Nearly 500 Tax Professionals Explore What’s Ahead in Tax Policy, Administration, and Enforcement
January 21, 2025
The new year and new administration bring the potential for big shake-ups in the tax world.
At the 2025 D.C. Bar Tax Conference on January 15–16, tax experts explored what’s next in tax policy, with key provisions of the 2017 Tax Cuts and Jobs Act expiring this year and with President Donald Trump promising to impose tariffs on foreign-made goods. Panelists also discussed areas where legislators on both sides of the aisle can find common ground.
Andrew Grossman, Democratic chief tax counsel in the House Committee on Ways and Means, said there are opportunities for legislative bipartisanship, including in the areas of retirement policy and treaty-like benefits to Taiwan.
Internal Revenue Service (IRS) administration and the tax filing season are perennial issues that could also invite collaboration between parties, as well as the burgeoning area of crypto regulation, said Randy Herndon, Republican deputy chief tax counsel in the Senate Committee on Finance.
Sarah Schaefer, Democratic chief tax advisor in the Senate Committee on Finance, spoke about Congress’s reliance on passing bills via budget reconciliation, which requires only a simple majority in the Senate. However, Schaefer noted, those bills are subject to the Byrd Rule, which limits “extraneous” additions and can hamstring potential policies for a possible tax bill.
A Stronger International Tax System
The 2025 tax conference, a signature event by the D.C. Bar Taxation Community, brought together nearly 500 tax professionals to explore developments in international, corporate, partnership, energy, and individual tax, among other topics. The conference also featured a keynote address by Scott Levine, former deputy assistant secretary of international tax affairs at the U.S. Department of the Treasury.
“Although my tenure has been brief — briefer that I had hoped — it has nevertheless been without a doubt the most rewarding professional experience in my life,” Levine said in a prerecorded address from Paris, where he was part of the U.S. Mission to the Organization for Economic Cooperation and Development (OECD).
Much of Levine’s speech touched on the importance of strengthening and stabilizing the country’s international tax system, simplifying its international tax rules, and protecting confidential taxpayer information. Citing rapid changes in the global economy, Levine argued that the United States’ international tax system has not kept pace. “Nowhere has there been more instability in taxation [than in] the digital economy,” he said.
He applauded OECD for its continued efforts to provide a forum for debates and negotiations aimed at designing a new framework for future taxation of the evolving digital economy sector. Nevertheless, Levine said, “U.S. policymakers continue to be concerned about DSTs [digital service taxes], especially considering they’re highly disproportionate on U.S. economies.”
“The U.S. response, to date, has been characterized by both sticks, in the form of investigations that can lead to the imposition of tariffs, and carrots, in the form of bilaterial agreements or so-called joint statements,” he added.
Regarding confidentiality of taxpayer information, Levine said that “the U.S. Treasury and the IRS have developed a process of evaluating the adequacy of a country’s data protection and confidentiality safeguards in order to qualify for the automatic exchange of information. This process has been adopted as the international gold standard and is applied to 170 countries by OECD’s Global Forum.”
Levine closed his address by reflecting on his one-year tenure at the Treasury Department and on the value of OECD. “OECD is not just a forum for economic cooperation; it is a cornerstone for the global system that has helped foster stability, security, and prosperity for decades,” he said. “Multilateral efforts coordinated by OECD and spearheaded by the United States have led to the strengthening and stabilization of the international tax system.”
Tax Administration by AI?
The conference also explored use of generative AI by the IRS and its impact on taxpayers. Caitlin Tharp, an associate at Steptoe & Johnson LLP, said the IRS has been using AI and data analytics “for some time” without robust public disclosure of how the technology is being utilized.
The accuracy of AI is also a cause of concern, Tharp said. For example, the IRS has been using the Reasonable Cause Assistant (RCA) algorithm to determine if a taxpayer is eligible for first-time penalty abatement. Citing a 2012 report by the Treasury Inspector General for Tax Administration (TIGTA), Tharp said 89 percent of the abatements determined by the RCA were incorrect, and yet IRS employees usually followed the RCA’s determinations.
“If we can’t see what databases the machines are being trained on, then that will lead to inaccurate results, which will harm taxpayers and waste IRS resources,” said Tharp, paraphrasing a critique by taxpayer advocate Nina Olson.
