1. IRS Free File Program Evolves in 2024
The IRS Free File program, a longstanding initiative to provide free tax preparation services to eligible taxpayers, underwent significant enhancements in 2024. These included a more user-friendly interface, expanded eligibility, and partnerships with new software providers. The program also gained traction with younger taxpayers and lower-income families, reflecting a growing trend toward self-preparation.
Why It Matters
With improved tools making DIY tax filing more accessible, tax professionals face increased competition. This highlights the importance of offering value-added services like tax planning, audit defense, and expert advice that go beyond software capabilities.
2. IRS Simple Notice Initiative Redesign
In 2024, the IRS introduced its Simple Notice Initiative, a major effort to make IRS correspondence clearer and easier to understand. Redesigned notices feature streamlined language, improved formatting, and actionable next steps, reducing taxpayer confusion. The initiative aims to improve compliance and speed up the resolution of tax-related issues.
Why It Matters
Deciphering complex IRS notices has long been a challenge for taxpayers. This redesign helps tax professionals, and their clients address tax issues efficiently, saving time and reducing stress. Clearer notices also mean fewer misunderstandings and delays when navigating IRS correspondence.
3. Multi-Factor Authentication (MFA) Mandate
To strengthen data security, the IRS officially mandated Multi-Factor Authentication (MFA) for all tax professionals accessing sensitive client data through online platforms. The requirement is part of a broader effort to combat identity theft, phishing attacks, and breaches targeting tax preparer accounts.
Why It Matters
Cybersecurity is a growing concern for tax professionals who handle sensitive financial data. Implementing MFA is no longer optional—it’s required. This mandate emphasizes the need for robust security measures to protect client data, maintain trust, and comply with IRS requirements.
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4. IRS Audits of Corporate Jet Usage
As part of its focus on high-income taxpayers, the IRS launched targeted audits on the use of corporate jets. The initiative examines whether corporate aircraft are being improperly reported for personal use, which can result in significant tax liabilities. The IRS is scrutinizing documentation, usage logs, and tax filings to ensure compliance.
Why It Matters
Tax professionals working with businesses and high-net-worth clients need to ensure corporate jet usage aligns with IRS regulations. Proper documentation and reporting are critical to avoid audits, penalties, and reputational risks.
5. IRS Compliance Efforts Reach $1 Billion in Back Taxes Collected
In 2024, the IRS announced it had collected over $1 billion in unpaid taxes from high-wealth individuals, corporations, and partnerships. This success highlights the agency’s increased focus on enforcing compliance through expanded audits and investigations targeting high-income taxpayers.
Why It Matters
The IRS continued to signal its commitment to closing the tax gap in 2024. Tax professionals must proactively ensure their clients, particularly those in high-income brackets, are fully compliant with reporting and payment obligations to avoid costly enforcement actions.
6. IRS Cracks Down on High-Income Non-Filers
As part of its expanded compliance efforts, the IRS initiated enforcement actions against 125,000 high-income non-filers in 2024. These cases involve individuals with significant financial activity—exceeding $100 billion collectively—who failed to file tax returns. The crackdown focuses on recovering unpaid taxes while encouraging voluntary compliance.
Why It Matters
Non-filing among high-income individuals is a major IRS priority. Tax professionals should stay ahead by helping clients resolve outstanding filings and address compliance gaps. Early action can prevent audits, penalties, and legal consequences.
7. IRS Targets Abusive Use of Partnerships
In 2024, the IRS issued new guidance to combat the abusive use of partnerships to reduce tax liabilities. Partnerships have increasingly been used to exploit loopholes and avoid taxes, costing the IRS tens of billions annually. The new measures aim to close these loopholes and ensure partnerships report income appropriately.
Why It Matters
Tax professionals working with partnerships must stay current on IRS guidance and ensure all filings comply with the new rules. Failure to address these changes could result in audits, penalties, and strained client relationships.
8. The 2024 Election and Potential Impacts on Tax Policy
The 2024 U.S. election brought significant attention to potential tax policy changes that could impact both individuals and businesses. Discussions focused on adjustments to corporate tax rates, extensions of certain tax credits, and modifications to deductions. While no immediate changes have occurred, the election outcome sets the stage for debates in 2025.
Why It Matters
Tax professionals must stay prepared for potential shifts in tax policy following the election. Understanding the possible impacts on clients’ tax strategies will allow professionals to provide timely advice and plan for the 2025 tax season.
9. BOIR Requirement and the Corporate Transparency Act
The Corporate Transparency Act (CTA) introduced Beneficial Ownership Information Reporting (BOIR) requirements to combat financial crimes. However, a major development occurred in December 2024 when a federal court issued a nationwide injunction, temporarily blocking enforcement of the CTA. This ruling has brought uncertainty and delays for businesses previously preparing to comply with BOIR requirements.
Why It Matters
The injunction has paused compliance obligations, but the legal status of the Corporate Transparency Act remains in flux. Tax professionals must stay informed about developments and be prepared to advise businesses on potential reinstatement of reporting requirements. This case underscores the complexity of regulatory compliance and its impact on businesses nationwide.