- (800) 664-8297
- Contact Us
In this Issue:
(Note: Click on the Issue to navigate directly to the newsletter section & Click on the logo to navigate back to the Top of the page.)
While the U.S. Supreme Court acted allowing the Financial Crimes Enforcement Network (FinCEN) to penalize entities for not filing required beneficial ownership information (BOI) reports, a separate nationwide federal district court injunction remains.
FinCEN said a temporary injunction issued on Jan. 7 remains in place, barring it from enforcing BOI reporting requirements.
Due to the Jan. 7 order issued by the Eastern District of Texas in Smith v. U.S. Department of the Treasury, FinCEN says reporting companies are still not subject to liability for failing to submit timely BOI reports while the court considers the case. However, FinCEN notes that reporting companies may still voluntarily submit reports. It is not clear whether the U.S. government will appeal the Smith order or let the injunction barring BOI enforcement to remain in place.
The U.S. Supreme Court on January 23, 2025, order allowed FinCEN to move forward with enforcement of BOI reporting requirements under the Corporate Transparency Act (CTA) addressed a temporary injunction issued by the U.S. Court of Appeals for the 5th Circuit in a separate case. The Eastern District of Texas judge hearing the Smith challenge to the CTA and its BOI reporting requirements claimed a separate injunction was warranted due to the uniqueness of the parties d the different arguments presented in the Smith case.
As this situation evolves, we recommend that you evaluate your options and advise your clients accordingly:
Option 1: Prepare and voluntarily file BOI reports now to stay ahead of potential compliance deadlines and reduce future risks.
Option 2: Wait until the courts provide further clarity regarding the Smith case and the injunction.
The 2025 tax filing season starts on Monday, Jan. 27, 2025, for Form 1040 filers, and will feature expanded and enhanced tools to help taxpayers as a result of the agency’s historic modernization efforts.
These improvements include:
Just a reminder for disaster-area clients who received extensions to file their 2023 returns that, depending upon their location, their returns are due by Feb. 3 or May 1, 2025.
Currently:
Eligible clients are individuals and businesses affected by various disasters that occurred during the late spring through the end of 2024. For extension filers, payments on the 2023 tax year returns are not eligible for the additional time because they were originally due last spring before any of these disasters occurred.
The IRS normally provides relief, including postponing various tax filing and payment deadlines, for any area designated by the Federal Emergency Management Agency (FEMA). As long as their address of record is in a disaster-area locality, individual and business taxpayers automatically get the extra time, without having to ask for it. The current list of eligible localities is always available on the disaster relief page on IRS.gov.
In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area should contact the IRS at 866-562-5227. This also includes workers who assisted with relief activities who are affiliated with a recognized government or philanthropic organization.
Southern California individuals and businesses affected by the wildfires and straight-line winds that began Jan. 7 will have until Oct. 15 to file various federal tax returns and make tax payments, the IRS announced. Currently, individuals and households that reside or have businesses in Los Angeles County qualify for relief. The same relief will be available to any other counties added to the disaster area by the Federal Emergency Management Agency (FEMA).
The SECURE 2.0 Act makes it easier for qualified individuals impacted by a federally declared major disaster to access their retirement savings.
Eligibility
A client may be eligible for relief that provides for expanded access to their retirement funds if their principal residence was in a major disaster area and they sustained an economic loss due to that disaster. An economic loss includes, but is not limited to:
Use the tool on FEMA.gov/Disaster to find a current list of major disaster declarations.
Types of relief
These types of disaster relief are available to people who qualify:
Please note Casualty Losses will be cover in June 2025 through a series of webinars. The dates have yet to be set as of this writing. Both individual and business losses will be discuss with case studies. Webinars will be 1-2 hours.
The standard mileage rate for vehicles driven for business will increase by 3 cents in 2025. The mileage rates for vehicles used for other purposes will remain unchanged from 2024.
The updated standard mileage rates for the use of a car, van, pickup or panel truck are:
The rates apply to fully electric and hybrid automobiles, as well as gas-and-diesel-powered vehicles.
Notice 2025-5 contains the optional 2025 standard mileage rates, as well as the maximum automobile cost used to calculate mileage reimbursement allowances under a fixed-and variable rate plan.
The IRS announced plans to issue automatic payments later this month to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns.
The IRS announced the special step after reviewing internal data showing many eligible taxpayers who filed a return but did not claim the credit. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), also known as stimulus payments.
