United States Capitol Building
The House Ways and Means Committee unanimously passed five bipartisan tax bills last week, each addressing a distinct group of taxpayers. While none of these measures are law yet, practitioners should begin thinking about how they may affect clients if enacted.
Sexual Assault Survivors
The Survivor Justice Tax Prevention Act would exclude all compensatory damages awarded to sexual assault survivors from gross income, regardless of whether physical injury can be proven. Under the bill, a court decision or settlement agreement would serve as presumptive evidence that an assault occurred, meaning survivors would not need to relitigate their case if the IRS later audits the claim. Medical records could not be required as substantiation. For practitioners, this simplifies the documentation picture considerably for any client receiving settlement proceeds tied to sexual assault claims.
Disaster and Wildfire Victims
The Doug LaMalfa Federal Disaster Tax Relief Certainty Act would extend more favorable treatment of personal casualty losses to disasters occurring before January 1, 2027. Current law limits that favorable treatment to disasters occurring between December 28, 2019, and July 4, 2025, leaving a gap for victims of more recent events. The bill would also exclude wildfire relief payments from taxable income for any wildfire disaster declared after December 31, 2014, and before January 1, 2027. Practitioners with clients in disaster-prone regions, particularly California and Florida, should watch this one closely.
Early Childhood Educators
The SEED Act would expand the educator expense deduction to include teachers, aides, principals, counselors, and instructors who work with children ages zero to five, a group currently excluded from the benefit. Eligible expenses would include professional development and classroom supplies, with a deduction of up to $350 for standard deduction filers. Those who itemize could deduct amounts above that threshold as well. Any client who works in early childhood education and currently misses out on this deduction stands to benefit directly.
General Taxpayer Experience
The Taxpayer Experience Improvement Act would require the IRS to build a real-time online dashboard showing call volumes, wait times, and backlog information. It would also upgrade the "Where's My Refund?" and "Where's My Amended Return?" tools and expand individual online account access to include balance due information, transcripts, payment options, and notices. A callback option within five minutes would be required by 2028. Practitioners who regularly field frustrated client calls about IRS response times will appreciate these changes if they come to pass.
Whistleblower Protections
The IRS Whistleblower Program Improvement Act would strengthen protections for individuals who report tax fraud by allowing new evidence in Tax Court appeals, permitting anonymous proceedings, and requiring the IRS to pay interest on delayed award recommendations. Attorney fee treatment would align with standards used in other federal whistleblower programs. This bill matters less for most individual clients but is worth tracking for practitioners who work with compliance-sensitive industries.
All five bills passed the committee by votes of 41-0 or 43-0. Congressional floor action and timing remain to be seen.
Dr. Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
Subscribe to the TPN Newsletter!
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.