The National Science Foundation, Unleashing American Energy, and National Small Business Week
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:
May 5: The IRS has lost almost one-third of its tax auditors after 2 months of DOGE cuts, report says
The Trump administration's plan to trim the IRS workforce has resulted in almost one-third of its tax auditors leaving the agency through March, according to a report from the U.S. Treasury Department's watchdog. Elon Musk's Department of Government Efficiency (DOGE) has sought to trim the federal workforce through layoffs and deferred resignation.
The IRS has been a focus of DOGE's cost-cutting efforts, with plans to trim as much as 40% of its workforce this year. Through March, those efforts have resulted in the tax agency losing about 11% of its workforce, with revenue agents seeing a much bigger hit, losing 31% of their workers.
Losing a large share of auditors could impact the federal government's ability to collect tax revenue, given that these agents typically handle cases involving wealthy taxpayers or corporations. The cuts to the IRS' auditing force raise questions about the effectiveness of DOGE's efforts, given that the tax agency is responsible for collecting the bulk of the nation's revenue.
DOGE claims to have saved $165 billion, but the Partnership for Public Service estimates that the savings have come at a cost of $135 billion due to paid leave, re-hiring mistakenly fired workers, and lost productivity. The IRS could forego $323 billion in tax revenue over the next decade due to lower tax compliance and a decline in audits, according to an estimate from the Yale Budget Lab.
May 5: House Republicans hunt for deals on Medicaid, taxes
House Republicans are seeking deals on Medicaid cuts, the state and local tax (SALT) deduction cap, and other contentious topics as they aim to advance a package of President Trump’s legislative priorities.
Speaker Mike Johnson (R-La.) is pushing to get the bill out of the House and to the Senate by the end of the month, but disagreements over Medicaid cuts and the SALT deduction cap are causing delays. The House Energy and Commerce Committee will address Medicaid cuts, while the Ways and Means Committee is dealing with the SALT deduction cap.
Additionally, House Republicans are grappling with potential rollbacks to green energy tax credits and cuts to the Supplemental Nutrition Assistance Program (SNAP). Despite these challenges, Johnson remains optimistic about meeting the timeline.
The House will also vote on a bill to rename the Gulf of Mexico as the Gulf of America, and Cabinet secretaries will appear on Capitol Hill to discuss Trump’s first budget request of his second term. The Senate will vote on a resolution to overturn a Biden-era rule related to rubber tire manufacturing.
May 2: IRS celebrates entrepreneurs and small business owners during National Small Business Week
The Internal Revenue Service celebrates National Small Business Week, May 4-10, with important tools and insights for entrepreneurs and small business owners to protect their businesses and successfully navigate tax filing requirements.
For over 60 years, the U.S. Small Business Administration has celebrated National Small Business Week, and the IRS supports this annual tradition, honoring the small businesses that serve as the backbone of the nation's economy. During National Small Business Week, the IRS will highlight important tax topics to help small business entrepreneurs prosper and grow.
These topics include best practices for small businesses, tips for tax professionals who support small businesses, delivering cutting-edge technology, and remaining vigilant against common scams. The IRS will also host a national webinar on May 8, titled "Small business, big tools: Free resources from the IRS that will lead to success." Additionally, the IRS emphasizes the importance of proactively planning and preparing to protect financial and tax records in case of a disaster.
The IRS offers a variety of resources, including webinars, workshops, meetings, seminars, and e-News subscriptions, to help small business owners understand tax responsibilities, benefits, and filing requirements.
Economic News/Policy:
May 2: The White House seeks sharp spending cuts in Trump’s 2026 budget plan
The White House released President Donald Trump’s 2026 budget proposal, aiming to slash spending on many government programs and restructure the nation’s domestic priorities.
The plan includes steep cuts to child care, disease research, renewable energy, and peacekeeping abroad, while increasing funding for the administration’s mass deportation agenda. The budget also targets “woke programs” and seeks to slash the Internal Revenue Service.
Overall, the proposal reduces domestic spending by $163 billion, or 22.6% below current year spending. At the same time, the White House is relying on Congress to approve $375 billion in new funding for the Homeland Security and Defense departments. House Speaker Mike Johnson welcomed the proposal, while Democrats criticized it as harmful to working Americans.
The budget includes significant cuts to the State Department, Health and Human Services, and Education Department, while increasing funding for defense and homeland security. The proposal has faced criticism from leading defense hawks and is subject to approval by Congress. The budget reflects Trump’s vision for his second term and his commitment to reshaping the federal government.
May 1: White House dismisses Chamber push for small businesses tariff relief
The White House rebuffed an effort to give small U.S. business owners immediate relief from tariffs, stating that economic relief would come from tax cuts that Congress is seeking to extend.
The U.S. Chamber of Commerce had requested that small companies be excluded from tariffs if they could show it would harm U.S. workers or if the products could not be made in the United States. White House deputy chief of staff for policy Stephen Miller emphasized that relief for small businesses would come in the form of the largest tax cut in American history.
