McDermott+ Check-Up – June 27, 2025
THIS WEEK’S DOSE
Senate Reconciliation Process Continues. Republicans are adjusting language to comply with Senate rules and appease various wings of the party.
HHS Secretary Kennedy Testifies at House Energy and Commerce Health Subcommittee. Secretary Kennedy was there to address the US Department of Health and Human Services (HHS) fiscal year (FY) 2026 budget request, which contains a large restructuring effort.
House Ways and Means Committee Holds Hearing on Digital Health Data. The conversation highlighted the role of wearable technology.
Senate HELP Committee Considers CDC Director Nomination. Dr. Susan Monarez is nominated to be Centers for Disease Control and Prevention (CDC) director.
House Appropriations Committee Advances FDA Spending Bill. The bill includes significant cuts to the US Food and Drug Administration (FDA), among other provisions.
House Budget Committee Examines Waste and Fraud. The focus was on the dignity of work and the utility of work requirements.
CMS Releases ACA Program Integrity Final Rule. The Centers for Medicare and Medicaid Services (CMS) rule related to Affordable Care Act (ACA) marketplaces was largely finalized as proposed, although it is only effective for plan year 2026.
CMS Announces Industry Commitment to Fix Prior Authorization. Participating health insurers voluntarily pledged to implement six changes to their prior authorization practices.
Office of Science and Technology Policy Issues Guidance on Science Standards. The guidance implements an executive order on the same subject.
Major SCOTUS Rulings Released. The Supreme Court of the United States (SCOTUS) released opinions related to Planned Parenthood, the US Preventive Services Task Force (USPSTF), and nationwide injunctions.
CONGRESS
Senate Reconciliation Process Continues. Language from committees has been undergoing the “Byrd Bath,” which is when the majority and minority parties bring their disputes forward to the Senate parliamentarian over which provisions are “extraneous” and therefore not allowed to be included in the reconciliation bill. The parliamentarian is a non-partisan official who advises the Senate on rules and procedural issues. If she determines that a provision – large or small – does not meet the Byrd rule test, it can be struck from the bill. For more information on the Byrd rule, read our +Insight.
At the same time, Republican leadership has also been working to address other concerns that various Republican senators have with the bill. Senate Majority Leader Thune (R-SD) and House Speaker Johnson (R-LA) have received several letters about the Senate’s proposed changes to the House-passed bill, including a group of 16 moderate House Republicans expressing concern with the Senate’s Medicaid provisions related to the provider tax and state directed payments, and a group of 24 House Republicans asking to reinstate the health savings account provisions that were included in the House-passed bill. In an attempt to assuage worries about the coverage losses, House Budget Committee Chair Arrington (R-TX) and House Energy and Commerce Committee Chair Guthrie (R-KY) requested an additional analysis of the population that would become uninsured because of this bill. The Congressional Budget Office found that of the 7.8 million uninsured individuals in 2034:
4.8 million would be able-bodied adults, ages 19 – 64, who have no dependents and do not meet the proposed work requirements.
1.4 million would be individuals who would not meet proposed immigration status requirements.
2.2 million would become uninsured due to other provisions, including verification of eligibility proposals.
To understand the health provisions at risk from the Byrd Bath, view these press releases from the Budget Committee Democrats: Senate Finance Committee provisions and Senate HELP Committee provisions. Importantly, it is possible that the language can be modified to address the concerns of the parliamentarian in certain cases. That means the ultimate outcome of these provisions remains uncertain.
The changes include:
Provider Taxes. The parliamentarian ruled that this provision is subject to the Byrd rule. The Senate text stated that provider taxes would be frozen at current rates, but starting in 2027, Medicaid expansion states would see their hold-harmless threshold incrementally decrease from 6% to 3.5% by 2031.
Medicaid Spread Pricing. The parliamentarian ruled that this provision is subject to the Byrd rule. This section would have required Medicaid managed care contracts with pharmacy benefit managers to adopt state reimbursement methodologies for pharmacy reimbursement.
Immigration Status and Eligibility. Several provisions related to immigrant utilization of benefits were ruled subject to the Byrd rule, including provisions that limited eligibility for Medicaid, advanced premium tax credits, and Medicare for certain legal non-citizens, required Medicaid eligibility checks for immigration status, and lowered Medicaid federal matching funds for states that use their own funds to provide Medicaid to undocumented immigrants.
Cost-Sharing Reduction Payments. A provision prohibiting federal cost-sharing reduction payments to qualified health plans that cover abortion services was ruled subject to the Byrd rule.
AI Moratorium. In the original Senate language, the 10-year moratorium on state enforcement of artificial intelligence (AI) laws and regulations was made a condition of receiving federal funds for the construction and deployment of broadband and AI infrastructure. To ensure Byrd rule compliance, the Senate Commerce Committee added language that sets aside $25 million of the federal funds for states to negotiate master services agreements and makes other conforming amendments. Though this appears to have satisfied the parliamentarian, there is still disagreement among Republican senators about this provision, so its fate remains uncertain.
Public Service Loan Forgiveness (PSLF) for Doctors and Dentists. The parliamentarian ruled that a provision changing the PSLF Program so that payments made by doctors and dentists during their residency would no longer count toward loan forgiveness was subject to the Byrd rule.
Gender-Affirming Care. A provision prohibiting Medicaid and CHIP coverage of gender-affirming care was ruled subject to the Byrd rule.
Not related to the Byrd rule, lawmakers have started discussion of a rural health fund to address concerns about the bill’s Medicaid impacts on rural hospitals. Whether such a fund will be included is still not known, but a version that provided $15 billion to states across five years has been circulating.
Though a deal seems far away, Republicans remain determined to meet the July 4th self-imposed deadline to send the bill to the president. That means that if the Senate passes the legislation this weekend, the House will need to reconvene (during the scheduled July 4th recess) to consider the bill.
HHS Secretary Kennedy Testifies at the House Energy and Commerce Health Subcommittee. The hearing focused on the administration’s FY 26 budget request. Republican members largely praised Kennedy’s efforts to restructure HHS, reduce bureaucratic inefficiencies, and return focus to patient-centered care. They strongly supported the expansion of digital health tools, telemedicine, AI, and regenerative medicine as means to modernize healthcare delivery. Democratic members expressed deep concern over the politicization of science and the restructuring of expert advisory committees, particularly tied to vaccine policy and public health guidance, and they criticized HHS for a lack of transparency and responsiveness, citing numerous unanswered letters and oversight requests. Kennedy emphasized the need to realign healthcare incentives toward outcome-based and value-based care, aiming to reduce chronic disease and improve overall health outcomes.
House Ways and Means Committee Holds Hearing on Digital Health Data. During the hearing, witnesses urged continued support and investment in healthcare technology and wearable products, while members of both parties expressed concerns regarding the privacy of health data. Democrats also used the opportunity to discuss the impact H.R. 1 would have on Americans’ access to healthcare and healthcare technology, while Republicans emphasized the low costs associated with them and noted the positive impact they could have on rural communities.