No action is needed for eligible taxpayers to receive these payments, which went out automatically in December and should arrive in most cases by late January 2025. The payments will be automatically deposited directly or sent by paper check; eligible taxpayers will also receive a separate letter notifying them of the payment.
The payments vary depending on several factors, but the maximum payment is $1,400 per individual. The estimated amount of payments going out will be about $2.4 billion.
Taxpayers who didn’t file a 2021 tax return may be eligible to claim the credit if they file a return
The IRS reminds taxpayers who have not yet filed their 2021 tax returns that they may be eligible for a refund if they file and claim the Recovery Rebate Credit by the April 15, 2025, deadline.
Eligible taxpayers who did not file must file a tax return to claim a Recovery Rebate Credit, even if their income from a job, business or other source was minimal or non-existent.
Treasury and the IRS has issued proposed regulations today addressing several SECURE 2.0 Act provisions relating to catch-up contributions, which are additional contributions under a 401(k) or similar workplace retirement plan that generally are allowed with respect to employees who are age 50 or older.
This includes proposed rules related to a provision requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions.
The proposed regulations provide guidance for plan administrators to implement and comply with the new Roth catch-up rule and reflect comments received in response to Notice 2023-62 issued in August 2023.
The proposed regulations also provide guidance relating to the increased contribution limit under the SECURE 2.0 Act for certain retirement plan participants. Affected participants include employees between the ages of 60-63 and employees in newly established SIMPLE plans.
Treasury and IRS welcome comments on these proposed regulations. Comments may be submitted through the Federal Register. See the proposed regulations for details.
The regulations require plan administrators to ensure the Roth option is available for all plan participants over 50 and otherwise eligible. The maximum contribution remains $7,500 for 2025.
Under SECURE 2.0, §109, employees ages 60-63 can contribute an additional $11,250 for the plan year 2025.
This does not include SIMPLE plans, which are addressed under §117 of the act. The limit is $5,000 or 150% of the regular catch-up amount, $5,250.
Proposed regulations have been issued by the IRS and Treasury to address the provisions in the SECURE 2.0 Act requiring automatic enrollment in 401(k) and 403(b) plans.
For 2025, SECURE 2.0 requires administrators to automatically enroll eligible employees in newly established retirement plans. 401(k) and 403(b) plans established after Dec. 29, 2022, with some exceptions, must enroll eligible employees with a starting contribution of 3%. Plans must also increase the contribution annually by 1% of pay, up to 10%, unless the employee opts out of the required enrollment.
The guidelines also require plan administrators to provide written notice on how contributions are made and invested.
Employees should know their rights and how they can elect out of automatic enrollment when they provide sufficient notice to the plan administrator. If your clients aren’t sure if they are enrolled in their company’s retirement plan, show them where that information can be found on their Form W-2, Wage and Tax Statement.
National Taxpayer Advocate Erin M. Collins released the 2024 Annual Report to Congress on Jan. 8. For the first time since 2020, Collins reports that the taxpayer experience has noticeably improved, but backlogs in identity theft cases, the processing of Employee Retention Credit claims and scams targeting taxpayers and tax professionals continue to be problems.
By law, the Advocate’s report must identify the 10 most serious problems taxpayers are experiencing in their dealings with the IRS and makes administrative and legislative recommendations to address those problems. Some key recommendations include:
Continuing delays in processing Employee Retention Credit claims. As of Oct. 26, 2024, the IRS faced a backlog of about 1.2 million ERC claims, with many claims pending for more than a year. While the IRS has valid concerns about paying ineligible claims, the slow processing time is harming many eligible businesses that are relying on these funds to pay expenses. Additional concerns include:
After the National Taxpayer Advocate’s report went to the press, the Commissioner announced in mid-December he anticipates that approximately 500,000 additional claims will be processed in 2025, but the details and timing of the refunds are still to be determined.
Continuing delays in resolving identity theft cases. For cases closed by the IRS’s Identity Theft Victim Assistance (IDTVA) unit in Fiscal Year 2024, the average time it took the IRS to resolve identity theft cases and issue refunds to the affected victims was almost two years. These delays impacted nearly half a million taxpayers and were even worse than the delays seen in FY 2023, when cases took almost 19 months to resolve. Collins again calls these delays “unconscionable” and recommends the IRS prioritize identity theft case resolution by keeping all IDTVA employees focused on these cases rather than reassigning them to other tasks during the filing season. In addition, she urged the agency to reduce case resolution times to 90 days or less.
