Tax News & Views Delays, Disclosures, and Muffins Roundup

Corporate Transparency Act Filing Rules Are Back On - Adam Sweet, Eide Bailly. "In response to a recent District Court decision, the Financial Crimes Enforcement Network announced yesterday that business entities are again required to report Beneficial Ownership Information under the Corporate Transparency Act."

March 21 BOI reporting deadline set; further delay possible - Martha Waggoner and Neil Amato, The Tax Adviser. "Most small businesses required to file beneficial ownership information (BOI) reports will have until March 21 to do so after a federal district court lifted the last remaining nationwide injunction that halted the filings, the Financial Crimes Enforcement Network (FinCEN) said Wednesday."

With CTA Injunction Stayed, Entities Have 30 Days to File Reports - Andrew Velarde, Tax Notes ($):

The CTA requires corporations, limited liability companies, and similar entities to disclose information about their beneficial owners to FinCEN. In September 2022 FinCEN released final regs concerning beneficial ownership reporting, including guidance on reporting requirements, definitions, and exemptions. The CTA and the reporting rule apply to 32.6 million entities. Failure to abide by reporting obligations can result in civil and criminal penalties.

Although FinCEN has had some success in fending off litigation challenges to the constitutionality of the CTA in other districts, it may also be under pressure from lawmakers to relax its reporting deadlines. A bill (H.R. 736) that passed the House on February 10 would extend from the beginning of 2025 to the beginning of 2026 the deadline for companies formed or registered before 2024 to submit their beneficial ownership information reports.

DOGE Layoffs Hit IRS; Expect Delays.

I.R.S. to Begin Laying Off Roughly 6,000 Employees on Thursday - Andrew Duehren and Michael Schmidt, New York Times:

The terminations will target relatively recent hires at the I.R.S., which the Biden administration had attempted to revitalize with a surge of funding and new staff, the people said on condition of anonymity because they were not authorized to speak publicly.

The Trump administration has begun laying off probationary employees — who do not enjoy as much job protection as their more tenured colleagues — across the federal government in recent days.

I.R.S. managers on Wednesday began asking employees to report to the office in the coming days and bring with them their government-issued equipment, according to messages viewed by The New York Times. The I.R.S. employs roughly 100,000 accountants, lawyers and other staff across the country.

Ben Peeler, Director of the Eide Bailly Tax Controversy practice, says taxpayers should expect delays in resolving IRS issues. "The IRS has experienced serious delays and were barely working through Covid related problems. This will only exacerbate many of those delays."

IRS Begins Laying Off Thousands of Employees Amid Filing Season - Benjamin Valdez, Tax Notes ($):

The IRS expects to terminate more than 3,500 probationary employees in its Small Business/Self-Employed Division by the end of the week, SB/SE Commissioner Lia Colbert and other leaders said in a February 19 email viewed by Tax Notes. Some staff have already begun to receive verbal confirmation of their termination, according to two IRS employees familiar with the situation.

...

SB/SE houses personnel in a variety of roles geared toward ensuring compliance for business taxpayers with less than $10 million in assets, including collections and examination positions.

IRS to Cut 6,700 New Employees Agency-Wide This Week - Erin Slowey, Bloomberg ($). "The probationary employees in the IRS Chief Counsel’s Office — the legal arm of the IRS — aren’t currently included in the ordered terminations impacting the agency, according to a Feb. 14 email seen by Bloomberg Tax."

Commerce Secretary Lutnick: Trump's goal is to abolish the IRS - Rebecca Falconer, Axios:

Fox News host Jesse Watters asked Lutnick if he'd give the savings from DOGE cuts back to the American people.

"Think about it, Donald Trump announces the External Revenue Service, and his goal is very simple ... his goal is to abolish the Internal Revenue Service and let all the outsiders pay," Lutnick replied."

Five Things To Know About Trump’s Income Tax and Tariffs Idea - Erica York, Tax Policy Blog. "The Math Doesn’t Work"

Trump Sides With House Tax Plan, Senate Goes its Own Way

Trump Rebuffs Senate G.O.P. and Backs House Budget Plan - Luke Broadwater, New York Times:

President Trump on Wednesday endorsed House Republicans’ proposal to move forward with one all-encompassing policy and tax cut plan, dismissing Senate Republicans’ efforts to break up his agenda into smaller pieces more easily moved through the chamber.

On his website Truth Social, Mr. Trump said he favored the House approach and “one big beautiful bill” because it “implements my FULL America First Agenda, EVERYTHING, not just parts of it!”

Budget Bills Teed Up for Votes, Next Steps in Both Chamber - Doug Sword and Cady Stanton, Tax Notes ($):

Splintered paths in the House and Senate on whether to tackle tax quickly or later in the year may begin to converge by the end of February if both chambers can adopt budget resolutions and trigger a legislative conference.

The politics behind a tax package simplified and blurred in recent days as President Trump posted his support of the House’s one-bill approach to budget reconciliation while the Senate maintained its full-steam-ahead mentality on the first of two budget resolutions, leaving tax for later in the year.

Meanwhile, Senate Republicans moved ahead with plans for an overnight debate beginning late February 20 on their $342 billion budget resolution on defense, energy, and border issues, while House leadership confirmed plans to bring its resolution, including a $4.5 trillion tax component, to the floor the week of February 24.

