The IRS has released the 2026 inflation-adjusted amounts for health savings accounts under Code Sec. 223. For calendar year 2026, the annual limitation on deductions under Code Sec. 223(b)(2) for a...
The IRS has marked National Small Business Week by reminding taxpayers and businesses to remain alert to scams that continue long after the April 15 tax deadline. Through its annual Dirty Dozen li...
The IRS has announced the applicable percentage under Code Sec. 613A to be used in determining percentage depletion for marginal properties for the 2025 calendar year. Code Sec. 613A(c)(6)(C) defi...
The IRS acknowledged the 50th anniversary of the Earned Income Tax Credit (EITC), which has helped lift millions of working families out of poverty since its inception. Signed into law by President ...
The IRS has released the applicable terminal charge and the Standard Industry Fare Level (SIFL) mileage rate for determining the value of noncommercial flights on employer-provided aircraft in effect ...
The IRS is encouraging individuals to review their tax withholding now to avoid unexpected bills or large refunds when filing their 2025 returns next year. Because income tax operates on a pay-as-you-...
The IRS has reminded individual taxpayers that they do not need to wait until April 15 to file their 2024 tax returns. Those who owe but cannot pay in full should still file by the deadline to avoid t...
The Arizona Department of Revenue has announced new local transaction privilege tax (TPT) rate changes.DouglasThe City of Douglas has decreased the transaction privilege tax on amusements to 0.0% effe...
Proposed Amendment 2 to the Louisiana Constitution, which was on the March 29, 2025 ballot, failed. The amendment would have :lowered the maximum income tax rate;increased income tax deductions for ci...
Applicable to tax years after 2024, Maryland personal income tax is abated for those who die while serving as members of the uniformed services (formerly, members of the armed forces). In addition, pe...
Effective January 1, 2027, the Michigan Department of Treasury will process the City of Flint's income tax returns. This includes returns from individuals, corporations, and partnerships, and fiduciar...
Texas ruled on the sales and use tax exemption status of equipment and supplies used by a taxpayer in treating and processing wastewater related to oil and gas drilling and fracking operations. The ru...
The Virginia Department of Taxation properly denied the claim by the taxpayer’s estate for an income tax overpayment credit because the taxpayer’s return was filed beyond the refund period allowed...
Click here to access resources available at the AICPA. For local resources: click here for Maryland, click here for Virginia and click here for the District of Columbia.
For small business relief, click here . For federal tax relief, click here and here .
On July 25, 2018, in a statement posted to their firm's respective websites, the leaders of the largest CPA firms reaffirmed the audit profession's commitment to audit quality.
On July 25, 2018, in a statement posted to their firm's respective websites, the leaders of the largest CPA firms reaffirmed the audit profession's commitment to audit quality. The statement notes, among other things, that the financial statement audit is the bedrock of our financial system. As a firm steeped in putting audit quality at the forefront of everything we do, we join in this commitment. For us, auditing is our passion and a major component to honoring our public-interest responsibilities.
In a 5 to 4 decision, the US Supreme Court overturned the landmark court case that required a physical presence to establish a seller's responsibility to collect and remit sales tax to a state.
In a 5 to 4 decision, the US Supreme Court overturned the landmark court case that required a physical presence to establish a seller's responsibility to collect and remit sales tax to a state. As noted in the respective CCH Special Report, this case, titled South Dakota v. Wayfair, opens the door for states to follow suit in crafting and enacting laws to require remote sellers to collect and remit sales or use tax. This issue warrants close monitoring to see how states address, among other things, retroactive application and the related implications under ASC 450, Contingencies.
On June 21, 2018, the Financial Accounting Standards Board (FASB) issued its latest updated guidance for nonprofit organizations.
On June 21, 2018, the Financial Accounting Standards Board (FASB) issued its latest updated guidance for nonprofit organizations. Click here for a copy of the newsletter and here for a copy of the new standard.
