Key Takeaways
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IRS FAQ covers effective date issues for OBBBA limits on energy credits.
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Some reporting requirements end.
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Good faith reliance relief offered.
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IRS looking to add 3,500 "seasonal contact representatives."
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Treasury Secretary/IRS Acting Commissioner: no IRS reductions "in foreseeable future."
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IRS polls on free filing options, with an "are you sure" feature.
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How states tax electric vehicles.
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Tooth Fairy Day.
Mark your calendars! for the Eide Bailly webinar "Agility in Operations: Navigating Tariffs, Market Changes, & the Rise of AI." Wednesday, August 27, 12:30 Central Time. Register here. One hour CPE is available.
New Energy Credit Guidance
IRS provides FAQs on expiring clean energy tax breaks - Michael Cohn, Accounting Today:
The OBBBA reversed many of the green energy tax incentives offered under the Biden administration's Inflation Reduction Act and instead favored the fossil fuel industry. While not all of the clean energy tax credits were immediately curtailed under the bill, the Trump administration followed up with an executive order a few days after the bill was signed and further guidance last Friday from the Treasury Department that would end many of the clean energy tax breaks early by tightening the definition of "placed in service" for when a project was considered to have begun construction.
IRS Clarifies Reconciliation Bill’s Impact on Energy Credits - Trevor Sikes, Tax Notes ($):
The guidance explains that for purposes of claiming a credit under sections 25E, 30D, and 45W, “acquired” means the date the contract is entered into and a payment, including a down payment or vehicle trade-in, has been made. It also clarifies that the vehicle must be placed in service, not just acquired, for the taxpayer to be entitled to the credits.
A transfer of a clean vehicle credit election should be made at the time of sale — when possession is taken, not at the time of acquisition. Lastly, new user registration for the online portal for the clean vehicle credit program closes September 30.
Key Modifications to Energy Credits and Deductions under the One, Big, Beautiful Bill Act - Ed Zollars, Current Federal Tax Developments. "Regarding the energy efficient home improvement credit under section 25C, qualified manufacturers are no longer required to make periodic written reports to the IRS concerning specified property. This change is due to the accelerated termination of the section 25C credit, and it applies even for property placed in service before January 1, 2026. It is important to note that a manufacturer is still obligated to register with the IRS to be recognized as a qualified manufacturer for their specified property to be eligible for the credit."
Treasury, IRS issue FAQs to address the accelerated termination of several energy provisions under OBBBA - IRS. From the FAQ:
IRS FriYay
IRS Posts Thousands of Jobs Amid Workforce Reductions - Lauren Loricchio and Benjamin Valdez, Tax Notes ($):
With a hiring freeze in effect across the federal government, the IRS said it “has been recently granted approval to hire contact representatives in select locations nationwide at hiring events and through USAJOBS.”
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The positions posted on USAJobs.gov are for call sites in locations across the country, including Austin, Texas; Baltimore; Caguas, Puerto Rico; Chamblee, Georgia; Cleveland; Jacksonville, Florida; Kansas City, Missouri; and Ogden, Utah.
Employees taking the deferred resignation program are paid through September and continue to accrue retirement credit and receive benefits until then, without working. Doing this and hiring and training inexperienced replacements is a remarkable way to reduce the cost of government.
IRS Has No Reduction in Force Planned for Now, Bessent Says - Erin Schilling, Bloomberg ($):
Bessent is serving as acting IRS commissioner, the seventh person this year to lead the agency after Billy Long, the confirmed chief, was removed earlier this month.
The IRS workforce will drop by about a quarter to roughly 75,000 employees this year amid the Trump administration’s efforts to downsize the federal government. Most of the departures come from the administration’s deferred resignation offer, which allowed employees to be on paid administrative leave through Sept. 30.
IRS should be more transparent when communicating phone service metrics, report says - Martha Waggoner, The Tax Adviser:
But those metrics only included calls made to the 33 staffed AM telephone lines, which handled about two-thirds of all calls answered by IRS, according to the report from the Treasury Inspector General for Tax Administration (TIGTA).
IRS Push-polling on Direct File
IRS Quizzes Taxpayers on Free Filing Preferences - Benjamin Valdez, Tax Notes:
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If respondents note they would be interested in an IRS-run tool like Direct File, the survey includes a disclaimer that “setting up and running the program is expected to have an initial cost to the federal government of at least $10-$20 per return processed,” asking once again if they would prefer that program.
