Accounting
IRS reforms bring relief, but Trump win clouds future plans
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The latest wave of changes out of the Internal Revenue Service includes a host of relief measures, from
Throughout his campaign, Donald Trump made repeated pledges to institute tax breaks for
Following
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Funding for the IRS has been a particular point of contention for the Republican party, as seen with
“IRS funding is at significant risk right now,” including both “the annual appropriation funding as well as the remaining IRA funding,” said Rochelle Hodes, principal at Top 25 Firm Crowe LLP’s Washington National Tax Office.
“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” Hodes said.
Hodes went on to highlight the
“If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. … If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with,” Hodes said.
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Below is a compilation of noteworthy items out of the IRS last month.
IRS is cutting late filers of foreign gift forms a break
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IRS executives announced last month that the agency will halt the automatic penalty process against taxpayers who delinquently file forms reporting foreign gifts and inheritance, following outcry from the American Institute of CPAs and National Taxpayer Advocate Erin Collins.
“By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal Revenue Code § 6677 penalty,” Collins wrote in a blog post last month.
The IRS followed up the change by emphasizing that it will begin reviewing the reasonable cause statements provided by taxpayers who late filed Forms 3520, Part IV, prior to assessing any penalties.”This favorable change will reduce unwarranted assessments and relieve burden on taxpayers by giving them the opportunity to explain their situation before the IRS assesses a penalty,” Collins said.
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IRS issues new benchmark for Sustainable Aviation Fuel Credit
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Qualified mixtures are required under the credit, which was created by the Inflation Reduction Act, to have a reduction of at least 50% in life cycle greenhouse gas emissions in order to be eligible.
This change is the most recent entry in the saga of the SAF credit, with other notable entries like
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Tax-exempt groups avoid filing requirement for 2023 corporate AMT form
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The IRS and the Treasury Department granted a joint filing exception on Oct. 23 for tax-exempt organizations, excusing them from submitting a
Both agencies said tax-exempt organizations, while not required to file, should still maintain a Form 4626 in their records as documented proof of whether or not they are indeed an applicable corporation for purposes of the AMT and if so, for determining any corporate AMT liability. Liable entities will need to pay the tax and record the amount paid on Part II, Line 5 of
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The return of PTIN season
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The expiration date for tax professionals’ Preparer Tax Identification Numbers is close at hand.
Both tax professionals and Enrolled Agents have until Dec. 31 to renew or obtain their PTIN for 2025 at $19.75 for the service. Those who currently have a PTIN will be notified by the IRS’s Return Preparer Office of the deadline in the coming weeks.
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IRS releases annual inflation adjustments for 2025
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The IRS issued its annual inflation adjustments on Oct. 22 for the 2025 tax year, featuring increases in standard deductions, tax credits, fringe benefits and more due to inflation.
These modifications are applicable to income tax returns filed in the 2026 tax season for the prior year with the agency’s
Featured dollar-amount changes that are of express importance to filers include standard deductions.
For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction climbs to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2024, an increase of $600 from the amount for tax year 2024.
The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
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