Article
Brochure
Executive Resource
Insight Hub
Video
Ext. PublicationThe Tax Navigator – What IRS Budget Cuts and State Tax Nexus Rules Mean for Taxpayers
Never miss a thing.
Sign up to receive our Tax News Brief newsletter.
In this episode of The Tax Navigator, Sean Muller breaks down recent federal and state tax developments that may have wide-ranging implications for taxpayers. The discussion proposed IRS budget cuts, a Maine court ruling on state tax nexus involving Tito’s vodka and P.L. 86‑272, IRS refund delays and a Supreme Court case that could affect penalty enforcement, along with updates on opportunity zones and newly named providers for Trump accounts.
For information or assistance, contact us. We are here to help.
©2026
Detailed Description of The Tax Navigator – What IRS Budget Cuts and State Tax Nexus Rules Mean for Taxpayers
00:00:00
Sean: We did have a busy week last week. As we prefaced last week, President Trump did release his budget proposal. One big highlight was that he was cutting IRS spending by $1.4 billion for next fiscal year.
00:00:13
Sean: There was an interesting case last week in Maine where Tito’s — for most of us in Texas and probably throughout the country, we’re very familiar with Tito’s vodka.
00:00:22
Sean: Well, they were not paying tax in Maine because they were claiming P.L. 86-272, which allows you to not pay tax in the state or not have nexus in the state if you’re just soliciting orders and you’re not actually operating in the state.
00:00:35
Sean: But actually, Maine took them to court, and in the Maine liquor rules, you have to store your liquor in a Maine bonded warehouse for 60 days prior to sale. And so the fact that Tito’s still owned the vodka when it was sitting in the bonded warehouse that was required by law, that gave them physical property in the state, which gave them nexus.
00:00:57
Sean: They had to pay a lot of tax there. I thought that was interesting.
00:01:00
Sean: The IRS is still struggling with folks that didn’t put their bank account information in direct deposit. We’ve talked about it in the past, but they’re going to send you a notice that says, “Please fill out your bank account information.”
00:01:12
Sean: If you do not fill out your bank account information, you have 30 days once you get the notice, and then they’ll send you a check in about six to seven weeks.
00:01:19
Sean: If you don’t give them bank account information, that’s the case. But they try to make it look like it’s very easy to set up bank account information. They want you to set up your own tax account on IRS.gov, then go and enter all your bank account information, and you’ll get your check within seven days.
00:01:34
Sean: If you don’t have a bank account, they still want you to set up an IRS account and then tell them that you don’t have a bank account. They’re just really struggling with folks that do not have a bank account to get this refund.
00:01:48
Sean: There is also a case before the Supreme Court right now — which could be a really big change for the IRS — is this taxpayer is requesting that the IRS cannot impose penalties on a taxpayer unless it goes before a jury trial.
00:02:08
Sean: There was an SEC case where the SEC was barred from fining a taxpayer without it going before a jury. So right now, the IRS can assess these fines and you have to go fight them in Tax Court, wherever it may be. They want to actually make that where it’d be a jury trial.
00:02:26
Sean: So that will be interesting if they pass this through. They’ve tried in the past to do that, but it’s been unsuccessful. So we’ll see how that goes.
00:02:34
Sean: We’re going to talk about some other things. But as well, there’s a new that came out with opportunity zones and how to identify the opportunity zones.
00:02:43
Sean: And the last thing for the week is the Trump accounts. They now have picked Bank of New York to be the transfer agent, and then Robinhood to be involved with it as well. So they’ve named the two providers that are going to run these accounts.
This episode of The Tax Navigator was recorded prior to publication. Some references or updates discussed may reflect information current as of the recording date.