Adequate funding for taxpayer services, technology upgrades is critical
In her preface to the report, Collins emphasizes the need for adequate funding to support critical taxpayer services and technology upgrades. She notes that the bulk of nearly $80 billion in multiyear IRS funding provided by the Inflation Reduction Act (IRA) was allocated for tax law enforcement and has been controversial. She further notes, however, that there has been bipartisan support for the smaller amounts allocated for taxpayer services and IT modernization. Stressing the importance of taxpayer services funding, she urges Congress, if it cuts IRA enforcement funding, not to make commensurate cuts to taxpayer services and IT.
The following table shows the original IRA funding total broken out among the IRS’s four budget accounts, highlighting that only 4% of the funding was allocated for Taxpayer Services and only 6% was allocated for Business Systems Modernization (BSM).
Inflation Reduction Act IRS Funding Allocations
IRS Budget Account | Amount Allocated | Percentage of Total |
Enforcement | $45.6 billion | 58% |
Operations Support | $25.3 billion | 32% |
Business Systems Modernization | $4.8 billion | 6% |
Taxpayer Services | $3.2 billion | 4% |
Total | $78.9 billion | 100% |
The report highlights numerous examples of improvements the IRS has made using its multiyear funding. Taxpayer Services funding has enabled the IRS to hire more customer service representatives, allowing the agency to answer nearly 9 million more telephone calls than 2 years earlier and to cut in half the average time needed to process individual taxpayer correspondence from about 7 months to about 3½ months.
The IRS has also expanded in-person help at its Taxpayer Assistance Centers, adding evening and weekend service in many locations to accommodate taxpayers who are unable to visit during normal business hours.
BSM funding has supported critical automation improvements, allowing taxpayers to resolve issues without the involvement of an IRS employee. With these improvements, taxpayers can now obtain more information and transact more business with the IRS through their online accounts, use voicebots and chatbots to get answers to many of their questions, submit correspondence to the IRS electronically and communicate with the IRS through secure messaging in pending cases. Furthermore, the IRS now allows taxpayers to submit 30 of the most common taxpayer forms from mobile devices, which is a game-changer for the estimated 15% of Americans who rely solely on their smartphones for internet access.
Most serious taxpayer problems
In addition to ERC and IDTVA processing delays, the report identifies eight other serious taxpayer problems, including the following:
Continuing delays in IRS return processing are frustrating taxpayers and causing refund delays. The IRS receives more than 10 million paper-filed Forms 1040 each year and more than 75 million paper-filed returns and forms overall. Until recently, IRS employees had to manually transcribe the data from those returns into IRS systems.
While the IRS has made strides toward automating return processing by scanning more than half of paper-filed returns and forms, it still has a long way to go to digitize all paper.
Additionally, e-filed returns are sometimes rejected – nearly 18 million (about 12%) of e-filed Forms 1040 were rejected in the past year. The IRS generally rejects returns flagged by its fraud detection filters, but most rejected returns are valid, requiring taxpayers to jump through additional hoops to resubmit their returns electronically or submit their returns on paper. The report highlights the strain this puts on taxpayers, particularly low-income taxpayers eligible for refundable Earned Income Tax Credit (EITC) benefits.
Taxpayer Advocate Service (TAS) recommends the IRS continue its efforts to automate tax processing including digitizing nearly all paper-filed returns by the 2026 filing season and enabling electronic processing of amended tax returns.
Taxpayer service is often not timely or adequate. While taxpayer service improved across the IRS’s three main channels – telephone, in-person and online – significant service gaps remain. The IRS achieved an 88% “Level of Service” (LOS) on its Accounts Management lines during the filing season, but this measure excludes calls directed to telephone lines that fall outside the “Accounts Management” umbrella (30% of all calls in FY 2024), calls where a taxpayer hangs up before being placed in a calling queue, and calls made outside the filing season. Overall, the LOS for all toll-free lines in FY 2024 was just 56%, with only 31% of callers reaching an assistant.
Of the 6.2 million calls the IRS received from taxpayers whose returns had been stopped by the IRS’s identify theft filters and who were calling to authenticate their identities, the IRS answered only about 20%. This has left millions of taxpayers without the support they need. TAS recommends the IRS adopt more accurate service metrics and prioritize answering non-Accounts Management telephone lines that serve largely vulnerable taxpayer populations. Among these are the Installment Agreement/Balance Due, Taxpayer Protection Program, and Automated Collection System telephone lines.
