Tax Newsletter - September 2025
In this Month's Issue:
- Issue 1 – IRS Commissioner on filing season outlook
- Issue 2 – No 2025 changes to info returns or withholding (OBBBA)
- Issue 3 – Direct File program in doubt
- Issue 4 – Commissioner Billy Long removed
- Issue 5 – Iowa adopts rules for preparers
- Issue 6 – SSA W-2 processing volumes
- Issue 7 – Employment tax form updates
- Issue 8 – Social Security’s 90th anniversary (Aug 14, 2025)
- Issue 9 – EFIN scams persist
- Issue 10 – Audit: improve fair, equitable taxpayer treatment
- Issue 11 – NAICS-based lines of business for fringe exclusions
- Issue 12 – Hirono/Tokuda bill to strengthen Social Security
- Issue 13 – IRA: IRS tech transformation spending (Aug 11, 2025)
- Issue 14 – IRS FAQs: energy credit changes (OBBBA)
- Issue 15 – Lockbox directory addresses outdated
- Issue 16 – Proposed reporting rules for partnership interest sales
- Issue 17 – September 2025 AFRs (Rev. Rul. 2025-17)
- FAQs – Common questions on latest changes
Heads Up
Draft of the 2026 Form W-2 provides some clues to what to expect concerning overtime wages and tips in 2026. IRS has stated we will not see any changes for the 2025 form. The 2026 form will be used in the 2027 filing season.
For 2025, we are required to use any reasonable method to track overtime wages and tips for reporting information for 2025. So, they must be reported to the employee.
New Codes for the 2026 Form W-2 that apply to Box 12
TA — Employer contributions to your Trump account.
TP — Total amount of qualified tips. Use this amount in determining the deduction for qualified tips on Sch. 1-A (Form 1040).
TT — Total amount of qualified overtime compensation. Use this amount in determining the deduction for qualified overtime compensation on Sch. 1-A (Form 1040).
Box 14b. Employers use this box to report on the Treasury Occupation Code for your tipped occupation. Use this code in reporting the deduction for qualified tips on Sch. 1-A (Form 1040).
The above is from the instructions on Form W-2 stated after Copy 2. Scroll down to Copy 2 and the next pages have the codes.
The Form is in Draft Form so could change. Please note it mentions Form 1040 Schedule -1-A. To view draft form, follow link:
Issue 1 - IRS Commissioner Discusses Filing Season Prediction
The IRS has clarified via various outlets that no firm start date has been set for the 2026 tax filing season, walking back recent remarks made by Commissioner Billy Long suggesting a President’s Day launch.
Commissioner Long, during a recent speech, mentioned the potential for a delayed start to accommodate the implementation of the One Big Beautiful Bill Act (P.L. 119-21). This sweeping legislation introduces new deductions, including changes to tips, overtime pay and a deduction for seniors, offering potential financial relief to many.
However, in response to the Commissioner’s statement, the IRS noted that comments should not be interpreted as an official schedule.
Historically, the IRS opens the filing season in late January. A mid-February kickoff such as President’s Day falls on Feb. 16 would represent the latest start since 2021, when returns were first accepted on Feb. 12.
This ambiguity comes as the IRS grapples with the loss of 25% of its workforce since the beginning of the year, following workforce reduction efforts. The attrition includes thousands of taxpayer services staff, underscoring the challenges ahead. However, the IRS remains committed to its modernization efforts, which will help it adapt to these changes.
Issue 2 - IRS Announces No Changes to Individual Information Returns or Withholding Tables for 2025
The Internal Revenue Service announced that, as part of its phased implementation of the One Big Beautiful Bill Act, there will be no changes to certain information returns or withholding tables for Tax Year 2025 related to the new law.
Key points for TY 2025 relating to OBBBA provisions:
- Form W-2, existing Forms 1099, and Form 941 and other payroll return forms will remain unchanged for TY 2025.
- Federal income tax withholding tables will not be updated for these provisions for TY 2025.
- Employers and payroll providers should continue using current procedures for reporting and withholding.
These decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business and tax professionals enough time to implement the changes effectively.