Senate HELP Committee Considers CDC Director Nomination. During the nomination hearing, the president’s nominee, Dr. Susan Monarez, emphasized CDC’s new focus on emerging threats and communicable disease. She expressed support for Secretary Kennedy’s mission to make America healthy again and reduce rising chronic disease rates, as well as for integrating new technologies, including AI, to improve healthcare, but noted the need for monitoring and safeguards. Democrats expressed concerns about agency restructuring, HHS Secretary Kennedy’s leadership, and the elimination of specific programs related to lead poisoning, smoking, and global health. They also focused on the impact of cuts to the Medicaid program and changes to the Advisory Committee on Immunization Practices (ACIP). Republicans primarily focused on chronic disease, AI, and health technology, and restoring public trust in the CDC, while a few members also expressed concerns about ACIP.
House Appropriations Committee Advances FDA Spending Bill. The final committee print, which included appropriations for agriculture, rural development, FDA, and related agencies, passed 35 – 27, along party lines, with all Republicans voting in favor. Six amendments were adopted and, of those, three were introduced by Democrats and passed with bipartisan support; these included amendments related to youth vaping and tobacco use education, maternal health services, and infant formula access. During the hearing, Democrats argued that the bill’s significant cuts to FDA, the Supplemental Nutrition Assistance Program, and the Special Supplemental Nutrition Program for Women, Infants, and Children would be detrimental to the health of Americans. They also stated that cuts to grants for telemedicine would harm rural communities and criticized the use of FDA resources to review mifepristone. Republicans supported the bill, arguing that it is fiscally responsible and will help reduce the federal deficit. To view the bill summary, report, amendments, and roll call votes, refer to the committee webpage.
House Budget Committee Examines Waste and Fraud. In the hearing, witnesses presented sharply contrasting views; some emphasized the need to curb fraud and prioritize the needy, while others warned that work requirements and administrative hurdles would harm working families, reduce access to care, and enrich private contractors at taxpayer expense. Members were similarly split. Democrats argued that H.R. 1 would strip healthcare and nutrition assistance from millions of working Americans, disproportionately harming low-income families, children, and older Americans, while delivering tax breaks to the wealthy and increasing bureaucratic burdens. Republicans contended that the current structure of Medicaid and SNAP is unsustainable, rife with fraud and abuse, and in need of reform through work requirements and eligibility verification.
ADMINISTRATION
CMS Releases ACA Program Integrity Final Rule. While the final rule was largely finalized as proposed, the rule modifies policies on a temporary basis to provide some flexibility to state-based marketplaces. Key policies include:
Temporary provisions (effective through 2026):
Ending availability of the monthly special enrollment period (SEP) for individuals with household incomes below 150% of the federal poverty level.
Requiring all marketplaces to reinstitute pre-enrollment verifications of eligibility for SEPs and require further verifications of income when there is no tax data available for verification.
Eliminating the fixed-dollar and gross percentage-based premium payment thresholds, allowing issuers to only adopt the net percentage-based threshold.
Permanent provisions:
Standardizing the annual open enrollment period starting with the 2027 plan year so that it ends by December 31 for all health insurance exchanges. (This has been shortened to December 15 in the proposed rule. The final rule clarifies that it will be December 15 for the federal marketplaces, but state-based marketplaces have the option to extend through December 31.)
Updating the methodology for calculating the premium adjustment percentage to establish a premium growth measure that captures premium changes, in both the individual and employer-sponsored insurance markets, for the 2026 plan year and beyond.
Requiring that when an enrollee does not proactively verify their ongoing eligibility for a fully subsidized plan, marketplaces must continue to re-enroll that individual into the same plan but must also reduce the amount of advance payment of the premium tax credit by $5.
Adding sex-trait modification to the list of items and services that may not be covered as essential health benefits beginning in plan year 2026.
Amending the definition of “lawfully present” to exclude Deferred Action for Childhood Arrivals recipients for purposes of enrolling in marketplace coverage.
Again, as noted above, many of these changes are only effective for plan year 2026. H.R. 1 (the House reconciliation bill) codifies all of the provisions permanently. The Senate version of reconciliation has no such provisions included at this time. We are watching to see if the Senate now chooses to codify the rule for 2027 and beyond in the budget reconciliation bill, which would produce additional savings that could help offset potential losses from the Byrd rulings.
The press release can be found here, and the fact sheet can be found here. See table 7 in the final rule (linked above) for a quick “cheat sheet” on the policy changes in the rule.
CMS Announces Industry Commitment to Fix Prior Authorization. To help streamline and speed up the prior authorization process, health insurance industry leaders committed to a voluntary pledge:
Standardizing electronic prior authorization submissions using Fast Healthcare Interoperability Resources (FHIR®)-based application programming interfaces.
Reducing the volume of medical services subject to prior authorization by January 1, 2026.
Honoring existing authorizations during insurance transitions to ensure continuity of care.
Enhancing transparency and communication around authorization decisions and appeals.
Expanding real-time responses to minimize delays in care with real-time approvals for most requests by 2027.
Ensuring medical professionals review all clinical denials.
Following this announcement, Secretary Kennedy and CMS Administrator Oz hosted a roundtable and held a press conference to highlight the pledge. While the commitments are voluntary, CMS noted that the reforms complement ongoing regulatory efforts and that the agency reserves the right to pursue additional regulatory actions if necessary.
OSTP Issues Guidance on Science Standards. In a memo, OSTP provided guidance on implementing executive order (EO) 14303, “Restoring Gold Standard Science,” to federal department and agency heads. The memo defines the key tenets of gold standard science outlined in the EO and specifies that agencies should work to implement these tenets while minimizing administrative burden through the use of AI and other technologies. It also requires that, by August 22, 2025, agencies submit to OSTP and post on their website a report outlining their implementation plans, which must include:
Descriptions of how the agency is addressing each of the tenets.
Development of standardized metrics and evaluation mechanisms to assess adherence to these tenets and their impact on scientific quality.
Plans for providing training and resources to ensure agency personnel understand and adhere to the tenets.
Discussion of how technology will be leveraged.
Descriptions of any challenges encountered in implementation.
Annual agency reports will then be due to OSTP by September 1 of each year.
COURTS
Major SCOTUS Rulings Released. This week, SCOTUS issued rulings for the rest of the cases in the current term. Several had significant implications for healthcare, the Trump Administration, and power of federal judges:
Kennedy v. Braidwood Management. In a 6 – 3 ruling, the Court held that the appointment of USPSTF members is consistent with the Constitution. The ACA requires insurers to cover USPSTF recommended preventive services with no cost sharing, which includes screenings for lung, cervical and colorectal cancers, as well as diabetes and statin medications to reduce the risk of heart disease and stroke. The opinion also stated that the HHS Secretary can review USPSTF recommendations before they take effect and can remove USPSTF members at will.
Trump v. CASA. In a case about President Trump’s EO prohibiting birthright citizenship, the justices ruled 6 – 3 along ideological lines to limit national injunctions to apply only to states, groups and individuals that sued. This opinion will have broad ramifications for almost all litigation on EOs, including nationwide injunctions on EOs related to gender-affirming care, the National Institutes of Health, and more.
Medina v. Planned Parenthood South Atlantic. At issue in this case was whether Medicaid beneficiaries have an individual right to challenge state Medicaid actions in federal court for failing to comply with the Medicaid “free choice of provider” provision – a requirement that beneficiaries may choose any willing and qualified provider. In a 6 – 3 ruling along ideological lines, the Court ruled that a South Carolina woman and Planned Parenthood did not have their civil rights violated and therefore do not have standing. Instead, litigants will need to go through an administrative process and, if necessary, state courts. This case, however, could have broader implications for Medicaid patient rights and will likely prompt other states to pursue similar efforts to defund Planned Parenthood.