The principal changes involve helping preparers and auditors more consistently 1) characterize grants and similar contracts (primarily with government agencies) as exchange transactions or contributions; and 2) distinguish between conditional and unconditional contributions.
Ellicott City Main Street has again suffered tragic losses from torrential rain storms.
Ellicott City Main Street has again suffered tragic losses from torrential rain storms. Click here and here on how you can help. And click here for a collection of thoughts from business owners on rebuilding (from The Baltimore Sun).
This represents MACPA's Accounting and Auditing Standards Committee's comments on the exposure draft issued by the Auditing Standards Board addressing changes to the auditor reporting model and the auditor's consideration of disclosures in a financial statement audit.
Welcome to volume 18.02 of our Tax Update newsletter.
Welcome to volume 18.02 of our Tax Update newsletter. Click here to access our newsletter covering highlights of the new tax law from an individual perspective. For a high level comparison of key provisions of the new law with prior law, click here.
Welcome to volume 18.01 of our Tax Update newsletter.
Welcome to volume 18.01 of our Tax Update newsletter. Click here to access our newsletter covering highlights of the new tax law from a business perspective. We welcome comments and suggestions for future editions. Thank you.
By now we are all well aware of the devastation and displacement caused by Hurricanes Harvey and Irma. The effort to restore and rebuild will be massive and long-enduring. For our clients and friends, we have put together this article to be a source of information on matters related to helping those affected. In the coming weeks and months, we will update and revise this resource as needed.
By now we are all well aware of the devastation and displacement caused by Hurricanes Harvey and Irma. The effort to restore and rebuild will be massive and long-enduring. For our clients and friends, we have put together this article to be a source of information on matters related to helping those affected. In the coming weeks and months, we will update and revise this resource as needed.
AICPA:
American Red Cross:
http://www.redcross.org/about-us/our-work/disaster-relief
Insurance Claims Information:
http://www.iii.org/article/insurance-company-claims-filing-telephone-numbers
IRS:
https://www.irs.gov/forms-pubs/about-form-1099r
https://www.irs.gov/individuals/tax-law-provisions-for-disaster-areas
https://www.irs.gov/newsroom/tax-relief-for-victims-of-hurricane-irma-in-south-carolina
Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Harvey
https://www.irs.gov/businesses/small-businesses-self-employed/faqs-for-disaster-victims
https://www.irs.gov/pub/irs-pdf/p584b.pdf
http://www.irs.gov/pub/irs-drop/rp-16-53.pdf
Louisiana:
http://gov.louisiana.gov/news/major-disaster-declared-for-the-state-of-louisiana-8-14-16
U.S. Government (other than IRS):
https://www.disasterassistance.gov/
https://www.dhs.gov/topic/disasters
https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/disaster-loans
https://www.sec.gov/news/press-release/2017-164
Texas:
The proposed ASU is designed to help organizations decide if a transaction should be accounted for as a contribution or as an exchange.
There has been a long standing debate in the financial accounting and reporting community as to the proper treatment of certain government grants. Specifically, the main issue is should these be treated as contributions or revenue from exchange transactions. The answer can have a significant effect on an organization's financial statements assuming they following U.S. Generally Accepted Accounting Principles. The proposal aims to provide more guidance around this issue. Also, the proposal provides enhanced guidance around the distinction between conditional versus unconditional contributions. The proposal can be found here. Comments can be submitted at the FASB's website through November 1.
This article discusses the importance of timing of enrollment.
This newsletter covers the recent ASU issued on revenue recognition in context of exchange transactions.
This newsletter summarizes the new ASU addressing accounting for leasing transctions.
FASB In Focus 14.05.28 (updated 16.01)
This represents our firm's comment on the PEEC exposure draft on proposed interpretations under the Integrity and Objectivity Rule.