Congressional Republicans are working to extend President Donald Trump's 2017 tax plan, which expires at the end of this year. The Chamber of Commerce supports eliminating unfair trade but expressed concern that small businesses are being hurt by higher costs and interrupted supply chains amid ongoing tariff negotiations.
The Chamber also sought exclusions for businesses of all sizes where U.S. jobs were threatened, arguing that certain products cannot be produced in the United States and raising prices on those products would harm struggling families.
April 30: ‘No good news': Trump’s first GDP reading shows economy shrank
President Donald Trump promised that his second term would mark the beginning of a new golden age, but early economic returns have been disappointing.
The Commerce Department estimated that the U.S. economy shrank by 0.3 percent during the first three months of 2025, the worst performance in three years. This is a sharp decline from the 2.4 percent expansion in the final full quarter of President Joe Biden’s presidency.
The contraction is attributed to the negative effects of Trump's trade war, with demand for foreign goods surging as businesses scrambled to get ahead of new trade barriers. The trade deficit for goods hit a record high in March, negatively affecting GDP. Despite stronger-than-expected consumer spending and private investment, recession fears have climbed.
Trump denied that his tariffs had anything to do with the contraction, blaming the “Biden ‘Overhang’.” The weak GDP report suggests that bad vibes are starting to negatively affect real economic output, with concerns that surging import costs could cause prices to spike and companies to lay off workers. The Business Roundtable’s quarterly survey reported a sharp decline in the number of businesses likely to expand their workforces in the next six months.
Energy and Environmental Policy/News:
May 1: 38 Republicans call for ‘full repeal’ of Democrats’ energy tax credits
A group of Republicans called for a “full repeal” of energy tax credits passed by Democrats in 2022 in a Thursday letter. Their letter comes after a different group of 21 Republicans, mostly moderates, called for changes to be “targeted and pragmatic” in March, and four senators expressed opposition to a “full-scale” repeal last month.
The two letters underscore the challenges GOP leaders face amid divisions in their caucus as they try to come up with a major budget deal to advance their priorities. In the latest letter, the 38 Republicans criticized the approach of their colleagues, saying it would be hypocritical to retain some credits for low-carbon energy sources while eliminating others.
They argued that the longstanding Republican position has been to allow the market to determine energy production and warned that defending favored subsidies could risk preserving the entire Inflation Reduction Act. Speaker Mike Johnson (R-La.) has struck a middling tone, saying in February that the Republican party’s approach would be “somewhere between a scalpel and a sledgehammer.”
The Inflation Reduction Act included hundreds of billions’ worth of tax credits for energy sources, including solar, wind, biofuels, nuclear, hydrogen and carbon capture, as well as electric vehicles, as part of an effort to combat climate change.
April 30: US House Republicans propose dropping $20 vehicle registration fee, seek EV fee of $250
U.S. House Republicans will propose dropping a $20 federal annual registration fee on all vehicles starting in 2031 to fund road repairs and will seek a new $250 annual fee on electric cars as part of a tax reform bill under consideration.
The House Transportation and Infrastructure Committee will take up the proposal from Representative Sam Graves, who heads the panel. As a result, the committee has shrunk its proposed funding for air traffic control infrastructure from $15 billion to $12.5 billion.
The bill also proposes a $100 fee on hybrids and had been projected to raise at least $50 billion over 10 years for highway repairs. Most revenue for federally funded road repairs is collected through diesel and gasoline taxes, which EV drivers do not pay. Some states charge fees for electric vehicles to cover road repair costs. The proposal includes $12.5 billion in new funding through 2029 for replacing aging Federal Aviation Administration facilities, including air traffic control towers, radar systems, telecommunications infrastructure, and air traffic controller hiring.
A persistent shortage of controllers has delayed flights, and many facilities are working mandatory overtime and six-day weeks. The FAA is about 3,500 air traffic controllers short of targeted staffing levels. Transportation Secretary Sean Duffy plans to ask Congress for tens of billions of dollars for a multi-year effort to revamp FAA air traffic control infrastructure and boost hiring.
April 30: 5 ways Trump reshaped energy and environment policy in his first 100 days
President Trump made “unleashing American energy” a cornerstone of his platform on the campaign trail and a focus of the first 100 days of his second term.
He has made his priorities in how to accomplish that goal clear, repeating a slogan of “drill, baby, drill” and making moves to boost fossil fuels while going after renewable energy, climate science, and environmental regulations. The administration has made speeding up fossil fuel and mining projects a key focus, including fast-tracking projects on federal lands and invoking wartime authority to expand extraction of minerals and coal.
Trump has repeatedly sought to deny or downplay the impacts of climate change, dismissing scientists and targeting policies and grants aimed at combating climate change. The administration has also implemented tariffs that have sparked fears of a recession, impacting the oil and gas sector.