QUICK HITS
GAO Publishes Reports on Medicaid. The US Government Accountability Office’s (GAO’s) first report, focused on Medicaid unwinding, found that of the 89 million completed redeterminations by states, about 27 million individuals were disenrolled during the first year and a half of unwinding. The second report evaluated the effectiveness of Medicaid managed care incentives for child screenings and treatment.
HRSA Announces Action on Drug Prices. The Health Resources Services Administration (HRSA) issued updated award terms for HRSA-funded health centers that require the centers to provide insulin and injectable epinephrine to low-income patients at or below the price paid by the center through the 340B Drug Pricing Program.
NEXT WEEK’S DIAGNOSIS
The Check-Up will be on hiatus next week for the Fourth of July holiday. Congress is also scheduled to be in recess, though that could be delayed or cancelled if reconciliation consideration is ongoing. We also await the release of the calendar year 2026 proposed rules from CMS, including the Physician Fee Schedule and Outpatient Prospective Payment System proposed rules.
Maryland Sales Tax Multiple Points of Use Exemptions: Is the Juice Worth the Squeeze?
In the waning days of its 2025 session, the Maryland Legislature passed the Budget Reconciliation and Financing Act, and Governor Wes Moore signed it into law.[1] This bill expands the sales tax base to include sales of various data and information technology and cloud computing services.[2] The sales tax rate on these new categories of taxable services is 3% as opposed to the prevailing state-wide tax rate of 6%. Imposition of the tax on sales of these new categories is effective starting July 1, 2025.
Putting aside the unworkable nature of keying the imposition to North American Industry Classification System codes and the obvious Internet Tax Freedom Act preemption of the imposition on web hosting and data storage, the Maryland Comptroller recently issued interim guidance that adds new, unwarranted complexity in the administration of multiple points of use (MPU) exemption certificates.
The new law takes effect July 1, and many taxpayers are scrambling to interpret and implement it. On June 10, the Comptroller issued a bulletin providing guidance on many of its more technical components,[3] which introduces a distinction between installment sales of and subscriptions to the newly taxable categories of services. This distinction has implications for managing MPU exemption certificates.
Included with the guidance are provisions that give buyers of these newly taxable services (if they plan on using the services in more than one jurisdiction) the option of providing the seller with an MPU exemption certificate.[4] Receipt by the seller of an MPU exemption certificate relieves the seller of the obligation to collect and remit Maryland sales tax on the sale, shifting the obligation of paying the use tax to the buyer.[5] The applicable tax the buyer must pay is determined using a reasonable method of apportionment of the use within Maryland as compared to all the locations of use of the service. Relevant headcount is a reasonable method of apportionment.[6] The presentation of an MPU exemption certificate by the buyer to the seller is optional.
In an installment sale context, there is one sale transaction that occurs at the time of contract execution. Buyers electing into the MPU process would need to supply only one certificate to the vendor that would cover all subsequent installment payments under the contract. Subscriptions are treated differently. Many of these newly taxable categories of computer-related services often are sold on a subscription basis. Under the guidance, each subscription payment is considered a separate sale requiring the issuance of a separate MPU exemption certificate for each subscription payment.[7] We told the Comptroller’s staff that requiring a separate MPU exemption certificate for each subscription payment is unnecessary. The staff responded saying that the rigidity of the process they’ve outlined in this context is under consideration and may be updated in subsequent guidance. (Vendors and buyers concerned about the practical implications of the MPU regime outlined are encouraged to contact the authors of this blog post for more details.)
The process suggested in the guidance for issuing MPU exemption certificates is unnecessarily burdensome. First, before tendering an MPU exemption certificate to the seller, the buyer “must apply to the Comptroller’s Office for authorization to issue an MPU certificate for each transaction.”[8] If the services are provided on a monthly subscription basis, the buyer may have to go through the online authorization process once a month for each vender to which it has tendered an MPU exemption certificate.
There are hurdles for the seller, too. To accept an MPU exemption certificate, the seller must verify its authenticity online.[9] There does not appear to be any current automation of these buyer certificate authorization and seller verification processes. Presumably, the buyer will have to manually have certificates authorized and the seller will have to manually verify them.
While implementation of the legislation does not mention anything about having MPU exemption certificates preauthorized and verified, it does require that certificates include all the information required by the Comptroller. Presumably, the Comptroller has authority from the legislature to impose these requirements. However, the tax administration objectives further requiring separate MPU exemption certificates for subscriptions are not obvious. It may be that the Comptroller lacks the headcount needed to administer the MPU exemption regime in such short order and is erecting administrative barriers to its use by taxpayers.
What happens if the buyer does not give the vendor an MPU exemption certificate? The vendor will collect the tax at the 3% tax rate on an unapportioned basis and remit it to the Comptroller. The buyer presumably would owe use tax to the other jurisdictions where the services will be used (if they are taxable there). The buyer could apply for refunds of tax paid on the portion of the service used outside Maryland. The Comptroller’s emergency regulations and current guidance contemplate this.[10]
What happens if (1) after clearing the authorization and verification hurdles, (2) the buyer tenders a certificate and the seller accepts it on the first payment on a multiyear subscription where payments are due monthly, (3) neither party does anything about following up with additional MPU exemption certificates on a monthly basis, (4) the vendor doesn’t collect tax on the future payments and the buyer apportioned and paid the tax and (5) the vendor gets audited? On this set of facts, the emergency regulations provide some breathing room. Upon notice from the Comptroller that it intends to assess tax on transactions for which the vendor doesn’t have MPU exemption certificates, the vendor has 60 days to obtain them from the buyer.[11] If the vendor has the certificate from the first subscription payment that automatically repeats each month, one wonders what an auditor would hope to accomplish by making the vendor clear this additional paperwork hurdle.
The quickly issued MPU exemption guidance initially seems simple enough, but when one layers on the administrative hurdles proposed by the Comptroller through its guidance, whether to make use of it requires a practical lens and an analysis of the impact on customer relations. If the customer is big enough and wants it bad enough, the vendor will undertake the periodic verification requirements. The buyer, too, will have to weigh whether the refund procedure or current MPU procedure is the lesser of two evils.
We anticipate that the Comptroller will go through the usual administrative procedure and seek public comment on the forthcoming permanent proposed regulations (to date, only temporary emergency regulations and informal guidance exists). Interested parties should be on the lookout for them and weigh in on the subscription/separate sale issue in the context of MPU exemptions. We hope the Comptroller will take industry feedback into consideration and soften the current stance on requiring additional certificates for each transaction in the subscription context.
[1] House Bill 352, passed April 7, 2025, and signed into law by Governor Moore on May 20, 2025.
[2] See Proposed Emergency Regulations COMAR § 03.06.01.48.A(2)(g)-(i).
[3] Tech. Bull. No. 56 (June 10, 2025).
[4] Id. at ¶28.
[5] Id.
[6] Id. at ¶32.
[7] Id. at ¶29.
[8] Id. at ¶30.
[9] Id. at ¶31.
[10] Proposed Emergency Regulations COMAR § 03.06.01.49.D(3).
[11] Id., § 03.06.01.49.F.