The Internal Revenue Service is looking toward automated solutions to cover the recent workforce reductions implemented by the Trump Administration, Department of the Treasury Secretary Bessent told a House Appropriations subcommittee.
The Internal Revenue Service is looking toward automated solutions to cover the recent workforce reductions implemented by the Trump Administration, Department of the Treasury Secretary Bessent told a House Appropriations subcommittee.
During a May 6, 2025, oversight hearing of the House Appropriations Financial Services and General Government Subcommittee, Bessent framed the current employment level at the IRS as “bloated” and is using the workforce reduction as a means to partially justify the smaller budget the agency is looking for.
“We are just taking the IRS back to where it was before the IRA [Inflation Reduction Act] bill substantially bloated the personnel and the infrastructure,” he testified before the committee, adding that “a large number of employees” took the option for early retirement.
When pressed about how this could impact revenue collection activities, Bessent noted that the agency will be looking to use AI to help automate the process and maintain collection activities.
“I believe, through smarter IT, through this AI boom, that we can use that to enhance collections,” he said. “And I would expect that collections would continue to be very robust as they were this year.”
He also suggested that those hired from the supplemental funding from the IRA to enhance enforcement has not been effective as he pushed for more reliance on AI and other information technology resources.
There “is nothing that shows historically that by bringing in unseasoned collections agents … results in more collections or high-end collections,” Bessent said. “It would be like sending in a junior high school student to try to a college-level class.”
Another area he highlighted where automation will cover workforce reductions is in the processing of paper returns and other correspondence.
“Last year, the IRS spent approximately $450 million on paper processing, with nearly 6,500 full-time staff dedicated to the task,” he said. “Through policy changes and automation, Treasury aims to reduce this expense to under $20 million by the end of President Trump’s second term.”
Bessent’s testimony before the committee comes in the wake of a May 2, 2025, report from the Treasury Inspector General for Tax Administration that highlighted an 11-percent reduction in the IRS workforce as of February 2025. Of those who were separated from federal employment, 31 percent of revenue agents were separated, while 5 percent of information technology management are no longer with the agency.
When questioned about what the IRS will do to ensure an equitable distribution of enforcement action, Bessent stated that the agency is “reviewing the process of who is audited at the IRS. There’s a great deal of politicization of that, so we are trying to stop that, and we are also going to look at distribution of who is audited and why they are audited.”
Bessent also reiterated during the hearing his support of making the expiring provisions of the Tax Cuts and Jobs Act permanent.
By Gregory Twachtman, Washington News Editor
A taxpayer's passport may be denied or revoked for seriously deliquent tax debt only if the taxpayer's tax liability is legally enforceable. In a decision of first impression, the Tax Court held that its scope of review of the existence of seriously delinquent tax debt is de novo and the court may hear new evidence at trial in addition to the evidence in the IRS's administrative record.
A taxpayer's passport may be denied or revoked for seriously deliquent tax debt only if the taxpayer's tax liability is legally enforceable. In a decision of first impression, the Tax Court held that its scope of review of the existence of seriously delinquent tax debt is de novo and the court may hear new evidence at trial in addition to the evidence in the IRS's administrative record.
The IRS certified the taxpayer's tax liabilities as "seriously delinquent" in 2022. For a tax liability to be considered seriously delinquent, it must be legally enforceable under Code Sec. 7345(b).
The taxpayer's tax liabilities related to tax years 2005 through 2008 and were assessed between 2007 and 2010. The standard collection period for tax liabilities is ten years after assessment, meaning that the taxpayer's liabilities were uncollectible before 2022, unless an exception to the statute of limitations applied. The IRS asserted that the taxpayer's tax liabilities were reduced to judgment in a district court case in 2014, extending the collections period for 20 years from the date of the district court default judgment. The taxpayer maintained that he was never served in the district court case and the judgment in that suit was void.
