The season has begun!
No, not tax season–that opened on January 27, 2025. I’m talking about baseball season. If you’re a regular reader–or you follow me on social media–you know that I love baseball, so of course, I was front and center for Opening Day (my Phillies won in a real nailbiter).I’ve mentioned before that I attribute a lot of my love for baseball to my grandfather. Like many Americans, when my grandfather reached what we would consider “retirement age,” he was still working. In his mid-70s, he would suit up as a security guard and work nights at the local hospital. He was gone a lot.
But on those hot, sticky summer afternoons in coastal North Carolina, when he had a free moment, he and I would sit and watch baseball on the old TV in the family room (for the record, he was a Cubs fan). Those are some of the most special memories of my life, and I’m sure it’s why I love baseball to this day.
I’ll bet you have a similar story–and maybe it’s not baseball. It could be another sport like basketball, football, or, in the case of my girls, ice hockey.
Sports are a little different today, including college sports. Players are now both student athletes and paid athletes, earning potentially significant income from Name, Image, and Likeness. This NIL income has significant tax consequences, and many states are using their tax law to maximize NIL’s effectiveness for their public universities.
One that’s making news right now? Arch Manning (yes, of those Mannings). According to On3 NIL Valuations–the presumptive starting quarterback for the University of Texas next season, has an NIL Valuation of $6.5 million per season. During his recruitment, Manning chose to play at Texas over the University of Alabama and the University of Georgia, the Sporting News reported. While it is likely that Manning considered many factors when choosing Texas, it is possible that tax played a part in his decision.
It’s a certainty that Manning will be a darling of social media, which could also garner him some big bucks–so long as he’s not in Italy. Italian tax authorities are advancing a landmark valued added tax, or VAT case against big tech (VAT is akin to a sales tax, though there are some key differences). Here’s what they’re arguing: When users sign up for a social media platform, they receive a valuable service in exchange for their personal data. Because that exchange involves consideration (you’re paying for a service with personal data, instead of money), it should be subject to VAT. As a result, Italy has reportedly handed Meta a bill for €900 million, with smaller claims lodged against the parent companies of X and LinkedIn. Since VAT is harmonized across the European Union, this isn’t necessarily just a local issue—it is a potential template for taxing tech giants across the community.
Figuring out reporting and tax obligations may be difficult for some U.S. businesses abroad, but in the U.S., they’re getting a break. U.S. businesses no longer have to comply with the beneficial ownership information (BOI) reporting filing requirements of the Corporate Transparency Act (CTA). That’s the result of an interim final rule issued this month by the Trump Administration that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). If finalized, the rule would exempt more than 99% of entities from the reporting requirement Congress passed in 2021.
While the Trump Administration has been busy cutting reporting requirements for corporations, it has also been making a slew of proposed rule changes and personnel cuts at the Social Security Administration (SSA) which could create more of an administrative burden for individuals. Frank Bisignano, President Donald Trump’s nominee to lead Social Security, faced questions about these during his confirmation hearing before the Senate Finance Committee to lead the agency responsible for paying $1.6 trillion a year to 72.5 million beneficiaries, including retirees, the disabled and children who are survivors of covered workers.
One controversial proposal being pushed by the Elon Musk-led Department of Government Efficiency (DOGE) would limit Social Security phone services, forcing Americans signing up for benefits or switching the bank accounts where they receive them, to do it online or in person at a Social Security office. But under questioning, Bisignano described phone service as “a part of meeting beneficiaries where they want to get met.”
Apparently, folks at the SSA took their future boss at his word. A day after the hearing, the agency changed course, committing to continuing phone service for certain beneficiaries. The agency announced that beginning April 14, 2025, individuals applying for Social Security Disability Insurance (SSDI), Medicare, or Supplemental Security Income (SSI) who cannot use a personal my Social Security (online) account can complete their claim entirely over the telephone. Those applying for regular retirement or survivor’s benefits, however, will have to do it online or go to an office, whereas now they can do it by phone.
The Social Security news didn’t stop there. This past week, President Trump signed an Executive Order declaring that the federal government must stop issuing paper checks by September 30 in favor of direct deposit, prepaid cards, or other digital payment options. That includes Social Security benefits, as well as payments from other agencies like tax refunds.
According to the order, using paper checks is expensive and wasteful. And Department of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered compared to an electronic funds transfer (EFT).
(You may remember that last week, I reported that a former U.S. Postal Service employee was found guilty of stealing nearly 100 checks, including tax refund checks, totaling over $1.6 million.)
The new rule also applies to federal government receipts–like paying taxes. Of course, many agencies have been fighting the battle against paper for years. My favorite paper check rule? In 2015, the Federal Reserve announced that it would not accept checks larger than $99,999,999 (luckily, this hasn’t been a problem for me).
