Accounting
IRS expands Tax Pro Account, launches enforcement campaign
Published
4 months agoon

The Internal Revenue Service is adding more features to the Tax Pro Account, Business Tax Account and Individual Online Account, while announcing a new enforcement campaign, even as it faces the threat of major cutbacks under the incoming Trump administration.
IRS Commissioner Danny Werfel discussed the new enforcement effort and technology improvements during a quarterly update Thursday on the IRS’s strategic operating plan, as he fended off questions from reporters about the future of the agency as it faces the
The Tax Pro Account helps tax professionals manage their authorization relationship with taxpayers, view the taxpayers’ information and act on the taxpayers’ behalf. New features include
- The ability to view individual and business taxpayer payment activity;
- A new virtual assistant that allows tax professionals access to an automated chatbot to resolve tax issues, with the ability to escalate to live chat for help with collection related issues; and,
- The ability to view and act on behalf of individual taxpayers to set up and revise payment plans; and,
- Make up to five same day payments on behalf of authorized clients using a checking or savings account.
“We’ve also made several enhancements to the tax professional online account to expand the work tax pros can do on behalf of taxpayers,” said Werfel. “Tax professionals are vitally important to the nation’s tax system. We have taken some initial steps with this tool. We’ve added the ability for tax professionals to easily navigate secure two-way messaging to digitally communicate with the IRS on behalf of their clients. There is also a new virtual assistant, which allows tax professionals access to an automated chat bot to help them resolve tax issues. Tax professionals can escalate to live chat for collection-related issues for assistance. These are important steps, but we’ve heard from tax professionals, and we know we need to do more with this important tool.”
When fully developed, the Tax Pro Account will become a stronger online tool, including the ability to initiate power of attorney and tax information authorizations for business taxpayers that they can review and approve in their Business Tax Account, link and manage business Centralized Authorization File access, view refund and audit status for individual and business taxpayers and much more.
Business Tax Accounts
As part of its Digital First Initiative, the IRS is expanding the features in
“The IRS has further expanded its Business Tax Account tool to include C corporations,” said Werfel. “That means millions of businesses now qualify to use this self service tool.”
Some of the other recent additions include:
- Authorized individuals of C corporations and S corporations who can legally act on behalf of their corporation are now able to view and pay tax balances and Federal Tax Deposits.
- The IRS also introduced a new feature that helps to speed up the lending process by providing sole proprietors and authorized individuals with access to the long-standing IRS Income Verification Express Service to approve or reject a tax transcript authorization request from a lending company.
- Business taxpayers can now access available tax returns, account and most entity transcripts in Spanish.
“IVES enables sole proprietors and authorized individuals to deal with the tax transcript authorization requests from lending companies, and we are also pleased that the Business Tax Account is now available in Spanish,” said Werfel.
The changes follow upgrades in September enabling business taxpayers to view and submit balance-due payments.
The IRS has also expanded the types of Transcript Delivery System transcripts available to business taxpayers, historically an underserved population. Previously, taxpayers and their representatives had to call to request information not available through a TDS transcript. Customer service representatives would provide an internal print with the requested information, manually masking the personally identifiable information before providing the prints to the caller. Masking the transcripts was time consuming. Now taxpayers and their representatives can access these new transcripts through online self-help tools that include Business Tax Account and e-Services TDS.
Business Entity and Form 94X Series Tax Return transcripts are now available through TDS for tax professionals and reporting agents with access to TDS through e-Services. IRS employees can access these transcripts through the Employee User Portal, and authorized users of Business Tax Account can download these transcripts. Transcript expansion will continue in a phased approach through December 2026. Future releases will include the Form 990 series, Form 1041. Form 2290, Form 1042 and Form 706. And transcripts in Spanish.