What to Know About Illinois’s 2025 Amnesty Programs
On May 31, 2025, the Illinois General Assembly passed House Bill 2755, which contains three amnesty programs the state estimates will substantially increase its coffers. Illinois Governor JB Pritzker signed the bill into law on June 16, 2025.
General Amnesty Program (35 ILCS 745/10)
The Illinois Department of Revenue (IDOR) will run a general amnesty program from October 1, 2025, through November 15, 2025. During this period, taxpayers who pay “all taxes due” to the State of Illinois for any taxable period ending after June 30, 2018, and before July 1, 2024, will have all associated interest and penalty charges waived.
IDOR regulations provide key details, including:
“Eligible tax liabilities” include any taxes (other than the motor fuel use tax) that are imposed by the State of Illinois and collected by IDOR.
Taxpayers can selectively participate in the program by paying all taxes due for an eligible tax liability (e.g., income tax but not sales tax) or for a particular tax period (e.g., 2022 but not 2023).
Specific procedures for amnesty participation by taxpayers under audit, with disputes pending in the Fast Track Resolution Program or before the Informal Conference Board.
Amnesty can also be granted to taxpayers with civil cases pending in state courts, in administrative hearings, or at the Illinois Independent Tax Tribunal, provided the litigation is dismissed before the end of the amnesty period by agreed order entering judgment in favor of IDOR.
Taxpayers can participate by making estimated payments of the taxes due, including additional Illinois taxes that will result from a federal change that has not become final.
Taxpayers participating in the amnesty program may claim a refund for an overpayment of an established liability based on an issue that is not an amnesty issue or of an estimated payment, including one based on an estimated federal change.
We expect IDOR to publish additional guidance and forms on its website prior to the program’s October 1, 2025, inception.
Franchise Tax Amnesty Program (805 ILCS 8/5-10)
The Illinois Secretary of State will run a franchise tax amnesty program from October 1, 2025, through November 15, 2025. The program applies to franchise taxes or license fee liabilities for any tax period ending after June 30, 2019, and on or before June 30, 2025. Payment of all franchise taxes and license fees due for any taxable period will result in abatement of any associated interest or penalties.
Notes:
There are no regulations related to the Franchise Tax Amnesty Program.
The Franchise Tax Amnesty Program has much more limited eligibility than IDOR’s General Amnesty Program. Taxpayers who have received interrogatories from the secretary’s Department of Business Services or that are a party to any civil, administrative, or criminal investigation or litigation for nonpayment of franchise tax or license fees are not eligible to participate.
The Secretary may publish additional guidance and forms on his website prior to the program’s October 1, 2025, inception.
Remote Retailer Amnesty Program (35 ILCS 120/2-13)
IDOR will run a remote retailer amnesty program from August 1, 2026, through October 31, 2026. During this time, IDOR will waive all interest and penalties associated with a remote retailer’s payment of a “simplified retailers occupation tax rate” for taxes due for January 1, 2021, through June 30, 2026.
Notes:
The “simplified retailers occupation tax rate” is a blended rate equal to 9% for sales subject to the state’s general 6.25% tax, and 1.75% for sales subject to the 1% tax (generally food and drug items).
Taxpayers must pay all taxes due at a simplified rate for the relevant period to obtain a penalty and interest waiver, either up front or via an approved repayment plan.
Registration with IDOR and payment of taxes on a going-forward basis is required.
Participating taxpayers must file returns for the relevant period but do not have to complete Form ST-2, an often-burdensome form that requires reporting of sales by specific locality.
Local units of government do not play a role in the acceptance of applications and do not have the ability to make assessments in addition to accepted payments.
Participation in the program would eliminate a remote retailer’s ability to challenge the constitutionality of IDOR’s assessment of destination-based local tax for the time period resolved by amnesty.
We expect IDOR to issue regulations and publish forms on its website prior to the program’s August 1, 2026, inception.
Elder Care Facilities Not Liable for Sales Tax on Purchase of Ingredients Used to Prepare Food for Residents
In a recent decision, the Louisiana First Circuit Court of Appeal held that nursing homes and adult residential care providers are not required to pay sales tax on their purchases of food ingredients used to prepare meals for residents. Camelot of North Oaks, LLC et al. v. Tangipahoa Parish School System, Sales and Use Tax Division, 2024 CA 0840 (May 22, 2025).
The Facts: Camelot of North Oaks, Kentwood Manor Nursing Home, and Summerfield of Hammond (collectively, the “Taxpayers”) are licensed Louisiana nursing homes and adult residential care facilities required by regulation to provide a “nourishing, palatable, well-balanced diet” to their residents. The Taxpayers contract with their residents to provide services to their residents, including three meals a day, for a lump-sum monthly fee. During the tax periods at issue, the Taxpayers purchased food ingredients, paid taxes on those purchases, and later sought refunds, claiming that the purchases were exempt from sales tax. The Taxpayers cited a statute which exempts sales of meals to residents of nursing homes and residential care providers from sales tax, La. R.S. 47:305(D)(2). The Tangipahoa Parish School System, Sales and Use Tax Division (the “Collector”) denied the refund claims, arguing that the food purchased by the Taxpayers were not “sold” to the residents, and therefore, the initial purchase could not qualify as a nontaxable sale for resale.
The Louisiana Board of Tax Appeals disagreed with the Collector, finding that the provision of meals to residents did constitute a sale and that the initial ingredient purchases were therefore nontaxable sales for resale.
The Decision: The Court began its analysis with La. R.S. 47:305(D)(2), which exempts “[s]ales of meals furnished . . . [t]o the . . . residents of nursing homes [and] adult residential care providers . . . .” The Court recognized that the Taxpayers’ sales of meals to residents would fall within the exemption, but the key issue was whether the Taxpayers “sold” the meals to their residents. The Court looked to the statutory definition of “retail sale,” which is “a sale to a consumer . . . for any purpose other than for resale in the form of tangible personal property . . . .” (Emphasis added). The Court concluded that the Taxpayers’ provision of meals to residents for consideration (as part of the monthly fee) constituted a sale and that the initial purchase of ingredients was therefore a nontaxable sale for resale. The fact that the meals were provided for a bundled fee, rather than being separately itemized, did not alter the character of the transaction as a sale.
The Concurrence: Chief Judge McClendon, in her concurrence, took a more streamlined approach, focusing on the two distinct transactions: (1) the purchase of ingredients by the Taxpayers, and (2) the provision of prepared meals to residents. The concurrence explained that the first transaction is a nontaxable sale for resale if the second transaction is a sale—regardless of whether the second transaction is itself exempt from tax. Because the residents paid consideration for the meals (as part of their monthly fee), the second transaction was a sale, making the initial purchase of ingredients a nontaxable sale for resale. The concurrence also noted that, while residents would normally bear the burden of sales tax as the ultimate consumers, the sale to residents was exempt under La. R.S. 47:305(D)(2). This interpretation of the statutes, the concurrence observed, furthers the public policy of minimizing the cost of meals to nursing home and adult care residents (presumably, if the Taxpayers’ purchase of the ingredients were taxable, the additional cost would be passed through to the residents).
