Tax News & Views Performance Evaluation Radio Roundup

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IRS layoffs weren't really performance-based - TIGTA

IRS Failed to Follow Policies When Firing Probationary Employees - Tyrah Burris, Tax Notes ($):

Out of more than 16,000 probationary employees, the IRS issued termination letters to 7,315 of them after exempting those who were deemed essential for the tax filing season, had appeal rights, were involved in law enforcement, or were military spouses, according to a Treasury Inspector General for Tax Administration report released August 19.

Although all employees received the same letter, TIGTA said that 3,716 probationary employees didn’t have a performance rating on record at the time. Of the remaining 3,599 employees, 3,556 had a “Fully Successful” rating or higher.

IRS Firings Failed to Account for Performance, Watchdog Finds - Erin Slowey, Bloomberg ($):

The Trump administration fired over 7,000 IRS probationary employees in February as part of its efforts to shrink the government. Elon Musk’s so-called Department of Government Efficiency was leading the steep cuts, with tens of thousands fired government-wide. Some of group’s workers were embedded—and remain—within the IRS.

At the time, several top leaders at the agency objected to the move to fire workers and the standardized language they deemed false: “taking into account your performance, and in light of current mission needs, the Agency finds that your continued employment at the Agency is not in the public interest.”

Reasoning For IRS Firings Clashes With Reality, TIGTA Says - Anna Scott Farrell, Law360 Tax Authority ($):

IRS officials said the termination letters were drafted by the U.S. Treasury Department and the Office of Personnel Management, and the IRS was not allowed to change the language, according to the report.

The notices went out unsigned "because they inaccurately cited performance as a factor for termination and no IRS officials were willing to sign the letters," the report said.

The TIGTA report provides some additional insights into the DOGE firing frenzy and its aftermath:

According to the IRS, in a limited number of circumstances, employees were terminated despite being mission critical.

The IRS attempted to rehire 113 employees after the agency determined the employees’ work was mission critical. Rather than return to work, 10 of the 113 opted to resign. Approximately 76 percent of the 113 employees were in two job series: revenue agents and tax law specialists. Revenue agents conduct examinations (audits) by reviewing financial records of individual and businesses to verify what is reported. Tax law specialists analyze and adjudicate tax claims, appeals, settlement offers, and perform work related to claims, contracts, and legal instruments regarding federal tax laws.

...

As previously mentioned, IRS and Treasury Department leadership decided that all 7,315 probationary employees would return to full work status, and employees were reinstated in May 2025. Of these:

· 3,531 employees opted to participate in the Treasury Deferred Resignation Program.
· 752 decided to resign rather than return to work.
· 9 employees are on administrative leave status.
· 3,023 were reinstated to full work status during May 2025.

At the time of the original layoffs, presidential economic advisor Kevin Hassett thought the performance evaluation justification was hilarious at a press conference:

Q: Because we're being told by a lot of people who have been let go at other agencies that they were told they were being dismissed because of poor performance, when, in some cases, they haven't even had a performance review yet because they've only been on the job a couple of months.

MR. HASSETT: Yeah, I've never seen a person who was laid off for poor performance say that they were performing poorly. (Laughter.) Okay?

In the new IRS

Putting more of a stamp at the IRS - Bernie Becker, Politico:

The IRS isn’t just in the process of losing around a quarter of the 100,000-plus employees with which it started 2025. The agency also has cycled through a number of people in senior positions, in no small part because of internal backlashes to the IRS’s agreement to assist immigration authorities and to the Department of Government Efficiency’s push to access agency systems.

That flux has floated all the way to the top, too. Bessent is now the seventh person to lead the IRS this year, taking over the job after the clashing with the sixth — former Commissioner Billy Long, who lasted less than two months on the job before being nominated as ambassador to Iceland.

Even so, both Bessent and Long apparently agreed on the importance of culling senior figures at the IRS.

Identity Theft: Consequences and Prevention

Staff and Budget Cuts Could Exacerbate Identity Theft Delays - Lauren Loricchio, Tax Notes ($):

Since the end of December 2024 and as of an August 15 update, the IRS website said it was processing Forms 14039, “Identity Theft Affidavit,” received in October 2023, according to the internet archive Wayback Machine.

Matlock pointed out that the IRS had previously been providing more regular updates on processing the forms. For instance, a December 10 capture shows that the IRS was processing those forms received in August 2023, and an October 14 capture shows that it was processing those forms received in June 2023.

