Key Takeaways
- Average refund up 11%.
- Filings, returns processed are down.
- Role of OBBBA in bigger refunds.
- Left, right populists not tax cut fans.
- IRS argues one ICE agent can cover 47,000 cases.
- Charitable LLC shelter fail.
- Robot portfolio tax trading.
- Cow Milked While Flying in an Airplane Day.
TODAY! HLB Group, Eide Bailly's worldwide accounting network affiliation, hosts a virtual webinar Tariffs Update: Current State, Outlook, Success Stories and Mitigation Strategies. Tune in at 11:00 Central. Register at the link.
Putting the Fun in Refunds
Average tax refund up nearly 11 percent so far this filing season - Andrew Dorn, The Hill:
Through Feb. 6, the average refund has reached $2,290 versus $2,065 at the same point in 2025.
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The average is expected to rise in the weeks ahead since the current figures do not include millions of Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) refunds, the IRS said.
Tax Refunds Are Up, Filings Are Down As Tax Season Gets Started - Kelly Phillips Erb, Forbes:
Processing numbers show an even steeper drop. The IRS processed 20,623,000 individual income tax returns as of February 6, 2026, compared to 23,515,000 as of February 7, 2025. That's a drop of 12.3%.
That drop is concerning if you consider the kinds of tax returns that the IRS typically processes early on in the season. Early filers tend to have simple returns—typically those claiming the standard deduction and relying on Forms W-2. They are less likely to include detailed itemized deductions, or schedules reporting business or rental income. A struggle to process simple returns early in the tax filing season could be indicative of more problems to come.
Your Effective Tax Rate Might Be Lower This Year. We Show You Why. - By Ashlea Ebeling, Jason French and Drew An-Pham, Wall Street Journal:
Even though your top bracket and and top rate might not drop, that isn’t always as important as you might assume. The U.S. has a progressive tax system. The result is an effective, or average, tax rate that is lower than your top rate.
Taxpayers shell out less in payments to the government than they would if all their income was taxed at their marginal rate. Now, taxpayers who qualify for new and enhanced deductions in the tax law may end up with even lower effective rates.
Tracking Three IRS Datapoints to Watch During the 2026 Tax Filing Season - Erica York, Tax Policy Blog. "We track three data points from the IRS filing season statistics and compare them to the prior two filing seasons to assess how the OBBBA is affecting tax refunds."
Tax Cuts and the Political Vibe
Allure of tax cuts fades on right, challenging GOP midterm message - Emily Brooks, The Hill:
Scott Presler, a conservative organizer with millions of followers, delivered that message bluntly in comments to GOP House members in the Republican Study Committee last week while advocating for a bill to strengthen voter ID and registration requirements.
“If the leadership is only going to run on milquetoast tax cuts, you are going to lose this November,” Presler said.
Dems wage populist fight on tax cuts - Burgess Everett, Semafor:
White House proposes new taxes to boost US shipbuilding - Peter Cohn, Roll Call. "The Trump administration on Friday proposed a new set of cargo taxes on goods entering the United States as part of a sweeping plan to revitalize domestic commercial shipbuilding capacity and port infrastructure."
IRS Doesn't Want to Stop Sharing with ICE Despite Privacy Violations
IRS Defends ICE Data Sharing on Appeal, Despite Disclosure Error - James Matheson, Bloomberg ($):
The lower court “abused its discretion” in November 2025 by halting the agency’s data-sharing agreement with Immigration and Customs Enforcement, the IRS said. It asked the US Court of Appeals for the DC Circuit to vacate the injunction preventing the IRS from sharing data on millions of American taxpayers with Department of Homeland Security because the Center for Taxpayer Rights failed to prove the agreement directly affected or obstructed its core business activities.
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The government’s appellant brief follows a declaration filed in the district court in which an IRS official said the agency mistakenly gave DHS personal data on thousands of immigrants during the now-suspended inter-agency data-sharing agreement.
One Immigration Officer Can Investigate 47,000 Crimes, IRS Argues - Nathan Richman, Tax Notes ($):
According to the government, it makes sense for one ICE official to use computer tools as part of a high-level analysis of address information to find people overstaying after departure orders and then use that information to determine how deep to investigate further. Those later investigations could involve more disclosures under section 6103, it said.