The Takeaway: The main opinion’s focus on the exemption in La. R.S. 47:305(D)(2) is a red herring. The critical issue is not whether the sale by the Taxpayers to their residents was exempt, but whether it was a “sale” at all. The exemption is relevant to the taxability of the end transaction, but the initial purchase of ingredients is nontaxable as a sale for resale so long as the subsequent transaction is a sale—regardless of whether that sale is taxable or exempt. It is important to focus on each transaction in a series of transactions and to determine whether each is subject to tax. Under Louisiana law, a transaction may not be subject to tax, where, as in this case, it is “for resale,” or the transaction may not be subject to tax based on a specific statutory exemption, such as La. R.S. 47:305(D)(2).
Departments’ Opinions Are Not Law
Departments of Revenue frequently issue pronouncements, fact sheets, notices, and the like. While having guidance issued by the taxing authority is generally helpful and encouraged, Departments often forget that such documents are merely statements of their opinion. By definition, an opinion is “a view, judgement, or appraisal formed in the mind about a particular matter” – it is not the final word on that matter. See merriam-webster.com/dictionary/opinion (last visited June 15, 2025). Significantly, the Department’s opinions cannot alter or expand an existing law. This guiding principle was highlighted in a recent Mississippi Supreme Court decision.
In Mississippi Department of Revenue v. Tennessee Gas Pipeline Company, LLC, No. 2023-SA-01079-SCT (May 1, 2025), the taxpayer purchased tangible personal property outside of Mississippi for use in the State. The taxpayer then arranged for shipment of the property into Mississippi by a third party that was not the seller. Use tax was paid in Mississippi on the property, but not on the delivery charges. On audit, the Department assessed use tax on the third-party delivery charges.
On review of the controlling statutes, the Mississippi Supreme Court stated that when property is purchased from a seller and then shipped by that same seller, any freight and delivery charges are likely subject to use tax. However, as in this case, when the seller of the property and the shipper of the property are separate third parties, then such charges are not subject to use tax.
The Department made a meritless argument that the language of the statutes does not limit the Department’s authority to impose use tax on delivery charges. However, the Court refused to so broadly apply the Department’s interpretation and grant the Department authority not specifically vested by the statute.
The Department also alleged that its Fact Sheet was entitled to deference, which stated that use tax was due on delivery charges even when paid to a third-party common carrier that was not the seller. However, the Department’s argument was belied by its own Fact Sheet, which provided that “[n]othing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, regulations, court decisions, or notices.” Miss. Dep’t of Revenue, Delivery Charges (last revised Oct. 2017). Because the controlling statutes did not extend the Department’s authority to impose use tax on third-party delivery charges, the Department’s opinion document to the contrary did not change the Court’s conclusion.
While it is often useful for Departments to issue guidance regarding their interpretation of the tax laws, this case serves as a reminder that such guidance is just their opinion. Such opinions are not—and should not be—irrefutable.
Florida Legislature Passes Bill to End Sales Tax Exemption for Sub-100 MW Data Centers
The Florida legislature has passed a bill that would end the data center sales tax exemption for existing data centers with a critical IT load of less than 100 megawatts (MW), effective Aug. 1, 2025. This may materially impact existing sub-100 MW data center owners and tenants, in addition to developers who are currently developing and constructing sub-100 MW data centers.
HB 7031: Understanding the New 100 MW Threshold for Sales Tax Exemption
The Florida data center exemption currently allows the owner, tenants, and construction contractors to purchase necessary equipment and materials to construct, equip, and operate a data center free of the states’ 6% sales tax (plus local option tax of typically 1% to 1.5%). Whether it was the legislative intent to end the sales tax exemption for existing and under construction sub-100 MW data centers is unclear, but this appears to be the practical effect of HB 7031, the legislature’s 200-page 2025 tax bill.
This exemption’s termination as of Aug. 1, 2025, may materially impact continuing operations even though all of the data center equipment and components have been purchased tax-free prior to Aug. 1, because the sales tax exemption applies not only to construction and equipment purchases but also to ongoing purchases of electricity. Since the exemption was meant to be permanent, and the benefit thereof was intended to be passed through to data center tenants, the loss of the exemption for electricity may hinder landlords’ ability to keep existing tenants and attract new ones to their data centers. The loss of the exemption might also result in a material breach of the owner’s covenants under some existing leases with tenants and possibly their loan agreement with lenders, ultimately impacting the underwriting and valuations attributable to these assets.
The language would eliminate, as of Aug. 1, 2025, the exemption for existing sub-100 MW data centers because the exemption statute requires a data center owner to go through a review process every five years to maintain their permanent exemption certificate. As part of this review process, the owner must certify that the data center’s critical IT load is 100 MW or higher. This means that when a sub-100 MW data center goes through its five-year review process after the Aug. 1, 2025, effective date, it would not be able to provide this certification and lose the exemption. Furthermore, the statute provides that in the event of a sales tax audit, if tax-free purchases were made after the data center lost its eligibility for the exemption, then the owner and tenants must pay back taxes, penalties, and interest on a retroactive basis. Since the new 100 MW requirement takes effect Aug. 1, then all purchases that owners and tenants of sub-100 MW data centers make after the effective date would appear to be subject to sales tax. The amendment to the exemption statute provides no grandfather rule for existing sub-100 MW data centers.
Potential Implications for Existing Data Center Owners, Tenants, and Contractors
As for sub-100 MW data centers currently under construction, this change would also impact the contractors and subcontractors constructing the projects. The data center exemption law allows contractors to also use this sales tax exemption when purchasing materials to “construct, outfit, operate, support, power, cool, dehumidify, secure, or protect a data center and any contiguous dedicated substations.” Under Florida sales tax law – for most types of construction contracts – the contractor (including a subcontractor) is considered the ultimate consumer of the materials they purchase, and therefore the contractor must pay sales tax on their purchases to carry out their contract. As a result, a contractor on a data center project under construction may have priced their bid on the assumption that no sales tax would be paid on many of the items purchased to fulfill their contract. If this bill is signed into law, contractors may no longer be able to purchase items tax-free after Aug. 1, and new developments may see higher costs. Data center operators with projects currently under development in the state should review their construction agreements to determine who bears the risk.
This amendment did not become a part of HB 7031 until a few days before the legislature passed this 200-page bill on June 16, and there is no detail in the bill’s staff analysis. Furthermore, HB 7031 also repealed the sales tax on commercial leases in Florida, which tenants must pay on their data center lease payments (typically 3% – 3.5% of the lease payment, depending on the county), which might have been a justification for the legislature to terminate the data center exemption for equipment and electricity.
Key Takeaways
Even if the legislature addresses this concern in next year’s legislative session, this may leave sub-100 MW data centers in limbo until that occurs. If the lease agreement with a data center tenant provides that the loss of the sales tax exemption is a breach thereunder, some tenants might use that as a reason to terminate their lease or further amend to the terms thereof.
This data center exemption is a small portion of HB 7031. Because this tax bill is integral to the legislature’s budget bill, which must be enacted by July 1, it is included among several provisions that are expected to move forward. It is possible that, if concerns are raised, Gov. DeSantis might instruct the Department of Revenue to consider issuing guidance delaying the enforcement of the loss of exemption for existing sub-100 MW data centers until after the legislature has the opportunity to address this next year.
IRS Roundup: June 3 – 17, 2025
Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for June 3, 2025 – June 17, 2025.
Commissioner update
June 16, 2025: Billy Long was sworn in as the 51st IRS Commissioner after having been confirmed by the US Senate on June 12. Long served as a US Representative for Missouri’s 7th congressional district from 2011 to 2023. His term will run through November 12, 2027.
