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IRS to start 2025 tax filing season on Jan. 27

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The Internal Revenue Service said tax season will begin on Monday, Jan. 27, 2025, with newly expanded and improved tools available.

The IRS anticipates over 140 million individual tax returns for tax year 2024 will be filed ahead of the Tuesday, April 15 federal deadline. Over half of all tax returns are expected to be filed this year with the help of a tax professional, and the IRS is urging taxpayers to use a trusted tax professional to avoid potential scams and schemes.

The IRS is also planning to open its new Direct File program on Jan. 27, even though the program has come under attack from Republicans in Congress. On the first day of the filing season, Direct File will open to eligible taxpayers in 25 states to file their taxes directly with the IRS for free: 12 states that were part of the pilot last year, plus 13 new states where Direct File will be available in 2025. During last year’s pilot, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Illinois, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.

In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, this year, Direct File will support taxpayers claiming deductions for Health Savings Accounts. The Treasury Department estimates that more than 30 million taxpayers will be eligible to use Direct File across the 25 states.

The 2025 tax season will reflect continued IRS progress to modernize and add new tools and features to help taxpayers. Since last tax season, improvements include more access to tax account information from text and voice virtual assistants, expanded features on the IRS Individual Online Account, more access to dozens of tax forms through cell phones and tablets and expanded alerts for scams and schemes that threaten taxpayers.

Direct File will include new features this year. A data import tool will allow taxpayers to opt-in to automatically import data from their IRS account, including personal information, the taxpayer’s IP PIN and some information from the taxpayer’s W-2. Also, this year, Direct File will cover more tax situations. During the pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents. This year, Direct File will also cover taxpayers claiming the   Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits.

“It’s important for everyone to realize that the filing season improvements we’re highlighting today, and many others, are all a reflection of our ongoing work to modernize our agency and the interactions that taxpayers have with us,” said IRS Commissioner Danny Werfel during a press conference Friday. “The multiyear funding provided by Congress continues to drive changes across the IRS, and taxpayers will continue to see this work in the months and years ahead.”

He predicted taxpayers would see a continuing improvement in the IRS in 2025 and beyond. “Brick by brick, or online tool by online tool, we are building a modern interface with taxpayers and tax professionals,” said Werfel. “We are moving steadily to accelerate these technology advancements for the benefit of everyone. These efforts are all about making the process of filing taxes easier and less stressful for taxpayers and also making it more cost efficient.”

Werfel made a case for continuing IRS funding as the agency faces the prospect of $20 billion in budget cuts as a result of the continuing resolution that Congress passed to keep the government open. Werfel said it should not be a partisan issue to provide continued funding for the IRS. He declined to answer questions about whether he has had any conversations with former Rep. Billy Long, who has been named as the next IRS commissioner by President-elect Trump, even though Werfel’s term doesn’t end until November 2027. Asked how long he plans to remain at the IRS, he insisted he has remained “laser focused” on his job and preparing for filing season.

“I spend every waking hour during the day and, quite frankly, at night, focused on one thing and one thing only, and that’s getting ready for this filing season,” said Werfel. “That has consumed all of my energy, and that is my sole focus.”

He stressed the need for Congress to provide continued funding for the IRS. “Thanks to the efforts of employees throughout the agency, we have a great deal of momentum right now on many improvements for taxpayers, more tools, more simplicity, less stress, less burden,” said Werfel. “That momentum is important because we still have a long way to go. Our ultimate goal is to have an IRS where all taxpayers can meet all of their responsibilities, including interactions with us, from questions to payments to resolutions in a completely digital manner if they prefer. For the IRS to continue to succeed, we must ensure we provide our employees with the right training and tools, as well as a modern technology infrastructure to help taxpayers. These are essential to allow the IRS to continue its modernization work to serve the nation today and in the future, and so our ability to continue making progress on all these fronts can only happen if the IRS receives a consistent, reliable funding stream. We also should not lose sight of the fact that we have accomplished so much on this journey to modernize our agency and improve service to taxpayers with the multiyear funding Congress has provided. The decision about whether to adequately fund the agency comes down to a fundamental choice, whether or not we can and should have an IRS that you can easily interact with to help meet your tax responsibilities, that can quickly and effectively address tax scams that exploit vulnerable populations, and that can deliver updated IT infrastructure and modern technology platforms capable of supporting our work to modernize the agency. For the IRS to be able to do all these things, adequate stable funding is essential, and we will continue making our case to Congress.”  

Although the IRS won’t start accepting tax returns until Jan. 27, starting today, nearly everyone can file electronically for free by using IRS Free File, available via IRS.gov. Now in its 23rd year, Free File includes free tax preparation software from eight companies in the public-private partnership between the IRS and Free File Inc. As part of this partnership, tax preparation and filing software partners offer their online products to eligible taxpayers for free. To access these tools, taxpayers should start from the IRS Free File page on IRS.gov.

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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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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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