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IRS guidance and key appointments set the stage for 2025

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Year’s end is fast approaching for preparers and taxpayers alike, making the regulatory clarity from the Internal Revenue Service’s November wave of guidance a welcome addition across the profession. But with notable tax figures set to bow out in the face of new appointees, experts are awaiting the full brunt of changes to come.

One such announcement is President-elect Donald Trump’s nomination of former U.S. Representative Billy Long as the next commissioner of the IRS. “Since leaving Congress, Billy has worked as a business and tax advisor, helping small businesses navigate the complexities of complying with the IRS rules and regulations. … Taxpayers and the wonderful employees of the IRS will love having Billy at the helm,” Trump said in a Truth Social post this month.

Danny Werfel, who was nominated to the position by President Joe Biden last year, said he was ready to stay in the role for the remainder of his term, which is slated to end on Nov. 12, 2027. According to the conditions of the role, however, he serves at the pleasure of the sitting president.

The IRS has launched numerous campaigns under Werfel’s tenure, ranging from reclaiming more than $1 billion in delinquent taxes from millionaires to the addition of payments and Spanish translations to Business Tax Accounts.

“While much more work remains for the IRS to get where it needs to be, there should be no doubt the agency has accomplished many things during the past two years,” Werfel said in a statement. “These efforts to serve taxpayers and improve tax administration will continue to intensify and accelerate in upcoming months and into the future.”

Read more: Two years in: IRS highlights improvements under IRA

David Samuel Johnson is another new face, whose nomination to succeed the late J. Russell George as the next Treasury Inspector General for Tax Administration was approved this month by the Senate Finance Committee. 

If confirmed, Johnson said during his November confirmation hearing that a core focus of his would be to “provide candid, reliable and pertinent information to Congress, the Treasury Secretary and the IRS Commissioner” to improve the agency’s operational efficiency.

Trump has been active since Nov. 6 in making nominations for various positions with influence over the accounting space, including Paul Atkins to replace outgoing Securities and Exchange Commission Chairman Gary Gensler.

Read more: IRS reforms bring relief, but Trump win clouds future plans

Learn more about the recent noteworthy guidance and final rules published by the IRS last month and how filing benchmarks have changed accordingly.

The IRS headquarters in Washington

IRS phasing in new Form 1099-K thresholds

The Internal Revenue Service is helping ease the transitory burden of its Form 1099-K information reporting threshold by issuing Notice 2024-85 last month, setting the benchmark at $2,500 for 2025.

The previous $20,000 and 200 transaction threshold was originally cut to $600 by the American Rescue Plan Act of 2021, prompting outcry from taxpayers and professionals regarding the potential flood of forms. The IRS quelled these worries by gradually rolling out the new threshold, starting with establishing a $5,000 threshold for the 2024 calendar year.

“There are a variety of examples throughout history where the IRS — to protect taxpayers from undue burden or from potentially being overtaxed — where we have either delayed implementation or ramped implementation,” IRS Commissioner Danny Werfel said during a congressional hearing in February.

Read more: IRS phases in Form 1099-K threshold at $2,500 in 2025

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Chris Ratcliffe/Bloomberg

IRS issues final regs on clean energy partnership credits

The IRS published its final regulations last month for assisting entities that co-own clean energy projects with accessing clean energy tax credits through elective pay.

Set to take effect on Jan. 19 of next year, the new rules allow elective-pay-eligible entities ranging from state and local governments to churches and nonprofit organizations to utilize incentives by deeming specific clean-energy credits as refundable. 

The regulations go on to further clarify how eligible organizations can remain compliant when jointly investing in clean energy projects, as well as add further adjustments to how such projects can classify themselves to not be treated as partnerships and take advantage of elective pay.

Read more: Final regs issued for clean energy partnership credits

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R&D Credit claim revision period extended

The transition period for filers revising research and development tax credit claims has been extended through Jan.10, 2026.

The new process, which allows taxpayers 45 days to fine-tune their research credit claim being submitted for refund prior to the IRS’s final decision, comes from an October 2021 initiative to cut down on dubious filings. 

The changes require taxpayers to provide the IRS with information regarding the business components to which the Section 41 research credit claim relates for that year, all research activities performed for each business component and the total qualified employee wage expenses, total qualified supply expenses and total qualified contract research expenses for the claim year. These rules apply for any claims posed after June 18 of this year.

