Reining in the ERC, and other major developments at the IRS

Since the introduction of the Inflation Reduction Act more than two years ago, the Internal Revenue Service has been hard at work putting the increased funding towards a range of initiatives, including improving services like its Business Tax Account and other programs. As the pace of new guidance and regulations increases, tax professionals are keeping a close watch on what’s coming next.

Legislation like the IRA has combined with growing consumer interest in digital assets, pandemic relief measures and other market factors into a force driving the IRS to issue fresh guidance. This regulatory clarity helped erase some of the uncertainty regarding increased compliance burdens.

Tom O’Saben, director of tax content & government relations at the National Association of Tax Professionals, said the IRS’s quickened pace this year has highlighted the importance of staying current with filing standards.

“Clients rely on tax professionals to navigate complex, ever-changing tax laws,” O’Saben said. “Staying updated with IRS guidance is essential for ensuring that tax returns are accurate and compliant with the latest regulations. Tax professionals must know new rules, interpretations and deadlines to avoid errors and penalties.”

The upcoming presidential election has brought its fair share of challenges as well.

Practitioners have been looking for ways to gauge what each administration could yield for the tax landscape, and are closely scrutinizing the past efforts of both Kamala Harris and Donald Trump to see how they’ve addressed issues in the past. This lens extends to both candidates’ running mates as well.

With the Tax Cuts and Jobs Act, taxes on tips, clean-energy tax credits and more all hanging in the balance, the future is still uncertain.

“Based on what I have heard [and] read about ‘Project 2025,’ a new administration would want to replace experienced government personnel with people whose primary responsibility would be to the chief executive, regardless of their background, training and experience,” said Neil Fishman, former president of the National Conference of CPA Practitioners and owner of Fishman Associates CPAs.

Others, like Stephen Mankowski, owner of the Pennsylvania-based accounting firm Mankowski Associates CPA, and current co-chair of the National Tax Policy Committee at NCCPAP, feel that the fate of the IRS’ path forward rests not with the White House but with Congress.

“Regardless of the administration, we can only hope that Congress ensures adequate funding for the IRS to modernize their systems and continue to enhance the overall taxpayer experience. … It is with these changes where the IRS can have the biggest impact on taxpayers and tax professionals,” Mankowski said.

Read on to find out more about the latest guidance and procedure changes out of the IRS and what they mean for the industry at large.