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IRS adds W-2, 1095 to online account, but is closing TACs

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The Internal Revenue Service made some improvements to its IRS Individual Online Account for taxpayers, adding W-2 and 1095 information returns for 2023 and 2024, but reports circulated about cutbacks to the agency, with layoffs and closures of taxpayer assistance centers scheduled.

The first information returns to be added online for taxpayers are Form W-2, Wage and Tax Statement and Form 1095-A, Health Insurance Marketplace Statement. The forms will be available for tax years 2023 and 2024 under the Records and Status tab in the taxpayer’s Individual Online Account

In the months ahead, the IRS plans to add more information return documents to the Individual Online Account. 

Only information return documents issued in the taxpayer’s name will be available in their Online Account. The taxpayer’s spouse needs to log into their own Online Account to retrieve their information return documents. That’s true whether they file a joint or separate return. State and local tax information, including state and local tax information on the Form W-2, won’t be available on Individual Online Account. The IRS said filers should continue to keep the records mailed to them by the original reporter. 

The IRS had been adding more technology tools, including Business Tax Accounts and Tax Pro Accounts, in recent years thanks to the extra funding from the Inflation Reduction Act of 2022. However, layoffs of between 6,000 and 7,000 employees and hiring freezes at the IRS in the midst of tax season threaten to stall such improvements, according to a group of former IRS commissioners. Both IRS commissioner Danny Werfel and acting commissioner Douglas O’Donnell have stepped down in recent weeks. Over the weekend, dismissal notices went out to 18F, a federal agency that helped develop the IRS’s Direct File program and other tools like the Login.gov authentication service. The Trump administration and the Elon Musk-led Department of Government Efficiency have reportedly made plans to shut down at least 113 of the IRS’s in-person Taxpayer Assistance Centers around the country after tax season, according to the Washington Post, either terminating their leases or letting them expire. Werfel had been using the funds from the Inflation Reduction Act to expand the number of Taxpayer Assistance Centers, opening or reopening more than 50 of them for a total of 360 nationwide.

A group of Democrats on Congress’s tax-writing committee criticized the move to close the centers. “Ask any congressional district office and you’ll hear about the challenges constituents face during filing season, which is why Democrats ushered in a once-in-a-generation investment in modernizing the IRS and delivering the customer service the people deserve,” said House Ways and Means Committee ranking member Richard Neal, D-Massachusetts, Tax Subcommittee ranking member Mike Thompson, D-Califonia, and Oversight Subcommittee ranking member Terri Sewell, D-Aabama, in a statement last week. “This administration is hellbent on destroying our progress. It wasn’t enough for them to fire nearly 7,000 IRS employees in the middle of filing season, but now, they are skirting federal mandatory notice procedures and reportedly shuttering over 100 offices that offer taxpayer assistance — an absolute nightmare for taxpayers. As required by the Taxpayer First Act, a 90-day notice must be given to both the public and the Congress before closing any Taxpayer Assistance Centers. We need answers now. We are demanding the Administration provide a list of the centers they plan to close — it’s the least the ‘most transparent Administration’ can do.”

Lawmakers are also concerned about reports of immigration officials pushing the IRS to disclose the home address of 700,000 people suspected of living in the U.S. illegally. According to the Washington Post, the IRS had initially rejected the request from the Department of Homeland Security, but with the departure of O’Donnell last week, the new acting commissioner, Melanie Krause, has indicated she is open to exploring how to comply with the request. However, that move could violate taxpayer data privacy laws, one Senate Democrat warned

“The Trump administration is attempting to illegally weaponize our tax system against people it deems undesirable, and if anybody believes this abuse will begin and end with immigrants, they’re dead wrong,” said Senate Finance Committee ranking member Ron Wyden, D-Oregon, in a statement. “Trump doesn’t care about taxpayer privacy laws and has likely promised to pardon staff who help him violate them, but those individuals would be wise to remember that Trump can’t pardon them out from under the heavy civil damages they’re risking with the choices they make in the coming days, weeks and months.”

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Accounting

IAASB tweaks standards on working with outside experts

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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 proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • 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 IAASB website by July 24, 2025.

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.  

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Tariffs will hit low-income Americans harder than richest, report says

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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 analysis from the Institute on Taxation and Economic Policy.

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 imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

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 estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

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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