The lights are on in D.C.. With a deadline looming to avert a government shutdown at midnight, Congress reached an agreement on spending for the rest of the year–that’s after Senator Chuck Schumer (D-N.Y.) voted on a procedure to advance a spending vote.
The Senate vote follows an earlier vote in the House (☆) to fund the government through September 30, 2025. The final House vote was 217 to 213, with only one Republican, Thomas Massie of Kentucky, voting no and one Democrat, Jared Golden of Maine, voting yes. You can see how your Representative voted here.
The Congressional Budget Office (CBO) estimates the bill will cost $1.6 trillion—that breaks down into $893 billion for defense and $708 billion for nondefense spending.
The continuing resolution, or CR, largely mirrors the previous year’s funding measures while increasing military spending by $6 billion and cutting $13 billion in nondefense spending. It also includes a boost in Immigration and Customs Enforcement (ICE) deportation operations and claws back $20.2 billion of IRS funding (this is in addition to earlier cuts).
Cuts to the IRS’ budget weren’t the only issue for the tax agency this week. Weeks after the acting IRS Commissioner departed, another high-profile staffer is leaving. Acting chief counsel William Paul has been removed (☆) and is expected to be replaced by Andrew De Mello.
Paul was reportedly demoted because he refused to cooperate with Elon Musk’s Department of Government Efficiency, as DOGE representatives allegedly sought to share taxpayer information with other federal agencies.
The Chief Counsel, a position that dates back to 1866, is the chief legal advisor to the IRS Commissioner on all matters related to the interpretation, administration, and enforcement of tax laws and other legal issues. Attorneys in the Chief Counsel’s Office serve as lawyers for the IRS. They provide the IRS and taxpayers with guidance on interpreting Federal tax laws correctly and represent the IRS in litigation. Before recent personnel cuts, the Chief Counsel organization had approximately 2,600 employees.
Other IRS cuts are still in the news. To date, approximately 7,000 probationary employees in the IRS have been fired. While probationary employees are often recent hires (meaning within the last one to two years), they don’t have to be—those who have been serving for years but were recently moved or promoted into a new position also qualify as probationary.
This week, however, a U.S. District judge in California called the terminations of probationary employees unlawful and ordered their reinstatement. The order impacts all fired probationary employees from six federal agencies, including the U.S. Treasury, the home of the IRS.
That relief for IRS employees may be shortlived, as reports suggest that the IRS will make additional dramatic cuts to its workforce. The exact numbers (estimates are between 20% and 50%) and the timing of those cuts have not been confirmed.
Even as cuts are happening, tax season is rolling on. IRS data from the fifth week of the tax filing season—the week ending February 28, 2025—continues to suggest that taxpayers are not excited about filing this tax season. Numbers for tax filing and processing of tax returns remain low (☆), a mark that has not changed throughout the filing season.
While the IRS may be slowing down, the Treasury’s Financial Crimes Enforcement Network (FinCEN) may become busier. The Trump administration is seeking more information (☆) about financial transactions for those who live or do business in one of 30 ZIP codes. Beginning in April, FinCEN will require money service businesses (MSBs) in those ZIP codes to report those Americans who spend more than $200 in cash or cash equivalent on items like money orders and traveler’s checks. That’s a dramatic expansion of the standard $10,000 cash reporting. The MSB designation includes businesses like check cashing services, sellers of traveler’s checks or money orders, and money transmitters.
The increased reporting rule is in sharp contrast to efforts to eliminate other reporting requirements. The House of Representatives has voted to repeal (☆) a Biden-era rule focused on decentralized finance—or DeFi. The bill reverses the “DeFi Broker Rule” published by the Treasury in December 2024. The rule created reporting requirements for trading front-end service providers that work directly with users on digital asset transactions.
DeFi refers to peer-to-peer financial services on the blockchain. In simple terms, it’s crypto and digital currency without banks, financial service companies, or other middlemen. DeFi brokers are a little more challenging to define, as stakeholders pointed out after the final regulations were made public. Notably, DeFi Brokers are decentralized (it’s right there in the name) and, as such, do not collect the information from users that would be needed to comply with the rule.
The vote now moves to the Senate, which voted earlier to overturn the rule (procedurally, however, the vote has to happen again to line up with the House).
As you can tell, there’s a lot happening in tax and budget news right now. We’re doing our best to sort out fact from speculation as we aim to keep you informed.
I know it can be a bit overwhelming, too–having so much happen during tax season keeps taxpayers and tax professionals on edge. I hope that you’ll take a break—go on a long walk, enjoy a Guinness and some corned beef and cabbage, or do a little early spring gardening.
In next week’s newsletter, look out for tips on how to keep your cool as tax season wraps up. Before then, I’d love to hear from you–drop me a line to let me know how you’re handling the pressure.
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a reader asked:
“My refund is late. When I checked my transcript, there was a code 570. Am I being audited?”
I encourage taxpayers to take advantage of their IRS online account, including taking a peek at their transcript when appropriate. That said, while IRS transcripts can be helpful, they can also be complicated if you’re not sure what you’re looking at. That includes transcript codes (TC) on your account.
One of those codes is TC 570, which is a catch-all. It simply means that there is a delay in processing your return. You’ll note that it’s typically accompanied by “additional account action pending.”
The code TC 570 doesn’t necessarily mean that you did anything wrong. Importantly, you don’t need to do anything further until you hear from the IRS (there’s no need to call and spend time on hold, for example).
The IRS may send you a letter asking for more information—this is often when testing indicates that there might be fraud on the account. When that happens, the account is flagged, and the IRS stops processing your tax return. They’ll usually send you a letter with information and instructions. If identity theft is suspected, you’ll typically receive a Letter 5071C asking you to verify your identity (here’s how to respond).