Tharp also discussed two executive orders issued by President Biden regarding AI use by government agencies: Executive Order 13960 (December 2020), which required a listing of AI projects that agencies were undertaking, and Executive Order 14110 (October 2023), which further defined the administration’s policy goals regarding AI, requiring many federal agencies to create chief artificial intelligence officer positions within their organizations.
In response to the latter order, TIGTA issued in November 2024 a report recommending that the IRS accelerate implementation of governance and oversight structures to ensure accountability and responsible use of AI. According to the report, the IRS has 68 AI projects to improve customer service through chatbots, streamline enforcement, and generally enhance IRS operations.
Conference attendees also heard from National Taxpayer Advocate Erin Collins on systemic problems in the nation’s tax system and ways in which the IRS can improve its services. In a conversation with Caroline Ciraolo, partner at Kostelanetz LLP and adjunct professor of law at Georgetown University Law Center, Collins called attention to some of her office’s recent efforts and the emerging challenges on the government side of the tax law space, including high turnover rate at the IRS.
“I think the IRS has changed since COVID, to be honest,” she said. “Prior to COVID, you used to see people stay there longer and stay there throughout their careers. So, they would coach IRS folks from customer service … which tended to be a feeder. They would have 5, 10 years of experience, or even 15 years within the IRS before they came to the top as revenue agents or revenue officers.”
Inside Look at DOJ’s Tax Division
On the second day of the conference, Diana Erbsen, a partner at DLA Piper and former deputy assistant attorney general for appellate and review at the Tax Division of the U.S. Department of Justice (DOJ), interviewed Francesca Ugolini, chief of DOJ’s Tax Division. They discussed Ugolini’s 22-year tenure at DOJ and the Tax Division’s role in representing the government in federal tax appeals.
Ugolini explained that the appellate section represents the government in all federal civil tax cases in the circuit courts throughout the United States. “We get to work across the country on every tax issue, not just substantive tax issues, but a lot of the procedural stuff that comes up, [such as] summons, enforcement, and FOIA [Freedom of Information Act] cases,” Ugolini said.
Explaining the difference between appeals from the U.S. Tax Court, the district courts, and Court of Federal Claims, Ugolini said that if a taxpayer files an appeal and the U.S. government wins in any of these courts, the case is settled. If the government loses a case, then there’s a difference in how the Tax Division handles the appeal.
Anytime the government loses a case in the district court or the Court of Federal Claims, the solicitor general decides whether the government should appeal or not. If the government loses a case in the Tax Court, the IRS chief counsel determines whether to send it over to the Tax Division’s appellate and review section for an appeal.
When asked about the solicitor general’s considerations in deciding whether to go forward with a government appeal, Ugolini responded, “First and foremost, we look at whether we can win an appeal. We don’t like to lose on appeal.”
“We are looking at the strength of the case, [including] the strength of our legal argument,” Ugolini continued. “Most often we are more likely to appeal cases that involve legal questions because those are reviewed as de novo on appeal, whereas adverse fact-findings are reviewed for clear error, which are hard to reverse on appeal.”
The government does not appeal every case “just because we think we’re right,” Ugolini said. “We are looking at the broader effect of the federal tax system and whether [the appeals case] is important to the IRS administratively and the impact on the federal tax administration.”
The government also rarely brings a case to the U.S. Supreme Court. “I can’t remember a case in the time I’ve been in the DOJ where we’ve recommended a cert petition in the absence of a circuit split. The Supreme Court doesn’t usually grant a cert in cases where there is not a circuit split.”
But that doesn’t always hold true on the taxpayer side, according to Ugolini, citing last year’s Moore v. United States case in which Charles and Kathleen Moore challenged the Mandatory Repatriation Tax as unconstitutional. The Supreme Court ruled in favor of the U.S. government.
The Tax Conference, held at the D.C. Bar headquarters, also included conversations around the Inflation Reduction Act, Supreme Court updates, and hot topics in tax insurance. The event was led by conference cochairs Ciraolo and Eric Solomon, a partner at Ivins, Phillips & Barker, Chartered, as well as by vice chair Amy S. Elliott, senior practice attorney at Akin Gump Strauss Hauer & Feld LLP.
If you missed this year’s conference, the recordings will be made available in the coming weeks on the Bar’s website.