The Tax Court held that its review of the IRS's certification of the taxpayer's tax debt is de novo, allowing for new evidence beyond the administrative record. A genuine issue of material fact existed whether the taxpayer was served in the district court suit. If not, his tax debts were not legally enforceable as of the 2022 certification, and the Tax Court would find the IRS's certification erroneous. The Tax Court therefore denied the IRS's motion for summary judgment and ordered a trial.
A. Garcia Jr., 164 TC No. 8, Dec. 62,658
The IRS has reminded taxpayers that disaster preparation season is kicking off soon with National Wildfire Awareness Month in May and National Hurricane Preparedness Week between May 4 and 10. Disasters impact individuals and businesses, making year-round preparation crucial.
The IRS has reminded taxpayers that disaster preparation season is kicking off soon with National Wildfire Awareness Month in May and National Hurricane Preparedness Week between May 4 and 10. Disasters impact individuals and businesses, making year-round preparation crucial. In 2025, FEMA declared 12 major disasters across nine states due to storms, floods, and wildfires. Following are tips from the IRS to taxpayers to help ensure record protection:
- Store original documents like tax returns and birth certificates in a waterproof container;
- keep copies in a separate location or with someone trustworthy. Use flash drives for portable digital backups; and
- use a phone or other devices to record valuable items through photos or videos. This aids insurance or tax claims. IRS Publications 584 and 584-B help list personal or business property.
Further, reconstructing records after a disaster may be necessary for tax purposes, insurance or federal aid. Employers should ensure payroll providers have fiduciary bonds to protect against defaults, as disasters can affect timely federal tax deposits.
A decedent's estate was not allowed to deduct payments to his stepchildren as claims against the estate.
A decedent's estate was not allowed to deduct payments to his stepchildren as claims against the estate.
A prenuptial agreement between the decedent and his surviving spouse provided for, among other things, $3 million paid to the spouse's adult children in exchange for the spouse relinquishing other rights. Because the decedent did not amend his will to include the terms provided for in the agreement, the stepchildren sued the estate for payment. The tax court concluded that the payments to the stepchildren were not deductible claims against the estate because they were not "contracted bona fide" or "for an adequate and full consideration in money or money's worth" (R. Spizzirri Est., Dec. 62,171(M), TC Memo 2023-25).
The bona fide requirement prohibits the deduction of transfers that are testamentary in nature. The stepchildren were lineal descendants of the decedent's spouse and were considered family members. The payments were not contracted bona fide because the agreement did not occur in the ordinary course of business and was not free from donative intent. The decedent agreed to the payments to reduce the risk of a costly divorce. In addition, the decedent regularly gave money to at least one of his stepchildren during his life, which indicated his donative intent. The payments were related to the spouse's expectation of inheritance because they were contracted in exchange for her giving up her rights as a surviving spouse. As a results, the payments were not contracted bona fide under Reg. §20.2053-1(b)(2)(ii) and were not deductible as claims against the estate.
R.D. Spizzirri Est., CA-11
The IRS issued interim final regulations on user fees for the issuance of IRS Letter 627, also referred to as an estate tax closing letter. The text of the interim final regulations also serves as the text of proposed regulations.These regulations reduce the amount of the user fee imposed to $56.
The IRS issued interim final regulations on user fees for the issuance of IRS Letter 627, also referred to as an estate tax closing letter. The text of the interim final regulations also serves as the text of proposed regulations.These regulations reduce the amount of the user fee imposed to $56.
Background
In 2021, the Treasury and Service established a $67 user fee for issuing said estate tax closing letter. This figure was based on a 2019 cost model.
In 2023, the IRS conducted a biennial review on the same issue and determined the cost to be $56. The IRS calculates the overhead rate annually based on cost elements underlying the statement of net cost included in the IRS Annual Financial Statements, which are audited by the Government Accountability Office.
