Accounting
UN tax deal may replace OECD framework after Trump executive order
Published
2 months agoon

Negotiations at the United Nations began last week in New York over a global tax framework, and those talks may gain new impetus after President Donald Trump signed an executive order rejecting the two-pillar framework that the Biden administration had been negotiating with the Organization for Economic Cooperation and Development.
On Inauguration Day,
The U.S. has not yet ratified the OECD/G20 Inclusive Framework on tax base erosion and profit-shifting framework, or BEPS for short, due to opposition from Republican lawmakers. But Trump’s repudiation of the global tax framework on his first day in office was a striking move for some observers.
“I was not so much surprised by this kind of policy direction, but just the timing,” said Zorka Milin, policy director of the FACT (Financial Accountability and Corporate Transparency) Coalition, a nonpartisan alliance of over 100 state, national and international organizations. “I don’t think any of us who follow international tax expected this to be a day one priority issue, so that came as a surprise.”
She sees a risk in the gains made on a global tax agreement. “In addition to all the trade wars, if we’re going to have a tax war, which is what they want this order threatens, that would not be in anyone’s interest,” said Milin.
Trump’s executive order threatens punitive action against other countries that are implementing parts of the OECD plan such as the Under-Taxed Profits Rule and the top-up tax, or the digital services taxes that countries like France and Canada have levied on multinational tech giants.
It says, “The Secretary of the Treasury in consultation with the United States Trade Representative shall investigate whether any foreign countries are not in compliance with any tax treaty with the United States or have any tax rules in place, or are likely to put tax rules in place, that are extraterritorial or disproportionately affect American companies, and develop and present to the President, through the Assistant to the President for Economic Policy, a list of options for protective measures or other actions that the United States should adopt or take in response to such non-compliance or tax rules. The Secretary of the Treasury shall deliver findings and recommendations to the President, through the Assistant to the President for Economic Policy, within 60 days.”
The Trump administration’s stance toward the OECD framework on global minimum taxes and country-by-country reporting could shift the action over to the United Nations now, where negotiations are underway on the UN Framework Convention on International Tax Cooperation. The Biden administration wasn’t able to get the OECD framework passed in Congress despite former Treasury Secretary Janet Yellen’s support for the effort.
“It doesn’t change anything, because everyone knew that the Biden administration couldn’t get these things through, but in some ways, it just clarifies that they’re not going to apply in the U.S.,” said Alex Cobham, chief executive of the Tax Justice Network, a U.K. advocacy group concerned about tax avoidance. “But I think it’s the other piece of the memorandum that’s more significant. It’s the threat to go after other countries that are introducing elements of the OECD proposals, or indeed other types of tax incentive responses to the OECD’s failure, like digital services taxes. That takes things to a different level, and there’s an interesting possibility that it might backfire. What it won’t do is show countries, perhaps particularly in the European Union, that there’s no hope for getting any improvements on what’s already quite a weak OECD proposal, and instead push them into the United Nations process where something more significant could be achieved, which is exactly what I think the Trump administration would want to avoid. They may have given it rather a big push.”
Bargaining power
The U.S. may lose some of its bargaining power in the UN negotiations. “The U.S. effectively has a veto of the OECD, and that’s why the last negotiations were so difficult,” said Cobham. “The first Trump administration couldn’t get to a deal within the two years. So then in came the Biden administration, and completely flipped and put their own proposal in instead, and really added to the approach on the second pillar. We’re now back to a Trump administration, and both of those pillars really look frozen. So that’s the degree of control the U.S. has had. In the United Nations, most decisions are made by consensus. But where there isn’t consensus, it will go either to a simple majority or perhaps a supermajority of two-thirds of countries. That’s still to be determined for this negotiation of the convention. And what that means is, unless the U.S. can bring lots of countries with it, it won’t be able to block individual items, or indeed the convention as a whole. So you might see the U.S. not withdrawing, but kind of staying at the table in order to be somewhat obstructive. But it won’t actually be able to stop anything. And in the end, if a significant number of countries sign the convention, it will become effective for U.S. multinationals in other countries, even if the U.S. stays outside.”
