Treasury Department Sanctions, Electric Vehicle Tax Credits, and the Inflation Reduction Act
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
January 3: IRS Reminder to Disaster-Area Taxpayers With Extensions: File 2023 Returns by Feb. 3 or May 1
The IRS is reminding taxpayers in federally declared disaster areas to file their 2023 returns by February 3 or May 1, 2025, depending on their location.
Residents of Louisiana, Vermont, Puerto Rico, the Virgin Islands, and parts of 12 other states have a February 3 deadline, while taxpayers in Alabama, Florida, Georgia, North Carolina, South Carolina, and parts of five additional states have until May 1.
Those with a May 1 deadline must also file their 2024 returns and pay any taxes due by that date. The relief applies automatically to affected individuals and businesses without needing to request it.
The IRS will also assist taxpayers outside the disaster zones if their necessary records are located in affected areas.
Additionally, the IRS has granted special relief for taxpayers impacted by terrorist attacks in Israel, Gaza, and the West Bank, giving them until September 30, 2025, to file and pay all 2023 and 2024 returns.
December 30: IRS Hiring to Be Tested by Trump’s Remote Work Disapproval
The IRS’s efforts to expand its workforce, particularly in customer service, may be hindered by President-elect Donald Trump’s plan to end remote work for federal employees.
Trump recently announced he would dismiss workers who refuse to return to the office and plans to challenge a telework agreement for Social Security Administration employees.
The IRS has relied heavily on remote work to attract and retain employees, hiring over 5,000 customer service representatives (CSRs) in 2023. According to the Government Accountability Office (GAO), telework has been crucial for reducing attrition and improving service during tax season.
Critics argue that ending remote work could reduce efficiency, worsen hiring challenges, and create space shortages at IRS facilities. Former IRS officials stress that telework is essential for competing with private-sector job offerings.
Security concerns remain a sticking point, with some Republicans advocating for legislation to limit telework and increase in-office requirements. The IRS faces balancing the benefits of telework with concerns over data security and employee performance.
Economic News/Policy:
January 4: Trump’s Tax Cuts Are About to Unleash Chaos on the Hill. Here’s How.
Congress is bracing for a contentious debate over trillions of dollars in proposed tax cuts as Republicans grapple with internal divisions and mounting legislative priorities.
The debate is expected to be slow and messy, with disagreements over how much to spend and whether to offset costs with spending cuts. House Republicans are split between prioritizing immigration reform or tax policy, with Senate Majority Leader-elect John Thune favoring immigration first.
The cost of extending Trump-era tax cuts, set to expire in 2025, is projected at $4 trillion. Some Republicans advocate for covering the cost, while others, like incoming Senate Finance Chair Mike Crapo, argue extensions should be viewed as maintaining current policy, which wouldn’t require offsets. Possible funding sources include higher tariffs, green energy credit cuts, and rescinded IRS funding.
Congressional Republicans may also reduce the duration of tax extensions to lower the price tag, but House Ways and Means Chair Jason Smith opposes anything shorter than 10 years. The GOP’s slim majority means rank-and-file members, particularly those from high-tax states, will push for concessions, such as lifting the $10,000 cap on state and local tax deductions.
With a packed legislative agenda—including raising the debt ceiling, immigration reform, and spending cuts—Republicans face a tight timeline. The chaotic tax debate could further delay progress, with GOP leaders tasked with managing demands from colleagues while avoiding budgetary fallout.
December 29: Fight Over Stopgap Funding Foreshadows Challenges for New GOP-Led Congress
A contentious fight to avert a government shutdown this month signals upcoming hurdles for House Republicans as they prepare to tackle fiscal 2025 funding. Despite GOP control of both chambers, internal divides and a narrow House majority have already complicated budget negotiations.
Congress passed a stopgap measure last week to keep the government funded through mid-March, but President-elect Trump’s demands and ongoing GOP infighting could make long-term funding plans difficult. House leaders have struggled to unify their caucus, with moderates and hardliners clashing over issues like abortion and border security.
With a deadline of March 14 to finalize fiscal 2025 funding, House Appropriations Chair Tom Cole expressed optimism, emphasizing bipartisan collaboration with Senate leaders. However, the Senate has yet to pass its 12 annual spending bills, and House proposals are more partisan in nature, increasing the likelihood of clashes during negotiations.
House GOP leaders face a delicate balancing act next year, juggling budget work with efforts to pass key elements of Trump’s agenda on immigration, energy, and taxes. Some lawmakers, like Rep. Mark Amodei, have warned that simultaneous reconciliation and appropriations work will make for a “multitasking Olympics.” Despite challenges, leaders remain hopeful that funding agreements will be reached before deadlines force across-the-board cuts or another crisis.
Technology:
January 3: Treasury Imposes Sanctions on Chinese Firm Over Attack on U.S. Routers
The Treasury Department has sanctioned Beijing Integrity Technology Group for its role in the Flax Typhoon cyberattacks, which compromised about 260,000 internet-connected devices worldwide, half of them in the U.S.
The Shanghai-listed firm is accused of aiding Chinese state-sponsored hackers in targeting government and industrial networks across the U.S., Taiwan, and Europe. U.S. authorities only regained control of the devices in September after an FBI operation.
The attacks highlight growing concerns about China’s cyber infiltration of U.S. critical infrastructure. Treasury officials said the new sanctions aim to disrupt these threats and bolster cyber defenses in both public and private sectors.