Current Rate
For this fee review, the fiscal year (FY) 2023 overhead rate, based on FY 2022 costs, 62.50 percent was used. The IRS determined that processing requests for estate tax closing letters required 9,250 staff hours annually. The average salary and benefits for both IR paybands conducting quality assurance reviews was multiplied by that IR payband’s percentage of processing time to arrive at the $95,460 total cost per FTE.
The Service stated that the $56 fee was not substantial enough to have a significant economic impact on any entities. This guidance does not include any federal mandate that may result in expenditures by state, local, or tribal governments, or by the private sector in excess of that threshold.
NPRM REG-107459-24
The Tax Court appropriately dismissed an individual's challenge to his seriously delinquent tax debt certification. The taxpayer argued that his passport was restricted because of that certification. However, the certification had been reversed months before the taxpayer filed this petition. Further, the State Department had not taken any action on the basis of the certification before the taxpayer filed his petition.
The Tax Court appropriately dismissed an individual's challenge to his seriously delinquent tax debt certification. The taxpayer argued that his passport was restricted because of that certification. However, the certification had been reversed months before the taxpayer filed this petition. Further, the State Department had not taken any action on the basis of the certification before the taxpayer filed his petition.
Additionally, the Tax Court correctly dismissed the taxpayer’s challenge to the notices of deficiency as untimely. The taxpayer filed his petition after the 90-day limitation under Code Sec. 6213(a) had passed. Finally, the taxpayer was liable for penalty under Code Sec. 6673(a)(1). The Tax Court did not abuse its discretion in concluding that the taxpayer presented classic tax protester rhetoric and submitted frivolous filings primarily for purposes of delay.
Affirming, per curiam, an unreported Tax Court opinion.
Z.H. Shaikh, CA-3
A new year may find a number of individuals with the pressing urge to take stock, clean house and become a bit more organized. With such a desire to declutter, a taxpayer may want to undergo a housecleaning of documents, receipts and papers that he or she may have stored over the years in the event of an IRS audit. Year to year, fears of an audit for claims for tax deductions, allowances and credits may have led to the accumulation of a number of tax related documents—many of which may no longer need to be kept.
A new year may find a number of individuals with the pressing urge to take stock, clean house and become a bit more organized. With such a desire to declutter, a taxpayer may want to undergo a housecleaning of documents, receipts and papers that he or she may have stored over the years in the event of an IRS audit. Year to year, fears of an audit for claims for tax deductions, allowances and credits may have led to the accumulation of a number of tax related documents—many of which may no longer need to be kept.
However, it is of extreme importance for tax records to support the income, deductions and credits claimed on returns. Therefore, taxpayers must keep such records in the event the IRS inquires about a return or amended return.
Return-related documents
Generally, the IRS recommended that a taxpayer keep copies of tax returns and supporting documents at least three years. However, the IRS noted, there are some documents that should be kept for up to seven years, for those instances where a taxpayer needs to file an amended return or if questions may arise. As a rule of thumb, taxpayers should keep real estate related records for up to seven years following the disposition of property.
Health care related documents
Although health care information statements should be kept with other tax records, taxpayers are to remember that such statements do not need to be sent to the IRS as proof of health coverage. Records that taxpayers are strongly encouraged to keep include records of employer-provided coverage, premiums paid, advance payments of the premium tax credit received and the type of coverage held. As with other tax records, the IRS recommended that taxpayers keep such information for three years from the time of filing the associated tax return.
Last year’s return
Taxpayers are encouraged to keep a copy of last year’s return. The IRS, in efforts to thwart tax related identity theft and refund fraud, continues to make changes to authenticate and protect taxpayer identity in online return-related interactions. Beginning in 2017, some taxpayers who e-file will need to enter either the prior-year adjusted gross income or the prior-year self-select PIN and date of birth—information associated with the prior year’s return—to authenticate their identity.
IRS Chief Counsel recently examined the tax treatment of crowdfunding activities in a new information letter (Information Letter 2016-36). Crowdfunding is a relatively recent phenomenon, used by an individual or entity to raise funds through small individual contributions from a large number of people. The guidance notes that the income tax consequences to a taxpayer of a crowdfunding effort depend on all the facts and circumstances surrounding that effort.