The UN tax negotiations have not been receiving as much attention as the OECD’s Pillar One and Pillar Two framework, but the move could shift momentum toward the UN.
“We need to have a multilateral agreement on tax issues because these are global problems, and the solution also has to be global,” said Milin. “I think that the OECD has done a lot of good work over the years and made a lot of progress, and the agreement was supported by something like 140 countries. It’s a big achievement, and maybe the UN can build on that achievement. But whether we’re talking about the OECD or the UN, I think it is unfortunate that the U.S. as a major international economic actor wouldn’t be at the table in those discussions. To be clear, I don’t expect that to happen necessarily, because if we read and parse carefully the text of that order, it’s not that the U.S. is withdrawing from their membership in the OECD. They will stay at the table, and I suspect try to gain additional leverage. I don’t think that this is the end of the story for the OECD process. I think it’s something that we’ll have to continue to watch to see how it evolves. If certain provisions of the previous agreement have to be reopened, that will be interesting to see, but I don’t think it will just be thrown out. I’m not even sure that that’s the policy goal of the Trump administration.”
DST impact
Canada’s digital services tax could pose a problem for the U.S., no matter what happens at the OECD or the UN. “There will be a test case very soon with Canada’s DST,” said Cobham. “Will Canada accept the tariffs, or whatever is going to be imposed? We’ll see that by the end of March. I think we’ll see the proposals come forward. Will Canada fold and give up their DST, or will they fight? That will be interesting to see, but it’s different when it’s one country. If we have 100 countries signing the UN convention, I think there will be a commitment to play together, to pass that into law collectively, perhaps to face collective punishment, but without the same kind of ability to pick off individual countries. I think we will see a move, almost because the U.S. multinationals will move first. In 2017 and 2018, it only took a few countries to start the process of introducing DSTs, and the big tech multinationals in the U.S. forced the administration into negotiations again at the OECD. Once it becomes clear that the UN convention could go much further than that, I think the U.S. Treasury will be hearing very clearly that they need to be full participants in the negotiations, even if that’s largely trying to block it. That’s going to be difficult, because you need a significant minority, at least, to be able to block at the UN.”
GILTI vs. UTPR
The upcoming negotiations in Congress over the extension of the Tax Cuts and Jobs Act of 2017 may also play a role. The TCJA includes some international tax provisions, such as Global Intangible Low-Taxed Income, or GILTI for short, and Foreign-Derived Intangible Income, or FDII. Similarly, the Biden administration’s version of a global minimum tax in the Inflation Reduction Act of 2022, known as the corporate alternative minimum tax, mainly applies to companies earning over $1 billion and
Trump’s executive order could be one way for the U.S. to regain leverage in the OECD process.
“Maybe they think they can get a better deal than what was negotiated under the previous administration,” said Milin. “That’s how I read the order, especially when we think about the context and the history here. The process was initiated under the first Trump administration, actually. It goes back to the days of [former Treasury] Secretary [Steven] Mnuchin and some of the policy ideas that were included in the 2017 Republican tax bill around the Global Intangible Low-Taxed Income. The U.S. was the first to introduce a tax like that, and the OECD was a forum where that policy idea could go global. I think that this has actually been a policy win for Republicans, even though it’s strange that they don’t see it that way. What is unfortunate is the order seems to be targeting — but It’s not explicit — an aspect of the international tax agreement that is called Under-Taxed Profits Rule, which is something that was included in order to deal with companies from nonimplementing countries, in particular China, at the insistence of U.S. negotiators. If they’re successful in undermining UTPR, that’s a gift to China, and I don’t think that’s what they would want.”
In contrast, Trump’s new executive order authorizes the Treasury Secretary to retaliate against other countries that seek to impose taxes on U.S. multinational companies.
