The answer is (D) seven million FEWER.
Before 1987, taxpayers could claim dependents by simply listing their names. The Tax Reform Act of 1986 changed that, requiring taxpayers to include the SSNs of dependents over the age of five when filing their taxes. The following year, seven million FEWER dependents were claimed on individual federal income tax returns, resulting in a $2.8 billion increase in tax revenue.
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