Looking ahead to TY 2026
The IRS is working on new guidance and updated forms for TY 2026. These will include changes to how tips and overtime pay are reported. The IRS will coordinate with employers, payroll providers and tax professionals to ensure a smooth transition.
Issue 3 - Demise of the Direct File Program?
IRS Commissioner Billy Long confirmed that the IRS’s Direct File tool has been effectively discontinued. The Direct File program, piloted in 2024, is no longer under consideration. The focus has shifted to “direct audit,” with no indication of reviving the program.
Behind the decline were political and administrative factors:
- The Republican reconciliation bill originally proposed eliminating Direct File, but the Senate stripped that provision.
- Treasury is now tasked with evaluating a public-private alternative to any IRS-run e-filing programs.
- The CIO of Treasury, Sam Corcos, previously recommended discontinuing the tool.
Internal support for Direct File has evaporated, with staffing reduced from 27 to 5. A FOIA-released report did note user growth, which failed to meet projections due in part to public misinformation about the program.
Issue 4 - IRS Commissioner Billy Long Removed from Service
After two months, Billy Long was removed from the IRS office on Aug. 11, 2025. Although no other comments were made about his brief tenure, the White House confirmed that President Trump has nominated Long to become the next ambassador to Iceland. Treasury Secretary Scott Bessent will serve as acting commissioner. With Long’s departure, there have been seven IRS commissioners since January 2025.
Reports also circulated over the weekend that the reason behind the firing was Long's alleged refusal to provide to the Department of Homeland Security tax information on a group of individuals suspected of living in the U.S. illegally. The IRS and DHS in April reached a formal
data sharing agreement 📌 amid litigation challenging the constitutionality of the IRS giving statutorily protected tax documents to outside agencies.
There is also speculation that Trump is poised to not appoint a replacement for Long and instead dismantle the IRS in favor of a supposed External Revenue Service that will supply the government collections from Trump's tariffs.
Issue 5 - Iowa Adopts Administrative Rules for Tax Return Preparers
Effective August 27, 2025, the Iowa Department of Revenue adopts new rules for tax return preparers, including continuing education (CE) requirements and penalties for failure to include their preparer tax identification number (PTIN) on a return or claim for refund (
Iowa Admin. Code § 701--8.9). 📌
The new rules specify that an individual prepares an income tax return or a claim for refund when they sign (or should sign) a return because they:
- Complete the return; or,
- Assume final responsibility for preliminary work completed by other individuals.
Iowa Code § 421.62(1)(d)(1) 📌 specifies that an individual is a "tax return preparer" when they prepare 10 or more tax returns or refund claims in a calendar year for a fee or other consideration.
The new rules specify that a "new tax return preparer" is an individual who qualifies as a tax return preparer in the current calendar year but not the prior year.
Iowa Code § 421.62(1)(d)(2) 📌 specifies that an individual is not considered a tax return preparer required to meet the CE requirement if they are a licensed CPA, a licensed public accountant, a lawyer, an enrolled agent, a fiduciary on behalf of an estate, trust, or individual, an employee of taxpayer, a government employee, or an employee of a tax return preparer.
PTIN requirement
The new rules specify that a tax return preparer is required to include their PTIN on every tax return and refund claim they prepare. Failure to include their PTIN will result in penalties of $50 per violation under (
Iowa Code § 421.62(2)). 📌
The new rules specify that tax return preparers will be required to complete 15 hours of continuing education (CE) every calendar year if they prepare 10 or more returns in a year.
A new tax return preparer must meet the CE requirement beginning with the year in which they first file 10 or more tax returns or refund claims. A tax return preparer should meet the CE requirement even if they prepare fewer than 10 tax returns or refund claims in a year. A tax return preparer who does not meet the CE requirement in a year because they prepared fewer than 10 tax returns or refund claims will lose eligibility to prepare 10 or more tax returns or claim refunds in the following year. They will not be considered a new tax return preparer.
Once a person becomes a tax return preparer, they must meet the CE requirement each year to remain eligible to prepare 10 or more returns or claim refunds.
The CE course requirements are:
- Two hours on professional ethics, and
- 13 hours on federal or state income tax.