“If we take the order on its face, the results would be that the U.S. would be imposing these punitive, retaliatory taxes on some of our major trade partners and political allies in Europe, Canada, Australia, Japan, while on the other hand, helping out China, and that makes no sense,” said Milin. “I don’t think that that is consistent with foreign policy of this or any other U.S. administration.”
Democrats are in the minority in both houses of Congress now, and Republicans plan to pass a tax bill through the budget reconciliation process that would sideline Democrats, allowing Republicans to bypass the requirement for a two-thirds majority in the Senate to overcome a filibuster. Nevertheless, Democrats nevertheless reintroduced a bill last week that might have some influence on the tax debate, especially since the Trump administration has expressed the desire to bring jobs back to the U.S. from abroad. Sen. Sheldon Whitehouse, D-Rhode Island, and Rep. Lloyd Doggett, D-Texas,
The Trump executive order seems to envision possible retaliatory actions by the U.S. against other countries that could come in the form of tariffs or even sanctions.
“It could be a form of trade sanctions, or even potentially an additional tax on U.K. companies operating in the U.S.,” said Cobham. “The U.K., because it’s quite isolated now, having left the European Union, is one that you can see being picked off in that way. But the European Union has also committed to introduce the UTPR, the Under-Taxed Profits Rule, and that’s the one where you where you can say, if the headquarters country is not applying a reasonable minimum rate of tax and the multinational operates in your country, then you can use the UTPR to apply that top-up tax. So I think that will be the big clash. Canada’s DST is interesting, but the European Union’s UTPR is the big one. If in effect, the Trump administration’s investigation over the next 60 days finds that the EU’s UTPR is effectively in breach, in their view, because they they would say it’s extraterritorial to try to top up the taxes being paid in the U.S., whereas the EU would say this is making sure that economic actors within the EU are paying fair tax. But that’s the difference, the tension this is bringing out. If there is a specific proposal to put some kind of tariff or tax measures on European Union countries or their multinationals, this very quickly comes to a head. It feels like the OECD proposals are already faltering. I think this is really the end of any prospect of global adoption, certainly, and the question is really whether it boosts momentum for the UN process instead.”
Disillusionment
The U.S. isn’t the only country that has become more skeptical about the OECD framework, and that could pave the way for the UN framework to make more headway.
“Hstorically, the OECD has really led the way here, but what happened in 2022 was a UN resolution,” said Cobham. “That’s something that the G77, the countries of the developing world, have really wanted for about 20 years, but have never been able to make progress with. What happened in 2022 was that so many OECD member countries had become so disillusioned with the OECD process that the resolution to begin looking at a UN convention went through the General Assembly by consensus. And that was quite remarkable, really unprecedented. Since then, they’ve had an ad hoc committee, as they call it, of delegates from every country in the world putting together the terms of reference for the full negotiations.”
Those delegates began meeting last week and plan further talks. “We have a schedule now for about two and a half years of negotiations to create a framework convention,” said Cobham. “That can do two things, really. It can create new rules within the convention, but as we have with the UNFCCC [United Nations Framework Convention on Climate Change], it will create a framework body. They’ll be able to set new tax rules in the future, on top of anything that’s agreed in this two and a half years in the convention. Potentially, this will displace the OECD as the global tax rule setter, and in that shift, the U.S. will lose the power of veto that it effectively has in the OECD.”
On the same day Trump signed an executive order repudiating the OECD global tax deal, he signed another
“I think the dynamics are different in the sense that in the Paris Agreement, there isn’t any mechanism against noncooperating countries,” said Cobham. “It may make it harder for the world to limit the degree of climate damage, but it doesn’t give anyone else the power to try to punish the U.S. And nothing that other countries do on climate, unless they were to come up with some kind of sanctioning measure around U.S. carbon emissions, let’s say, but that’s really not being thought of. Whereas on the tax side, you can move ahead very quickly — and you might move ahead quicker if you don’t have the U.S. at the table — with measures that will apply to U.S. multinationals in other countries where they operate, so almost without anyone trying, the tax convention will have an impact on U.S. economic actors. And I think that means the dynamics are different. I think it would be very hard for Trump to ignore that this is happening, even if he thinks the UN is worthless or illegitimate or anything else. The fact that this will affect the taxes paid by U.S. multinationals may affect the access of U.S. financial institutions to world markets if they’re seen as outside the cooperative sphere. The convention could do things in that space too. All of that means that the lobbying pressure from business and finance on the Trump administration on the Treasury, I think, would be hard to resist.”
