With the contentious 2024 elections behind us, we can finally focus on President-elect Trump’s agenda for the economy, taxes and jobs. With Republicans flipping the Senate (and White House) and also retaining the majority in the House of Representatives, the president-elect should have control and a voter mandate that could dramatically streamline the legislative process in his second term. As you start year-end planning for your clients, you’ll want to familiarize yourself with the many potential 2025 tax changes to ensure more thorough analyses and productive client discussions. Many tax policy experts believe Republicans are likely to use a process called budget reconciliation, which allows for budget legislation to be passed out of the House and Senate via a simple majority.

Trump’s landmark tax legislation from his first term — the 2017 Tax Cuts and Jobs Act — remains intact even after Democrats won the White House in 2020. But most TCJA provisions are set to expire in 2026 as part of the original legislation passed seven years ago. As such, the TCJA will be the centerpiece of Trump’s new tax and economic platform. However, there are many new additions to the TCJA that you and your clients will want to keep an eye on. Let’s look at the potential impact of 11 of the most important ones, thanks to a skillful analysis of the governmental impact by the Tax Foundation, a nonpartisan, nonprofit independent tax policy research organization. Below the Tax Foundation analysis, we have added our own take on what the proposed changes could mean for you and your clients.

Saving Social Security; sued over an address; more 5471 opinions; and other highlights from our favorite tax bloggers.

You will survive

• U of I Tax School (https://taxschool.illinois.edu/blog/): From fielding endless tax questions to relatives’ barrage of requests for help with returns, the accountants’ survival guide to Thanksgiving.
• Tax Vox (https://www.taxpolicycenter.org/taxvox): Could a pre-tariff buying frenzy kick off a new round of inflation?
• TaxProf Blog (http://taxprof.typepad.com/taxprof_blog/): Congress last reformed the nation’s current tax penalty regime some three decades ago, before the rise of big data and the advent of predictive analytics. Is it time for Congress to weave the latter into the Internal Revenue Code?
• Tax Foundation (https://taxfoundation.org/blog) As Social Security faces looming insolvency, one issue that garners a lot of attention in the debate over solutions is raising the payroll tax cap. Policymakers should also recognize that broader changes in how workers are compensated have contributed to the decline in wages subject to payroll taxes. Expanding the payroll tax base to include all forms of worker compensation should be on the table.
• Institute on Taxation and Economic Policy (https://itep.org/category/blog/): A recent analysis shows that some widespread tariffs are beneficial — and that those now proposed wouldn’t be among them.
• Don’t Mess with Taxes (http://dontmesswithtaxes.typepad.com/): What do holiday shopping and taxes share? The growing potential for ID theft.

Just guess

Tricky stuff

• The Tax Times (https://www.thetaxtimes.com): The Tax Court just opined on another case that thwarts IRS authority to assess 5471 reporting penalties.
• Global Taxes (https://www.globaltaxes.com/blog.php): Seems that in Mukhi v. Commissioner, the Tax Court rejected arguments that a due process hearing was conducted by a partial appeals officer and that non-filing penalties violated the Eighth Amendment’s Excessive Fines Clause. The big win was in the third question.
• Withum (https://www.withum.com/resources/): Latest state updates include Washington’s Supreme Court denying an investment income deduction and new services subject to B&O retailing classification in the state.
• TaxConnex (https://www.taxconnex.com/blog-): Execs go into M&A often blindly jazzed about the deal and thinking they know the landmines, such as employees’ reactions or overpaying the target company. What about the risk of past sales tax exposure?
• Palm Beach Accounting and Financial Services (https://www.pbafs.com/blog): Savings bonds, 529 contributions and the good old-fashioned, rattling piggy bank: Gifts that can teach kids about finances.
• Boyum & Barenscheer (https://www.myboyum.com/blog/): What to remind them about the differences between accounting and tax profitability.
• Avalara (https://www.avalara.com/blog/en/north-america.html: A state-by-state look at clothing taxes.
• Vertex (https://www.vertexinc.com/resources/resource-library/filter/field_asset_type/blog?page=0): What to remind them of the complexities of corporate taxes.
• Armanino (https://www.armanino.com/articles/): The latest on issuing 1099s for next season.
• Sovos (https://sovos.com/blog/): Third-party settlement organizations are also keeping a close watch on IRS guidance regarding their obligations under 1099-K requirements. Recent changes to reporting thresholds, coupled with delayed enforcement and conflicting guidance, have left many TPSOs on marshy ground about their responsibilities.
• MBK (https://www.mbkcpa.com/insights): How business-vehicle deductions can be especially “tricky.”
• Virginia – U.S. Tax Talk (https://us-tax.org/about-this-us-tax-blog/): Overseas Americans are entitled to certain tax breaks, one significant break being the exclusion of amounts provided by an employer for foreign housing.
• Gordon Law (https://gordonlawltd.com/blog/): When big hearts co-exist with small tax brains: What to remind them about taxes and charities this giving season.
• Summing It Up (http://blog.freedmaxick.com/summing-it-up): One of the main provisions of Secure 2.0 kicks in on Jan. 1: automatic enrollment for new employee benefit plans.
• AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): Whether accounting for digital assets or auditing entities in this space, to understand the asset class you need to understand the fundamentals of the underlying technology: blockchain.

The Internal Revenue Service extended its transition relief Tuesday for the new Form 1099-K information reporting threshold, setting it at $5,000 for 2024 and $2,500 in 2025 before reaching the statutory level of $600 in 2026 and thereafter.

The threshold applies to payment apps and online marketplaces such as Venmo, PayPal, eBay, Etsy, Airbnb and more, also known as third-party settlement organizations. The American Rescue Plan Act of 2021 lowered the old threshold from $20,000 to $600 as a way of collecting more taxes from people and businesses who receive payment through these third parties.

Many taxpayers and tax professionals had worried the lower threshold would prompt a flood of 1099-K forms arriving in the mail for people who had never been subject to the requirement, prompting the IRS to repeatedly delay the requirement. Last November, the IRS began phasing in the lower threshold at $5,000 for calendar year 2024. Now it is setting the threshold at $2,500 for next year by issuing Notice 2024-85 on Tuesday.

Lawmakers in Congress have complained that the IRS has been overstepping its authority by setting its own thresholds, but legislation to repeal the $600 threshold has not yet passed in Congress. IRS commissioner Danny Werfel has defended the IRS’s authority to phase in the new threshold, as it has done for other parts of the Tax Code that have provoked resistance.

Al Drago/Bloomberg

“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,” said Werfel during a congressional hearing in February. “This is not the first time and I’m not the first commissioner that has confronted this tension.”

Under the guidance issued Tuesday, third-party settlement organizations will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and after. Notice 2024-85 also says that for calendar year 2024, that the IRS will not assert penalties under section 6651 or 6656 for a TPSO’s failure to withhold and pay backup withholding tax during the calendar year.

TPSOs that have performed backup withholding for a payee during calendar year 2024 must file a Form 945 and a Form 1099-K with the IRS and furnish a copy to the payee. For calendar year 2025 and afterward, the IRS said it will assert penalties under section 6651 or 6656 for a TPSO’s failure to withhold and pay backup withholding tax.