Individual Online Accounts
Taxpayers can also get more help for their personal accounts through the IRS Individual Online Account, Werfel noted. “For example, they can retrieve tax related information from a single source, including digital copies of notice and letters,” he added. “We have redesigned 247 of the most common notices, all of which are now available in the Individual Online Account. They can see their refund status and check updates on certain audits. They can access a complete overview of their account information, including detailed historical data. This is extremely helpful for people to have at tax time and throughout the year. They can access Identity Protection Services and a lien payoff calculator, and those who need help with a tax bill can apply for an installment agreement more easily by using smartphones or tablets.”
The online accounts are not the only way the IRS is helping to provide a better digital experience, he added. “Taxpayers now have access to more than 60 mobile adaptive forms, allowing them to fill out common tax forms on cell phones and tablet devices and then submit them to the IRS digitally,” said Werfel. “The three most recent forms feature save and draft capabilities, which allow taxpayers to start a form, save it and return to it later.”
Enforcement campaign
Werfel also discussed the launch of a new enforcement campaign at the IRS aimed at improving taxpayer compliance among those with complex returns and those who intentionally evade tax responsibilities.
One of the issues the IRS is targeting involves the exploitation of deferred legal fees. The IRS has begun an examination campaign to address a tax deferral transaction where taxpayers, specifically plaintiff’s attorneys or law firms, fail to report legal fees earned from representing clients in litigation on a contingency fee basis.
The IRS noted that plaintiff’s attorneys or law firms representing clients in lawsuits on a contingency fee basis can receive up to 40% of the settlement amount that they then defer by entering an arrangement with a third party unrelated to the litigation, who then may distribute to the taxpayer in the future; generally, 20 years or more from the date of the settlement. The taxpayer fails to report the deferred contingency fees as income at the time the case is settled or when the funds are transferred to the third party. Instead, the taxpayer defers recognition of the income until the third party distributes the fees under the arrangement.
The goal of the new campaign is to ensure taxpayer compliance and consistent treatment of similarly situated taxpayers which requires the contingency fees be included in taxable income in the year the funds are transferred to the third party.
The IRS is also staying focused on offshore tax evasion through unreported financial accounts and structures, employing data analytics and other tools to spot various forms of offshore tax evasion. The agency is also encouraging whistleblowers to come forward and report on offshore tax evasion and other tax schemes by filing a
“Our compliance work is protecting billions of dollars of revenue by enforcing laws already on the books, and we’re cracking down on terrorist financing and drug dealers through IRS Criminal Investigation’s work,” said Werfel. “The momentum from this historic work at the IRS is real, and we’re continuing to build on these successes month after month. We still have a long way to go to deliver the IRS the taxpayers deserve. But I firmly believe the agency is on the right path, and the agency is well positioned for continued modernization efforts, including those from the incoming administration.”
IRS Criminal Investigation
On the compliance front, IRS Criminal Investigation agents helped deliver convictions in several high-profile criminal cases, resulting in the recovery of billions of dollars and long prison sentences for dangerous criminals, he noted.
The IRS has now recovered $4.7 billion from new initiatives underway during the period of its strategic operating plan, he added. “We have recovered $2.9 billion related to IRS Criminal Investigation work into tax and financial crimes, including drug trafficking, cyber crime and terrorist financing, and another $475 million in proceeds from criminal and civil cases,” said Werfel.
The $4.7 billion figure also includes more than $1.3 billion from high income, high wealth individuals who have not paid overdue tax debts or filed tax returns.
The IRS Criminal Investigation Division has worked on cases covering terrorist financing and drug trafficking, Werfel noted. These cases include an 18-year sentence for a fentanyl trafficker for attempting to support terrorist activity connected to ISIS. In two other cases, IRS CI efforts played a part in a nearly 20-year sentence for one drug dealer and netted nearly four years for another.
Werfel also provided some updates on the IRS’s work on high income nonfilers who have not filed tax returns since 2017. The IRS has now collected $292 million from more than 28,000 nonfilers, an increase of $120 million since September.