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Accounting
IRS plans to bring back fired probationary employees
Published
3 hours agoon
April 3, 2025
The Internal Revenue Service reportedly intends to reinstate thousands of probationary employees who were fired after two courts ordered it to do so.
IRS acting commissioner Melanie Krause announced in a conference call Wednesday that approximately 7,0000 fired employees would be able to return to work by April 14, a day before the end of tax season, according to the
“You are receiving this email as one of approximately 7,000 probationary employees who were separated from service and have been reinstated in compliance with recent court orders,” said the email. “At this time, while you remain on administrative leave, you will soon receive instructions for how to return on full-time duty by April 14.”
The employees will be able to get back their identity badges, computer equipment and workspace assignments and will be allowed to temporarily take advantage of telework if office space isn’t available for them. However, employees are also being given the option to not return to work at all.
“If you wish to not return and voluntarily resign from federal service, you should send an email to [email protected] as soon as possible,” said the email. Please know that outside employment does not necessarily prevent you from returning to work. If you have secured outside employment and wish to continue with the outside employment while re-employed with the IRS, you must submit an outside employment request to your manager.”
The IRS had placed many of the fired employees on paid administrative leave in order to comply with a federal judge’s order in California requiring employees at the Treasury Department and five other government agencies to be reinstated. However, the judge later ruled that putting the fired employees on paid administrative leave wasn’t enough to comply with his preliminary injunction. Another judge in Maryland on Tuesday ordered 18 federal agencies to reinstate workers in 19 states and the District of Columbia. The National Treasury Employees Union and other unions have
Some IRS employees have reportedly been using the time on paid administrative leave to search for other jobs, which could help fill the ranks of accounting firms and other businesses searching for talent.
Joseph Perry, national tax leader and managing director at the accounting and professional services firm CBIZ, has been seeing more resumes coming in from IRS employees.
“We actually have an uptick in resumes,” he recently told Accounting Today. “In fact, I was connected by a business leader to somebody that is still working for the IRS, but is not going to be there too much longer, and he’s exploring other options. So there is going to be, I think, an uptick in many companies. The IRS has really good, talented people that are going to come back into industry, that are going to be very useful to firms like our firm, CBIZ, to bolster our ability to service our clients in an effective way and be able to do that. It’s pretty interesting, right? We’re one of the top 10 firms. As it relates to firms that may be in the top 25, I would tend to think it’s a unique opportunity for them to pick up somebody that they otherwise wouldn’t have been able to pick up, somebody with talent and experience, and that probably would lead to them providing services that they otherwise wouldn’t have.”
Staffing companies have seen some interest, but the uncertain state of the various federal court cases may have been keeping people on the sidelines. “It’s still a bit early to tell if there’s been a significant increase in interest from former federal employees in the private sector accounting and tax space,” said Brandi Britton, executive director of finance and accounting practice at the staffing company Robert Half. “While we do see candidates with federal experience, it’s difficult to immediately distinguish between those transitioning directly from federal roles and those who have federal experience as part of their broader career background. What we do know is that finance and accounting leaders are facing ongoing skills gaps and are actively seeking candidates to fill in-demand roles. A few notable skills gaps include finance and FP&A, financial reporting and tax expertise.”