Read more: IRS extends R&D tax credit transition period

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IRS to accept duplicate dependent returns with IP PIN

Beginning in the 2025 filing season, the IRS will start accepting electronically filed tax returns claiming dependents featured on another taxpayer’s return, provided the second taxpayer uses a valid Identification Protection Personal Identification Number.

The agency will begin taking Forms 1040, 1040-NR and 1040-SS starting next season, helping cut down on the time between when the IRS receives the forms and when reimbursements are distributed — all while preserving the level of security against identity theft risks.

E-filed returns claiming duplicate dependents will continue to be rejected unless a valid IP PIN is provided.

Read more: IRS to accept duplicate dependent returns with an IP PIN

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401(k) limit increases, IRA limit stays the same

The IRS has raised its contributions cap for individual 401(k) plans for the 2025 tax year to $23,500 as part of its annual cost-of-living adjustments, while the $7,000 individual retirement account limit remains unchanged.

Guidance issued last month that outlined numerous cost-of-living adjustments highlighted how employees with 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan benefit from the increase. Both the annual contribution limit and catch-up contribution limits for IRA plan participants aged 50 and older remain constant at $7,000 and $1,000 for 2025, even with the latter adjusted under the SECURE 2.0 Act of 2022.

Read more: IRS increases 401(k) limit, keeps IRA limit the same

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Trump berates Republicans to ‘Stop talking,’ pass tax cuts

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Donald Trump listens to a question while speaking to members of the media before boarding Marine One on the South Lawn of the White House in Washington, D.C.
Donald Trump

Al Drago/Bloomberg

President Donald Trump called on members of his party to unite behind his economic agenda in Congress, putting pressure on factions of lawmakers who are calling for last-minute changes to the legislation to drop their demands.

“We don’t need ‘GRANDSTANDERS’ in the Republican Party,” Trump said in a social media post on Friday. “STOP TALKING, AND GET IT DONE! It is time to fix the MESS that Biden and the Democrats gave us. Thank you for your attention to this matter!”

Trump sent the post from Air Force One after departing the Middle East as the House Budget Committee was meeting to approve the legislation, one of the final steps before the bill can move to the House floor for a vote.

House Speaker Mike Johnson has set a goal to pass the bill next week before the House recesses for its Memorial Day break.

However, the the bill failed the initial committee vote — typically a routine, procedural step — with members of the party still sparring over the scope of the cuts to Medicaid benefits and how much to raise the limit on the state and local tax deduction.

Narrow majorities in the House mean that a small group of Republicans can block the bill. Factions pushing for steeper Medicaid cuts and for an increase to the SALT write-off have both threatened to defeat the bill unless their demands are met.

“No one group gets to decide all this stuff in either direction,” Representative Chip Roy, an ultraconservative Texas Republican advocating for bigger spending cuts, said in a brief interview on Friday. “There are key issues that we think have this budget falling short.”

Trump’s social media muscle and calls to lawmakers have previously been crucial to advancing his priorities and come as competing constituencies have threatened to tank the measure.

But shortly after Trump’s Friday post, Roy and fellow hardliner Ralph Norman of South Carolina appeared unmoved — at least for the moment. Both men urged continued negotiations and significant changes to the bill that could in turn jeopardize support among moderates.

“I’m a hard no until we get this ironed out,” Norman said. “I think we can. We’ve made progress but it just takes time”

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97% say CPA firms not using tech efficiently says survey

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While CPA firms far and wide have made major technology investments over the years, the vast majority of accountants say they’re not being used to their full potential. 

This finding comes from a recent survey undertaken by CPA.com and payment solutions provider Bill. The 400-person poll found that nearly all respondents, 97%, say they use technology inefficiently and that additional training is needed to maximize return on investment. Further illustrating the point, 43% of respondents said that technology is making them do more manual work, not less, something. Becky Munson, an Eisner Amper partner specializing in outsourced accounting services, believes this reflects a failure of training and change management, as she has seen many who disliked a technology change develop manual workarounds specifically to avoid using the new solutions. 