CE hours count only for the year that they are completed. If a tax return preparer has more than 15 hours in one year, those hours cannot be used to meet another year's 15-hour CE requirement.
Courses are approved for credit if they:
- Are offered by an IRS-approved provider;
- Cover federal or state income tax topics or professional ethics; and
- Meet Iowa Code § 421.64 📌 and can be taken in person, online or by self-study.
Credit hours completed in a calendar year must be reported by the tax return preparer. IRS providers are not required to report a student's credit hours to the department. The deadline for reporting credit hours is February 15 in the following year. The credit hours must be reported using
IA Form 78-012 📌 or the Income Tax Preparer Continuing Education form on GovConnectIowa.Tax return preparers are required to keep records for five years that show their completion of CE hours, including any certificates issued.
If a tax return preparer fails to complete the CE requirement but shows their failure was reasonable under the circumstances and not willful or reckless conduct, the Department may allow the preparer to make up the hours.
Issue 6 - SSA Reports W-2 Processing Volumes
A representative from the Social Security Administration (SSA) reported that, as of August 1, 2025, approximately 1.65 million paper W-2s and 263.8 million electronic W-2s had been processed.
Issue 7 - Employment Tax Form Updates
The IRS BMF Services Branch announced a series of updates to employment tax forms, including new refund options, form enhancements, and the reactivation of certain business rules. These changes will be rolled out across the 2025 and 2026 tax years.
One of the most notable updates involves expanded refund capabilities. Beginning with tax year 2026, Form 941 will support direct deposit for refunds, aligning it with other 94x series forms that already offer electronic refund options.
In addition, the IRS is introducing a new "aggregate return indicator" section to help identify the type of aggregate filer. This section will feature three checkboxes and will be added to Forms 940 and 943 starting in tax year 2025. Form 941 will incorporate the same section beginning in tax year 2026.
The agency also confirmed the reactivation of Business Rule R0000-240. This rule will be re-enabled for Forms 941 and 941-X starting in tax year 2026, and for Forms 940, 943, 945, 943-X, and 945-X beginning in tax year 2025.
IRS Business Rule R0000-240 📌 was a rule within the Modernized e-File (MeF) system that verified if the business name and name control on an electronically filed tax return matched the IRS database for the given Employee ID Number (EIN). This rule was introduced partly because of increased rejections of returns containing special characters in the business name.
Issue 8 - Social Security Celebrates 90 Years – Aug 14, 2025
Today, the Social Security Administration (SSA) proudly commemorates its 90th anniversary, marking its unwavering commitment to the financial security and dignity of millions of Americans. Since President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935, the program has grown into one of the most successful and trusted institutions in American history.
“For 90 years, Social Security has stood as a promise kept, ensuring that older Americans, people with disabilities, and families facing loss have the support they need,” said Commissioner Frank J. Bisignano. “As we honor this legacy, we are also building a future where service is faster, smarter, and more accessible than ever before. Through President Trump’s vision, we are protecting and preserving Social Security by delivering extraordinary customer service through technological improvements and enhanced process engineering.”
In an open letter to the American people, Commissioner Bisignano emphasized the importance of Social Security, his commitment to strengthening the agency, and the significant improvements to customer service achieved in his first 100 days in office.
Commissioner Bisignano also joined President Donald J. Trump at the White House as the President issued a presidential proclamation, recommitting to always defend Social Security and recognizing the countless contributions of every American senior who has invested their time, talent, and resources into our Nation’s future.
Issue 9 - EFIN Scams Don’t Sleep
Tax professionals should always remain alert to any scams and protect their client data. A common scam geared towards tax pros aims to collect their Electronic Filing Identification Numbers.
How the scam works
The scammer poses as a tax software provider and emails the tax pro with a request to provide their EFIN information by fax. When the tax pro faxes back their EFIN information, the scammer uses the information to steal client data and file fraudulent tax returns for refunds.
If tax pros receive a EFIN scam email
Preparers who receive these emails should not respond to the email or follow the directions in the email. They should report it immediately.
