Newsletters
The IRS encouraged taxpayers to make essential preparations and be aware of significant changes that may affect their 2024 tax returns. The deadline for submitting Form 1040, U.S. Individual Income Ta...
The IRS reminded taxpayers to choose the right tax professional to help them avoid tax-related identity theft and financial harm. Following are key tips for choosing a tax preparer:Look for a preparer...
The IRS provided six tips to help taxpayers file their 2024 tax returns more easily. Taxpayers should follow these steps for a smoother filing process:Gather all necessary tax paperwork and records to...
The IRS released the optional standard mileage rates for 2025. Most taxpayers may use these rates to compute deductible costs of operating vehicles for:business,medical, andcharitable purposesSome mem...
The IRS, in partnership with the Coalition Against Scam and Scheme Threats (CASST), has unveiled new initiatives for the 2025 tax filing season to counter scams targeting taxpayers and tax professio...
The IRS reminded disaster-area taxpayers that they have until February 3, 2025, to file their 2023 returns, in the entire states of Louisiana and Vermont, all of Puerto Rico and the Virgin Islands and...
The IRS has announced plans to issue automatic payments to eligible individuals who failed to claim the Recovery Rebate Credit on their 2021 tax returns. The credit, a refundable benefit for individ...
Florida has released the severance tax rates on the production of heavy minerals and other solid minerals for 2025.Phosphate Rock ProducersFrom January 1, 2025, through December 31, 2025, the tax rate...
The Financial Crimes Enforcement Network (FinCEN) has announced that the mandatory beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) is back in effect. Because reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
The Financial Crimes Enforcement Network (FinCEN) has announced that the mandatory beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) is back in effect. Because reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
FinCEN's announcement is based on the decision by the U.S. District Court for the Eastern District of Texas (Tyler Division) to stay its prior nationwide injunction order against the reporting requirement (Smith v. U.S. Department of the Treasury, DC Tex., 6:24-cv-00336, Feb. 17, 2025). This district court stayed its prior order, pending appeal, in light of the U.S. Supreme Court’s recent order to stay the nationwide injunction against the reporting requirement that had been ordered by a different federal district court in Texas (McHenry v. Texas Top Cop Shop, Inc., SCt, No. 24A653, Jan. 23, 2025).
Given this latest district court decision, the regulations implementing the BOI reporting requirements of the CTA are no longer stayed.
Updated Reporting Deadlines
Subject to any applicable court orders, BOI reporting is now mandatory, but FinCEN is providing additional time for companies to report:
- For most reporting companies, the extended deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN expects to provide an update before that date of any further modification of the deadline, recognizing that reporting companies may need additional time to comply.
- Reporting companies that were previously given a reporting deadline later than March 21, 2025, must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
Plaintiffs in National Small Business United v. Yellen, DC Ala., No. 5:22-cv-01448, are not required to report their beneficial ownership information to FinCEN at this time.
The IRS has issued Notice 2025-15, providing guidance on an alternative method for furnishing health coverage statements under Code Secs. 6055 and 6056. This method allows insurers and applicable large employers (ALEs) to comply with their reporting obligations by posting an online notice rather than automatically furnishing statements to individuals.
The IRS has issued Notice 2025-15, providing guidance on an alternative method for furnishing health coverage statements under Code Secs. 6055 and 6056. This method allows insurers and applicable large employers (ALEs) to comply with their reporting obligations by posting an online notice rather than automatically furnishing statements to individuals.
Under Code Sec. 6055, entities providing minimum essential coverage must report coverage details to the IRS and furnish statements to responsible individuals. Similarly, Code Sec. 6056 requires ALEs, generally those with 50 or more full-time employees, to report health insurance information for those employees. The Paperwork Burden Reduction Act amended these sections to introduce an alternative furnishing method, effective for statements related to returns for calendar years after 2023.
Instead of automatically providing statements, reporting entities may post a clear and conspicuous notice on their websites, informing individuals that they may request a copy of their statement. The notice must be posted by the original furnishing deadline, including any automatic 30-day extension, and must remain accessible through October 15 of the following year. If a responsible individual or full-time employee requests a statement, the reporting entity must furnish it within 30 days of the request or by January 31 of the following year, whichever is later.
For statements related to the 2024 calendar year, the notice must be posted by March 3, 2025. Statements may be furnished electronically if permitted under Reg. § 1.6055-2 for minimum essential coverage providers and Reg. § 301.6056-2 for ALEs.