Accounting
Tax Strategy: Updates on the Clean Vehicle Tax Credit
Published
3 hours agoon
April 3, 2025
The requirements for the Clean Vehicle Credit
There were restrictions based on where the vehicle was assembled and where the critical minerals and battery components originated. Then there were limits on the manufacturer’s suggested retail price for the vehicle and the income of the purchaser. The manufacturer was required to have vehicles pre-approved for a given level of credit and the dealer was required to be registered.
Some provisions were phased in over time, including the option to transfer the credit to the dealer, which became effective for 2024. The Internal Revenue Service then added certain compliance requirements, including filing a time of sale report (the Clean Vehicle Seller Report (Form 15400)) within 72 hours of the vehicle being placed in service and submitting information through an Energy Credits Online portal.

Some of these provisions were designed to simplify the process. When a potential purchaser entered the showroom, the purchaser would be able to find out in real time what amount of credit was associated with a particular vehicle. A time-of-sale report could be filed with the IRS electronically via the portal to determine even before the sale was finalized if the vehicle qualified for the credit.
Unfortunately, things have not worked out quite so well in practice.
The more simplified requirements in place for purchases in 2023 appear to have lulled dealers into the belief that the same practices would be fine for 2024. Some dealers, far from using the time-of-sale reports to make sure the credit was cleared for approval at the time of sale, failed even to prepare the reports. Purchasers, unaware of the new requirement, failed to demand a copy at the time of sale. In those instances where the purchaser retained entitlement to the credit, rather than transferring it to the dealer, the purchaser found that, when they filed their 2024 tax return in 2025, the IRS rejected the claim for the credit. When the purchaser contacted the dealer about the problem, the dealer found they were unable to correct the issue because the time-of-sale report had not been filed within the required 72-hour period and any late submission was rejected as untimely.
Only 7% of purchasers in 2024 retained their entitlement to the credit. The rest of the purchasers transferred entitlement to the credit to the dealer, resulting in a price rebate on the vehicle purchase. However, again, when the dealer sought to claim the credit transferred from the purchaser, the dealer encountered the same problem of an untimely time-of-sale report, which could not be corrected because the 72-hour time period had expired.
This glitch in the system impacted dealers even more than purchasers and got the attention of the National Automobile Dealers Association, which immediately started pressuring the IRS and Congress to find a solution to the problem. In response, the IRS has informed NADA that it is waiving the 72-hour requirement and is accepting late time-of-sale reports into the Energy Credits Online portal. The IRS has set no time limits so far on the submission of late reports.
Corrective action
Dealers will want to refile all rejected time-of-sale reports that had been rejected as untimely. Dealers will also want to make sure they are registered with the IRS and notify any purchasers that the credit has now been approved.
Purchasers will want to contact the dealer for a copy of the time-of-sale report and make sure the dealer is resubmitting the report or submitting it for the first time. Purchasers will need to file a Form 8936, “Clean Vehicle Credits,” to be used for the Clean Vehicle Credit, the Previously Owned Clean Vehicle Credit and the Qualified Commercial Clean Vehicle Credit. Form 8936 is required to be filed either when the purchaser is claiming the credit on the purchaser’s tax return or when the purchaser has transferred the credit to the dealer.
In some cases, where the purchaser had already filed a tax return where the credit was rejected by the IRS, the purchaser will be required to file an amended tax return to claim the credit once the time-of-sale report has been accepted.
Termination of the Clean Vehicle Credit
While under current law, the Clean Vehicle Credit is scheduled to continue until 2032, Congress is working on tax legislation expected to be enacted this year that might repeal the credit. President Trump has expressed his opposition to many of the clean energy credits included in the Inflation Reduction Act enacted in 2022, and in particular opposition to the Clean Vehicle Credit.
Congress is still in the early stages of working on this legislation, and it is not clear to what extent this provision might be included in the final legislation. If enacted at all, it is likely that the legislation would not be enacted until later in 2025. This makes it unlikely that any repeal of the Clean Vehicle Credit would be made retroactive to the beginning of 2025. However, it is possible repeal could be effective as of the enactment date of the legislation.