How to report
Tax pros who receive a tax-related scam email should let the IRS know. Tax pros can:
- Notify the Treasury Inspector General for Tax Administration 📌 to report an IRS impersonation scam,
- Save the email and send it as an attachment to [email protected], 📌
- Report the phishing email to the tax software preparation provider being impersonated, and
- Report it to their local IRS Stakeholder Liaison 📌 as soon as possible if data theft may have occurred. IRS Stakeholder Liaison staff will let the appropriate IRS offices know to take steps to block fraudulent returns in the clients’ names and assist tax pros through the process.
The correct way to request EFIN information
Requests for EFIN information should be handled through the appropriate tax software provider’s portal after the request has been verified.
Keep client data safe
Tax pros should watch for phishing scams that seek EFINs, Preparer Tax Identification Numbers or e-Services usernames and passwords. Find out more about keeping clients’ info safe at the
Identity Theft Information 📌 for Tax Professionals page of IRS.gov.
Issue 10 - Audit: Improve Fair and Equitable Treatment of Taxpayers
The standard requires the IRS to "use the fair and equitable treatment of taxpayers by employees' for evaluating employee performance. Employees who fail to meet the retention standard are ineligible for such things as a performance award, career ladder promotion, competition for promotion, and satisfactory completion of a probationary period." They may also be subject to removal from their position or the IRS.
In apparent violations of the retention standard, TIGTA identified 10,892 employees who were rated as 'Not Applicable' and 62 employees who were not separated from service even though they received the 'Not Met' rating for the retention standard and received an overall rating of 'Unacceptable'.
In addition, the audit cited the need to improve training material designed to educate agency employees on the retention standard.
Issue 11 - Use NAICS for Certain Fringe Benefit Exclusions (Proposed)
The IRS proposed regulations (
REG-132805-17) 📌 on August 6, 2025, that would replace the Enterprise Standard Industrial Classification Manual (ESIC Manual) with the North American Industry Classification System (NAICS) for determining employer lines of business for purposes of the no-additional-cost service and qualified employee discount exclusions.
The change aims to modernize classifications, as the ESIC Manual has not been updated since 1974.
The proposed regulations would also update the aggregation rules for determining lines of business.
- § 132(a)(1) excludes from an individual's gross income any fringe benefit that qualifies as a no-additional-cost service, which means the benefit is a service that is offered to customers in the ordinary course of the employer's business and does not incur any additional cost to the employer.
- § 132(a)(2) excludes from an individual's gross income any fringe benefit that qualifies as a qualified employee discount, which generally applies to (1) goods sold to employees at a price at least equal to the employer's cost and (2) services sold to employees at a discount of no more than 20%.
To qualify for the exclusions, the individual receiving the benefit must have performed substantial services in the employer's line of business offering those services or property for sale to customers in the ordinary course of business. If an employer has more than a single line of business, the lines of business will be treated as a single line of business if certain aggregation rules apply.
Proposed regulations
The proposed regulations would also update the aggregation rule to change the existing reference to department store with reference to general merchandise stores, including warehouse clubs or super centers. Consistent with the current rules, the separate lines of business would be treated as one line of business if:
- It is uncommon in the employer's industry for any of the separate lines of business to be operated without the others,
- It is common for a substantial number of employees at an establishment to perform substantial services for more than one line of business of the employer, so that determining which employees perform substantial services for which line of business would be difficult, or
- The retail operations of an employer that are located on the same premises are in separate lines of business but would be considered to be within one line of business if the merchandise offered for sale was for sale at a general merchandise store, including a warehouse club or super center.
The proposed applicability date for the proposed regulations is tax years beginning on or after the date final regulations are published in the Federal Register.
Issue 12 - Hirono/Tokuda Introduce Bill to Strengthen Social Security
The Protecting and Preserving Social Security Act aims to restore fairness in Social Security and protect the program from future cuts.
U.S. Senator Mazie K. Hirono (D-HI) and Representative Jill Tokuda (D-HI) introduced the Protecting and Preserving Social Security Act, legislation that would strengthen Social Security’s financial state and ensure that seniors continue to benefit from the programs they have paid into throughout their lives.
This bill will make significant progress toward extending the Social Security lifeline. According to the Social Security Administration’s Office of the Chief Actuary, the Protecting and Preserving Social Security Act is expected to extend the ability of the Old Age, Survivors, and Disability Insurance (OASDI) program to pay scheduled benefits in full and on time for an additional 19 years, moving the date of projected depletion from 2035 to 2054.