This alternative method applies regardless of whether the individual shared responsibility payment under Code Sec. 5000A is zero. The guidance clarifies that this method applies to statements required under both Code Sec. 6055 and Code Sec. 6056. Reg. § 1.6055-1(g)(4)(ii)(B) sets forth the requirements for the alternative manner of furnishing statements under Code Sec. 6055, while the same framework applies to Code Sec. 6056 with relevant terminology adjustments. Form 1095-B, used for reporting minimum essential coverage, and Form 1095-C, used by ALEs to report health insurance offers, may be provided under this alternative method.
The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2025 and the lease inclusion amounts for business vehicles first leased in 2025.
The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2025 and the lease inclusion amounts for business vehicles first leased in 2025.
Luxury Passenger Car Depreciation Caps
The luxury car depreciation caps for a passenger car placed in service in 2025 limit annual depreciation deductions to:
- $12,200 for the first year without bonus depreciation
- $20,200 for the first year with bonus depreciation
- $19,600 for the second year
- $11,800 for the third year
- $7,060 for the fourth through sixth year
Depreciation Caps for SUVs, Trucks and Vans
The luxury car depreciation caps for a sport utility vehicle, truck, or van placed in service in 2025 are:
- $12,200 for the first year without bonus depreciation
- $20,200 for the first year with bonus depreciation
- $19,600 for the second year
- $11,800 for the third year
- $7,060 for the fourth through sixth year
Excess Depreciation on Luxury Vehicles
If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends.
The annual cap for this excess depreciation is:
- $7,060 for passenger cars and
- $7,060 for SUVS, trucks, and vans.
Lease Inclusion Amounts for Cars, SUVs, Trucks and Vans
If a vehicle is first leased in 2025, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:
- $62,000 for a passenger car, or
- $62,000 for an SUV, truck or van.
The 2025 lease inclusion tables provide the lease inclusion amounts for each year of the lease.
The lease inclusion amount results in a permanent reduction in the taxpayer’s deduction for the lease payments.
The leadership of the Senate Finance Committee have issued a discussion draft of bipartisan legislative proposals to make administrative and procedural improvements to the Internal Revenue Service.
The leadership of the Senate Finance Committee have issued a discussion draft of bipartisan legislative proposals to make administrative and procedural improvements to the Internal Revenue Service.
These fixes were described as "common sense" in a joint press release issued by committee Chairman Mike Crapo (R-Idaho) and Ranking Member Ron Wyden (D-Ore.)
"As the tax filing season gets underway, this draft legislation suggests practical ways to improve the taxpayer experience," the two said in the joint statement. "These adjustments to the laws governing IRS procedure and administration are designed to facilitate communication between the agency and taxpayers, streamline processes for tax compliance, and ensure taxpayers have access to timely expert assistance."
The draft legislation, currently named the Taxpayer Assistance and Services Act, covers a range of subject areas, including:
- Tax administration and customer service;
- American citizens abroad;
- Judicial review;
- Improvements to the Office of the Taxpayer Advocate;
- Tax Return Preparers;
- Improvements to the Independent Office of Appeals;
- Whistleblowers;
- Stopping tax penalties on American hostages;
- Small business; and
- Other miscellaneous issues.
A summary of the legislative provisions can be found here.
Some of the policies include streamlining the review of offers-in-compromise to help taxpayers resolve tax debts; clarifying and expanding Tax Court jurisdiction to help taxpayers pursue claims in the appropriate venue; expand the independent of the National Taxpayer Advocate; increase civil and criminal penalties on tax professionals that do deliberate harm; and extend the so-called "mailbox rule" to electronic submissions to provide more certainty that submissions to the IRS are done in a timely manner.
National Taxpayer Advocate Erin Collins said in a statement that the legislation "would significantly strengthen taxpayer rights in nearly every facet of tax administration."
Likewise, the American Institute of CPAs voiced their support for the legislative proposal.
Melaine Lauridsen, vice president of Tax Policy and Advocacy at AICPA, said in a statement that the proposal "will be instrumental in establishing a foundation that helps simplify some of the laborious tax filing processes and allows taxpayers to better meet their tax obligation. We look forward to working with Senators Wyden and Crapo as this discussion draft moves forward."
