Now that the 2024 tax season is over, it’s time for tax pros to start looking forward to 2025. We understand that over the past few months tax preparers have been focused on looking back at the 2023 tax year while preparing returns. However, the past few months have also seen several notable developments that will impact your clients and your practice during the 2024 tax year and beyond. Below is a roundup of recent tax items that tax pros and their clients need to be aware of.

Taxpayers still have time to withdraw unprocessed ERC claims

While the IRS’s program allowing taxpayers to voluntarily disclose that they have received improper employee retention credit (ERCs) funds was suspended in March, taxpayers whose claims have yet to be processed can still withdraw their erroneous claims. Because the IRS does not expect to lift its moratorium on processing new ERC claims until late spring, taxpayers who realized they filed incorrect claims still have time to withdraw their claims.

IRS continues ramping up its ERC enforcement efforts

The IRS has already sent more than 12,000 letters to taxpayers as part of its efforts to recapture improper 2020 ERC claims, and the agency is planning to start sending out letters related to erroneous 2021 claims soon. The IRS noted that, since the 2021 ERC credit amounts were larger than those issued in 2020, taxpayers receiving the letters for 2021 will likely owe more than those who received the 2020 letter. Taxpayers who received improper ERC credits and did not take advantage of the voluntary disclosure program must repay 100% of the fraudulent ERC funds received, plus penalties and interest dating back to the date of payment.

If you don’t have a designation, now is a good time to earn your enrolled agent designation. Learn more at natptax.com/eagoals.

Beneficial ownership reporting rules still in place for most businesses

An Alabama federal judge found the Corporate Transparency Act of 2021 (CTA) to be unconstitutional in March. However, he only barred the Financial Crimes Enforcement Network (FinCEN) from enforcing the beneficial ownership information (BOI) reporting rules included in the legislation against the plaintiffs in the case. This means any entity subject to the reporting requirements that was not a member of the National Small Business Association as of the March 1 decision date will still be subject to the BOI reporting requirements for new businesses that went into effect Jan. 1. The Department of Justice appealed the Alabama ruling, so it could be months before the questions raised by the ruling are resolved.

IRS targeting high earners who are not filing returns

As part of its efforts to increase tax compliance among high-income non-filers, the IRS has launched a compliance effort targeting high-income taxpayers who have not filed a return since 2017. The agency has sent out more than 125,000 compliance letters to non-filing individuals who either had annual earnings of more than $1 million or earned between $400,000 and $1 million between 2017 and 2021. The IRS is recommending that non-filers who receive the letters consult with a tax professional and file their overdue returns to mitigate potential penalties and enforcement actions.

IRS changes to transcript delivery authorizations

The IRS changed its Transcript Delivery System (TDS) to better combat identity theft and protect taxpayer information. Since April 8, tax preparers who want client transcripts deposited into their secure object repository (SOR) must do so by calling the Practitioner Priority Service (PPS). Tax preparers had previously been able to use the IRS’s toll-free lines for the requests.

Additionally, to request that transcripts be deposited into a preparer’s SOR, they must provide authentication and verify their short identification. If a preparer’s identity can’t be verified, the IRS will only mail transcripts to the address of record. Finally, PPS assistors can’t resolve issues with proving an ID.Me identity or the status of an ID.Me account.

Spearphishing attacks against tax pros on the rise

The IRS is warning tax preparers of a surge in spearphishing attacks seeking to gain access to their client and business information. The attacks include “new client” scams where identity thieves pose as new clients seeking help with their taxes to gain access to a tax preparer’s information. Tax preparers are urged to use extra caution when opening emails, clicking on links or sharing client information.

Tax professionals are also being warned of scam emails purporting to be from their software providers, which attempt to steal their electronic filing identification numbers (EFINs).

IRS issues guidance on energy-efficient property rebates

Recently issued IRS guidance has specified that rebates authorized by the Inflation Reduction Act (IRA) of 2022 to purchase energy-efficient property improvements are not income. The language in the IRA caused some confusion because it describes performance-based incentives and electrification product subsidies as “rebates.”

The guidance states that amounts received through Department of Energy (DOE) home energy rebate programs funded under the IRS will be treated as a reduction in the purchase price or cost of the property eligible for upgrades and projects.

Tax relief in disaster situations

Since the beginning of 2024, the IRS has offered individual and business taxpayers in 15 states extensions of time to file their tax returns and make tax payments. Taxpayers in Maine and Rhode Island have been subject to multiple disaster declarations. The IRS maintains a list of disaster situations where taxpayers have received relief.

The IRS has also given taxpayers who live or have businesses in Israel, Gaza, the West Bank and other areas that were affected by the Oct. 7, 2023, terrorist attacks in Israel until Oct. 7 to pay and file most of their taxes due.