IRS guidance
June 12, 2025: The IRS has announced that it is experiencing a delay in processing electronic payments and that some taxpayers are receiving notices indicating a balance due even though payments were timely made.
Taxpayers who receive a balance due notice but electronically paid the tax they owed in full and on time do not need to respond. The IRS has said that any associated penalties and interest will be automatically adjusted once the payment(s) are applied correctly.
June 12, 2025: The IRS released Tax Tip 2025-39, reminding businesses about the Childcare Tax Credit. Taxpayers may receive a credit of up to $150,000 per year to offset 10% of qualified childcare resource and referral costs and 25% of qualified childcare facility costs.
To be eligible for the credit, an employer must have paid or incurred qualified childcare costs during the tax year to provide childcare services to employees. Employers should complete Form 8882, Credit for Employer-Provided Childcare Facilities and Services, to claim the credit. The credit is subject to the carryback and carryover rules for business credits.
June 12, 2025: The IRS issued Notice 2025-33, extending for an additional year the transitional relief provided in Sections 3.01, 3.02, and 3.06 of Notice 2024-59. Notice 2025-33 provides transitional relief from penalties with respect to certain information reporting obligations under Section 6045 and provides transitional relief from the liability for the payment of backup withholding tax required to be withheld under Section 3406 and its accompanying regulators.
This notice also provides transitional relief from penalties for brokers who fail to pay that tax with respect to certain sales of digital assets required to be reported under Section 6045, as well as a digital asset sale relief for certain customers that have not been previously classified by the broker as US persons.
June 13, 2025: The IRS issued Notice 2025-35, providing guidance on the corporate bond monthly yield curve, corresponding spot segment rates under Internal Revenue Code (Code) Section 417(e)(3), and the 24-month average segment rates under Code Section 430(h)(2). The notice also provides guidance on the interest rate for 30-year Treasury securities under Code Section 417(e)(3)(A)(ii)(II) (for plan years in effect before 2008) and the 30-year Treasury weighted average rate under Code Section 431(c)(6)(E)(ii)(I).
June 17, 2025: The IRS issued Revenue Ruling 2025-13, providing prescribed rates for federal income tax purposes for July 2025, including but not limited to:
Short-, mid-, and long-term applicable federal rates for July 2025 for purposes of Code Section 1274(d).
Short-, mid-, and long-term adjusted applicable federal rates for July 2025 for purposes of Code Section 1288(b).
The adjusted federal long-term rate and the long-term tax-exempt rate, as described in Code Section 382(f).
The federal rate for determining the present value of an annuity, an interest for life, a term of years, a remainder, or a reversionary interest for purposes of Code Section 7520.
June 17, 2025: The IRS published improvements to its Pre-Filing Agreement (PFA) program to provide greater tax certainty for large business and international taxpayers. The PFA program allows taxpayers under the Large Business and International Division jurisdiction to resolve potential tax issues before filing their return. The program is meant to offer certainty, reduce audit risk, and encourage voluntary compliance.
Key enhancements include:
A redesigned PFA landing page with program statistics, a streamlined process overview, and direct navigation to dispute prevention resources.
New step-by-step instructions to submit a PFA request, including response time expectations and post-submission next steps.
A dedicated PFA page regarding Likely Suitable Issues and Relevant Documents will help taxpayers identify if a PFA request is appropriate for their situation.
Updated program guidelines to help businesses strategically align their PFA submissions with tax filing deadlines.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Lindsay Keiser, a summer associate in the Washington, DC, office, also contributed to this blog post.
New Jersey Required to Turn Square Corners and Pay Untimely Filed Refund Claim
The New Jersey Tax Court has required the Director of the Division of Taxation to turn square corners and pay a refund despite the claim not being timely filed. The ARC/Mercer, Inc. v. Dir., Div. of Tax’n, Docket No. 007970-2024 (N.J. Tax Ct. May 8, 2025).
The Facts: New Jersey imposes a mansion tax on the sales price of certain types of properties including certain commercial properties. The Legislature, however, exempted I.R.C. § 501(c)(3) entities from the mansion tax.
The ARC/Mercer, Inc. (“ARC/Mercer”) is an I.R.C. § 501(c)(3) entity that purchased a commercial property and mistakenly paid the mansion tax. Nine months later it sought a refund of the erroneous payment. The Director refused to pay the refund on the basis that the statute of limitations period under the mansion tax is 90-days.
The Decision: The Tax Court first reviewed the mansion tax, which provides that it is subject to the provisions of the State Uniform Tax Procedure Law (the “Procedure Law”). The mansion tax also provides that, notwithstanding the provisions of N.J.S.A. 54:49-14(a) (which is part of the Procedure Law and generally provides a four-year limitations period for refunds), a taxpayer may file a refund claim within 90 days of payment of the tax. Since ARC/Mercer filed its refund claim nine months after payment, it was untimely and the Tax Court found that the company did not have a refund claim.
The Tax Court then stated “[h]owever, the case is not over” and found that N.J.S.A. 54:49-16(a) of the Procedure Law requires the return of the erroneously paid monies to which “the Director has no entitlement.” That statute generally provides for a limitations period of two years for the return of undisputed erroneous payments under certain limited circumstances. First, the statute is limited to situations where no questions of fact or law are involved. Second, the monies must have been erroneously or illegally collected or paid under a mistake of fact or law.
Here, there are no disputes of fact or law. The fact is that ARC/Mercer is an I.R.C. § 501(c)(3) entity, and the law is that I.R.C. § 501(c)(3) entities are exempt from the mansion tax. The additional requirement is satisfied since ARC/Mercer paid the tax under a mistake of law. Accordingly, the two-year limitations period applied.
The Tax Court rejected the Director’s allegation that the I.R.C. § 501(c)(3) exempt status of ARC/Mercer is in dispute as the status of I.R.C. § 501(c)(3) organizations is a matter of public record available from the Internal Revenue Service’s internet site. “The Director cannot claim ignorance of the status of ARC/Mercer when verification of the status is literally right at her fingertips.”
It is always frustrating when taxing agencies attempt to keep taxes to which they are not entitled. The Tax Court’s decision demonstrates that it will require the Director to turn square corners and not keep such amounts.
Foley Automotive Update June 26, 2025
Foley is here to help you through all aspects of rethinking your long-term business strategies, investments, partnerships, and technology. Contact the authors, your Foley relationship partner, or our Automotive Team to discuss and learn more.
Trade and Tariff Policies
Foley & Lardner provided an update for multinational companies to mitigate risks posed by the Trump administration’s focus on drug cartels and transnational criminal organizations (TCOs).
Mexico will impose an Export Notice requirement for five tariff lines that include certain mechanical and electrical machinery, according to an update from Foley & Lardner.
A Section 232 investigation into imports of semiconductors and semiconductor manufacturing equipment that may result in new import tariffs prompted widespread concern from automakers and other stakeholders in a review of public comments featured in Bloomberg. The Commerce Department did not provide an update on the expected outcome of the investigation.
President Trump on June 12 stated he may raise automotive tariffs “in the not-too-distant future. The higher you go, the more likely it is they build a plant here.”
The U.S. Supreme Court rejected a request from two family-owned businesses to expedite their challenge to President Trump’s broad “reciprocal” tariffs. A federal appeals court had ruled in a separate case that the tariffs can remain in effect at least until a hearing in late July.