Speaking of paying taxes, there are just two weeks left in Tax Season. I imagine that many of you are scrambling to finish up. Not ready? Don’t panic, simply file for an extension–but remember to make a payment with your request since an extension only extends the time to file and not the time to pay.
Enjoy the rest of the tax/baseball/college basketball/your-favorite-season-here season!
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a reader asked:
I just received a retroactive bonus for 2024, but I’ve already filed my taxes. Do I need to amend my tax return?
Congrats on the bonus!
Luckily, you don’t need to do anything for 2024. Your employer must report payments in the year in which they are paid—that’s 2025—even if the payments are attributable to work performed in a previous year. So, you’ll report your bonus on your 2025 tax return even though it’s a bonus for your work in 2024.
That’s true for bonuses, as well as your regular wages. Those hours you worked on December 30 or 31, 2024, for which you were paid in 2025? They also get reported (and taxed) in 2025. This also applies to corrected wages—when your employer pays you to make up for wages that were underpaid in a previous year.
The same rules generally apply to other payments as well, such as Social Security benefits received as a single lump sum in the current year. You typically must include the taxable portion of a lump-sum payment received in the current year in your income for that year, even if the payment covers benefits for an earlier year.
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Statistics, Charts, And Maps (Oh My!)
Stop me if you’ve heard this before: Taxpayers do not appear to be excited about this tax filing season. IRS data from the seventh week of the tax filing season—the week ending March 14, 2025—show that numbers for tax filing and processing of tax returns have dipped again, a trend that hasn’t changed since the season opened on January 27, 2025.
The data shows that the IRS received 70,370,000 individual income tax returns as of March 14, 2025, compared to 71,587,000 as of March 15, 2024. The dip is 1.7%, with taxpayers filing more than one million fewer individual tax returns to date in 2025 as compared to 2024.
Two sets of data points stand out to me. First, the number of e-filed returns prepared by professionals was nearly neck and neck with the number of e-filed returns that were self-prepared. The IRS received 34,467,000 individual income returns e-filed by tax professionals and 34,880,000 self prepared e-filed returns. That’s consistent with predictions—in January, the IRS noted that it expected more than half of all tax returns to be filed this year with the help of a tax professional.
Second, tax refund numbers are up. That’s true not only for the number of tax refunds issued to date (despite the dip in filing) but also the dollar values of tax refunds issued. The average tax refund so far this year is $3,271 (direct deposit numbers are even a little higher: $3,330).
The IRS expects more than 140 million individual tax returns for tax year 2024 to be filed ahead of the April 15 federal deadline.
A Deeper Dive
Changes at the IRS continue to make news. Topping conversations are efforts by the Treasury and the IRS to finalize the reduction-in-force plan. Acting Commissioner Melanie Krause told employees that Treasury hasn’t provided the agency with its RIF plan yet, and there are still discussions regarding the scope and how many employees are going to be cut.
(It’s unclear whether the RIF numbers will include the 7,000 probationary employees who were terminated and reinstated–they’re currently on paid administrative leave.)
Tax professionals–including me–are concerned about the effect that the cuts will have on collections, especially given that the terminations so far have disproportionately affected enforcement personnel like revenue agents and revenue officers.
There are also concerns about leadership. Former Missouri Representative Billy Long has been picked by President Trump to serve as the next IRS Commissioner following the departures of former Commissioner Danny Werfel and former Acting Commissioner Doug O’Donnell. Lawmakers on the Hill are still waiting for all of the final paperwork for Long, and they haven’t scheduled a hearing date yet.
Another concern is the security of taxpayer data. The DOGE team reportedly wants to use IRS information to investigate potential fraud in the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Prior analysis at the Urban Institute focused on improving tax administration shows that even if the IRS did share the data, differences between how taxes and SNAP are administered likely make the data of limited value. Why? They don’t use the same datapoints.
You can hear more about what’s happening at the IRS on the latest edition of the Tax Notes podcast–you can read the transcript here.
Tax Filings And Deadlines
📅 April 1, 2025. Deadline for retirees who turned 73 in 2024 to begin receiving required minimum distributions (RMDs) from IRAs, 401(k)s and other retirement plans. Under a special rule, IRA owners and participants born after December 31, 1950, and who turned 73 in 2024, can delay their first RMD until April 1, 2025. The April 1 deadline is for the first year only–for subsequent years, the distribution is due by December 31. Further, taxpayers receiving their first required distribution for 2024 in 2025 (by April 1) must take their second RMD for 2025 by December 31, 2025.
📅 April 15, 2025. Due date for most taxpayers to file an individual tax return—or apply for an extension.