Additionally, the Trump administration has sought to roll back environmental protections, including regulations on pollution and safety screenings for harmful chemicals. Finally, the administration has cut staff at energy and environmental agencies, including layoffs of probationary workers and firing employees working on environmental justice and health programs.
Technology:
May 3: NSF invites ideas to keep U.S. atop AI research ranks
The National Science Foundation’s Networking and Information Technology Research and Development Coordination Office, acting for the White House Office of Science and Technology Policy, is taking public comments through May 29 on a 2025 National Artificial Intelligence Research and Development Strategic Plan that aims to keep the U.S. “the unrivaled world leader” in AI.
At present, the U.S. appears to have a narrow lead over China in AI capabilities. NVIDIA CEO Jensen Huang recently warned that China is “very close” to U.S. capabilities and that the AI race is “long-term, infinite.” The request for information (RFI) emphasizes the need to define the Federal government’s unique role in AI research and development (R&D) over the next 3 to 5 years, focusing on areas where private sector investment may be lacking.
The RFI seeks input from AI researchers, industry leaders, and other stakeholders directly engaged in or affected by AI R&D. It also asks for ideas on specific R&D priorities, such as fundamental advances in AI algorithms, architectures, high-risk, high-reward AI research, next-generation AI hardware, and agentic and physically embodied AI.
AI pioneer and Facebook AI chief Yann LeCunn highlighted the government request on LinkedIn, drawing significant reactions and comments from the community.
May 1: U.S. research dominance is imperiled, report says
A new report warns that the U.S. could lose its dominance in the R&D arena to China. The United States spends more money on research and development than any other country worldwide, but nations like China are nipping at its heels in other areas that drive innovation.
China is publishing more research, applying for more patents, has more researchers, and is accelerating efforts that fuel scientific discoveries, while the U.S. has plateaued or is decreasing efforts in many of those same areas, according to a report published Wednesday by the American Association for the Advancement of Science. Senate Appropriations Chair Susan Collins (R-Maine) referenced the report during a panel hearing on biomedical innovation Wednesday, calling the Trump administration’s cuts to National Institutes of Health research funding “very troubling.”
The report also found that federal spending on research and development in the U.S. is unlikely to increase in the near future, with slight cuts in 2024 extended through 2025. The U.S. holds fifth place in private R&D spending globally, with businesses investing 2.39 percent of gross domestic product in R&D in 2023. China surpassed the U.S. as the country with the largest number of highly cited peer-reviewed science papers in 2021.
China sharply increased the number of patents it applies for, while patent applications in the U.S. have fallen slightly. Without significant course correction, the U.S. is increasingly likely to lose its position as the world’s dominant R&D power, the report warns.
April 30: US set to close office responsible for global science and technology deals
The Office of Science and Technology Cooperation (OSTC) at the US Department of State is set for elimination, marking a significant blow to global research cooperation.
The OSTC oversees nearly 60 agreements and more than 2,000 sub-agreements, facilitating international collaboration and access to foreign research infrastructures for US scientists. The closure is part of broader cuts initiated by President Donald Trump, who has targeted scientific and academic establishments, deeming them wasteful and un-American.
The cuts have already impacted biomedical research, with a halt to about 800 grants worth over $1 billion and proposed reductions to the National Institute of Health's budget. Secretary of State Marco Rubio announced departmental cutbacks, but there has been no public confirmation of the OSTC's closure. The elimination of the OSTC could disrupt thousands of arrangements that grant US scientists access to facilities like CERN and essential data for weather forecasting.
The move reflects the current US government's aversion to international cooperation and multilateralism. Despite resistance through lawsuits and legislative maneuvers, the damage to the US scientific enterprise has been considerable, with many researchers considering leaving the country. The ultimate impact of Trump's cuts remains uncertain, but the reputation and stability of US science are at risk.
For Fun:
May 1: Revealed: the unusual mathematics that gives rose petals their shape
The growth of rose petals exploits a geometric trick previously unobserved in nature, physicists have found. Using theoretical analysis, computer simulations, and experiments with rubbery plastic sheets, researchers established that as the petals curl outwards, mechanical feedback regulates their growth, leading to the formation of rolled edges and points at their tips.
The findings, described in Science, could one day have applications in engineering and architecture. Geometric patterns are known to affect developing organisms, but previously observed cases were associated with the intrinsic geometry of surfaces. The shape of a growing rose petal relies on extrinsic geometry, where the petals tend to curl with the geometry of a cylinder.
However, a petal’s edge cannot form a single curl, so it forms a number of curls with cusps in between. As the petal continues to grow outwards, mechanical stresses at each cusp begin to turn what was a round edge into an angle. It is unclear whether this way of growing serves a function in roses, but potential advantages could include attracting more pollinators, collecting dew more efficiently, and increasing the flower’s mechanical robustness.