By Gregory Twachtman, Washington News Editor
A limited liability company (LLC) classified as a TEFRA partnership could not claim a charitable contribution deduction for a conservation easement because the easement deed failed to comply with the perpetuity requirements under Code Sec. 170(h)(5)(A) and Reg. § 1.170A-14(g)(6). The Tax Court determined that the language of the deed did not satisfy statutory requirements, rendering the claimed deduction invalid.
A limited liability company (LLC) classified as a TEFRA partnership could not claim a charitable contribution deduction for a conservation easement because the easement deed failed to comply with the perpetuity requirements under Code Sec. 170(h)(5)(A) and Reg. § 1.170A-14(g)(6). The Tax Court determined that the language of the deed did not satisfy statutory requirements, rendering the claimed deduction invalid.
Easement Valuation
The taxpayer asserted that the highest and best use of the property was as a commercial mining site, supporting a valuation significantly higher than its purchase price. However, the Court concluded that the record did not support this assertion. The Court found that the proposed mining use was not financially feasible or maximally productive. The IRS’s expert relied on comparable sales data, while the taxpayer’s valuation method was based on a discounted cash-flow analysis, which the Court found speculative and not supported by market data.
Penalties
The taxpayer contended that the IRS did not comply with supervisory approval process under Code Sec. 6751(b) prior to imposing penalties. However, the Court found that the concerned IRS revenue agent duly obtained prior supervisory approval and the IRS satisfied the procedural requirements under Code Sec. 6751(b). Because the valuation of the easement reported on the taxpayer’s return exceeded 200 percent of the Court-determined value, the misstatement was deemed "gross" under Code Sec. 6662(h)(2)(A)(i). Accordingly, the Court upheld accuracy-related penalties under Code Sec. 6662 for gross valuation misstatement, substantial understatement, and negligence.
Green Valley Investors, LLC, TC Memo. 2025-15, Dec. 62,617(M)
The Tax Court ruled that IRS Appeals Officers and Team Managers were not "Officers of the United States." Therefore, they did not need to be appointed under the Appointments Clause.
The Tax Court ruled that IRS Appeals Officers and Team Managers were not "Officers of the United States." Therefore, they did not need to be appointed under the Appointments Clause.
The taxpayer filed income taxes for tax years 2012 (TY) through TY 2017, but he did not pay tax. During a Collection Due Process (CDP) hearing, the taxpayer raised constitutional arguments that IRS Appeals and associated employees serve in violation of the Appointments Clause and the constitutional separation of powers.
No Significant Authority
The court noted that IRS Appeals officers do not wield significant authority. For instance, the officers do not have authority to examine witnesses, unlike Tax Court Special Trial Judges (STJs) and SEC Administrative Law Judges (ALJs). The Appeals officers also lack the power to issue, serve, and enforce summonses through the IRS’s general power to examine books and witnesses.
The court found no reason to deviate from earlier judgments in Tucker v. Commissioner (Tucker I), 135 T.C. 114, Dec. 58,279); and Tucker v. Commissioner (Tucker II), CA-DC, 676 F.3d 1129, 2012-1 ustc ¶50,312). Both judgments emphasized the court’s observations in the current case. In Buckley v. Valeo, 424 U.S. 1 (per curiam), the Supreme Court similarly held that Federal Election Commission (FEC) commissioners were not appointed in accordance with the Appointments Clause, and thus none of them were permitted to exercise "significant authority."
The taxpayer lacked standing to challenge the appointment of the IRS Appeals Chief, and said officers under the Appointments Clause, and the removal of the Chief under the separation of powers doctrine.
IRC Chief of Appeals
The taxpayer failed to prove that the Chief’s tenure affected his hearing and prejudiced him in some way, under standards in United States v. Smith, 962 F.3d 755 (4th Cir. 2020) and United States v. Castillo, 772 F. App’x 11 (3d Cir. 2019). The Chief did not participate in the taxpayer's CDP hearing, and so the Chief did not injure the taxpayer. The taxpayer's injury was not fairly traceable to the appointment (or lack thereof) of the Chief, and the Chief was too distant from the case for any court order pointed to him to redress the taxpayer's harm.
C.C. Tooke III, 164 TC No. 2, Dec. 62,610
The scheduled January 1, 2014 rollout of withholding, reporting and other rules in the Foreign Account Tax Compliance Act (FATCA) has been delayed six months, the Treasury Department and the IRS have announced. The six-month delay is expected to give the U.S. more time to conclude negotiations and sign agreements to implement FATCA with foreign governments. The Treasury Department and the IRS have not, however, delayed the rules for reporting by individuals.