“These are cases where the IRS has received third-party information, such as Forms W-2 and 1099, where we see people receive income from between $400,000 and $1 million, and in some cases more than $1 million, but failed to do their basic civic duty under the law to file a tax return,” said Werfel. “This is an important effort. The nonfiler program ran sporadically since 2016 due to severe budget and staff limitations that did not allow these cases to be pursued. With additional funding, the IRS had the capacity to resume this core tax administration work earlier this year.”
Improving taxpayer service
Werfel believes it’s crucial to improve IRS technology, provide new tools, add more efficiency and continue the agency’s work on taxpayer service.
“At the same time, we remain focused on improving taxpayer services and advancing our monetization efforts,” said Werfel. “Our work in these areas has made a world of difference for taxpayers during the past two tax seasons, and we believe taxpayers will continue to see benefits of our modernization work as we head into the 2025 filing season.”
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Accounting
Senate unveils plan to fast-track tax cuts, debt limit hike
Published
10 hours agoon
April 2, 2025
Senate Republicans unveiled a budget blueprint designed to fast-track a renewal of President Donald Trump’s tax cuts and an increase to the nation’s borrowing limit, ahead of a planned vote on the resolution later this week.
The Senate
Republicans say they are assuming that the cost of extending the expiring 2017 Trump tax cuts will cost zero dollars.
The draft is a sign that divisions within the Senate GOP over the size and scope of spending cuts to offset tax reductions are closer to being resolved.
Lawmakers, however, have yet to face some of the most difficult decisions, including which spending to cut and which tax reductions to prioritize. That will be negotiated in the coming weeks after both chambers approve identical budget resolutions unlocking the process.
The Senate budget plan would also increase the debt ceiling by up to $5 trillion, compared with the $4 trillion hike in the House plan. Senate Republicans say they want to ensure that Congress does not need to vote on the debt ceiling again before the 2026 midterm elections.
“This budget resolution unlocks the process to permanently extend proven, pro-growth tax policy,” Senate Finance Chairman Mike Crapo, an Idaho Republican, said.
The blueprint is the latest in a multi-step legislative process for Republicans to pass a renewal of Trump’s tax cuts through Congress. The bill will renew the president’s 2017 reductions set to expire at the end of this year, which include lower rates for households and deductions for privately held businesses.
Republicans are also hoping to include additional tax measures to the bill, including raising the state and local tax deduction cap and some of Trump’s campaign pledges to eliminate taxes on certain categories of income, including tips and overtime pay.
The plan would allow for the debt ceiling hike to be vote on separately from the rest of the tax and spending package. That gives lawmakers flexibility to move more quickly on the debt ceiling piece if a federal default looms before lawmakers can agree on the tax package.
Political realities
Senate Majority Leader John Thune told reporters on Wednesday, after meeting with Trump at the White House to discuss the tax blueprint, that he’s not sure yet if he has the votes to pass the measure.
Thune in a statement said the budget has been blessed by the top Senate ruleskeeper but Democrats said that it is still vulnerable to being challenged later.
The biggest differences in the Senate budget from the competing House plan are in the directives for spending cuts, a reflection of divisions among lawmakers over reductions to benefit programs, including Medicaid and food stamps.
The Senate plan pares back a House measure that calls for at least $2 trillion in spending reductions over a decade, a massive reduction that would likely mean curbing popular entitlement programs.
The Senate GOP budget grants significantly more flexibility. It instructs key committees that oversee entitlement programs to come up with at least $4 billion in cuts. Republicans say they expect the final tax package to contain much larger curbs on spending.
The Senate budget would also allow $150 billion in new spending for the military and $175 billion for border and immigration enforcement.
If the minimum spending cuts are achieved along with the maximum tax cuts, the plan would add $5.8 trillion in new deficits over 10 years, according to the Committee for a Responsible Federal Budget.