Taxpayers considering the purchase of an electric vehicle in 2025 may want to monitor the progress of this tax legislation through Congress and whether a repeal of the clean vehicle credit appears to be included. Purchase of the vehicle before enactment of the legislation may preserve the credit for the taxpayer.
Tariffs
The limit on the manufacturer’s suggested retail price for electric vehicles could become more difficult for manufacturers and dealers to stay under if the tariffs on imported automobiles and auto parts force manufacturers to raise prices. The MSRP limit for vans, SUVs and pick-ups is $80,000 and for other vehicles $55,000. If the electric vehicle currently under consideration for purchase is close to these price limits, a taxpayer might want to consider purchasing the vehicle sooner, before these tariffs achieve their full impact.
Accounting
Tariffs put Fed in tough spot, raise growth and price fears
Published
4 hours agoon
April 3, 2025
An aggressive suite of tariffs announced Wednesday by President Donald Trump will significantly complicate the Federal Reserve’s job as it struggles to quash inflation and avoid an economic downturn, likely keeping officials in wait-and-see mode.
“They’re basically our worst-case scenario,” said Diane Swonk, chief economist at KPMG, who said the tariffs raised the likelihood of an economic slowdown in the U.S.
But Swonk and other economists said Fed officials will likely hold off on lowering rates to cushion the economy while they assess the potential impact of the tariffs on inflation.
The levies, which are harsher than many analysts were anticipating, are expected to raise prices on
Trump said Wednesday the U.S. would apply a minimum 10% levy on all imports to the U.S., but tariffs on many countries will
Bloomberg Economics estimated the new levies could lift the average effective tariff rate in the U.S. to around 22%, from 2.3% in 2024. Omair Sharif, president of Inflation Insights LLC, calculated a level of 25% to 30%.
For Fed officials still working to rein in the price gains that spiked during the pandemic, however, the inflationary fallout from the president’s actions may limit policymakers’ ability to step in and bolster the economy.
Fed Chair Jerome Powell is scheduled to speak at a conference Friday in Arlington Virginia.
“It puts the Fed between a rock and a hard place,” said Jay Bryson, chief economist for Wells Fargo & Co. “On the one hand, if growth slows and the unemployment rate comes up, they want to be more accommodative, they want to be cutting rates. On the other hand, if inflation goes up from here, they kind of want to be raising rates. So it really puts them in a tough spot.”
Joseph Brusuelas, chief economist at RSM US LLP, agreed the new regime was far tougher than many analysts expected and will raise the probability of a US recession.
“I expect inflation into 3% to 4% range by the end of the year,” he said, adding the Fed isn’t likely to provide a cushion to the economy with rate cuts in the near to medium term. “The act taken today by the White House puts the Fed in much more difficult position, given the pressure on both sides of its mandate.”
By Thursday morning, some economists had lowered their projections for the number of interest-rate cuts they see in 2025. Morgan Stanley said they now expect no cuts this year, down from one.
Investors, however, tilted the other way. Fed funds futures, possibly reflecting higher recession fears, implied the outlook for rate reductions had increased. That market now points to three to four cuts this year.
The Fed left borrowing costs unchanged last month. Policymakers have emphasized the labor market is healthy and the economy is solid overall. But the uncertainty caused by Trump’s rapidly-evolving trade policies had stoked fears of higher inflation and tanked sentiment among consumers and businesses even before Wednesday’s announcement.
A closely watched survey from the University of Michigan showed consumers’ outlook for inflation over the next 5 to 10 years rose in March to its
Many business leaders are in
A substantial escalation in tariff tensions with back-and-forth retaliatory levies against major trading partners could slow economic activity in the U.S. and globally, economists said.
“If you get that escalation scenario, then you’re just talking about fundamentally less productive economies around the world,” Seth Carpenter, chief global economist at Morgan Stanley, said Wednesday morning on Bloomberg TV ahead of the tariff announcement. “It’s not a zero-sum game. It could actually be a net loss for the whole global order.”

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