Continuing challenges in employee recruitment, hiring, training and retention are hindering the IRS’s ability to achieve transformational change in taxpayer service and tax administration. The IRS faces ongoing difficulties in hiring, training, and maintaining employees. Job postings are not consistently targeted to reach the desired candidates. The agency often takes several months to hire new employees, leading some candidates to accept other offers. New hires require extensive training before they become productive employees, and experienced employees often must be reassigned to train them. Additionally, a Congressional Budget Office study published in 2024 found that federal employees with professional degrees earn almost 29% less than their non-federal counterparts, making it harder for the IRS to compete in the tight job market. TAS recommends the IRS explore alternative recruitment platforms, review pay disparities and implement strategies to improve employee retention.
Legislative recommendations: the “Purple Book”
The National Taxpayer Advocate’s 2025 Purple Book proposes 69 legislative recommendations intended to strengthen taxpayer rights and improve tax administration. Among the recommendations:
Research studies
The report contains three TAS research studies offering insight into challenges facing taxpayers and practitioners and recommending ways to improve IRS services and processes.
Identity theft filters and unpaid refunds. A TAS study reviewed tax returns flagged by IRS identity theft filters and found that some legitimate taxpayers were not receiving refunds to which they were entitled. Each year, several million returns claiming refunds are flagged by IRS fraud filters and suspended during processing. The IRS issues one letter to each taxpayer notifying them that they need to authenticate their identities to receive their refunds. If a taxpayer does not respond – whether due to not receiving the letter or misplacing it – the IRS does not follow up and does not issue the refund. This study explored the effect of sending additional letters to a sample of potentially eligible taxpayers who had filed Tax Year 2020 returns and had not responded to the original IRS letter. The study found that more than 7% of recipients of a second letter successfully authenticated their identities, suggesting that thousands of taxpayers may be losing refunds simply because they were not reached. Among other things, TAS recommends the IRS send a follow-up letter if a taxpayer does not respond to the initial letter within 60-90 days.
IRS telephone service performance measures. The IRS typically receives about 100 million telephone calls each year, but its method for measuring service effectiveness, LOS, has been widely criticized for failing to accurately reflect the taxpayer experience. For the 2024 filing season, the IRS reported 87.6% LOS, but only 32.1% of calls were answered by an employee. TAS reviewed call center operations of other large government agencies and private sector businesses to identify the best practice processes and measures. Of the call centers reviewed, the study found the IRS is the only one that uses this LOS measure. By comparison, other call centers in both government and the private sector typically answer a higher percentage of calls and use more comprehensive metrics, such as first contact resolution (FCR) rate. TAS recommends the IRS eliminate or revise its LOS formula to account for total call attempts and calls answered through automation.
Challenges in obtaining Individual Taxpayer Identification Numbers (ITINs). TAS conducted a review of the IRS’s ITIN program and confirmed that the application process is burdensome for taxpayers. ITINs are required for individuals who are required to file U.S. tax returns but are not eligible for a Social Security number, such as foreign workers on temporary visas and nonresidents with U.S.-based income. Overall, several million returns include at least one ITIN each year, and they account for several billion dollars in revenue. The study identified significant taxpayer challenges, including the cost and difficulty of using Certifying Acceptance Agents (CAAs) to verify documents as well as the risk of losing original identity documents (such as passports, birth certificates, driver’s licenses and visas) when submitting ITIN applications by mail. Many applicants are unable to give up these documents for several weeks or run the risk of document loss. The study examined the size and composition of the ITIN population and the IRS’s administration of the program. TAS makes several recommendations to improve the ITIN program, including expanding CAA services in Volunteer Income Tax Assistance sites and addressing recurring issues that lead to the erroneous deactivation of ITINs.
Revenue Ruling 2025-3 addresses the application of § 530 of the Revenue Act of 1978 (section 530), § 3509 rates, and the requirements to issue a Notice of Employment Tax Determination Under IRC § 7436 (§ 7436 Notice) in several distinct factual situations. Internal Revenue Code § 3509 allows an employer to remit unpaid taxes at reduced rates if an employer fails to deduct and withhold income tax or the employee share of FICA tax with respect to any of its employees because the employer treated that employee as a non-employee.