The article quotes Mandi Matlock of the Center for Taxpayer Rights:

“I take this to mean they either are no longer processing these forms or have stopped reporting their progress. Either way, big problem,” Matlock said. “Did the whole unit get fired or go on administrative leave in January?”

IRS Encourages Taxpayers To Take Measures To Prevent Fraud - Kelly Phillips Erb, Forbes:

With worries about identity theft on the rise, the IRS is encouraging all taxpayers to consider getting an identity protection PIN (IP PIN) for the upcoming tax filing season. An IP PIN is a six-digit number that helps prevent thieves from filing federal tax returns in your name. The IP PIN is a voluntary program open to any taxpayer who can verify their identity.

...

The fastest way to receive an IP PIN is to request one through your online account. If you don’t already have an account on IRS.gov, you’ll need to create one. The IP PIN is generally available in your online account from mid-January to mid-November.

Tariffs Today

Trump tariff agency plan stalls amid White House turf battle - Ari Hawkins, Politico:

President Donald Trump boasts that his global tariffs are bringing in “much more money than the country has ever seen,” which he says could help reduce the debt and even pay for rebate checks for American taxpayers.

What Trump no longer mentions is the new agency he once envisioned would be key to implementing those policies: an “External Revenue Service.”

...

But more than six months later, the new agency is still just a concept, stalled by competing visions for its mission and the fact that tariff revenue has fallen short of the president’s forecasts, according to three people close to the White House.

How One American Brand Stays Ahead of Trump Tariff Whac-a-Mole - Peter Goodman, New York Times:

It began abandoning factories in China that had long made its products: rugged sandals and hiking boots. It set up plants in Southeast Asia and India and then another in the Dominican Republic. In June, the company opened its newest factory, in Kentucky, an investment in the proposition now emblazoned on its shoe boxes: “American Built.”

But that branding and the company’s investment in the United States coincide with the reality that Keen, like most modern businesses, depends on access to a global supply chain for parts and raw materials. The company strives to find local suppliers to limit its vulnerability to faraway trouble, but it still moves many components around the globe to assemble its products.

That movement is now subject to an ever-changing assortment of American tariffs. Keen’s strategy to limit its dependence on any single part of the world has not been enough to spare the company from the turbulence caused by President Trump’s trade war.

Blogs and Bits

A lesson plan for maximizing 8 education tax breaks - Kay Bell, Don't Mess With Taxes. "Whether you’re a student or parent, and regardless of where in the educational system your studying, you might qualify for some financial help from Uncle Sam."

How far a $100,000 salary goes after taxes in every U.S. state - Mike Winters, CNBC. Oregon, Hawaii, California, Delaware, and Minnesota fare the worst.

Trump Accounts - Roger McEowen, Agricultural Law and Taxation Blog. "Trump Accounts are a new investment vehicle for parents of newborns. They have some unique features and are only good for a short window of time (unless extended)."

How Plaintiffs Can Write Off Their Legal Fees Under Big New Tax Law - Robert Wood, Forbes. "But under a U.S. Supreme Court tax cases, Commissioner v. Banks, 543 U.S. 426 (2005), plaintiffs in contingent fee cases must generally include 100 percent in income, even if the lawyer is paid directly, and even if the plaintiff receives only a net settlement."

What If I Own Real Estate In a Foreign Country? Answers Here! - Manasa Nadig, The Buzz About Taxes. "So, what about your real estate holdings in foreign countries, do they have to go on these forms?"

Only Fans, Only Taxed

OnlyFans content creator charged with tax fraud - IRS (Defendant name omitted, emphasis added):

United States Attorney Gregory W. Kehoe announces the return of an indictment charging Defendant, a/k/a “(omitted),” with one count of filing a false tax return and four counts of failing to pay income tax. If convicted on all counts, Defendant faces a maximum penalty of seven years in federal prison.

Not familiar with OnlyFans? The IRS explains:

According to the indictment, Defendant was a content creator who operated under the stage name “(omitted)” on OnlyFans, a subscription-based social media platform. OnlyFans allows creators to share various types of content with subscribers, such as photos, videos, and live streams. Creators, like Defendant, can monetize their content through subscription fees, pay-per-view content, and tips from subscribers. From 2019 through 2023, Defendant earned more than $5.4 million from OnlyFans. Despite this fact, she engaged in a scheme to evade the assessment of taxes by filing a false tax return for calendar year 2019 and failing to pay at least $1.6 million in taxes owed for calendar years 2020 through 2023.

Various types of content must be lucrative. Sadly, I don't believe they are tax-related.

The moral? However varied, you need to report the income.

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Joe B. Kristan, CPA