Key Takeaways
- If you haven't filed, maybe you should extend to get it right.
- How to do it.
- Why postmarks have become a problem.
- ERC delays: time to sue?
- Budget would slash funding for IRS, Inspector General.
- Tariffs and the F-150.
- National Empanada Day.
One Week.
Next Wednesday is the individual filing deadline. That doesn't mean you should wait until Tuesday to think about it.
The wisdom of extending. If you don't have your tax return completed yet, you should seriously consider extending. You absolutely should extend if you are still waiting on information, like a K-1. Even if your tax prep firm has all of your other information, this is their busiest time. You don't want your return completed by tired people working 15-hour days. Have your return extended.
What do you have to do to extend? You have to file Form 4868 either electronically or by mail. Or, make a proper electronic extension payment as described below.
You also have to "properly estimate your 2025 tax liability using the information available to you," according to IRS instructions. I have never seen an extension disallowed for a bad estimate, so precision isn't required. If you have nothing else, look at last year's return and consider what might have changed.
You will be subject to a 1/2 percent late payment penalty if you don't have at least 90 percent of your tax paid by April 15. The IRS offers a number of electronic payment options. These can also handle the mechanics of the election (see below).
The problem with postmarks. If you don't have a tax pro, extending is still a good idea, but there is a catch. Paper Form 4868 extensions have to be postmarked by April 15 to be valid. New postal service procedures (see next item) mean that your mail doesn't get postmarked the day it gets picked up. It is postmarked at the postal processing center when they get around to it.
So E-file the extension. If you use a tax preparer, they can file your extension electronically. If you use one of the retail computer software programs, you should be able to extend through their instructions. If you make a payment marked as a 2025 extension payment by April 15 using one of the IRS online options - such as through an IRS Individual Online Account, IRS Direct Pay, EFTPS or credit card, for example - the mere marking of the payment as an extension payment counts as a timely-filed extension.
Why not just file late?
- If you file late, you face a 5% penalty on any unpaid balance due, plus an additional 5% for each month that passes, up to 25%. If you merely pay late on an extended return, the late payment penalty is 1/2% per month - not ideal, but a lot lower than the late-filing penalty.
- There are some elections that you can only make on a timely-filed return.
- Unextended late filed returns are likely to attract extra IRS attention - especially if you never get around to filing that return in the first place.
Don't forget C corporation returns. Calendar year 2025 Forms 1120 should also be filed or extended by April 15.
New U.S. Postal Service Rules Could Affect Whether Your Tax Filing Is Considered On Time - Erin Collins, NTA Blog:
When the IRS receives a tax form or payment after the due date, the postmark date can be the determining factor of whether the submission is considered timely, and whether late filing or late payment penalties may apply.
...
If you are close to a filing deadline, do not rely on a mailbox alone. One method of ensuring your postmark date is the same as your date of mailing is by using an authorized private delivery service. In addition, there are several options available for taxpayers who want to use the USPS and ensure the postmark date is the same as the date of mailing, and equally important, that they have documentation to prove it. Go to a USPS counter and use:
-Certified Mail;
-Registered Mail; or
-Postage Validation Imprint (special marking indicating postage paid and date accepted).
Employee Retention Credit Delays, or the Other Long Covid
Sue It or Lose It: ERC Claims Face Growing Litigation Push - Trevor Sikes, Tax Notes ($):
Many of the ERC claim disallowances that were issued in the summer of 2024 have been challenged, but the two-year deadline to bring a refund suit following a disallowance notice is pushing taxpayers to decide how to proceed with their unresolved claims still lingering in examinations and appeals, according to attorneys.
Related: Eide Bailly Employee Retention Credit Services.
The Trump Account Legend of Robinhood
BNY and Robinhood Will Help Run ‘Trump Accounts’ for Children - Stacy Cowley, New York Times:
Bank of New York Mellon, a New York-based bank that brands itself as BNY, will be the designated financial agent handling management of the initial accounts. BNY has the world’s largest custodian banking business, holding $60 trillion in assets for pension funds, insurers and other institutions.
Robinhood, the fast-growing financial technology company, will serve as the accounts’ brokerage and initial trustee and help design of the accounts’ app.
Tax Administration: IRS Cuts, Watchdog Cuts
IRS Woes Persist as White House Pitches Another Big Funding Bust - Erin Slowey, Bloomberg ($):
...
IRS workload over the last decade has increased, with added mandates from Congress, most recently in a slew of new tax breaks in the GOP 2025 tax law. Tech has changed. Tax cheats are getting smarter.
Agency funding hasn’t kept up.
Republicans say they want a smaller government, can’t trust the agency, and that the IRS’s emphasis on enforcement has turned off appropriators in Congress. Democrats point to reports showing cutting enforcement encourages tax cheaters and leads to less revenue collected.