Revenue Procedure 2025-10 modifies and supersedes Revenue Procedure 85-18, 1985-1 CB 518; it clarifies the provisions of Rev. Proc. 85-18 with respect to the definition of employee, the § 530 requirement for the filing of required returns, and the reasonable basis safe harbor rules. This revenue procedure also amplifies the guidelines set forth in § 3.03 of Rev. Proc. 85-18 (interpreting the word “treat” for purposes of determining whether a taxpayer did not treat an individual as an employee for purposes of § 530(a)).
This revenue procedure also includes new provisions that reflect statutory changes made to § 530 since 1986 that added §§ 530(d), (e), and (f). § 530 of the Revenue Act of 1978 (as amended) was enacted to provide relief to taxpayers involved in worker classification disputes with the IRS. § 530 is not an Internal Revenue Code provision.
The Social Security Fairness Act, HR 82, concerning the Windfall Elimination Provision and Government Pension Offset, was signed into law on January 5, 2025. Upon implementation, the Social Security Fairness Act eliminates the reduction of Social Security benefits while entitled to public pensions from work not covered by Social Security. The Social Security Administration is evaluating how to implement the Act.
I previously filed for Social Security benefits, and they are partially or completely offset.
At this time, you do not need to take any action except to verify that Social Security has your current mailing address and direct deposit information if it has recently changed. Most people can do this online with their personal my Social Security account without calling or visiting Social Security. Visit www.ssa.gov/myaccount to sign in or create your account. We will provide ongoing updates regarding implementation on this page.
I have not previously filed for Social Security benefits.
If you are receiving a public pension and are interested in filing for benefits, you may file online at ssa.gov/apply or schedule an appointment.
Prior law. Under prior law, public sector workers were subject to two provisions that affected their social security payments; the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) provision.
The WEP reduced social security benefits for individuals who also received a pension from employment not covered by social security, usually a state or local pension.
The GPO reduced social security spousal or survivor benefits for individuals who also received government pensions.
The Social Security Fairness Act eliminated both provisions from the law. It also includes retroactive payments back to January 2024. The Act is expected to increase social security benefits for affected retirees by an average of $360.
The caucus demanded that any tax legislation cut “rampant inflationary spending significantly” to reduce the deficit. In addition, legislation must not “increase federal borrowing before real spending cuts are agreed to and in place,” reads the letter.
President Donald Trump has called upon Congress to act swiftly to address tax, the border, energy, and more— whether via one reconciliation bill or two.
TCJA cost. Extending the expiring Tax Cuts and Jobs Act (TCJA, P.L. 115-97) provisions is projected to cost more than $4 trillion over a 10-year period — and that is before accounting for the many additional tax cuts Trump promised on the campaign trail. Those cuts could bring the cost up to $7.75 trillion, the Committee for a Responsible Federal Budget calculated back in October.
Senate Finance Committee Chair Mike Crapo (R-ID) has called for scoring the cost of tax cut extenders differently — to him, the correct approach is using a “current policy baseline.”
Under that approach, it is assumed that “existing policies continue indefinitely, regardless of whether they are set to expire under current law.” Using a current policy baseline, “a full extension of the TCJA would be scored to cost $0.”
This matters because to use reconciliation, the TCJA extensions cannot have revenue impacts outside the 10-year budget window.
Among the options for balancing out the cost of TCJA extensions is using dynamic scoring, which would account for behavioral changes, or economic feedback, due to the tax cuts. But even using dynamic scoring to evaluate TCJA extensions might not be enough to satisfy the debt-conscious House Freedom Caucus members and other deficit hawks.
Beyond just extending expiring tax cuts, Republicans also have tossed around options for offsetting, or paying for, some of the cuts. Those options include using tariff revenue as an offset and dialing back or ending certain Inflation Reduction Act energy credits.
Child support. The Senate passed a bill that would allow child support enforcement contractors to access the same taxpayer information as state and local agencies. The Supporting America’s Children and Families Act (H.R. 9076), a broad bill on child welfare passed the House in September, will allow states to continue to use third-party contractors for child support enforcement purposes. It also will allow Tribal agencies to access taxpayer information and collect past-due support from federal tax overpayments. President Biden has signed the bill into law.
Health care. Two bills on Affordable Care Act tax form requirements were signed into law. The Paperwork Burden Reduction Act (H.R. 3797) codifies regulations that permit written statements regarding minimum essential coverage (Forms 1095-B and 1095-C) to be furnished electronically and on request. The Employer Reporting Improvement Act (H.R. 3801) codifies regulations that allow an individual’s date of birth to be substituted for their TIN if a TIN is not available. The act also increases from 30 to 90 days the time the IRS is required to give large employers to respond to an initial letter regarding a proposed employer-shared responsibility payment assessment and sets a six-year statute of limitations for collecting assessments.