The Senate is planning a vote on the plan in the coming days. Then it goes to the House for a vote as soon as next week. There, it could face opposition from spending hawks like South Carolina’s Ralph Norman, who are signaling they want more aggressive cuts.
House Speaker Mike Johnson can likely afford just two or three defections on the budget vote given his slim majority and unified Democratic opposition.

Financial advisors and clients worried about stock volatility and inflation can climb bond ladders to safety — but they won’t find any, if those steps lead to a place with higher taxes.
The choice of asset location for bond ladders in a client portfolio can prove so important that some wealthy customers holding them in a taxable brokerage account may wind up losing money in an inflationary period due to the payments to Uncle Sam,
“Thats going to be the No. 1 concern about, where is the optimal place to hold them,” Spranger said in an interview. “One of our primary objectives for a bond portfolio is to smooth out that volatility. … We’re trying to reduce risk with the bond portfolio, not increase risks.”
READ MORE:
The ‘peculiarly bad location’ for a bond ladder
Risk-averse planners, then, could likely predict the conclusion of the working academic paper, which was
“Few planners will be surprised to learn that locating a TIPS ladder in a taxable account leads to phantom income and excess payment of tax, with a consequent reduction in after-tax real spending power,” McQuarrie writes. “Some may be surprised to learn just how baleful that mistake in account location can be, up to and including negative payouts in the early years for high tax brackets and very high rates of inflation. In the worst cases, more is due in tax than the ladder payout provides. And many will be surprised to learn how rapidly the penalty for choosing the wrong asset location increases at higher rates of inflation — precisely the motivation for setting up a TIPS ladder in the first place. Perhaps the most surprising result of all was the discovery that excess tax payments in the early years are never made up. [Original issue discount] causes a dead loss.”
The Roth account may look like a healthy alternative, since the clients wouldn’t owe any further taxes on distributions from them in retirement. But the bond ladder would defeat the whole purpose of that vehicle, McQuarrie writes.
“Planners should recognize that a Roth account is a peculiarly bad location for a bond ladder, whether real or nominal,” he writes. “Ladders are decumulation tools designed to provide a stream of distributions, which the Roth account does not otherwise require. Locating a bond ladder in the Roth thus forfeits what some consider to be one of the most valuable features of the Roth account. If the bond ladder is the only asset in the Roth, then the Roth itself will have been liquidated as the ladder reaches its end.”
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RMD advantages
That means that the Treasury inflation-protected securities ladder will add the most value to portfolios in a tax-deferred account (TDA), which McQuarrie acknowledges is not a shocking recommendation to anyone familiar with them. On the other hand, some planners with clients who need to
“More interesting is the demonstration that the after-tax real income received from a TIPS ladder located in a TDA does not vary with the rate of inflation, in contrast to what happens in a taxable account,” McQuarrie writes. “Also of note was the ability of most TIPS ladders to handle the RMDs due, and, at higher rates of inflation, to shelter other assets from the need to take RMDs.”
The
“If TIPS yields are attractive when the ladder is set up, distributions from the ladder will typically satisfy RMDs on the ladder balance throughout the 30 years,” McQuarrie writes. “The higher the inflation experienced, the greater the surplus coverage, allowing other assets in the account to be sheltered in part from RMDs by means of the TIPS ladder payout. However, if TIPS yields are borderline unattractive at ladder set up, and if the ladder proved unnecessary because inflation fell to historically low levels, then there may be a shortfall in RMD coverage in the middle years, requiring either that TIPS bonds be sold prematurely, or that other assets in the TDA be tapped to cover the RMD.”
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The key takeaways on bond ladders
Other caveats to the strategies revolve around any possible state taxes on withdrawals or any number of client circumstances ruling out a universal recommendation. The main message of McQuarrie’s study serves as a warning against putting the ladder in a taxable brokerage account.