The scheduled January 1, 2014 rollout of withholding, reporting and other rules in the Foreign Account Tax Compliance Act (FATCA) has been delayed six months, the Treasury Department and the IRS have announced. The six-month delay is expected to give the U.S. more time to conclude negotiations and sign agreements to implement FATCA with foreign governments. The Treasury Department and the IRS have not, however, delayed the rules for reporting by individuals.
Far-reaching scope
FATCA 's scope is very far reaching. FATCA requires certain foreign financial institutions (FFIs) to report information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The reporting institutions include not only banks, but also other financial institutions, such as investment entities, brokers, and certain insurance companies. Some non-financial foreign entities will also have to report certain of their U.S. owners.
FATCA also requires that some individuals holding financial assets outside the U.S. must report those assets to the IRS. The IRS has developed Form 8938, Statement of Specified Foreign Financial Assets. This reporting requirement is separate from the long-time reporting requirement under the Bank Secrecy Act to file an "FBAR" (Form TD F 90.22-1, Report of Foreign Bank and Financial Accounts).
Final rules
In early 2013, the Treasury Department and the IRS issued final FATCA regulations. The final rules require withholding agents to withhold 30 percent of certain payments (called "withholdable payments") to FFIs unless the FFI has entered into a reporting agreement with the IRS. To avoid withholding under FATCA, a participating FFI must enter into an agreement with the IRS to:
- Identify U.S. accounts,
- Report certain information to the IRS regarding U.S. accounts, and
- Withhold a 30 percent tax on certain U.S.-connected payments to non-participating FFIs and account holders who are unwilling to provide the required information.
Delay
The final regulations called for the gradual phasing-in of the FATCA rules beginning in 2014 and continuing through 2017. Now, the Treasury Department and the IRS have further delayed the start of some of the FATCA rules, including rules on withholding, reporting and due diligence by FFIs. Withholding agents generally will be required to begin withholding on withholdable payments made after June 30, 2014 instead of December 31, 2013.
Withholding agents also generally will be required to implement new account opening procedures by July 1, 2014. In addition, Treasury and the IRS intend to modify the final regulations so that the information reports previously required from certain FFIs on U.S. accounts for the 2013 and 2014 calendar years will be required only for 2014 (with respect to U.S. accounts identified by December 31, 2014). Reporting by these FFIs would be required by March 31, 2015. Additionally, all qualified intermediary agreements that would otherwise expire on December 31, 2013 will be extended to June 30, 2014. The launch date of the IRS's online FATCA registration site has also been delayed to August 19, 2013.
Agreements
Since FATCA became law, the U.S. has been negotiating with foreign jurisdictions to implement its reporting requirements. The U.S. has developed two model intergovernmental agreements (IGAs). The first model agreement (Model I) generally requires an FFI to report account information to its government, which, in turn, will exchange the information with the IRS. Under the second model agreement (Model II), an FFI registers with the IRS and reports account information directly to the IRS. As of August 1, 2013, the U.S. has entered into IGAs with nine countries (Denmark, Germany, Ireland, Japan, Norway, Mexico, Spain, Switzerland, and the U.K.). The Treasury Department has reported that it hopes to conclude negotiations before 2014 with Argentina, Belgium, Korea, Malaysia, New Zealand, South Africa, and many other countries.
Individuals
FATCA's rules for reporting by individuals are not delayed. Generally, FATCA requires taxpayers to file Form 8938 if he or she is a U.S. citizen, a resident alien, and in some cases, a nonresident alien. The taxpayer also must own a "specified foreign financial asset," which includes any financial account maintained by an FFI unless specifically excluded. Additionally, the aggregate value of the specified foreign financial asset must exceed certain reporting thresholds.
For single individuals living in the U.S., the total value of the specified foreign financial assets must be more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. For married couples filing a joint return and living in the U.S these amounts are $100,000 and $150,000. The threshold amounts are higher for taxpayers living outside the U.S.
Form 8938 is not a substitute for the FBAR. The forms have different filing requirements. Please contact our office for more details about the two forms and their filing requirements. The IRS is also expected to issue rules on FATCA reporting by domestic entities if the entity is formed or used to hold specified foreign financial assets and the assets exceeds the appropriate reporting threshold. Until the IRS issues regulations, only individuals must file Form 8938.
FATCA is a very complex law, which impacts many taxpayers here and abroad. Please contact our office if you have any questions about FATCA.