Disaster relief. The Federal Disaster Tax Relief Act (H.R. 5863), bipartisan legislation to provide tax relief to wildfire, hurricane, and other disaster victims, was also signed into law. The act reinstates the deduction for certain disaster-related personal casualty losses and adds an exclusion from gross income for certain disaster relief payments.
Veterans. Finally, President Biden signed into law the VSO Equal Tax Treatment (VETT) Act (H.R. 1432). The act allows VSOs that serve veterans who do not fall into the definition of “wartime veterans” — including those who served between the Vietnam War and the Persian Gulf War — to accept tax-deductible donations.
Introductions
With the 119th Congress convening on January 3, bills introduced last session will need to be reintroduced to move forward. While now “dead,” here are a few late-session introductions worth noting — they may bubble up again soon.
Energy. Representative Jodey Arrington’s (R-TX) Eliminating Lavish Incentives to Electric (ELITE) Vehicles Act (H.R. 10516) would repeal the $7,500 tax credit for new clean vehicles. A similar measure was introduced in the Senate back in May (S. 4237). The legislation also would repeal the tax credit for used electric vehicles, end the credit for electric vehicle charging stations, and close the “leasing loophole.”
Housing. Senators Mark Warner (D-VA) and Shelley Moore Capito (R-WV) introduced the Rural Historic Tax Credit Improvement Act (S. 5607). The bill is intended to “streamline processes, reduce cost-burdens to rural home owners and small developers, and provide affordable housing incentives.” Among other things, the bill would increase the credit for historic tax credit projects in rural areas to 30%, and to 40% for affordable housing creation.
Representative Greg Landsman (D-OH) introduced the Tax Relief for Renters Act (H.R. 10277). The bill would allow renters to claim a personal deduction of one month’s rent paid for their primary residence each year. The deduction is limited to $4,000 annually and available only to those within certain income categories.
Social Security. A Republican-backed bill, the Reducing Excessive Taxation and Inefficiencies by Reforming Elder Exemptions to Support Fairness, Inflation Relief, and Simpler Taxes (RETIREES FIRST) Act (H.R. 5603), would, among other things, raise the income threshold for paying tax on Social Security to $34,000 for single filers and $68,000 for married filers. This would “exempt most middle-class retirees from paying taxes on their Social Security benefits.”
Settlements. Senators Kirsten Gillibrand (D-NY) and Marsha Blackburn (R-TN) introduced the Tax Fairness for Survivors Act (S. 5566), which would exclude from gross income any judgments, awards, and settlements with respect to sexual assault or sexual harassment claims. A House version of the measure (H.R. 9254) was introduced by Representatives Lois Frankel (D-FL) and Claudia Tenney (R-NY) back in August.
Disaster aid. The bipartisan HIRE CREDIT Act (H.R. 10423) would revise the Work Opportunity Tax Credit by adding a new category for “displaced disaster victims.” Businesses that newly hire these workers could receive a credit of up to 40% of $6,000 wages paid.
The Treasury Inspector General for Tax Administration (TIGTA) has provided Congress with a summary of its accomplishments during the second half of fiscal year 2024.
TIGTA emphasized that in addition to its regular IRS oversight roles and responsibilities, it monitored the IRS’ use of supplemental Inflation Reduction Act (IRA) funds.
The report to Congress highlighted two of TIGTA’s IRA-related reports. The first examined the IRS’ “Lifting Up Communities” initiative which was developed to “rebuild underserved communities by creating jobs for people living in these communities.” The second examined IRS efforts to comply with a Treasury Department directive not to increase the audit rate for taxpayers with incomes below $400,000.
During the latest reporting period, the Office of Audit issued 50 reports; the Office of Inspections and Evaluations issued 10 reports; and the Office of Investigations completed 1,032 investigations. “TIGTA’s combined audit and investigative efforts during this reporting period resulted in the recovery, protection, and identification of monetary benefits totaling more than $6.1 billion,” the report noted.
A client’s filing status generally depends on their being married or unmarried on the last day of the year – which means that a taxpayer’s marital status as of December 31, 2024, determines their tax filing options for all of 2024.