IRS Watchdog Again Faces Threat of Budget, Staff Cuts - Benjamin Valdez, Tax Notes ($):
If not for the Inflation Reduction Act, which provided $403 million in supplemental funding to TIGTA through fiscal 2031, the proposed reductions would hobble the watchdog, which has already lost over 130 full-time equivalent employees since the start of 2025, according to Principal Deputy Inspector General Heather Hill.
“We estimate these proposed reductions would result in a 35 percent decrease in TIGTA’s programmatic oversight activities,” Hill wrote in an attached response to the budget proposal. “This reduction would come at a time of increased risk at the IRS, which, if anything, warrants additional oversight.”
To summarize: the administration says it wants to cut the IRS budget to prevent it from going rogue, while also cutting the budget of the agency that monitors the IRS to prevent it from going rogue.
Tax Policy: Reconciliation 2.0, Dem Plans
A tax menu for 2.0? - Bernie Becker, Politico:
Then there might be chances to address what some GOP lawmakers could call missed opportunities. For instance, Republicans could look to hike the stock buybacks tax, particularly if they need to produce new savings, given that it hasn’t produced much blowback in the business community.
And finally, there could be the opportunity to clean up some of the issues specifically created by the One Big Beautiful Bill Act — like the tweak the Senate made to the deduction used by gamblers, which has caused some consternation in gaming circles.
Democrats Go Big on Tax Cuts Ahead of 2028 Presidential Race - Chris Cioffi, Bloomberg ($):
While Democrats have typically focused on cutting taxes for their base, these ideas go further and would effectively eliminate federal income tax for taxpayers below a certain threshold and let the taxpayer decide what to do with the windfall.
...
Economic policy analysts on the left and the right have already criticized the proposals, with some progressives preferring to focus on expanding the social safety net rather than cutting taxes. Analysts have also raised concerns about cost.
Around the World: Tariffs, Transfer Pricing, Housing Costs
Ford Asks Trump Administration for Relief as Tariffs Pummel F-150 - Gavin Bade, Bob Tita and Ryan Felton, Wall Street Journal:
...
In recent weeks, Ford has petitioned the Trump administration for assistance, asking officials for relief from the duties at least until Novelis’ Oswego plant returns to full service, according to people with knowledge of the conversations. The discussions are part of ongoing conversations between automakers and the administration about the impact of Trump’s tariffs, the people said.
So far, the administration hasn’t budged, the people added. While conversations continue, Trump officials have told the companies that they already provided some relief from other national security tariffs last year, when they allowed major automakers to recoup some of the tariff costs that they have paid for automotive parts, which are subject to 25% levies.
IRS Updates Foreign Housing Expense Limits For 2026 - Asha Glover, Law360 Tax Authority ($):
In Notice 2026-25, the agency provided a geographical list of adjustments to the base amount of $21,264 used in calculating the housing exclusion or deduction under the Internal Revenue Code Section 911 exclusion for foreign earned income. The limit for such housing exclusions or deductions is $39,870, the IRS said.
Related: Eide Bailly Global Mobility Services.
Four Transfer Pricing Words That Don’t Exist, But Should - Chad Martin, Eide Bailly:
Use in a sentence: Undaunted by the initial, unpalatably high valuation results, the transfer pricing practitioner undertook a rangemaxxing exercise, increasing the discount rate to 75% and lowering the useful life of the intangibles to 27 hours.
Blogs and Bits
Be aware of (and beware!) these 11 tax audit red flags - Kay Bell, Don't Mess With Taxes. "The number error also applies to Social Security numbers. Enter wrong tax identifying digits for yourself, your spouse, or any dependents, and you could lose tax breaks based on your filing status or tax credits you claimed."
Bozo Tax Tip #4: Procrastinate! - Russ Fox, Taxable Talk. "What happens if you wake up and it’s April 15, 2026, and you can’t file your tax? File an extension."
IRS Extends Temporary Relief for Identifying Digital Asset Units Through 2026 - Parker Tax Pro Library. "The IRS issued a notice extending the temporary relief provided in Notice 2025-7 for an additional year."
Choose your preparer carefully
Peoria Tax Preparer Indicted for Preparing Fraudulent Tax Returns - United States Attorney's Office, District of Arizona (Defendant name omitted, emphasis added):
...
As we head into the final weeks of tax season, IRS Criminal Investigation wants to remind the public to protect themselves when choosing a tax preparer. Keep these tips in mind:
— Be wary of tax return preparers who claim they can obtain larger refunds than others can.
— Avoid tax return preparers who base their fees on a percentage of the refund or who offer to deposit all or part of your refund into their financial accounts.
— Ensure you use a preparer with a Preparer Tax Identification Number (PTIN). Paid tax return preparers must have a PTIN to prepare all or substantially all of a tax return.
— Use a reputable tax professional who enters his or her PTIN on the tax return, signs the tax return, and provides you a copy of the return (as required).
— Consider whether the individual or firm will be around for months or years after filing the return to answer questions about the preparation of the tax return.
— Never sign a blank tax form.
The biggest refund does not necessarily identify the best preparer.
What day is it?
It's National Empanada Day! You can't eat just one.
Make a habit of sustained success.
