The 2025 tax season continues to evolve with significant changes at the IRS, new scam alerts, and updates to Corporate Transparency Act enforcement. Here's what tax practitioners need to know:
IRS Planning Massive Staff Reductions
The Internal Revenue Service is reportedly preparing to lay off up to half of its 90,000-person workforce, according to recent reports by the Associated Press. This follows 6,000-7,000 layoffs last month, primarily affecting probationary employees.
The Elon Musk-led Department of Government Efficiency has been implementing workforce reductions across federal agencies. President Trump signed an executive order mandating a government-wide hiring freeze shortly after taking office, with extended restrictions for IRS employees. The agency has also rescinded job offers for anyone scheduled to start after February 8.
Many of the layoffs have impacted the Small Business/Self-Employed Division, though the Large Business and International Division has also seen cuts. Notably, many probationary employees who lost their jobs were experienced tax attorneys and accountants hired specifically to handle complex audits of wealthy individuals, partnerships, and corporations.
Kelly Reyes, executive director of the Professional Managers Association, warns of difficulties ahead: "When tax professionals, taxpayers and businesses encounter difficulties receiving assistance from the IRS this filing season, it is important to recognize that IRS employees are doing their best under the circumstances."
In response to these workforce reductions, the National Association of Tax Professionals has created job resources to help affected tax professionals find new opportunities in the industry through a dedicated "Looking for Positions" section on natptax.com.
Scam Alert: Fake "Economic Impact Payment" Texts Circulating
The Better Business Bureau is warning taxpayers about fraudulent text messages claiming eligibility for a "$1,400 Economic Impact Payment." The scam texts request personal information and instruct recipients to click suspicious links.
One version reads: "You are eligible to receive a $1,400 Economic Impact Payment. Please provide your accurate personal information. We will deposit the amount into your bank account or mail a paper check within 1 or 2 business days. (Please reply with a 'Y,' then exit the text message. Open it again, click the link, or copy it into your Safari browser and open it.)"
The BBB emphasizes that "the IRS does not contact taxpayers via text, email or social media, and they will never request information this way." Investigation of the fake links revealed suspicious elements, including what one recipient described as a "homemade-looking webpage with Cyrillic script in the upper right."
Tax practitioners can help protect their clients by sending reminders like the one above to ensure clients are not falling for the latest scams.
Corporate Transparency Act Enforcement Update
On February 27, 2025, the Financial Crimes Enforcement Network (FinCEN) announced it would not issue fines or penalties for failure to file or update beneficial ownership information (BOI) reports under the Corporate Transparency Act by current deadlines.
In a more expansive statement on March 2, the Treasury Department indicated it will not enforce penalties against U.S. citizens or domestic reporting companies even after forthcoming rule changes take effect. The department plans to issue proposed rulemaking that would narrow the BOI reporting rule's scope to apply only to certain foreign companies registered to do business in the U.S.
Currently, penalties are not being issued for domestic entities that opt not to report. However, tax practitioners should note that without amendments to the CTA itself, the administration's decision not to fully implement statutory reporting requirements could face legal challenges.
Tax Code Changes on the Horizon
During his recent address to Congress, President Trump outlined several potential tax code modifications he hopes to implement as part of negotiations around extending the Tax Cuts and Jobs Act. These proposals include eliminating taxes on tips, overtime, and Social Security income, as well as making interest payments on American-made car loans tax deductible.
"We had tremendous success in our first term, with a very big part of our plan, we're seeking permanent income tax cuts all across the board," Trump stated. "And to get urgently needed relief to Americans hit especially hard by inflation, I'm calling for no tax on tips, no tax on overtime, and no tax on Social Security benefits for our great seniors."
Tax professionals should stay alert to these developing situations as the 2025 tax season continues.
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.
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