IRS reforms bring relief, but Trump win clouds future plans

The latest wave of changes out of the Internal Revenue Service includes a host of relief measures, from disaster assistance in the wake of Hurricane Milton to halting the practice of immediate penalties for late reports of foreign gifts and inheritance. But with the results of the presidential election, much is uncertain about the IRS’s path forward.

Throughout his campaign, Donald Trump made repeated pledges to institute tax breaks for caregivers, domestic car purchases and U.S. citizens living overseas, with further considerations towards excusing police officers, firefighters, and both current and retired military members from paying taxes.

Following Trump’s Nov.5 win, cementing his return to the White House in 2025, many across the accounting profession are now in a “wait and see” period to see which pledges, if any, he makes good on.”The Republicans’ control of the Senate makes it much more likely that Republicans will be able to implement many of Trump’s proposed tax policies, such as making parts of the expiring 2017 [Tax Cuts and Jobs Act] provisions permanent,” said John Gimigliano, principal in charge of the federal legislative & regulatory services group within KPMG’s Washington National Tax practice, in a statement.

Read more: Trump’s victory: What it means for taxes

Funding for the IRS has been a particular point of contention for the Republican party, as seen with reductions in backing from the Inflation Reduction Act of 2022.

“IRS funding is at significant risk right now,” including both “the annual appropriation funding as well as the remaining IRA funding,” said Rochelle Hodes, principal at Top 25 Firm Crowe LLP’s Washington National Tax Office.

“The only question for me on funding is, will any portion of the funding remain available for taxpayer service-related improvements at the IRS?” Hodes said.

Hodes went on to highlight the Tax Cuts and Jobs Act of 2017 as the first major priority for the incoming Trump administration, followed close behind by determining “how will the cost of that endeavor be determined,” she said.

“If the view that is held by several Senate Republicans wins the day, then the cost of extending the expiring provisions will not be counted under those particular budget rules that are created dealing with extending current policy. … If, however, that view is not adopted, then there is a high cost just to TCJA, and so any other provisions with cost will sort of stretch the boundaries of what many in Congress would be comfortable with,” Hodes said.

Read more: Trump win may threaten IRS funding

Below is a compilation of noteworthy items out of the IRS last month.

IRS is cutting late filers of foreign gift forms a break

Article by Michael Cohn

IRS executives announced last month that the agency will halt the automatic penalty process against taxpayers who delinquently file forms reporting foreign gifts and inheritance, following outcry from the American Institute of CPAs and National Taxpayer Advocate Erin Collins.

“By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal Revenue Code § 6677 penalty,” Collins wrote in a blog post last month. 

The IRS followed up the change by emphasizing that it will begin reviewing the reasonable cause statements provided by taxpayers who late filed Forms 3520, Part IV, prior to assessing any penalties.”This favorable change will reduce unwarranted assessments and relieve burden on taxpayers by giving them the opportunity to explain their situation before the IRS assesses a penalty,” Collins said.

Read more: IRS offers penalty relief for late-filed foreign gift forms

IRS issues new benchmark for Sustainable Aviation Fuel Credit

Article by Jeff Stimpson

Guidance released by the IRS last month established the Sustainable Aviation Fuel Credit at $1.25 to $1.75 for each gallon of sustainable aviation fuel in a qualified mixture.

Qualified mixtures are required under the credit, which was created by the Inflation Reduction Act, to have a reduction of at least 50% in life cycle greenhouse gas emissions in order to be eligible.

This change is the most recent entry in the saga of the SAF credit, with other notable entries like Notice 2024-37 allowing fuel producers to employ the 40BSAF-GREET 2024 model when calculating their greenhouse gas emissions reduction percentage for the credits.

Read more: New rules for Sustainable Aviation Fuel Credit

Tax-exempt groups avoid filing requirement for 2023 corporate AMT form

Article by Michael Cohn

The IRS and the Treasury Department granted a joint filing exception on Oct. 23 for tax-exempt organizations, excusing them from submitting a Form 4626, “Alternative Minimum Tax – Corporations,” for tax year 2023.

Both agencies said tax-exempt organizations, while not required to file, should still maintain a Form 4626 in their records as documented proof of whether or not they are indeed an applicable corporation for purposes of the AMT and if so, for determining any corporate AMT liability. Liable entities will need to pay the tax and record the amount paid on Part II, Line 5 of Form 990-T, “Exempt Organization Business Income Tax Return.”

Read more: Tax-exempt groups don’t need to file corporate AMT form for 2023

The return of PTIN season

Article by Jeff Stimpson

Bloomberg via Getty Images

The expiration date for tax professionals’ Preparer Tax Identification Numbers is close at hand.

Both tax professionals and Enrolled Agents have until Dec. 31 to renew or obtain their PTIN for 2025 at $19.75 for the service. Those who currently have a PTIN will be notified by the IRS’s Return Preparer Office of the deadline in the coming weeks.

Read more: PTIN renewal season kicks off

IRS releases annual inflation adjustments for 2025

Article by Michael Cohn

The IRS issued its annual inflation adjustments on Oct. 22 for the 2025 tax year, featuring increases in standard deductions, tax credits, fringe benefits and more due to inflation.

These modifications are applicable to income tax returns filed in the 2026 tax season for the prior year with the agency’s Revenue Procedure 2024-40 outlining all of the changes to more than 60 tax provisions.

Featured dollar-amount changes that are of express importance to filers include standard deductions. 

For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction climbs to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2024, an increase of $600 from the amount for tax year 2024.

Read more: IRS adjusts tax amounts for inflation for 2025