Key Takeaways
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Extended Individual, C Corporation returns are due today.
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E-file if you can.
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Preparers need your 8879 in-hand to e-file your return.
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Disaster deadline relief available in limited areas.
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Shutdown: “taxpayers will feel the impact at every level and interaction with the IRS.”
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Shorthanded IRS struggles with tip, overtime break implementation.
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Furniture tariffs.
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"Bitcoin Jesus" settles.
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National Expense Report Day.
End of the extension road. Today is the deadline for filing extended 1040 and 1120 tax returns. There are no second extensions, this is it. The government shutdown doesn't change the deadline.
How should you file? If you can file electronically, file electronically. The IRS struggles to process paper returns in the best of times. With half of the IRS on furlough, and with a big pile of non-processed paper returns ahead of you, there's no telling when they'll get to yours. Despite some silly things you may have read, e-filing is more secure than trusting your return to the vagaries of the postal service and the understaffed IRS.
If you use a preparer to e-file your tax return, the preparer needs to have your Form 8879 e-file authorization in hand to transmit your return to the IRS. They can lose their e-filing privileges if they transmit without the form. They aren't going to risk it for you. Mailing it to your preparer today doesn't cut it.
If you must file on paper, document your filing. Certified Mail, Return Receipt Requested, is the standard. Yes, it costs $4.85, but it more than pays for itself if the IRS asserts a late filing penalty. If you really are a last-minute filer and you get to the post office after it closes, you can use an authorized private delivery service. Be sure you use the right delivery option; for example, UPS Next Day Air qualifies, but UPS Ground does not. Save your shipping documents.
There are a few exceptions to the deadline. Taxpayers in designated disaster areas have additional time to file returns that would otherwise be due today. Among them:
- Taxpayers in parts of Texas and Oklahoma affected by severe storms in March of this year have until November 3 to file.
- Taxpayers in parts of Texas affected by July 2, 2025 storms have a February 2, 2026 deadline.
- Taxpayers in parts of Wisconsin affected by August 9 severe storms also have a February 2, 2026 deadline.
The IRS has a complete list of extended deadlines on its disaster relief web page; be sure you are in a qualifying area if you plan to rely on the disaster extension.
Shutdown Update: IRS Effects. The "Stupid Stage." Extenders at Risk.
More shutdown questions for the IRS - Bernie Becker, Politico:
Among the biggest concerns for tax preparers is that the IRS plans to continue automated collection efforts during the shutdown.
In short, they fear that the agency might still be able to automatically generate notices about owed debts, but it won’t have the employees around to be able to answer questions or help process responses from taxpayers.
Shutdown enters ‘stupid’ stage - Burgess Everett, Semafor:
Who will lose out when ACA health insurance subsidies expire? - Alyssa Fowers, Washington Post. "About a million people would go from paying 8 percent of their income on health insurance premiums to becoming responsible for the entire cost themselves. That would be especially painful because health insurance premiums are expected to increase by 18 percent in 2026."
Implementing the New Tax Law, Shorthanded.
Employers, Workers Prep for Overtime Tax Break Without IRS Input - Chris Cioffi, Bloomberg ($):
The GOP tax law lets certain workers deduct up to $12,500 on the “half” of the “time-and-a-half” of federal overtime income this year through 2028, though the tax break doesn’t apply to Social Security and Medicare taxes.
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Not everyone can benefit from the break. The tax law utilizes the Fair Labor Standards Act definition of overtime, which excludes railroad and certain highly compensated workers, and when overtime kicks in it isn’t uniform for all workers.
Overtime Deductions May Leave Some Money on the Table - Trevor Sikes, Tax Notes ($):
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The new deduction can be challenging to put in place for employers because “it is not as simple as saying, everything that we pay for overtime is going to be qualified,” Karcher said. Thus, employers need to give the right information to an employee who receives overtime pay, she added.
“Options might include a specific employee statement — something that says your qualified overtime amount is X, or even more general statements that give employees guidance on how and where to find their pay slips on your employee websites and how to interpret the overtime that’s reported there,” Karcher said.
Will IRS Know Pornography When It Sees It for Tips Deduction? - Trevor Sikes, Tax Notes ($):
“I know it when I see it,” Supreme Court Justice Potter Stewart famously said regarding what constitutes pornography. Treasury and the IRS seem to be taking the same position and haven’t defined what pornography is.
