“One Big Beautiful Bill Act” Signed into Law
On July 4, President Trump signed H.R. 1, officially titled the “One Big Beautiful Bill Act,” into law. This 362-page budget reconciliation package makes many Tax Cuts and Jobs Act (TCJA) provisions permanent, introduces new deductions (including tips, overtime, auto loan interest, and seniors), renames GILTI (Global Intangible Low-Taxed Income) and FDII (Foreign-Derived Intangible Income) regimes, and raises the SALT (State and Local Taxes) deduction cap to $40,000 through 2029.
Why It Matters:
This comprehensive legislation reshapes tax planning strategies across individual, small business, and multinational clients. With renamed international tax regimes and expanded domestic deductions, advisors should reassess compliance requirements, projections, and opportunities.
Actionable Steps:
- Update tax planning tools to reflect new terminology and adjust for revised thresholds.
- Re-run projections for clients who may benefit from the new deductions related to tips, overtime, or age.
- Advise high-SALT clients on the timing of deductions before the cap begins phasing down after 2029.
Congress Fast-Tracks Disaster Tax Deadline Relief
On July 10, Congress passed the bipartisan Filing Relief for Natural Disasters Act. This new law allows states, through their governor’s declaration, to trigger automatic IRS filing and payment extensions ranging from 60 to 120 days, without requiring FEMA or federal approval.
Why It Matters:
This legislation enhances responsiveness during disasters and reduces stress for affected clients. Preparers should monitor state-level disaster declarations closely, particularly during peak wildfire or hurricane seasons.
Actionable Steps:
- Subscribe to state emergency alert systems to receive immediate disaster notifications.
- Update client intake forms to include questions and checklist triggers for disaster status.
- Train staff on how to accurately apply and document state-driven IRS extensions.
IRS Service Delays Ahead as Budget and Staffing Cuts Take Hold
In July, the Treasury Inspector General for Tax Administration (TIGTA) reported that IRS budget cuts and staff losses are delaying taxpayer services and modernization efforts. Funding has dropped from $79.4 billion to $37.6 billion. Over 25 percent of new hires have already exited, and more than 150 planned improvement projects are now delayed or under review. Earlier this year, several key oversight positions were also eliminated.
Why It Matters:
With IRS operations under pressure, tax professionals may face longer response times, slower processing, and reduced digital service enhancements. Advisors should take proactive steps to manage client expectations and optimize internal workflows.
Actionable Steps:
- Encourage clients to submit tax documents well before tax deadlines to minimize delays.
- Promote the use of IRS online resources like transcripts, e-services, and secure messaging portals whenever possible.
- Communicate potential IRS response delays during onboarding and advisory meetings.
IAASB Releases Revised Fraud-Detection Standard
On July 8, the International Auditing and Assurance Standards Board (IAASB) finalized updates to ISA 240. The revised standard requires auditors to apply a more rigorous fraud-focused lens during risk assessment, strengthen professional skepticism, enhance communication with management and audit committees, and disclose fraud-related key audit matters.
Why It Matters:
Auditors need to strengthen fraud detection procedures and increase transparency, especially when auditing public entities. This updated guidance calls for refined evidence-gathering techniques and clearer stakeholder communication.
Actionable Steps:
- Update audit methodologies to incorporate expanded fraud inquiries and documentation protocols.
- Provide staff training to reinforce skepticism, particularly in high-risk areas.
- Develop new protocols to ensure fraud-related audit findings are documented and communicated effectively.