“Unsurprisingly, the higher the client’s tax rate, the worse the outcomes from locating a TIPS ladder in taxable when inflation rages,” he writes. “High-bracket taxpayers who accurately foresee a surge in future inflation, and take steps to defend against it, but who make the mistake of locating their TIPS ladder in taxable, can end up paying more in tax to the government than is received from the TIPS ladder during the first year or two.”
For municipal or other types of tax-exempt bonds, though, a taxable account is “the optimal place,” Spranger said. Convertible Treasury or corporate bonds show more similarity with the Treasury inflation-protected securities in that their ideal location is in a tax-deferred account, he noted.
Regardless, bonds act as a crucial core to a client’s portfolio, tamping down on the risk of volatility and sensitivity to interest rates. And the right ladder strategies yield more reliable future rates of returns for clients than a bond ETF or mutual fund, Spranger said.
“We’re strong proponents of using individual bonds, No. 1 so that we can create bond ladders, but, most importantly, for the certainty that individual bonds provide,” he said.
Accounting
Why IRS cuts may spare a unit that facilitates mortgages
Published
12 hours agoon
April 2, 2025
Loan applicants and mortgage companies often rely on an Internal Revenue Service that’s dramatically downsizing to help facilitate the lending process, but they may be in luck.
That’s because the division responsible for the main form used to allow consumers to authorize the release of income-tax information to lenders is tied to essential IRS operations.
The Income Verification Express Service could be insulated from what NMN affiliate Accounting Today has described of
“It’s unlikely that IVES will be impacted due to association within submission processing,” said Curtis Knuth, president and CEO of NCS, a consumer reporting agency. “Processing tax returns and collecting revenue is the core function and purpose of the IRS.”
Knuth is a member of the IVES participant working group, which is comprised of representatives from companies that facilitate processing of 4506-C forms used to request tax transcripts for mortgages. Those involved represent a range of company sizes and business models.
The IRS has planned to slash thousands of jobs and make billions of dollars of cuts that are still in process, some of which have been successfully challenged in court.
While the current cuts might not be a concern for processing the main form of tax transcript requests this time around, there have been past issues with it in other situations like 2019’s lengthy
President Trump recently signed a continuing funding resolution
The mortgage industry will likely have an additional option it didn’t have in 2019 if another extended deadlock on the budget emerges and impedes processing of the central tax transcript form.
“It absolutely affected closings, because you couldn’t get the transcripts. You couldn’t get anybody on the phone,” said Phil Crescenzo Jr., vice president of National One Mortgage Corp.’s Southeast division.
There is an automated, free way for consumers to release their transcripts that may still operate when there are issues with the 4506-C process, which has a $4 surcharge. However, the alternative to the 4506-C form is less straightforward and objective as it’s done outside of the mortgage process, requiring a separate logon and actions.
Some of the most recent IRS cuts have targeted technology jobs and could have an impact on systems, so it’s also worth noting that another option lenders have sometimes elected to use is to allow loans temporarily move forward when transcript access is interrupted and verified later.
There is a risk to waiting for verification or not getting it directly from the IRS, however, as government-related agencies hold mortgage lenders responsible for the accuracy of borrower income information. That risk could increase if loan performance issues become more prevalent.
Currently, tax transcripts primarily come into play for government-related loans made to contract workers, said Crescenzo.
“That’s the only receipt that you have for a self-employed client’s income to know it’s valid,” he said.
The home affordability crunch and rise of gig work like Uber driving has increased interest in these types of mortgages, he said.
Contract workers can alternatively seek financing from the private non-qualified mortgage market where bank statements could be used to verify self-employment income, but Crescenzo said that has disadvantages related to government-related loans.
“Non QM requires higher downpayments and interest rates than traditional financing,” he said.
In the next couple years, regional demand for loans based on self-employment income could rise given the federal job cuts planned broadly at public agencies, depending on the extent to which court challenges to them go through.
Those potential borrowers will find it difficult to get new mortgages until they can establish more of a track record with their new sources of income, in most cases two years from a tax filing perspective.

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