Key Takeaways
- Shutdowns, turnover bode ill for filing season, per former IRS heads.
- First-time penalty relief to be automatic for 2026, per Taxpayer Advocate.
- Turmoil, tumult may make it hard for IRS to recruit for top positions.
- IRS releases instructions for crypto reporting, farm sale deferral.
- All-in corporate rates around the world.
- Elder scams and taxes.
- Women's Entrepreneurship Day.
Tomorrow! Tune in at 10:30 Central Time for the first installment of Eide Bailly's three-part Tax Update webinar series. We will:
- Explore the Tax Cuts and Jobs Act of 2017 provisions that are extended and their impact on tax planning strategies.
- Specify key provisions of the new legislation and their impact on businesses and individuals.
- Identify key year-end planning considerations for businesses and individuals.
- Examine the year-end reporting requirements for payroll tax and 1099 forms.
Fair warning: I am one of the presenters. This is a paid session, but a bargain at twice the $125 price. Register here.
Ex IRS Commissioners Warn of Filing Season Peril
Shutdown May Stifle Filing Season Timeline, Former IRS Chiefs Say - Benjamin Valdez, Tax Notes ($):
The combination of both a new tax law with several individual tax changes and the lengthy government shutdown has put the IRS in a difficult place ahead of the next filing season, said Douglas O’Donnell of KPMG LLP, a former acting commissioner with a decades-long career at the agency.
“As you all know, there are some provisions in [the One Big Beautiful Bill Act (P.L. 119-21)] that I expect are going to raise taxpayer demand, tax professional demand for IRS help — and it’s going to be very difficult for the service to have worked through this period and be ready for it,” O’Donnell said during a November 18 event hosted by the American Institute of CPAs.
Shutdown Puts '26 Filing Season In Danger, Ex-IRS Chiefs Say - Stephen Cooper, Law360 Tax Authority ($):
Is the IRS just between shutdowns? Former IRS commissioners are worried - Martha Waggoner, The Tax Adviser:
“It would be, I think, disaster to do it again on Jan. 31,” said John Koskinen, the IRS commissioner from 2013–2017 and deputy director of management for the Office of Management and Budget during the three-week partial government shutdown in 1995–1996. “At this point, the support structure is going to be shut down. And it just, I mean, you can’t imagine a worse time to have a shutdown than the end of January.”
Automatic "First Time" Penalty Abatement for '26
IRS to Provide Automatic Penalty Relief Next Filing Season - Erin Slowey, Bloomberg ($):
Typically, the IRS will remove penalties if a taxpayers doesn’t file, pay, or deposit and it’s the first time it’s happened in the last three years. Taxpayers have to opt in.
“It’s about a million taxpayers a year who qualified that don’t receive it, and when we did the financial breakdown, the overwhelming majority were lower income folks,” Collins said Tuesday at an American Institute of CPAs conference.
Elyse Katz, a partner in the Eide Bailly tax controversy team, says that the change would be helpful, but raises concerns about how the IRS will administer it:
For example, the IRS often erroneously assesses late filing penalties. We have to send in proof of timely mailing to reverse the penalty. The IRS might use wrongly use First-time Abatement instead of fixing their mistake. The taxpayer would then be shut out of using FTA for three years.
IRS Dysfunction: "Turmoil" and "Tumult"
Turmoil at Top of Trump’s IRS May Deter Future Legal Candidates - Erin Schilling, Bloomberg ($):
The abrupt reversal came after far-right activist Laura Loomer questioned Korb’s loyalty to the Republican party. Citing reporting and an opinion piece published in Bloomberg Tax, she challenged Korb’s “by-the-book” style and criticism of whistleblowers.
The withdrawal comes after Billy Long, President Donald Trump’s confirmed IRS commissioner, was ousted just two months into his tenure. The removals, combined with historic churn among IRS leaders and rank-and-file workers, make it difficult to predict who would be willing to accept a nomination.
The IRS rollercoaster - Laura Weiss and Brendan Pedersen, Punchbowl News:
Republicans also say they have faith in the leadership of acting commissioner Scott Bessent, the treasury secretary, and CEO Frank Bisignano, who’s also Social Security commissioner. But that isn’t negating all their worries.
“We’re keeping an eye … they’re communicating with us what they’re doing,” House Ways and Means Committee Chair Jason Smith (R-Mo.) said. “But is it a concern that apparently the IRS can’t? Of course that’s a concern. But I have a lot of faith in the CEO of the IRS.”
IRS Function: Crypto Reporting, Farm Sale Deferral Instructions
IRS Releases Instructions for 2026 Crypto Broker Reporting - Mary Kathrine Browne, Tax Notes ($):
,,,
The general instructions remind brokers that for tax year 2026 they are required to report not only gross proceeds, but also basis information for digital assets that are covered securities. Basis information reporting for digital assets that are noncovered securities is still voluntary. However, if a broker chooses to report basis information, they will not be subject to penalties under section 6721 or 6722.