The bill would also reduce the federal deficit by approximately $13.3 trillion by the end of the 75-year projection period.
The Protecting and Preserving Social Security Act aims to improve the Social Security system’s fairness, solvency, and benefits. Specifically, the bill:
- Ensures the appropriate weight is given to the real costs in seniors’ budgets by using the Consumer Price Index for the Elderly (CPI-E) to calculate the relevant cost-of-living adjustment (COLA), rather than the more generic Consumer Price Index for Urban Wage Earners (CPI-W); and
- Requires the wealthiest Americans to pay their fair share by phasing out the cap on Social Security contributions over the next seven years and encouraging contributions above the cap in exchange for additional benefits.
Issue 13 - IRA: IRS Tech Transformation (Aug 11, 2025)
The IRS initially received $79.4 billion in supplemental funding when the Inflation Reduction Act of 2022 (IRA) was signed into law in August 2022.
As of March 2025, Congress subsequently reduced IRA funding to $37.6 billion. This supplemental funding is available through September 30, 2031. TIGTA initiated this evaluation to provide an overview of the IRS’s use of IRA funding for technology transformation projects for Fiscal Years 2022 through 2024.
Impact on Tax Administration
The IRS’s reliance on legacy systems, aged hardware, and outdated programming languages pose significant risks to the IRS’s ability to deliver its mission. Successfully modernizing IRS systems and developing and implementing new information technology applications are critical to IRS transformation and how the agency does business. In addition to improving taxpayer services and increasing enforcement efforts, the IRA supplemental funding was to be used to modernize outdated information technology. With this funding, the IRS planned to deliver cutting-edge technology and analytics to operate more effectively.
In its 2024 Strategic Operating Plan (SOP) Update, the IRS noted several technology transformation efforts the agency completed using IRA funding. These transformation efforts include:
- Enhanced Live Assistance by adding a call back option on the main telephone line so that taxpayers were not required to stay on long holds. Also, rolling out a conversational voice technology that can route calls based on what a taxpayer says.
- Increased Online Services, such as: Individual Online Account improvements that allow multiple bank accounts to be saved, payments scheduled or cancelled, and payment plans revised.
- New Voicebots that help taxpayers with a wide range of issues, including security tax account transcripts, getting answers to questions about balances due, and getting assistance from the Taxpayer Advocate Service.
- Business Tax Accounts that allow eligible entities to view digital notices and letters.
- Tax Pro Account enhancements that include the ability to manage active client authorizations with the Centralized Authorization File database view and manage active authorizations; and view individual and business client’s tax information, including business balance due and canceled and returned checks for individuals.
- Digital Submissions that allow taxpayers to submit all correspondence and responses to notices and letters that do not have a filing or payment action.
- Launched Direct File allowing taxpayers in 12 states to file their tax returns online with the IRS for free.
- Accelerated Digitalization by providing almost all taxpayers with the capability to interact with IRS digitally. The IRS also enabled taxpayers to submit forms on their mobile devices, including the launch of four mobile-friendly forms at the end of Calendar Year 2023.
- Leveraged Data and Artificial Intelligence to help select complex partnerships for audits.
- Modernized Underlying Technology by deploying new technology to benefit taxpayers and making significant progress on modernizing the IRS’s foundational legacy information technology systems.
From the passage of the IRA through March 4, 2025, the IRS spent approximately $5.7 billion of its IRA funds on technology transformation efforts. To complete its modernization efforts, the IRS continues to use contractor support. As reported in our July 2025 IRA spending report, as of March 31, 2025, the IRS has $4.9 billion of its IRA funding for contractor support. Most of this amount ($2.2 billion) was spent in the BSM budget activity.5 5 TIGTA, Report No. 2025-IE-R026, The IRS’s Inflation Reduction Act Spending Through March 31, 2025 (July 2025).
Issue 14 - IRS FAQs: Energy Credit Modifications (OBBBA)
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review.
Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability.
Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so.