“We see employees make workarounds with tech stacks, which makes headaches that I think align with this 43%. We train people on new things, we ask them to use them, and they keep doing what they were doing before and only use the technology as much as they have to [in order to] move things along while you have people well trained on the software keeping up,” she said in a webcast on Thursday about the survey. 

Inefficient

Ariege Misherghi—senior vice president and general manager of accounts payable, accounts receivable and the accountant channel—said the issue isn’t just because of firms but also vendors that don’t provide enough support, and may not necessarily understand the profession in the first place. 

“Too often I think tools aren’t fully aligned with the workflows they’re meant to support. In SaaS they talk about product-market fit, but in this profession it’s not just that but also product-firm fit, and maybe product-profession fit. Not every tool marketed to accountants was built by people who truly understand how this profession works: the rhythms, the regulations, the stakes, the relationships, all of that. And even the greatest tools can fall short if they’re not implemented with a deep understanding of how firms really operate,” she said. 

And sometimes the inefficiencies come from both sides at once: the survey found that only 37% of firms require clients to use their tech stack, something that Munson said “breaks my heart” as “it is so low.” A streamlined, established tech stack is needed to achieve true economies of scale, but to get there firms need to standardize their data, and to do that firms need to make sure their clients’ data is also standardized, which usually means integrated tech stacks. 

“If you have all these different clients with all these different technologies, even if your own tech stack is standardized the systems they use is different, so the kind of data you will get will be different, and the work you need to do to make it work with your data is different, and your team spends a lot of time spinning their wheels,” she said. “Once you get standardized, where everything back and forth from clients is the same, you get to see how well the teams can do their work.” 

One source of inefficiencies is a rushed implementation. Munson said that, too many times, firms are so eager to get a solution working that they don’t pay attention to all its capacities, just the ones they need right now, but once the basics are down firms still don’t circle back on the rest of the features and how they can be used to drive efficiency. 

“Most of us have been through an implementation, either in the practice or with a client, where you’re just like ‘anything to get it working. Forget about all the fancy things it does. We just needed to do the basics right,’ and then we never circle back on those better, more efficient processes. We get to sort of minimal viable, and then we forget to come back and give it an extra polish. And so what we see there is the processes get written for that basic piece, and we never update,” she said. 

But this is part of what both speakers believed was the larger problem of firms getting lost in the details of their tech stacks and not taking a broader, more holistic approach, which would enable more efficiencies. The key component to managing technology effectively, Munson said, is looking not at individual solutions here and there but thinking of the system as a whole. 

“Often, what happens is something’s wrong or something is troublesome in some way. And so [we say] what can we do to fix that one thing? And we don’t think about it holistically and get all the right folks in there so that we’re solving for the right pain points,” she said. 

Misherghi agreed, and added that this holistic extends not only to the technology a firm already has but the solutions they plan to purchase in the future. When evaluating what technology they need, she said leaders need to think not in terms of specific point solutions to particular problems but things that can support the entire workflow—plus, the onboarding, training and ongoing support from the vendor. 

“Don’t just look for features, right? Look for solutions that support your workflows from providers that understand you. For firms, onboarding and training and optimization can’t be an afterthought. They’re essential to realizing value. I think this is where vendor partnerships matter. Firms seeking the strongest results aren’t just using software, they’re collaborating with their providers, they’re staying educated, they’re making sure their tools evolve alongside their needs. The best outcomes happen when your technology partner acts like part of your team, not just part of your toolkit,” she said. 

Misherghi said that the more successful firms she’s seen think less in terms of performing particular tasks but designing an entire system that, through automation, can do those tasks for them. It is less about plugging holes and more about developing a full infrastructure. The survey found that 74% of participants have a detailed plan to add new services in the next 12 month; Misherghi noted that, among these firms, 86% have a detailed technology roadmap, which is “a wonderful mark on the evolution of the profession we’re seeing.” 

She said a good tech roadmap is more like a service design blueprint versus a shopping list. Successful firms, she said, are not just chasing features but designing intentional workflows and systems capable of scalable service delivery. Similarly, she stressed that the provider should be more than just a vendor but a strategic co-architect that can help with growing pains. 