Beijing Integrity Technology is a major player in China’s police and intelligence services, facilitating cyberattacks through compromised devices to obscure hackers’ locations.
The company will be barred from accessing U.S. financial systems, though analysts believe the sanctions will have limited impact due to its limited international exposure. The Chinese government has denied involvement in state-backed cyberattacks.
Energy and Environmental Policy/News:
January 3: Car Sales Get Boost From Trump's Threat to End EV Credits
President-elect Donald Trump’s threat to eliminate federal tax credits for electric vehicles (EVs) triggered a year-end surge in EV sales, which grew 12% in the fourth quarter of 2024, pushing the annual total to a record 1.3 million vehicles, according to Cox Automotive.
EVs now account for 8% of the U.S. car market, though the boost is expected to be temporary. Many buyers rushed to purchase EVs before policy changes, including the potential removal of the $7,500 tax credit, make them more expensive. Trump’s proposals also include tariffs on Canada and Mexico, which could further raise car prices.
Despite Tesla remaining the EV leader, it experienced its first annual sales decline in over a decade. Meanwhile, hybrid vehicles saw significant growth as automakers like GM, Ford, and Hyundai adjusted strategies to prioritize hybrids over fully electric models.
Analysts warn that without EV incentives, demand could drop by as much as 27%, with affordability and charging infrastructure continuing to pose major hurdles for widespread EV adoption.
January 2: The IRA Will Deliver a Fourfold Return on Taxpayer Investment, Says ACP
The Inflation Reduction Act (IRA) is expected to generate over $2.7 trillion in economic benefits from 2025 to 2035, according to a report by ICF for the American Clean Power Association (ACP).
With $656 billion in costs, the IRA will provide $740 billion in tax credits, spurring $2 trillion in private investments across power, building, and transportation sectors. The report projects $3.8 trillion in total spending, creating an average of 1.2 million jobs annually and increasing Americans' disposable income by $846 billion.
Additionally, the IRA could reduce CO2 emissions by 4.1 billion tons and add $1.9 trillion to U.S. GDP. Endorsed by major industry groups, the report highlights a significant rise in domestic clean energy manufacturing.
From its passage in 2022 to mid-2024, clean energy investments surged to $493 billion—a 71% increase. Sectors expected to see job gains include manufacturing, construction, finance, and utilities, with the largest benefits projected in early years from new clean energy projects and facilities.
January 2: Electric Cars Already Won — in Norway
Norway continues to lead the global shift to electric vehicles (EVs), with nearly 90% of all new cars sold in 2024 being fully electric, according to the Norwegian Road Federation (OFV).
This marks a rise from 82.4% in 2023, as Norway aims to sell only zero-emission vehicles by the end of 2025. Tesla’s Model Y and Model 3 dominated the market, accounting for over 18% of total new car sales.
Norway’s progress is driven by government incentives, which lower taxes on zero-emission cars and increase them on polluting vehicles. Other popular brands in the country include Volkswagen, Toyota, Volvo, and BMW, with Chinese automakers like BYD and Xpeng gaining traction.
Despite progress in passenger EV adoption, electric vans are lagging, making up only 30% of new van registrations in 2024. OFV Director Øyvind Solberg Thorsen emphasized the importance of maintaining government incentives to meet the country’s ambitious 2025 target, noting that reaching the final few percentage points may prove challenging.
December 27: 5 People to Watch on Energy, Environmental Issues in the New Year
Energy and climate policy are expected to be contentious in 2025 as President-elect Trump seeks to boost U.S. energy development amid Democratic opposition over climate concerns.
Key figures shaping this debate include Doug Burgum, Trump's nominee for Interior secretary, who is expected to oversee increased oil and gas drilling on federal lands. Chris Wright, nominee for Energy secretary and a fracking CEO, will likely shift the department’s focus away from renewable energy.
Lee Zeldin, tapped to lead the EPA, is expected to roll back environmental regulations in line with Trump’s agenda. Sen.-elect John Curtis (R-Utah), founder of the Conservative Climate Caucus, may play a key bipartisan role in climate policy.
Meanwhile, Rep. Jared Huffman (D-Calif.) will lead Democrats on the House Natural Resources Committee, focusing on environmental justice and renewable energy as they brace for Trump’s efforts to reverse previous environmental protections.
For Fun:
A breakthrough in battery technology using single-crystal electrodes could enable electric vehicle (EV) batteries to last decades, with a lifespan of over 20,000 charge cycles — equivalent to driving 8 million kilometers.
The study, led by Professor Jeff Dahn at Dalhousie University and funded by Tesla Canada, demonstrated that single-crystal batteries maintain 80% of their capacity far longer than conventional lithium-ion batteries.
Researchers found that these batteries exhibit minimal internal damage even after prolonged use, unlike traditional batteries that develop microscopic cracks over time. This durability is attributed to the continuous structure of single-crystal electrodes, which are more resistant to mechanical stress.
The innovation could transform EV longevity and support second-life applications like grid-scale energy storage for renewable power sources. Already in commercial production, these next-gen batteries are expected to see wider adoption as automakers aim to reduce carbon footprints and meet regulatory standards for battery performance. Researchers believe this advancement will help manufacturers plan for long-term EV reliability and sustainability.