For filing purposes, the IRS generally considers taxpayers as married if they are separated but not legally separated or divorced at the end of the year. Marriage status can determine filing requirements, standard deductions, eligibility for certain credits and tax.
Here are a few things taxpayers should do if their marital status changed in 2024.
Report on name change
Report any name changes to the Social Security Administration. The name on a person’s tax return must match what’s on file at the SSA. If the name does not match, it could delay any tax refund. To update information, go to the SSA’s website and look for “Change name with Social Security.” Name changes can also be processed by calling the SSA at 800-772-1213 or by visiting a local SSA office.
Update address
Notify the U.S. Postal Service, any employers and the IRS of an address change. Clients have several options to notify the IRS of an address change.
Check withholding
A change in marital status may also affect how much tax should be withheld from the client’s paycheck. To avoid a surprise at tax time, the client should use the IRS Tax Withholding Estimator to calculate their withholding and then use that estimate to complete a new Form W-4, Employee’s Withholding Certificate, to give to their employer. Clients can also use Form W-4 to tell an employer not to withhold any federal income tax. To qualify for this exempt status, the client must have had no tax liability for the previous year and must expect to have no tax liability for the current year.
Review filing status
Clients who were newly married in 2024 will want to review their filing status options. They can choose to file their federal income taxes jointly or separately each year, so it’s a good idea to figure the tax both ways to find out which makes the most sense. Clients should remember that if a couple is married as of December 31, the law says they’re married for the whole year for tax purposes.
The IRS has issued temporary relief allowing taxpayers to use certain alternative methods for making an adequate identification of digital asset units held by a broker pursuant to recently finalized crypto reporting regs. (Notice 2025-7)
Background. Notice 2025-7, released December 31, provides temporary relief under Reg. §1.1012-1(j)(3)(ii), a section of final digital asset rules (TD 10000)) published in July 2024 that implement provisions of the Infrastructure Investment and Jobs Act (P.L.117-58).
Generally, the final regs require certain digital asset brokers to file information returns and furnish payee statements reporting gross proceeds and adjusted basis on dispositions of digital assets effected for customers in certain sale or exchange transactions.
As provided in Reg. §1.1012-1(j)(3)(ii), a client can make an adequate identification of digital asset units held in custody of their broker. This must be done before the units are sold, disposed of, or transferred by reference to any identifier that the broker designates as sufficiently specific to allow it to determine the basis and holding period of those units, the notice explained.
Temporary relief. During the relief period beginning on January 1, 2025, and ending on December 31, 2025, a taxpayer may make an adequate identification by:
According to the notice, relief is necessary because some digital asset brokers may not have the necessary technology in place by January 1, 2025, allowing taxpayers to make adequate identifications. By default, units held in custody of a broker would be determined under the first in, first out, or FIFO, rule.
Although separate ordering rules cover units not held in custody of a broker, the temporary relief only applies to units held in custody of a broker.
The IRS clarified that those relying on the safe harbor under Rev. Proc. 2024-28 may only rely on the temporary relief after the applicable requirements of the revenue procedure are satisfied first.
A federal district court ruled December 3, 2024, that the Corporate Transparency Act (CTA) is likely unconstitutional and issued an order to halt the enforcement of both the CTA and the beneficial ownership information (BOI) reporting rule included in its regulations.
The court’s injunction, which is intended to have nationwide effect, was issued in the case Texas Top Cop Shop, Inc. vs. Garland.
As a result of this injunction, it is reported that the CTA and the BOI reporting rule cannot currently be enforced and until a further order of the court, companies are not required to meet the CTA’s Jan. 1, 2025, BOI reporting deadline.
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force.
However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.), a federal district court in the Eastern District of Texas, issued an order granting a nationwide preliminary injunction that:
(1) Enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, specifically,
(2) Stays all deadlines to comply with the CTA’s reporting requirements.
The Department of Justice, on behalf of the Department of the Treasury, filed a notice of appeal on December 5, 2024. In light of this recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. As these requirements are currently enjoined, that guidance should be understood to address the requirements at such a time as the injunction may be lifted. While the injunction is in effect, reporting companies are not required to file beneficial ownership information with FinCEN.
REV. RUL. 2025-5 TABLE 2
PO Box 1031
Pinellas Park, FL 33780
Toll Free: 800.664.8297
Fax: 866.579.0796
Contact Us
Basics & Beyond, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State Boards of Accountancy have the final authority on the acceptance of individual course for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.