1. Which energy credits and deductions are expiring under OBBBA, and what are their new termination dates?
OBBBA accelerated the termination of several energy credit and deduction provisions. The following incentives expire soon:
| Code Section |
Section Title |
Termination Date |
| 25C |
Energy efficient home improvement credit |
The credit will not be allowed for any property placed in service after December 31, 2025. |
| 25D |
Residential clean energy credit |
The credit will not be allowed for any expenditures made after December 31, 2025. |
| 25E |
Previously-owned clean vehicles credit |
The credit will not be allowed with respect to any vehicle acquired after September 30, 2025. |
| 30C |
Alternative fuel vehicle refueling property credit |
The credit will not be allowed for any property placed in service after June 30, 2026. |
| 30D |
New clean vehicle credit |
The credit will not be allowed for any vehicle acquired after September 30, 2025. |
| 45L |
New energy efficient home credit |
The credit will not be allowed for any qualified new energy efficient home acquired after June 30, 2026. |
| 45W |
Qualified commercial clean vehicle credit |
The credit will not be allowed for any vehicle acquired after September 30, 2025. |
| 179D |
Energy efficient commercial buildings deduction |
The deduction will not be allowed with respect to any property the construction of which begins after June 30, 2026. |
2. For purposes of the expiring clean vehicle credits under sections 25E, 30D, and 45W, what does “acquired” mean?
For purposes of sections 25E, 30D, and 45W, a vehicle is “acquired” as of the date a written binding contract is entered into and a payment has been made. A payment includes a nominal downpayment or a vehicle trade-in.
3. What effect does “acquisition” of a vehicle have on a taxpayer’s ability to claim a credit under sections 25E, 30D, and 45W?
Acquiring a vehicle prior to the termination date is an initial step, but acquisition alone does not immediately entitle a taxpayer to a credit. Sections 25E(a), 30D(a), and 45W(a) require the vehicle be “placed in service” to claim the respective credit (see IRS.gov for additional requirements). If a taxpayer acquires a vehicle by having a written binding contract in place and a payment made on or before September 30, 2025, then the taxpayer will be entitled to claim the credit when they place the vehicle in service (namely, when they take possession of the vehicle), even if the vehicle is placed in service after September 30, 2025. Taxpayers should receive a time of sale report from the dealer at the time they take possession or within three days of taking possession of the vehicle.
4. Can an election to transfer a clean vehicle credit be made at the time of acquisition?
5. What will happen to the Energy Credits Online portal with the new termination periods for the clean vehicle credits?
New user registration for the Clean Vehicle Credit program through the Energy Credits Online portal will close on September 30, 2025. The portal will remain open beyond September 30, 2025, for limited usage by previously registered users to submit time of sale reports and updates to such reports, such as when a vehicle has been returned.
6. For purposes of the energy efficient home improvement credit under section 25C, are qualified manufacturers required to make periodic written reports to the IRS regarding specified property?
No. Because of the accelerated termination of the section 25C credit, periodic written reports, including reporting for property placed in service before January 1, 2026, are no longer required. A manufacturer is still required to register with the IRS to become a qualified manufacturer for its specified property to be eligible for the credit.
7. For purposes of the residential clean energy credit under section 25D, can a credit be claimed for property installed after December 31, 2025, or constructed after that date, if a taxpayer pays for the property on or before December 31, 2025?
No. Section 25D(e)(8)(A) provides that an expenditure with respect to an item is treated as made when the original installation of the item is completed. If installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit. In the case of an expenditure made in connection with the construction or reconstruction of a structure, section 25D(e)(8)(B) provides that such expenditure will be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins. If such construction or reconstruction is completed and taxpayer’s original use of the structure begins after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit.
Issue 15 - IRS Lockbox Addresses Not Updated in Directory
In July, the IRS updated several state-specific mailing addresses for certain tax forms and preprinted estimated tax (ES) vouchers. Although the individual tax form information pages are correct, the most recent version of Publication 3891, Lockbox Addresses for 2025, has not been posted to the IRS website.
Please verify the correct addresses below.