TC 570 could also be triggered for other reasons, like questions about credits that you claimed or income that you reported. If that is the cause, expect a letter asking for more information.
If you receive a letter from the IRS, it’s important to respond promptly. If you don’t, your tax refund will be delayed.
Once the IRS has resolved the issue, you may see TC 571—that’s the thumbs up. If you see TC 846 after that, the IRS has finally issued your refund.
With that, I don’t recommend using the transcript tool to check on your refund.
The Where’s My Refund? tool on IRS.gov (or through the app) remains the best way to check the status of a refund. Refund status information is typically available within 24 hours after the IRS receives your e-filed tax return for the current tax year or four weeks after mailing your paper return.
The IRS only updates the tool once a day, usually overnight.
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Do you have a tax question or matter that you think we should cover in the next newsletter? We’d love to help if we can. Check out our guidelines and submit a question here.
Statistics, Charts, And Maps (Oh My!)
The IRS may have your money. The tax agency says that more than $1 billion in outstanding refunds remain unclaimed from the 2021 tax year. The agency estimates that more than 1.1 million taxpayers might have qualified for a refund but did not file a federal income tax return to claim it.
If you are due a refund, typically, you must file a federal income tax return to get your money. Taxpayers usually have three years to file and claim their tax refunds—if you don’t file within three years, the money becomes the property of the U.S. Treasury. The three-year window for filing your 2021 tax return would close on April 15, 2025.
The IRS estimated how many people in each state may be entitled to a tax refund. You can take a peek here:
If you live in one of the states bolded in green (New York, Pennsylvania, Rhode Island, Massachusetts, and Illinois), you’re in luck—those states are expected to have the highest median potential refund. California, Idaho, New Jersey, Minnesota, and Montana taxpayers are expected to have the lowest refunds.
Not surprisingly, taxpayers in the most populated states are missing out the most. More than 100,000 taxpayers in each of California and Texas may be entitled to a refund, followed by New York, Florida, and Pennsylvania. Taxpayers in less populated states may be missing out, too, with thousands of taxpayers in Wyoming, North Dakota, Vermont, South Dakota, and the District of Columbia also reporting potentially unclaimed refunds.
A Deeper Dive
The markets may be down, but the price of gold is up. Over the past five years, the price of gold increased by more than 78%, with each bar of gold bullion costing more than $1 million. Does that make the precious metal a good choice for your IRA?
The tax code allows certain precious metals to be invested in an IRA under section 408(m)(3). To qualify, gold must meet specific purity standards, with bullion bars and coins typically needing to be at least 99.5% pure.
There are other rules (this is tax law, after all). For example, the gold must be stored in an IRS-approved depository (personal storage of the gold, such as at home or in a safe, is prohibited). And, not all gold products qualify (collectible coins are usually not permitted).
If you do not want to have physical ownership of bullion, your IRA can buy shares of an exchange-traded fund (ETF) that follows the value of a precious metal–that’s according to Private Letter Ruling (PLR) 20073202.
The bottom line? You can invest in some nontraditional assets, like precious metals or ETFs, in your IRA. Another option is to invest in gold mining companies.
(Last week, I answered a reader question about buying penny stocks for your Roth IRA–you can find that question–and my answer–here. And, for more IRA and retirement account information, don’t forget to check the Tax Filings and Deadlines below.)
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).
📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025, Caesars Palace, Las Vegas. Registration required.
Trivia
The IRS expects to receive more than 140 million individual tax returns for tax year 2024 by the April 15 deadline. In the first year of the modern federal income tax system–those tax returns received in 1914–approximately how many returns did the IRS receive?
(A) 350,000
(B) 750,000
(C) 1,500,000
(D) 3,000,000
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS has published Internal Revenue Bulletin 2025-12.
A task force of the American Institute of CPAs’ Professional Ethics Executive Committee (PEEC) has posted a discussion memo on potential revisions to independence rules related to alternative practice structures, changes necessary because of the increasing prevalence of private equity investment in accounting firms. The committee’s Alternative Practice Structures Task Force will seek comment through June 15 on the memo’s preliminary conclusions and two interpretation options.
Noteworthy
Akin announced that Mary Alexander has joined the firm as a tax partner in its Washington, D.C. office, deepening the firm’s tax equity and tax credit transfer experience in the renewable energy and energy transition space. Alexander’s practice focuses on the federal income tax aspects of energy transition transactions, including renewable energy, carbon capture, biogas property, and electric vehicles.
Hinshaw & Culbertson LLP announced that Anshuman Vaidya has joined the firm’s Government Practice Group as a partner in the Chicago office. Formerly serving in the U.S. Department of the Treasury as Area Counsel (Criminal Tax) and Deputy Managing Counsel of the Office of IRS Chief Counsel in Chicago, Vaidya has two decades of litigation and government enforcement experience with federal, state, and local agencies.
A post-election boost in business executives’ optimism about the U.S. economy has moderated, declining from a more than three-year high of 67% last quarter to 47% this quarter, the American Institute of CPAs (AICPA) and Chartered Institute of Management Accountants (CIMA) Economic Outlook Survey found. The shift reflects growing concerns about inflation and tariffs, according to the survey, which polls chief executive officers, chief financial officers, controllers, and other certified public accountants in U.S. companies who hold executive and senior management accounting roles.
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In Case You Missed It
Here’s what readers clicked through most often in last week’s newsletter:
You can find the entire newsletter here.
Trivia Answer
The answer is (A) 350,000.
By 1945, IRS was processing 50,000,000 individual tax returns annually. In 2024, the IRS received 139,137,000 individual tax returns by Tax Day–and 163,473,000 by year-end.
Feedback
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