Like-Kind Exchanges Form Instructions Get OBBBA Deferral Update - Trevor Sikes, Tax Notes ($):
Under section 1062, a taxpayer may elect to defer net income tax attributable to the gain on the sale or exchange of qualified farmland to a qualified farmer during the tax year, effective July 5.
ACA Tax Credit Controversy Simmers
Republican Leaders Harden Stance Against ACA Tax Credit - Katie Lobosco, Tax Notes ($):
While some rank-and-file members are working to put together a bipartisan solution to temporarily extend and reform the enhanced premium tax credit, House Majority Leader Steve Scalise, R-La., said that Republicans are eyeing other ideas to bring down healthcare costs, like creating a federally funded health savings account.
Trump Tells Congress Don’t ‘Waste’ Time on Obamacare Credits - Skylar Woodhouse, Bloomberg ($):
Trump said the only health-care plan he would “SUPPORT OR APPROVE” would be “SENDING THE MONEY DIRECTLY BACK TO THE PEOPLE” instead of to insurance companies, in a Truth Social post on Tuesday. He went on to urge lawmakers to “not waste your time and energy on anything else,” casting his proposal as “the only way to have great Healthcare in America.”
All-in Rates
Integrated Tax Rates on Corporate Income in Europe, 2025 - Cristina Enache, Tax Foundation:
In most European countries, corporate income is taxed twice—once at the entity level and once at the shareholder level. Before shareholders pay taxes, the business first faces corporate income tax on its profits. Thus, when shareholders pay their layer of tax, they are doing so on dividends or capital gains distributed from after-tax profits. The integrated tax rate on corporate income reflects both the corporate income tax and the dividends or capital gains tax—the total tax levied on corporate income.
The comparable US rate is 49.61%, per the article.
Related: Eide Bailly International Structuring Services.
Blogs and Bits
Some tax penalties increase in 2026 due to inflation - Kay Bell on Substack:
The penalty for filing late is steeper. The IRS assesses it at 5 percent of any tax due that isn’t paid as of its filing date, usually April 15. Remember, even if you get an extension to file your return as late as Oct. 15, you still must pay any tax due by the April deadline.
Wildfire Victims Only Have Until 12/12/25 To Claim IRS Tax Refunds - Robert Wood, Forbes. "If you received a lawsuit recovery in 2020 or 2021 in connection with a federally declared wildfire and paid taxes on your recovery, you may be entitled to a tax refund if you act quickly."
Challenges with Tip Income Deduction, Particularly for 2025 - Annette Nellen, 21st Century Taxation. "Now you might think, don't tipped workers know how much their tip income is? Well, they might, but do they know what their 'qualified' tip amount was? They are not the same thing!"
How the New Charitable Deduction Floors Work - Andrew Lautz, Bipartisan Policy Center. "Starting in 2026, corporations and individuals who itemize their tax deductions will face new floors on the charitable deduction. C corporations will not be able to deduct charitable contributions equal to the first 1% of taxable income, and itemizers will not be able to deduct the first 0.5% of adjusted gross income (AGI)."
Elder Fraud and Tax Enforcement
Owner of Lake Sammamish restaurant pleads guilty to wire fraud and false tax return related to embezzlement from former elderly customer - IRS (Defendant name omitted, emphasis added):
According to the facts admitted in the plea agreement, Defendant cultivated a friendship with a widow who lived near his restaurant. The widow was elderly and suffering cognitive decline. Defendant arranged for a friend of his to serve as the power of attorney for the victim, with Defendant still having access and control over the victim’s bank accounts. The victim had no surviving family members, and trusted Defendant to assist her with her finances and take care of her bills. Defendant abused his access to her accounts and used her money for his own real estate purchases, gambling, travel, and restaurant operation expenses. He convinced his friend, as power of attorney, to liquidate over $800,000 from the victim’s retirement account to fund the purchase a home for himself in North Carolina by falsely claiming that he was entitled that amount as reimbursement for money that he spent on the victim’s care and for remodeling her home.
The victim ultimately moved into an assisted living facility and passed away in November 2020. Defendant moved into her waterfront home and later inherited her estate.
When Defendant filed his taxes in February 2021, he failed to report the $437,000 he embezzled from the victim’s accounts. That additional income resulted in a tax liability of $124,000 he did not report to the IRS. As part of his plea agreement Defendant will pay the $124,000 to the IRS.
According to AARP, elder fraud is a $28 billion annual problem. $20 billion of that is caregivers, friends, or family. Scams involving elders are often tax related. Tax scam enforcement is an IRS enforcement function, and cutting IRS enforcement funding, or diverting it to non-tax purposes, makes life easier for scammers.
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