Form 1040-ES addresses for taxpayers living within the 50 states.
| If You Live in ... |
And you are enclosing payment – use this address |
|
Alabama, Alaska, Arizona, California, Colorado, Florida, Georgia, Hawaii, Idaho, Kansas, Louisiana, Michigan, Mississippi, Montana, Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Wyoming
|
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
|
|
Arkansas, Connecticut, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kentucky, Maryland, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Oklahoma, Rhode Island, Virginia, West Virginia, Vermont, Wisconsin
|
Internal Revenue Service
P.O. Box 931100
Louisville, KY 40293-1100
|
Form 1040-ES address for taxpayers who are non-residents.
| If You Live in ... |
And you are enclosing payment – use this address |
|
a foreign country, American Samoa or Puerto Rico (or are excluding income under Internal Revenue Code 933), or use an APO or FPO address, or file Form 2555 or 4563, or are a dual-status alien or nonpermanent resident of Guam or the U.S. Virgin Islands.
|
Internal Revenue Service
P.O. Box 1303
Charlotte, NC 28201-1303
USA
|
Issue 16 - Proposed Reporting Rules for Partnership Interest Sales
The Treasury Department and IRS have proposed a rule that would modify reporting requirements for sales or exchanges of certain interests in partnerships owning inventory or unrealized receivables.
The proposal (
REG-108822-25, RIN 1545-BR54) 📌 would remove a rule finalized in November 2020 that requires a partnership to give a transferor partner information about an exchange to submit with their income tax return.
The IRS had revised Form 8308 after the 2020 rule, making the deadline to report the information Jan. 31 the following year.
These proposed regulations specifically address returns relating to sales or exchanges of partnership interests where § 751(a) of the Internal Revenue Code (Code) applies. A § 751(a) exchange occurs when a transferor partner receives money or property in exchange for all or part of their partnership interest that is attributable to either unrealized receivables or inventory items of the partnership. The amount realized from such an exchange is considered as derived from the sale or exchange of property other than a capital asset.
Under current law, § 6050K(a) generally requires a partnership to file a return if a § 751(a) exchange of any interest in the partnership occurs during a calendar year. This return, typically Form 8308, "Report of a Sale or Exchange of Certain Partnership Interests," must include the names, addresses, and taxpayer identification numbers of the transferee, transferor, and the partnership, along with the date of the exchange and other information as prescribed by the form or its instructions. Form 8308 is filed as an attachment to the partnership’s Form 1065, "U.S. Return of Partnership Income," for the taxable year that includes the last day of the calendar year of the exchange.
Furthermore, partnerships are required by § 6050K(b) to provide specific information to the transferor and transferee partners by January 31 of the year following the § 751(a) exchange. This information must include what is reported on the partnership’s return under § 6050K(a) for each person. The transferor partner also has an obligation under § 6050K(c)(1) to notify the partnership of such an exchange, and the partnership is not required to file a return until it is notified. Currently, partnerships generally use a copy of the completed Form 8308 as the statement furnished to transferors and transferees.
The proposed regulations introduce several key modifications to existing guidance:
- Removal of §1.6050K-1(c)(2): The most significant change is the proposed removal of §1.6050K-1(c)(2). This eliminates the requirement for partnerships to furnish the information required in Part IV of Form 8308 by January 31 of the year following the § 751(a) exchange.
- Modification to §1.6050K-1(c)(1): The language specifying the statement to be furnished to transferors and transferees will be revised. The reference to a "completed copy of Form 8308" will be replaced with "a copy of Form 8308 filled out in accordance with the instructions to the form".
- Revised Form 8308 Instructions: The IRS plans to update the instructions for Form 8308 to clarify that only the information in Parts I, II, and III is required by the due dates of Section 6050K for furnishing to partners.
- Clarified Due Dates for Partner Statements: As a result of these changes, a partnership would be required to furnish only the information reported on Parts I, II, and III of Form 8308, or a statement with the same information, to the transferor and transferee by the later of (1) January 31 of the year following the exchange, or (2) 30 days after the partnership is notified of the exchange.
- Unchanged Filing of Completed Form 8308: The requirement for a partnership to file a completed Form 8308, including Part IV, as an attachment to its Form 1065, remains unchanged. The instructions for Form 8308 will be updated to make this clear.