📅 May 1, 2025. Due date for individuals and businesses in the entire states of Alabama, Georgia, North Carolina, and South Carolina and parts of Florida, Tennessee, and Virginia affected by severe storms and flooding from Hurricane Helene (☆) and Hurricane Milton.
📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel.
📅 October 15, 2025. Due date for individuals and businesses affected by wildfires and straight-line winds in southern California that began on January 7, 2025. Currently, individuals and households that reside or have a business in Los Angeles County qualify for tax relief.
Tax Conferences And Events
📅 May 8-10, 2025. American Bar Association Section of Tax May Meeting. Marriott Marquis Washington, DC. Registration required.
📅 May 13-14, 2025. National Association of Enrolled Agents 2025 Capitol Hill Fly-In, Washington, DC. Registration required (NAEA members only).
📅 June 16-19, 2025. Latino Tax Fest. MGM Grand Hotel & Casino, Las Vegas, Nevada. Registration required.
📅 July 18-19, 2025. Tax Retreat “Anti Conference”. Denver, Colorado. Registration TBA.
📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025, Caesars Palace, Las Vegas, Nevada. Registration required.
Trivia
All this talk about Social Security benefits made me wonder: Who was Social Security’s first beneficiary?
(A) Ernest Ackerman
(B) Fred Happel
(C) Grace Dorothy Owen
(D) John David Sweeney
Find the answer at the bottom of this newsletter.
Positions And Guidance
The American Institute of CPAs (AICPA) submitted a letter to the Treasury and the IRS responding to proposed regulations related to automatic enrollment requirements authorized under SECURE 2.0. The SECURE 2.0 Act generally requires newly established 401(k) and 403(b) plans to automatically enroll eligible employees starting with the 2025 plan year. Unless an employee opts out, these plans must automatically enroll employees at an initial contribution rate of at least 3% of their pay, increasing that rate by 1% each year until it reaches at least 10% of the employee’s pay (exceptions apply to new and small businesses, church plans, and governmental plans).
The IRS has published Internal Revenue Bulletins 2025-13 and 2025-14.
Noteworthy
In an op-ed for Bloomberg Tax, former IRS Commissioner Danny Werfel explains how the IRS has, over the years, given some of its employees access to taxpayer data but notes that it was rare for anyone at the IRS to have access to all the data. Werfel says that if he, as the former IRS commissioner, had requested access to all the data in the IRS systems, “the agency’s data security team would rightfully say “no.” I would have no compelling need, and there was no legal basis for me to demand it.” That’s why DOGE requests to access all data should be met with questions.
The 50th anniversary of the Earned Income Tax Credit (EITC) is Saturday, March 29, 2025. The EITC was signed into law by President Gerald Ford on March 29, 1975. What began as a modest means of providing financial support to working families has evolved, through a series of legislative changes, into one of the federal government’s largest anti-poverty programs. As of December 2024, approximately 23 million workers and families received about $64 billion from the EITC. The EITC continues to provide financial assistance to low- to moderate-income working families and individuals. Taxpayers can use the EITC Assistant on IRS.gov to determine their eligibility.
Oregon recently celebrated registering more than 100,000 electric vehicles. But the move towards more fuel-efficient cars has resulted in a dip in tax revenues since electric vehicles (about 5% of the cars registered in Oregon in the past decade) aren’t subject to the gas tax, causing state officials to consider what to do. Policymakers and tax pundits across the country are thinking about alternatives–including a kilowatt tax.
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In Case You Missed It
Here’s what readers clicked through most often in the newsletter last week:
You can find the entire newsletter here.
Trivia Answer
The answer is (A) Ernest Ackerman.
In 1937, a retired Cleveland motorman named Ernest Ackerman became Social Security’s first beneficiary. A nickel was withheld from his wages for the one day he worked under the new program. In return, he received a one-time, lump-sum retirement payment of 17 cents—not a bad return.
The other choices happen to be real people with a connection to Social Security.
Fred Happel of Albany, N.Y., designed the original Social Security card in 1936 and was paid $60 for his work.
Grace Dorothy Owen of Concord, N.H., applied for her Social Security number on November 24, 1936. She received the lowest Social Security number: 001-01-0001. The lowest area numbers were assigned to New Hampshire. This was apparently done so that SSN 001-01-0001 could be given to the Social Security Board Chairman and three-time Governor of New Hampshire, John G. Winant. However, Winant declined. That meant that the first applicant from New Hampshire, Grace D. Owen, who applied for her number on November 24, 1936, was issued the card with the lowest possible number.
Owen wasn’t, however, the first person to receive a Social Security number. That was John David Sweeney of New Rochelle, N.Y., who received the first Social Security number, 055-09-0001, on December 1, 1936. Sweeney died of a heart attack in 1974 at the age of 61 without ever receiving any benefits from the program; however, his widow was able to receive benefits based on his work until she died in 1982.
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