1. New Executive Order Freezes IRS Hiring and Ends Global Tax Deal Participation
A recent executive order by President Donald Trump has implemented a hiring freeze at the IRS and led to the U.S. withdrawing from a global tax deal aimed at standardizing a 15% corporate minimum tax for multinational companies. These decisions reflect the administration’s shift in priorities, with potential implications for IRS operations and international tax compliance.
Why It Matters
The hiring freeze could lead to slower processing times for audits and taxpayer support, while the withdrawal from the global tax deal introduces uncertainty for multinational clients navigating cross-border compliance.
Actionable Steps
- Monitor IRS guidance to understand how resource limitations may impact tax filings and audits.
- For clients with international operations, evaluate the potential implications of the global tax deal withdrawal.
- Offer advisory services to help clients navigate new compliance challenges.
2. IRS Chief Danny Werfel Resigned on Jan. 20
Danny Werfel stepped down as Commissioner of the IRS on January 20. His leadership tenure included initiatives aimed at modernizing the IRS and improving customer service. The transition raises questions about continuity and future leadership priorities for the agency.
Why It Matters
Leadership changes at the IRS can influence its direction, particularly regarding enforcement priorities, modernization efforts, and taxpayer support services. Tax professionals must stay aware of potential policy shifts that could affect their work and their clients.
Actionable Steps
- Stay informed about the appointment of the next IRS Commissioner and their potential priorities.
- Anticipate possible delays in IRS decision-making during the transition period.
- Reassure clients that you are prepared to navigate any operational changes.
3. 2025 Filing Season Changes Target Scams and Schemes
The IRS and CASST (Committee on Anti-Scam and Scheme Threats) have introduced new measures to curb fraudulent claims in the upcoming tax season. Highlights include requiring a Fuel Tax Credit statement and increased scrutiny of “other withholding” claims, which are often used in fraudulent filings.
Why It Matters
As fraud prevention measures tighten, tax professionals must ensure all client claims comply with new requirements. This is especially critical for those handling complex returns or clients in higher-risk categories.
Actionable Steps
- Review and update client documentation processes to ensure compliance with new filing requirements.
- Educate clients on the importance of accurate claims to prevent delays or audits.
- Leverage IRS resources to stay ahead of fraud prevention protocols.
4. LA Fire Victims Receive Tax Relief
Victims of the Los Angeles wildfires now qualify for federal tax relief, including extended deadlines for tax filings and penalty waivers. These measures are designed to help affected individuals and businesses recover from the disaster.
Why It Matters
Understanding disaster relief provisions allows tax professionals to provide critical support to clients in affected areas. These provisions can ease financial burdens and help clients focus on rebuilding.
Actionable Steps
- Familiarize yourself with the IRS disaster relief provisions specific to this event.
- Communicate available relief options to impacted clients promptly.
- Adjust filing and payment timelines for clients eligible for deadline extensions.
5. Seven Indicted in COVID-Relief Fraud Scheme
Seven individuals have been indicted for defrauding COVID-relief programs, such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). The case underscores heightened enforcement of fraud investigations related to pandemic relief efforts.
Why It Matters
This case highlights the ongoing scrutiny of COVID-relief funds. Tax professionals advising clients on relief program compliance must remain vigilant, as improper documentation or misunderstandings could expose clients to legal risks.
Actionable Steps
- Review all client documentation related to COVID-relief programs for accuracy and compliance.
- Educate clients about the importance of maintaining proper records for relief fund use.
- Stay updated on enforcement trends to provide informed guidance.