"Ultimate" Tax Shelter that Ultimately Led to Jail Time
IRS Disregards Charitable LLC Under Economic Substance Doctrine - Kristen Parillo, Tax Notes ($):
The promoters usually have control over the charity that receives the donation, and they might execute an exit strategy for taxpayers to buy back their contributions at significantly discounted prices after a period, the alert said. It added that the IRS was “using a variety of compliance tools to combat abusive donations, including thorough audits of tax returns and civil penalty investigations.”
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In 2018 the Justice Department filed a promoter injunction lawsuit against Michael L. Meyer, a Florida attorney and CPA who had been selling an abusive charitable giving scheme involving LLCs or limited partnerships — which he called the “Ultimate Tax Plan” — since the late 1990s. Meyer settled the suit in 2019 after agreeing to a permanent injunction.
Further reading: Florida Attorney Sentenced to 8 years in Prison in Fraudulent Charitable Contribution Tax Scheme.
This one brings to mind Reilly's 13th Law of Tax Planning: "When an idea makes you think of a Seinfeld episode, it is not going to end well."
Meet Your Robot Portfolio Manager
Tax-Smart Robots Can Boost Investors’ Returns - Spencer Jakab, Wall Street Journal:
If they use tax losses to enhance returns, investors tend to get interested in dumping their losers late in the year. Media mentions of “tax-loss harvesting” were almost twice as frequent last November and December combined as during tumultuous April and May, according to Factiva.
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A “Tax-Alpha Calculator” from Vanguard uses the example of a $500,000 portfolio of someone in the top tax bracket who took capital gains of 5% of their portfolio annually between 2015 and 2024. He or she could have boosted their after-tax return by 1.24 percentage points if living in high-tax California. The same investor in Florida, one of the few states with no income tax, would have boosted their return by just 0.81 points.
Blogs and Bits
IRS’ online options, like an individual account, can help you avoid tax-help phone delays - Kay Bell, Don't Mess With Taxes. "But instead of waiting on hold, and eventually getting someone who isn’t really trained in tax, the IRS recommends we instead use IRS.gov options, today and for the rest of the filing season."
Have a Form 1099-DA? Your Return Will Likely Cost More to Prepare this Year - Russ Fox, Taxable Talk. "The net result is that tax professionals will, in many cases, need to spend additional time (versus 2024 returns) to correctly prepare 2025 returns with cryptocurrency disposals."
Poultry Processor Scores Partial Win on Research Credits in Tax Court - Parker Tax Pro Library. "The Tax Court held that a poultry processing company was entitled to claim research credits under Code Sec. 41 for some of the research activities it conducted related to disease resistance in broiler chickens, but disallowed other research credits that the court found merely to be post hoc distortions of routine data."
Related: Research & Development Tax Incentives — Request for Assessment
A Preparer Having a Worse Tax Season than You Are.
Suburban Chicago Tax Preparer Indicted for Allegedly Preparing More Than 25 Fraudulent Tax Returns - US Department of Justice (Defendant name omitted, emphasis added):
From 2020 to 2024, Defendant prepared and assisted in the preparation of 26 false and fraudulent tax returns on behalf of clients of her business, Hall Tax & Services Corp. of Flossmoor, Ill., according to an indictment returned in U.S. District Court in Chicago. Defendant helped prepare federal tax returns that fraudulently overstated and misrepresented tax credits, deductions, income, and expenses in order to fraudulently reduce the taxpayers’ tax liability and claim refund amounts to which they were not entitled, the indictment states. Defendant also filed an individual tax return for herself in 2021 that substantially underreported her income, the indictment states. She also failed to file a corporate tax return for her business for the tax year 2022, the indictment alleges.
Defendant, 43, of Chicago Heights, Ill., is charged with 26 counts of willfully aiding and assisting in the preparation of false or fraudulent tax returns, one count of making false or fraudulent statements on a tax return, and one count of willful failure to file a tax return. Defendant pleaded not guilty to the charges during her arraignment on Friday in federal court in Chicago.
Remember, the biggest refund doesn't necessarily identify the best preparer. Taxpayers are responsible for their own tax returns, even when they use a preparer. While it's natural not to look too closely at a return with a big refund, it can be expensive. If a return was prepared fraudulently, courts have ruled that the IRS has forever to audit you, even if you didn't know about the fraud.
What day is it?
While it's Ash Wednesday, don't sleep on Cow Milked While Flying in an Airplane Day. "Cow Milked While Flying in an Airplane Day is celebrated annually on February 18 to commemorate the day a cow named Nellie Jay, which later became Elm Farm Ollie, became the first cow to be flown and milked in an airplane."
Is there a second?
Make a habit of sustained success.