They don't have the same followup question for the free-filing options involving private tax software companies.
IRS asks for public input on free tax filing options to inform congressional report - IRS:
The IRS invites the public to participate in an anonymous feedback survey on tax preparation and filing options, which will run through Sept. 2, 2025.
Treasury and the IRS encourage taxpayers to share their perspectives and help inform this important congressional report.
To participate, visit the Free Online Tax Preparation Feedback Survey or the IRS.gov landing page. Participation is anonymous.
No Tax Court Juries
Tax Court Says Civil Fraud Penalty Cases Don't Require Juries - Kat Lucero, Law360 Tax Authority ($):
In a unanimous opinion, a Tax Court panel held that Silver Moss Properties LLC lacks the right to a jury trial under the Seventh Amendment in spite of the majority of justices' decision in Securities and Exchange Commission v. Jarkesy. The high court's Jarkesy decision required the SEC to prosecute individuals or businesses before assessing civil fraud penalties against them.
EVs and States
Electric Vehicle Taxes by State, 2025 - Jacob Macumber-Rosin, Adam Hoffer, and Brayden Myers, Tax Foundation. "As the market share of electric vehicles (EVs) on the road grows, however, the gas tax’s ability to fund road projects and decrease traffic congestion erodes. Both federal and state real tax revenue per vehicle mile traveled has been on a steady decline for decades, creating a fiscal gap for road expenditures even as the demand for road infrastructure improvements has grown."
Blogs and Bits
6 tax and other money tips for the next lottery millionaire - Don't Mess With Taxes. "1. Hire or at least consult a tax professional. By now, everyone is well aware that lottery jackpots mean big winnings for the tax man, too, since Uncle Sam considers gambling proceeds (and other winnings) taxable income that must be reported to the Internal Revenue Service and, in most cases, your state tax collector. A tax pro will be able to give you an overview of the myriad tax issues you'll face at the federal and more local taxing levels."
How to get an IRS identity protection PIN (IP PIN) - National Association of Tax Professionals. "This simple six-digit code is one of the best defenses against tax-related identity theft, and it’s available to any taxpayer who wants an extra layer of security."
OB3 Act: Planning for the "SALT Spot" - Thomas Gorczynkski, Tom Talks Taxes. "Individuals in the $500,000 to $600,000 income range should consider immediate shifts"
Eighth Circuit Affirms Mayo Clinic Win on Unrelated Business Income Tax - Parker Tax Pro Library. "The Eighth Circuit affirmed a district court and held that the Mayo Clinic is an 'educational organization' that is exempt from unrelated business income tax based on the acquisition indebtedness of property held by Mayo to produce income."
What could go wrong?
Florida man pleads guilty for role in an off-the-books payroll scheme - IRS (Defendant name omitted, emphasis added):
The following is according to court documents and statements made in court: Defendant conspired with others to operate an illegal, off-the-books cash payroll system for construction workers to avoid paying employment taxes to the IRS and to defraud workers’ compensation insurance companies. Between 2017 and 2019, Defendant managed and directed the operations of Tape Drywall Services Inc., located in Naples, Florida. Contractors entered into agreements with Tape Drywall to provide workers for various construction contracts and provided checks in the name of Tape Drywall for payment. Defendant and his co-conspirator would cash the checks and retain a small percentage as a fee. Defendant and his co-conspirator provided cash to the foremen who used the cash to pay the workers. In total, Defendant and his co-conspirator cashed over 3,600 checks totaling approximately $28 million.
Defendant and his co-conspirator did not report the wages to the IRS and did not withhold Social Security, Medicare, and federal income taxes from those wage and pay them over to the IRS, as required by law. As a result, Defendant caused a loss to the United States of more than $4.2 million.
In addition, Defendant and his co-conspirator defrauded workers’ compensation companies by substantially misrepresenting the amount of Tape Drywall’s payroll. The misrepresentations resulted in substantially lower insurance payments.
I think our readers know that paying employees in cash to skip payroll taxes is illegal. It's also foolish. Every employee becomes a potential informant, and nobody keeps every employee happy.
What day is it?
It's National Tooth Fairy Day. May you never want a tooth fairy visit as a grown-up, and remember that the Tax Fairy is as real as the tooth fairy.
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