IRS Chief Counsel recently examined the tax treatment of crowdfunding activities in a new information letter (Information Letter 2016-36). Crowdfunding is a relatively recent phenomenon, used by an individual or entity to raise funds through small individual contributions from a large number of people. The guidance notes that the income tax consequences to a taxpayer of a crowdfunding effort depend on all the facts and circumstances surrounding that effort.
In general, Chief Counsel determined, crowdfunding revenues are included in the recipient’s gross income. Code Sec. 61(a) generally provides that gross income includes all income from whatever source derived. However, there are some benefits that a taxpayer receives that are excluded from income because they do not meet the definition of gross income or because a specific exclusion exists.
Chief Counsel observed that money received without an offsetting liability, such as a repayment obligation, that is neither a capital contribution to an entity in exchange for a capital interest in the entity, nor a gift, is included in income. The facts and circumstance surrounding the receipt of crowdfunding revenue must be considered to determine it is income.
Chief Counsel concluded that crowdfunding revenues generally are included in income if they are not (1) loans that must be repaid; (2) capital contributed to an entity in exchange for an equity interest in the entity; or (3) gifts made out of detached generosity and without any “quid pro quo.” Crowdfunding revenues also must generally be included in income to the extent they are received for services rendered or are gains from the sale of property.
Chief Counsel also examined constructive receipt rules in relation to crowdfunding. Income, although not actually reduced to a taxpayer’s possession, is constructively received in the tax year during which it is credited to the taxpayer’s account, set apart for the taxpayer, or otherwise made available. Further, although income is not constructively received if the taxpayer’s control of the income is subject to substantial limitations or restrictions, a self-imposed restriction on the availability of income does not legally defer recognition of that income, Chief Counsel noted.
These are only the specific issues that Chief Counsel addressed in Information Letter 2016-36. As the crowdfunding space develops, more guidance is likely to follow.
Employers and other organizations must obtain an employer identification number (EIN) to identify themselves for tax administration purposes, such as starting a new business, withholding taxes on wages, or creating a trust. Entities apply for an EIN by filing IRS Form SS-4. Page two of the form advises whether an applicant needs an EIN.
Employers and other organizations must obtain an employer identification number (EIN) to identify themselves for tax administration purposes, such as starting a new business, withholding taxes on wages, or creating a trust. Entities apply for an EIN by filing IRS Form SS-4. Page two of the form advises whether an applicant needs an EIN.
Other entities that need an EIN include corporations, partnerships, estates, trusts, state or local governments, and churches and other nonprofit organizations. Unincorporated entities (sole proprietorships) that establish a retirement plan or that file certain tax forms will also need an EIN for filing the relevant forms.
Application process
The IRS does not charge for obtaining an EIN and has sought to simplify the application process. Taxpayers may apply by mail, by fax, or online. International applicants may also apply by phone. In all cases, if the IRS determines that the applicant needs an EIN, the IRS will issue the EIN and transmit it to the taxpayer in the same manner as the application was made.
Applications by mail generally take four weeks, the IRS indicates, once the SS-4 is properly and completely filled out. Entities located in the U.S. or a U.S. territory can apply online. For online applications, the IRS validates the information and issues the EIN immediately. The IRS notes that the principal officer or other relevant party must have a valid taxpayer identification number, such as a Social Security Number, to use the online application process. The IRS will respond to a completed fax application within four business days, if the applicant provides a fax number.
Filing without EIN
The IRS states that it will only issue one EIN per day per responsible party, regardless of the means of applying. If the taxpayer needs to file a return but lacks an EIN because of this limitation, the IRS advises that the taxpayer should attach a completed Form SS-4 to the completed and signed tax return. The IRS will assign an EIN and then process the return.