Accounting
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
Danny Werfel, who was
The IRS has launched numerous campaigns under Werfel’s tenure, ranging from
“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.”
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David Samuel Johnson is another new face, whose nomination to succeed the late
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
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Learn more about the recent noteworthy guidance and final rules published by the IRS last month and how filing benchmarks have changed accordingly.
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
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Chris Ratcliffe/Bloomberg
IRS issues final regs on clean energy partnership credits
The IRS published its
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.
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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
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.
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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.
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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.
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Easing restrictions, sharpening personal attention and clarifying denials are among the aims of
The programs focus on “fast track settlement,” which allows IRS Appeals to mediate disputes between a taxpayer and the IRS while the case is still within the jurisdiction of the examination function, and post-appeals mediation, in which a mediator is introduced to help foster a settlement between Appeals and the taxpayer.
The IRS has been revitalizing existing ADR programs as part of transformation efforts of the agency’s new strategic plan, said Elizabeth Askey, chief of the IRS Independent Office of Appeals.
“By increasing awareness, changing and revitalizing existing programs and piloting new approaches, we hope to make our ADR programs, such as fast-track settlement and post-appeals mediation, more attractive and accessible for all eligible parties,” said Michael Baillif, director of Appeals’ ADR Program Management Office.
Among other improvements, the pilots:
- Align the Large Business and International, Small Business and Self-Employed and Tax Exempt and Government Entities divisions in offering FTS issue by issue. Previously, if a taxpayer had one issue ineligible for FTS, the entire case was ineligible.
- Provide that requests to participate in FTS and PAM will not be denied without the approval of a first-line executive.
- Clarify that taxpayers receive an explanation when requests for FTS or PAM are denied.
Another pilot, Last Chance FTS, is a limited scope SB/SE pilot in which Appeals will call taxpayers or their representatives after a protest is filed in response to a 30-day or equivalent letter to inform taxpayers about the potential application of FTS. This pilot will not impact eligibility for FTS but will simply test the awareness of taxpayers regarding the availability of FTS.
A final pilot removes the limitation that participation in FTS would preclude eligibility for PAM.
The traditional appeals process remains available for all taxpayers.
Inquiries can be addressed to the ADR Program Management Office at
The Internal Revenue Service has updated and added new guidance for taxpayers claiming the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit.
The updated
New sections have been added on how long a taxpayer has to claim the tax credits, guidance for condominium and co-op owners, whether taxpayers who did not previously claim the credit can file an amended return to claim it, and a series of questions on qualified manufacturers and product identification numbers. Other material has been added on how to claim the credits, what kind of records a taxpayer has to keep for claiming the credit, and for how long, and whether taxpayers can include financing costs such as interest payments in determining the amount of the credit.
The IRS states that “financing costs such as interest, as well as other miscellaneous costs such as origination fees and the cost of an extended warranty, are not eligible expenditures for purposes of the credit.”
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