- Continued Schedule K-1 Reporting: Partnerships will continue to be required to report the information needed by the transferor under §1.751-1(a)(3) (which includes the information from Part IV of Form 8308) on the Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., issued to the transferor partner.
- Substitute Statement Clarification: §1.6050K-1(c)(1)(i) will be modified to clarify that information on a substitute statement furnished in lieu of Form 8308 will be provided to the IRS.
Issue 17 - Applicable Federal Rates for September 2025, Rev. Rul. 2025-17
REV. RUL. 2025-17 TABLE 1
Applicable Federal Rates (AFR) for September 2025
| |
Period for Compounding
|
|
Annual |
Semiannual |
Quarterly |
Monthly |
| Short-term |
| AFR |
4.00% |
3.96% |
3.94% |
3.93% |
| 110% AFR |
4.41% |
4.36% |
4.34% |
4.32% |
| 120% AFR |
4.81% |
4.75% |
4.72% |
4.70% |
| 130% AFR |
5.22% |
5.15% |
5.12% |
5.10% |
| Mid-term |
| AFR |
4.04% |
4.00% |
3.98% |
3.97% |
| 110% AFR |
4.45% |
4.40% |
4.38% |
4.36% |
| 120% AFR |
4.86% |
4.80% |
4.77% |
4.75% |
| 130% AFR |
5.27% |
5.20% |
5.17% |
5.14% |
| 150% AFR |
6.09% |
6.00% |
5.96% |
5.93% |
| 175% AFR |
7.12% |
7.00% |
6.94% |
6.90% |
| Long-term |
| AFR |
4.83% |
4.77% |
4.74% |
4.72% |
| 110% AFR |
5.32% |
5.25% |
5.22% |
5.19% |
| 120% AFR |
5.80% |
5.72% |
5.68% |
5.65% |
| 130% AFR |
6.30% |
6.20% |
6.15% |
6.12% |
REV. RUL. 2025-17 TABLE 2
Adjusted AFR for September 2025
| |
Period for Compounding
|
|
Annual |
Semiannual |
Quarterly |
Monthly |
Short-term
adjusted AFR |
3.03% |
3.01% |
3.00% |
2.99% |
Mid-term
adjusted AFR |
3.06% |
3.04% |
3.03% |
3.02% |
Long-term
adjusted AFR |
3.65% |
3.62% |
3.60% |
3.59% |
REV. RUL. 2025-17 TABLE 3
Rates Under Section 382 for September 2025
| Adjusted federal long-term rate for the current month |
3.65% |
|
Long-term tax-exempt rate for ownership changes during the current month
(the highest of the adjusted federal long-term rates for the current month and the prior two months.)
|
3.71% |
REV. RUL. 2025-17 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for September 2025
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%.
| Appropriate percentage for the 70% present value low-income housing credit |
8.03% |
| Appropriate percentage for the 30% present value low-income housing credit |
3.44% |
REV. RUL. 2025-17 TABLE 5
Rate Under Section 7520 for September 2025
|
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years, or a remainder or reversionary interest
|
4.80% |
FAQs - Frequently Asked Questions
Q1. What changed for 2025 under the OBBBA?
For TY 2025, forms (W-2/1099/941) and withholding tables do not change. See
Issue 2.
Q2. How should I handle overtime and tips reporting in 2025?
Use a reasonable method in 2025; draft W-2 adds codes starting 2026. See “Heads Up” above and the draft W-2:
IRS draft W-2 (PDF).
Q3. Is IRS Direct File still available?
No—per
Issue 3, it has been discontinued.
Q4. Where do I send 1040-ES payments?
Use the lockbox tables in
Issue 15 (states) and the non-resident table immediately following.
Q5. What are the September 2025 AFR and related rates?
See
Issue 17 for Tables 1–5 (AFR, Adjusted AFR, §382 rates, §42 percentages, §7520 rate).
Q6. What changed for Iowa tax return preparers?
New CE and PTIN rules effective Aug. 27, 2025; links in
Issue 5 go to the Iowa Code and rules.
Q7. I got an email asking for my EFIN. What should I do?
Treat it as phishing. Follow the reporting steps in
Issue 9 (TIGTA,
[email protected], Stakeholder Liaison, guidance page).
