Accounting
A bumpy start: Tax season kicks off amid growing uncertainty
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Accountants are in the midst of a series of changes, ranging from the future of the Internal Revenue Service to the kick-off of tax season.
President Donald Trump’s hiring freeze for federal government workers, changes at the top at the Internal Revenue Service, a proposed ban on contingency fees from the IRS, massive uncertainty around the Corporate Transparency Act, and a number of other recent developments have introduced a lot of volatility that has professionals wondering where to start.
Catch up on the most pressing issues in the field to stay ahead of the regulatory curve.
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Trump freezes IRS hiring, nixes global tax deal
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President Donald Trump signed a series of executive orders on Jan. 20 after his inauguration, including one that enacted a hiring freeze for federal government workers, particularly at the Internal Revenue Service. He also backed out of a global tax deal that had enjoyed support from the Biden administration.
“I will also issue a temporary hiring freeze to ensure that we are hiring only competent people who are faithful to the American public. And we will pause the hiring of any new IRS agents,” said Trump during a rally and parade at the Capital One Arena. “We will also require that federal workers must return to the office in person.”
Trump then began to refer to claims about thousands of armed IRS agents being hired during the Biden administration, although this claim has
IRS proposes banning contingency fees
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The Treasury Department and the Internal Revenue Service have proposed amendments to Circular 230, which governs practice before the IRS. The amendments are the most extensive since 2014 and cover significant developments that have affected practice since that time.
The proposed regulations would remove or update the parts of Circular 230 that related to registered tax return preparers and tax return preparation, as well as contingent fees to reflect changes in the law since the prior amendments to Circular 230 in 2011 and 2014. The regs would also revise or eliminate other provisions that are out of date.
The proposed regulations would incorporate provisions that better align Circular 230 with the current practice environment, such as requiring practitioners to maintain technological competency as part of their practice before the IRS.
Supreme Court lifts injunction on Corporate Transparency Act
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The Supreme Court granted a stay against an injunction on the Corporate Transparency Act and its beneficial ownership information reporting requirement that had been imposed by a federal appeals court, but CTA enforcement nevertheless remains on hold because of a separate nationwide injunction.
The lower courts will continue to hear arguments over the law, which requires companies to file reports on their true owners to the Treasury Department’s Financial Crimes Enforcement Network as a way to deter illicit activity such as money laundering, tax fraud, drug trafficking and the financing of terrorism by shell companies. New businesses were required to start filing the beneficial ownership information reports with FinCEN last year, and existing ones had to file the BOI reports starting Jan. 1 of this year.
But a
FTC mandates changes at H&R Block
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The Federal Trade Commission finalized
The settlement also requires H&R Block to pay $7 million toward compensating consumers harmed by the company’s unlawful practices.
In a
Grant Thornton CEO steps down
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Top 10 Firm Grant Thornton announced that its CEO, Seth Siegel, is stepping down from his position after 30 years with the firm, though he will still remain involved as a senior advisor.
“I have called Grant Thornton home for almost three decades and am proud to have been part of this amazing team and organization, which has solidified its standing as the destination of choice for clients and talent alike,” said Siegel in the firm’s
In a
IRS starts tax season with hiring freeze and rescinded job offers
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The Internal Revenue Service kicked off tax season on Jan. 27 facing a
The IRS has been rescinding job offers and posted on its
Last month, Trump formally nominated Billy Long, a former Republican congressman from Missouri, as IRS commissioner. Trump announced his intention last month to nominate Long, even though then-commissioner Danny Werfel’s term wasn’t set to end until Nov. 12, 2027.
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Supreme Court takes on CTA, BOI
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In the continuing saga of the fate of the Corporate Transparency Act, the New Civil Liberties Alliance filed an amicus curiae brief with the Supreme Court on Jan. 13, 2025, in Garland v. Texas Top Cop Shop.
The brief urges the court to reject the government’s request to stay a preliminary injunction against the enforcement of the CTA and its beneficial ownership information reporting mandate.
The CTA mandates that organizations that have filed for incorporation under state law submit detailed reports to the Treasury’s Financial Crimes Enforcement Network, or FinCEN, with civil and criminal penalties available to the government to punish those who fail to comply, either by omitting information or even accidentally submitting false information.
Werfel resigns as IRS commissioner
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IRS Commissioner Danny Werfel said on Jan. 17 that he planned to resign on Monday, Jan. 20, coinciding with Inauguration Day.
President Donald Trump had announced plans in December 2024 to
“While I had always intended to complete my full term as commissioner, the president-elect has announced his plan to nominate a new IRS commissioner,” Werfel said in an email to all IRS employees. “I have been touched by those who have reached out to me to share how they were hopeful that I could remain in seat and continue the important work underway. But as civil servants, we have a job to do, and that job is to now ensure a new commissioner is set up for success.”
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Taxpayer Advocate spotlights IRS delays in ERC claims
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National Taxpayer Advocate Erin Collins released her
“For the first time since I became the National Taxpayer Advocate in 2020, I can begin this report with good news: The taxpayer experience has noticeably improved,” Collins wrote. “In 2024, taxpayers and practitioners experienced better service, generally received timely refunds, and faced shorter wait times to reach customer service representatives … . After receiving multiyear funding, the IRS has [also] made major strides toward improving its taxpayer services and information technology (IT) systems.”
However, the IRS faces a
Tax season kicks off with non-tax issues center stage
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While much has happened during the past few years, and significant change lies immediately ahead, there is little that is new in the upcoming tax season. However, beneficial ownership reporting and tariffs — which are not part of the typical issues that preparers deal with — are potential topics of concern.
For now, this filing season appears to be business as usual for most accounting professionals, according to Misty Erickson, tax content program manager at the National Association of Tax Professionals.
“That said, there are a few things to keep in mind,” she added. “With the ever-changing landscape with BOI reporting, business owners that have not already filed, and need to, may be dealing with a tax deadline and a BOI deadline at the same time. While we wait for a new deadline to be announced, this is something to keep in mind and be prepared to advise clients on next steps.”
The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.
The
- ISA 620, Using the Work of an Auditor’s Expert;
- ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
- ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
- ISRS 4400 (Revised), Agreed-upon Procedures Engagements.
The IAASB is asking for comments via a digital response template that can be found on the
In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.
President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an
The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings.
Trump has
Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.
Food prices could rise by 2.6% in the short run due to tariffs, according to an
The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.
Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist
Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time.
“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said.
One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load.
“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai.
Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies.
“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.
However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area.
“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai.
As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales.
“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai.
While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves.
“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”
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