Ford and other automakers are still experiencing challenges obtaining adequate supplies of certain rare earth magnets two weeks after the announcement of a U.S.–China trade deal.
The Trump administration’s attention to the U.S. auto trade deficit with Japan is one of the key issues that have impeded that nation’s trade agreement negotiations.
Automotive Key Developments
Automotive News released its annual ranking of the top 100 global parts suppliers.
U.S. new light-vehicle sales in June are projected to increase 2.5% year-over-year to reach a SAAR of 15 million units, according to a joint forecast from J.D. Power and GlobalData.
A draft of the “big, beautiful” budget and tax bill released by the Senate Finance Committee on June 16 would end EV tax credits for all automakers 180 days after bill passage.
California and 10 other states sued the federal government on June 12 over Congressional Resolutions that revoked Clean Air Act waivers which had allowed the Golden State to establish vehicle emission standards that were more stringent than federal requirements. The waivers had also facilitated a California program that required increasing percentages of zero-emission vehicle sales in the state over the next decade.
California Governor Gavin Newsom signed an executive order on June 12 reaffirming the state’s “commitment to accelerate the deployment of zero-emission technologies.”
The U.S. Supreme Court on June 20 ruled that fuel producers have standing to sue over California’s vehicle emissions standards.
A Seattle federal judge on June 24 issued a preliminary injunction blocking the Trump administration from withholding funds for EV charging infrastructure projects in certain states, but stayed the order to allow time for an appeal.
The National Highway Traffic Safety Administration (NHTSA) plans to streamline reviews of automakers’ exemption requests to deploy self-driving vehicles without certain required human controls such as steering wheels or brake pedals.
The Alliance for Automotive Innovation expressed concernsover risks to vehicles’ wireless safety features resulting from provisions in the “big, beautiful” bill that may require the Federal Communications Commission (FCC) to auction federal spectrum rights in the years ahead. Features at risk of losing functionality may include remote parking, hands-free trunk release, and anti-theft capabilities, as well as certain systems to prevent collisions.
OEMs/Suppliers
Certain ongoing trade challenges experienced by a Japanese supplier to Honda suggest “the true toll of the trade war on the auto sector will be magnitudes more than the billions of dollars forecast” by the top automakers, according to a report in Bloomberg. Japan’s top automakers estimated the Trump administration’s tariffs will cost them over $19 billion.
German automakers incurred approximately €500 million ($576 million) in tariff-related costs in April.
Marelli CEO David Slump cited tariffs “against automotive manufacturers and suppliers” as a key factor in the company’s Chapter 11 bankruptcy filing.
Toyota intends to raise prices on certain vehicles sold in the U.S. by up to $270 per vehicle beginning in July in response to the Trump administration’s tariffs. Ford and Subaru raised vehicle prices by up to $2,000 because of the levies, and Mitsubishi will raise prices on U.S. vehicles by an average of 2.1%.
Consultancy AlixPartners estimated consumers’ new-vehicle prices will increase by nearly $2,000 per vehicle due to tariffs.
A number of parts suppliers are reported to be skeptical of certain Chinese automakers’ promises to adhere to 60-day payment terms. This coincides with concerns over the impact to profit margins and financial risk resulting from ongoing price wars among China’s car companies.
Dana Inc. announced an agreement to sell its off-highway business to Allison Transmission for $2.7 billion. The divestment supports Dana’s goal to reduce the complexity of its business and “become a streamlined light- and commercial-vehicle supplier with traditional and electrified systems.”
Continental announced a partnership with GlobalFoundries to establish an Advanced Electronics and Semiconductor Solutions (AESS) organization to design automotive semiconductors.
Market Trends and Regulatory
The Alliance for Automotive Innovation called for significant reforms to NHTSA, and stated the regulator has impeded automotive industry progress and innovation.
Nippon Steel closed its $14.1 billion acquisition of U.S. Steel after reaching an agreement that will give the U.S. government approval over certain provisions such as job moves, facility closures or future acquisitions.
Exports of Chinese-built vehicles to Brazil are projected to rise by 40% year-over-year to represent approximately 8% of the nation’s total light-vehicle registrations in 2025.
China suspended vehicle trade-in subsidies in certain cities due to funding shortfalls, as well as scrutiny over the prevalence of exporting new zero-mileage cars as “used” to boost sales volumes.
New-vehicle registrations in Europe rose 1.6% YOY in May, but declined 0.6% for the first five months of 2025, according to data from the European Automobile Manufacturers’ Association (ACEA).
Ford will require the majority of its salaried workforce to report to the office four days a week.
A report from a court-appointed monitor concluded that UAW President Shawn Fain unjustly withdrew certain key duties of Secretary-Treasurer Margaret Mock in 2024 after Mock was “falsely accused of misconduct.”
Workers at GM’s plant in San Luis Potosí, Mexico will vote this week on whether to join the National Auto Workers Union (SINTTIA).
Autonomous Technologies and Vehicle Software
Waymo launched driverless rides in parts of Atlanta for Uber passengers on June 24, expanding a partnership that started earlier this year in Austin, Texas. Separately, Waymo applied for a permit to begin autonomous vehicle testing in New York City.
Daimler Truck subsidiary Torc Robotics announced a new $5.6 million engineering center in Ann Arbor, Michigan.
Livonia, Michigan-based Roush Industries was selected to scale upfitting trucks with autonomous driving systems for Kodiak Robotics.
Amazon-owned autonomous vehicle company Zoox opened a plant in Hayward, California that will be capable of producing up to 10,000 robotaxis annually.
China released draft guidance to regulate the export of data generated by cars in the country, including details of scenarios that may require security assessments for companies seeking to transfer data outside the nation.
Volvo and Daimler Truck announced the launch of joint venture Coretura to develop a software-defined vehicle platform for commercial vehicles.
Electric Vehicles and Low-Emissions Technology
BloombergNEF expects battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) to represent 27% of U.S. new light-vehicle sales by 2030, from a previous forecast of 47.5%. The updated analysis eliminated 14 million units from the 2030 sales projection, and assumes California will retain its ability to set its emissions standards.
A report from the Alliance for Automotive Innovation indicates BEVs and PHEVs achieved a 9.6% share of total new light-vehicle sales in the first quarter of 2025, representing a decline of 1.3 percentage points from the fourth quarter of 2024, and a 0.3 percentage point increase YOY.
Cox Automotive estimated new EV sales in May fell 10.7% year-over-year to 103,435 units, representing a 6.9% share of the total U.S. new light-vehicle market. The average transaction price (ATP) for a new EV in May declined 1% YOY to $57,734.
Leases represented nearly 60% of first quarter 2025 new EV sales in the U.S.,up from 36% one year ago, according to data from Experian.
Automotive News provided an update on the status of notable U.S. battery manufacturing investments and projects.
Uber announced an international partnership with C40 Cities to increase access to charging infrastructure in London, Boston and Phoenix. Uber also launched the Electric Vehicle Infrastructure Estimator (EVIE) tool to help cities project EV charging demand from Uber drivers. Uber estimated there are 230,000 EV drivers on its platform globally, and charging access has overtaken vehicle cost as drivers’ top concern.
Ion Storage Systems began small-scale production of solid-state batteries at its factory in Maryland. Solid-state technology is expected to significantly extend batteries’ range and improve charging speeds. However, the technology has a number of challenges to overcome to achieve cost-effective production at scale.