Trump Endorses GOP House Budget With $4.5T In Tax Cuts - Asha Glover, Law360 Tax Authority ($). "The House-passed resolution advanced by House Budget Committee Republicans last week includes instructions allowing the House Ways and Means Committee to increase the deficit by up to $4.5 trillion and specifically supports a permanent extension of the 2017 Tax Cuts and Jobs Act."

Can Senate Republicans pull off permanent tax cuts? - Laura Weiss and Samantha Handler, Punchbowl News:

Senate GOP leaders have drawn a red line on the need to make the expiring 2017 Trump tax cuts permanent. That’s not feasible under the House’s budget resolution, which would give the tax committees $4.5 trillion of room for tax cuts.

It doesn’t include a “current policy baseline,” which Republicans view as the only realistic way to make the Trump tax cuts permanent. This scoring method would consider extensions of existing tax policy cost-free and get around Senate reconciliation rules that otherwise end up requiring big offsets down the line.

So can Senate Republicans secure that victory?

International Terminal

Getting Congress Informed - Alex Parker, Eide Bailly. "Global taxes are just one issue among hundreds for a member of Congress—and perhaps one of the most complicated. Bringing members of Congress up to speed on issues like the Organization for Economic Cooperation and Development’s 15% global minimum tax has been a challenge, for the agreement’s supporters and for its critics."

Reports of Pillar 2’s Death Are Greatly Exaggerated - Adam Kern, Tax Notes ($). "The United States was never fully in the coalition of countries that agreed to enact pillar 2 — but neither is it fully out."

Who Pays Tariffs? Americans Will Bear the Costs of the Next Trade War - Alex Durante, Tax Foundation. "The bottom line is that contrary to President Trump’s claims, Americans will bear the costs of the next trade war in the form of lower incomes as tariffs cause prices of imported goods to rise."

A VAT is not a tariff - Scott Sumner, Econlog. "A VAT is a tax on all consumption, regardless of where the product is produced."

Getting Ready to File

Tax Time Guide 2025: Essentials needed for filing a 2024 tax return - IRS:

The deadline for submitting Form 1040, U.S. Individual Income Tax Return, or 1040-SR, U.S. Tax Return for Seniors, is April 15, 2025. To avoid mistakes and potential processing delays, taxpayers should refrain from filing until they have received all necessary tax documents. Taxpayers should always carefully review documents for inaccuracies or missing information. They should immediately contact their employer or payer to request a correction if issues arise.

The IRS recommends taxpayers create an IRS Online Account, which provides secure access to their tax information, including payment history, tax records and other key information. Maintaining digitally organized tax documents can streamline the preparation of a complete and accurate tax return and may help identify overlooked deductions or credits.

Taxpayers who have an individual taxpayer identification number or ITIN may need to renew it if it has expired. The IRS can accept a tax return with an expiring or expired ITIN, but there may be processing delays.

Blogs and Bits

Free online state tax filing options are available nationwide - Kay Bell, Don't Mess With Taxes. "Those with adjusted gross income of $84,000 or less can find a program this year at Free File, the no-cost online tax preparation and electronic filing program offered by the IRS and its Free File Alliance partners. To help complete 2024 tax year returns, eight software companies are participating."

Tax deductions 101: choosing between standard and itemized - National Association of Tax Professionals. "For determining age, taxpayers are considered age 65 the day before their birthday. For example, Tillie turns age 65 on Jan. 1, 2026. For tax purposes, Tillie is considered age 65 on Dec. 31, 2025, and is eligible for the increased standard deduction in 2025."

IRS Issues Applicable Federal Rates (AFR) for March 2025 - Bailey Finney, Eide Bailly. "The IRS has released (Rev. Rul. 2025-06) the Applicable Federal Rates under Sec. 1274(d) of the Internal Revenue Code for March 2025. These rates are used for various tax purposes, including minimum rates for loans."

40% Transfer Tax: IRS Final Say On Foreign Gifts, Bequests From “Covered Expatriates” - Virginia La Torre Jeker, US Tax Talk. "Covered expatriates are individuals who meet certain criteria and who renounce U.S. citizenship or abandon long-term resident status. For green card holders, a tax expatriation can happen inadvertently when challenged at the border about meeting requirements for continued U.S. permanent residence."

IRS Form 2555: How to Exclude Foreign Earned Income - Olivier Wagner, 1040 Abroad. "If you’re a U.S. expat, you may be able to exclude foreign earned income from U.S. taxable income using IRS Form 2555."

Tax Court: Typed Signatures are Fine for Electronic Petitions.

Tax Court: Court-Generated Petition With Typed Name Is Validly Signed - Kristen Parillo, Tax Notes ($):

A Tax Court petition that a couple electronically filed with typed signatures using the court’s new online petition generator — which doesn’t enable handwritten signatures — counts as a properly signed petition, the court held.

...

Because the Donlans used the online petition generator, their petition didn’t bear handwritten signatures or facsimiles of handwritten signatures. Instead, the signature blocks contained their typewritten names and contact information.

In a December 2024 motion to dismiss, the IRS argued that the court lacked jurisdiction because the petition wasn’t signed by the Donlans or someone authorized to act as their counsel.

It's hard to understand why the IRS would want the Tax Court to rule against its own e-filing platform.

What day is it?

It's National Muffin Day! Yes, please.

Tax News & Views Delays, Disclosures, and Muffins Roundup

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Joe B. Kristan, CPA