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The landscape of adult media has changed, especially with online platforms like OnlyFans, and the lack of clarity on what constitutes pornographic activity could create issues for digital content creators who receive tips, Garrett Watson of the Tax Foundation told Tax Notes.
Should make for an interesting chapter of the IRS Audit Guide.
Tariffs: Furniture for National Security, Political Shifts, Bailouts, Alternatives.
Trump’s Wood Tariffs Are Here. Who’s Hit Hardest - Ilena Peng, Bloomberg ($):
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US homebuilders and retailers warn that higher costs could push housing prices and furniture costs higher as the trade fight over wood products escalates once again.
Relief Concerns Grow As Sectoral Tariff Actions Build - Dylan Moroses, Law360 Tax Authority ($):
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The more recent Section 232 investigation announced last month into imported robotics and industrial machinery could be particularly harmful to clients in the midst of increasing their domestic production, Smith said.
"We have a lot of clients that are manufacturing in the United States that seek to expand U.S. manufacturing and are already in the process, but now they have tariffs on this very expensive machinery they cannot get in the United States at all," Smith said.
Democrats Embrace Free Trade — And Their Party’s Heritage - Joseph Thorndike, Tax Notes ($):
That would be a break from the party’s recent past — but a return to its historical form. And it would have important implications not only for U.S. foreign economic policy but for domestic tax reform as well.
A Tax-Reform Alternative to Trump’s Tariffs - Paul Ryan and Kyle Pomerleau, Wall Street Journal:
The DBCFT has three important features. First, all investment costs can be immediately deducted rather than depreciated over years or decades. Second, there is no deduction for borrowing costs. Third, a “border adjustment” would subject all imports to a single rate tax while providing all exports with a subsidy at the same rate.
Blogs and Bits
Inflation bumps for 2026 for tax-cutting deductions, credits, and exclusions - Kay Bell on Substack. "Remember, these amounts apply to 2026 taxes, which will be filed in 2027. As in earlier (and coming) posts, I’ve also included for comparison the 2025 amounts that apply to the tax return you’ll file next year."
IRS Clarifies Rural Property Provisions for Qualified Opportunity Zone Investments - Parker Tax Pro Library. "The guidance clarifies two important OBBBA provisions: (1) the application of the substantial improvement threshold for certain enhancements to property located in a QOZ that is comprised entirely of a rural area, and (2) the definition of 'rural area.'"
Related: Extensions and Permanency for Opportunity Zone Investors
How Trump Alleges Terrorism To Expand His War On Tax-Exempt Groups - Howard Gleckman, Forbes. "Even with a plausible claim, lifting a group’s tax-exempt status is no simple matter."
Related: Eide Bailly Exempt Organization Tax Services.
The Tariff Mirage: Fiscal Illusion, Monetary Decline - Jack Salmon, the Unseen And The Unsaid. "Tariffs look like a tax on foreigners but function as a tax on Americans, on their consumption, their productivity, and their financial privilege."
How Should the US Address Long-Term Deficits? Lessons from Other Countries - William Gale, Ian Berlin, and Samuel Thorpe. "A gradual, phased-in plan that leans more on tax increases than spending cuts may offer the best path toward sustainable fiscal policy."
Resurrection
‘Bitcoin Jesus’ Signs $50 Million Deferred Prosecution Agreement - Nathan Richman, Tax Notes ($).
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The government indicted Roger Ver in February 2024 and announced his arrest in Spain three months later. The indictment accused him of tax evasion, filing false tax returns, and mail fraud for failing to report what the government thought were his full bitcoin holdings when he expatriated from the United States to Saint Kitts and Nevis in 2014.
Ver, an early bitcoin evangelist colloquially known as “Bitcoin Jesus,” admitted in the DPA that the government was right that he owned or controlled the cache of bitcoin identified in the indictment. However, rather than holding him responsible for tax on the $240 million he was accused of earning from selling a chunk of the hoard in 2017, the DPA calculated the exit tax on a valuation of almost $74 million.
There's a lot going on here, including hints of high-level intervention in the case and the nature of the "exit tax" on expatriates. Remember, crypto income is still income.
Related: Eide Bailly Global Mobility Services.
What day is it?
It's National Expense Report Day! Don't forget to submit your miles too.
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