Analysis by Julie Dautermann, Competitive Intelligence Analyst
Case Closed: Commission Sanctions Ruling Isn’t an Import Decision
The US Court of Appeals for the Federal Circuit dismissed an appeal for lack of jurisdiction, finding that a denial of sanctions at the International Trade Commission was not a “final determination” under trade law because it did not affect the exclusion of imported goods. Realtek Semiconductor Corp. v. ITC and Future Link Systems, LLC, Case No. 23-1187 (Fed. Cir. June 18, 2025) (Reyna, Bryson, Stoll, JJ.)
In 2019, Future Link entered into a license agreement with MediaTek, Inc. (not a party to the present litigation), which included a provision for a lump-sum payment if Future Link filed a lawsuit against Realtek. Future Link subsequently initiated a patent infringement complaint against Realtek before the Commission. During the proceedings, Future Link settled with a third party and determined that the settlement resolved the underlying dispute, prompting it to notify Realtek and ultimately withdraw its complaint. Realtek moved for sanctions, citing the MediaTek agreement as improper, but the administrative law judge (ALJ), while expressing concern about the agreement’s lawfulness, found no evidence it influenced the complaint and denied sanctions. The Commission terminated the investigation after no petition for review of the ALJ’s termination order was filed. Realtek then petitioned the Commission to review the denial of sanctions, but the Commission declined, closing the sanctions proceeding. Realtek appealed to the Federal Circuit, not challenging the investigation’s termination but seeking an order requiring Future Link to pay a fine based on the alleged impropriety of its agreement with MediaTek.
Realtek argued that the Commission and the ALJ violated the Administrative Procedure Act (APA). In response, the Commission and Future Link not only defended the denial on the merits but also challenged the Federal Circuit’s jurisdiction and Realtek’s standing to appeal. The Court agreed that it lacked jurisdiction under 28 U.S.C. § 1295(a)(6), which only authorizes review of final determinations under specific subsections of Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337). Because the Commission’s denial of sanctions under subsection (h) does not constitute a “final determination” under § 1337(c), the Court declined to address standing or the merits of the sanctions issue.
The Federal Circuit emphasized that a “final determination” within the meaning of § 1295(a)(6) refers to decisions affecting the exclusion of imported articles, such as those made under subsections (d), (e), (f), or (g) of § 1337. Realtek argued that the Commission’s denial of its sanctions request qualified as a final merits decision, but the Court disagreed, citing long-standing precedent, including its 1986 decision in Viscofan, S.A. v. ITC, that limits appellate jurisdiction to exclusion-related rulings. Because the sanctions decision had no bearing on whether products were excluded from importation, the Court held that it lacked the authority to review and dismissed the appeal.
Navigating Uncertainty: How Recent IEEPA Tariff Rulings Impact the Maritime Industry
On May 28, 2025, the United States Court of International Trade (“CIT”) issued a landmark decision in V.O.S. Selections, Inc. v. United States,[1] holding that tariffs imposed by the President under the International Emergency Economic Powers Act (“IEEPA”) exceeded the statutory authority granted by Congress. The CIT vacated the challenged tariff orders and permanently enjoined their enforcement nationwide. However, less than 24 hours later, the U.S. Court of Appeals for the Federal Circuit temporarily stayed the CIT’s order, preserving the tariffs while the government’s appeal is pending. A separate decision from the D.C. District Court also found the President’s IEEPA tariffs to be beyond the scope of the statute, though it imposed a more limited injunction.[2]
The CIT’s decision is significant for the maritime industry, as it directly challenges the President’s ability to impose broad, unbounded tariffs on imports under IEEPA. The CIT emphasized that IEEPA does not grant the President unlimited authority to regulate importation through tariffs, and that any such delegation of power must be clearly limited and guided by statutory principles. The CIT found that the tariffs in question—ranging from a 10 percent rate on all imports to higher, country-specific duties—were not sufficiently tied to the “unusual and extraordinary threat” required by IEEPA and lacked meaningful limitations in scope or duration.
Immediate Impact on the Maritime Industry
Although the CIT’s decision would have set aside all tariffs imposed under the challenged executive orders, the Federal Circuit’s stay means that these tariffs remain in effect for now. This ongoing legal uncertainty has several immediate implications for the maritime industry:
Continued Tariff Collection. Maritime carriers, freight forwarders, and port operators must continue to process shipments subject to the existing tariffs, as the stay preserves the status quo pending further judicial review.
Operational Uncertainty. The potential for a sudden removal or reinstatement of tariffs creates significant unpredictability for shipping schedules, contract negotiations, and supply chain planning. Maritime stakeholders should be prepared for rapid changes in tariff policy as the litigation progresses.
Customs and Compliance Considerations. Importers and logistics providers must remain vigilant in tracking the status of the litigation and any changes to tariff enforcement. Accurate documentation and compliance with current tariff requirements remain essential to avoid penalties or delays.
Long-Term Implications for Maritime Trade
The CIT’s decision, if upheld, would have far-reaching consequences for the maritime industry:
Potential Elimination of Additional Duties. If the tariffs are vacated, importers would no longer be subject to the additional duties imposed under the challenged executive orders. This could lead to increased cargo volumes and reduced costs for shippers and their customers.
Judicial Scrutiny of Emergency Tariffs. The decision signals that future attempts to use IEEPA to impose broad tariffs—especially as leverage in trade negotiations or to address general trade deficits—will face significant judicial scrutiny. This may provide greater predictability and stability for maritime trade policy going forward.
Distinction from Section 232 Tariffs. It is important to note that the CIT’s decision does not affect tariffs imposed under other authorities, such as Section 232 duties on steel, aluminum, and automobiles. These measures remain in place and continue to impact certain segments of the maritime industry.
Next Steps and Recommendations
Given the dynamic nature of the current legal landscape, maritime stakeholders should vigilantly monitor ongoing litigation developments and be ready to adapt their operations in response to changes in tariff policies. It is advisable to consult with legal counsel regarding the status of duties paid under the relevant tariffs and potential refund procedures if these tariffs are ultimately overturned. Maintaining robust compliance programs is essential to ensure adherence to all applicable customs and tariff requirements during this period of uncertainty.
Recent court rulings emphasize the importance of statutory limits on presidential authority to impose tariffs, highlighting the need for maritime industry stakeholders to stay informed and agile as the situation evolves.
[1] cit.uscourts.gov/sites/cit/files/25-66.pdf
[2] courthousenews.com/wp-content/uploads/2025/05/contreras-blocks-certain-trump-tariffs.pdf
Payroll Brass Tax: Payroll Tax Compliance for Multistate Employees [Podcast]
In the second installment of Ogletree Deakins’ new podcast series, Payroll Brass Tax, Mike Mahoney (shareholder, Morristown/New York) and Stephen Kenney (associate, Dallas) discuss multi-jurisdictional tax issues for hybrid and remote employees. Stephen explains the complexities employers face with varying state and local income tax withholding rules, unemployment insurance contributions, and state-specific benefit programs, emphasizing the importance of a state-by-state analysis. Mike and Stephen explore the nuances of non-resident income tax withholding, reciprocal income tax agreements, and the “convenience of the employer” rule. They also address the impact of multi-jurisdictional employees on state benefit contributions and the registration obligations for employers with remote workers in new jurisdictions.