Misherghi said this approach will become especially relevant as AI becomes more common, as integrations will be key to their effective use, which means thinking in terms of the whole system to understand where those integrations should take place. Right now, she said, people think of AI in terms of analyzing data or extracting fields, but with the rise of AI agents will require firms to focus more on coordinating between them. 

“I think the next big leap is when those systems don’t just talk to each other, they act on each other’s behalf. I think the next big inflection point will be moving from automated steps to autonomous workflows, where AI agents aren’t just analyzing data or extracting fields but actually orchestrating tasks across tools based on firm policies and context and that will change the role of the accounting profession: its less time doing the work and more time designing the system for how everything works together. So the firms that will be thriving are those who are building strong infrastructure now because that is what AI needs to deliver on its core value,” she said.

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Trump tax bill fails in House panel

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A key House committee on Friday failed to advance House Republicans’ massive tax-and-spending bill after hard-line conservatives bucked President Donald Trump and blocked the bill over cost concerns.

The House Budget Committee rejected the bill 21-16, with Republican Reps. Chip Roy, Ralph Norman, Josh Brecheen, and Andrew Clyde joining Democrats to vote against it. The four hardliners demanded deeper cuts to Medicaid and other government programs.

It’s incredibly rare for bills to fail at this step in the process, with the committee vote typically serving as a rubber-stamp to the bill before it moves to the House floor. 

Representative Chip Roy
Rep. Chip Roy

Stefani Reynolds/Photographer: Stefani Reynolds/B

The setback could be temporary and the panel can still approve the bill once the GOP differences are resolved. 

Republican Lloyd Smucker, who switched his vote to “no” to allow the committee to bring it up again, told reporters the committee will hold another vote on Monday. 

Trump, whose social media muscle and calls to lawmakers have previously been crucial to advancing his priorities, inserted himself in the debate less than two hours before the vote, berating dissidents and urging them to fall into line. 

“We don’t need ‘GRANDSTANDERS’ in the Republican Party,” Trump said in a social media post on Friday. “STOP TALKING, AND GET IT DONE! It is time to fix the MESS that Biden and the Democrats gave us. Thank you for your attention to this matter!”

The bill’s failure exposes the power a small group of lawmakers can wield as Republicans seek to push Trump’s “one big, beautiful bill” through the House with very narrow margins. GOP infighting threatens to kill the bill, or at least significantly delay Republicans’ plans to pass the bill next week.

(Read more:‘One big beautiful bill’ full of tax surprises.”)

Republican holdouts spelled out their demands during Friday’s committee meeting, including accelerating new work requirements for able-bodied adults on Medicaid to take effect immediately rather the 2029 deadline set in the legislation. The ultraconservatives also want a faster phase-out of clean energy tax credits.

It wasn’t immediately clear how House Republicans will re-group to address the divisions and advance the bill.

“I’ll let you know this weekend if we’re going to return first thing Monday. That’s the goal at this point,” Budget Chairman Jodey Arrington said after the vote. 

House Majority Leader Steve Scalise, who is helping to broker a deal among Republicans, said party leaders are in touch with the Trump administration to address some of the changes demanded by hardliners.

“We are all in agreement on the reforms we want to make,” Scalise said. “We want to have work requirements. We want to phase out a lot of these green subsidies. How quickly can you get it done?”

House Speaker Mike Johnson on Thursday pledged he would work through the weekend to broker a compromise between moderates, who are seeking an increase in state and local tax deductions, and ultra-conservatives, who say they won’t support it without more spending cuts.

(Read more:Here are the winners and losers in the Republican tax bill.“)

Members from both factions — the SALT Republicans representing high-tax districts and the fiscal hawks who want steeper budget reductions — have threatened to block the bill if House leaders don’t acquiesce to their demands. 

“No one group gets to decide all this stuff in either direction,” Roy, an ultraconservative Texas Republican advocating for bigger spending cuts, said in a brief interview on Friday. “There are key issues that we think have this budget falling short.”

Both Roy and Norman urged continued negotiations and significant changes to the bill that could in turn jeopardize support among moderates.

“I’m a hard no until we get this ironed out,” Norman said. “I think we can. We’ve made progress but it just takes time.”

If the legislation passes the House, it would then head to the Senate where it would likely undergo significant changes. Several members, including Senator Josh Hawley of Missouri, have stated opposition to the Medicaid cuts in the House bill.

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