The big news this week was the stock market. U.S. stocks tumbled as traders grappled with the consequences of President Donald Trump’s tariffs. The S&P 500—a stock market index tracking the stock performance of 500 leading companies in the U.S.—which hit a record high on February 19, dropped quickly on Tuesday, the second-fastest such drop in history (lagging only behind the drop due to Covid). Stocks powered back after Trump announced a 90-day reprieve on most tariffs but dropped again. By the end of the week, investors felt like they had motion sickness after one of the most volatile periods on record for Wall Street.
Losing money inside your brokerage or retirement account may hurt—but it doesn’t necessarily mean a loss for federal tax purposes. Markets go up and down—it’s the nature of the beast. When the market goes down, that doesn’t equal an actual or realized loss for tax purposes. Similarly, when the market goes back up, that doesn’t equal a real or realized gain for tax purposes.
For tax purposes, gains and losses aren’t determined moment to moment or from those highs and lows, but how much your cost basis has gone up or down from when you acquired the asset to the disposition of the asset. To realize a gain or a loss for tax purposes, you must do something with the asset. Typically, that means that you sell it or otherwise dispose of it.
(The tax rules can be more complicated for day traders.)
Things were equally as hectic at the IRS. A Treasury announcement confirmed that Melanie Krause, the acting commissioner of the IRS, was leaving her position. The announcement followed the news that the tax agency agreed to share immigrant tax data with Immigration and Customs Enforcement (ICE). Under the agreement, the IRS will verify the names and addresses of immigrants provided on tax records to ICE. It’s unclear what other information may be provided by the IRS. However, an initial lawsuit suggests it could include information about dependents and other personal information.
Krause stepped in as acting commissioner in early March following the retirement announcement of Doug O’Donnell. O’Donnell had served in the role for just a few short weeks following former IRS Commissioner Danny Werfel’s departure on January 20, 2025 (one week before the tax season officially kicked off). O’Donnell’s departure on February 28 marked a remarkable 39-day span of rotating commissioners. Krause becomes the fourth commissioner or acting commissioner to leave the agency in less than 80 days.
The IRS is also bracing for more cuts in its workforce. Thousands of agency employees are expected to receive pink slips in mid-May, about a month after Tax Day, April 15. About 11,000 cuts are predicted, bringing the total loss of employees in the first half of 2025 to 20,000.
With a few days left before Tax Day, cracks are showing at the IRS. Millions of taxpayers are expected to file their federal income tax returns by the end of the day on April 15, 2025, with millions more expected to file for an extension. It’s not the ideal time for mistakes to appear on the IRS website, but that’s precisely what is happening. Potentially confusing errors are popping up on the site, including one that impacts taxpayers filing for an extension.
Specifically, the extension payment date for taxpayers who log into the IRS website is incorrect. While payment should be made by April 15, 2025, taxpayers who log in to pay see an April 22, 2025, due date. The site says, “Your payment is due on April 22, 2025, regradless of filing for an extension.” (Yes, the ‘regradless’ typo is on the IRS site, too).
Multiple other errors appear on the site, including misidentifying the amended tax form as Form 104X (it’s Form 1040X) that was recently “filled” instead of “filed.” The mistakes prompted Wendy Marsden, a CPA and author, to quip on BlueSky, “This is feeling like the website is spoofed and your payments will go straight to Russia.” It would be funny if it weren’t true.
The timing raised eyebrows so close to Tax Day. It’s not clear when the changes were made—so far, there’s been no answer. However, on Wednesday, Elon Musk tweeted on X (formerly Twitter) that the Department of Government Efficiency (DOGE) had made a fix to the IRS website.
Multiple tax professionals and some groups have reached out to the IRS. The IRS confirmed that it was investigating.
As we look ahead to next week, here’s hoping it’s not quite so exciting. Don’t forget to file your return—or request an extension—by April 15, 2025. Check back with Forbes early next week for a list of deals and specials to make the day a little less taxing. (I’ll see myself out.)
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a taxpayer asked:
I can’t pay my taxes in full. Can I pay with a credit card?
You can definitely pay your taxes with a credit card—either online or over the phone.
But should you? That’s more complicated.
I’m generally not a fan of replacing one kind of debt with another. But if your ability to pay is a timing issue—as opposed to an “I absolutely don’t have it at all” issue—it can make sense to use a credit card to pay off your tax debt. The IRS accepts all major credit cards (American Express, Discover, MasterCard, or Visa). To make a payment, head over to the credit card payment page on the IRS website and choose one of the payment processors to pay online or by phone (if you’re paying by credit card and using e-file, your options are here).
The IRS doesn’t charge a fee for credit card payments. However, third-party credit and debit card providers may charge a fee, which may vary by provider, card type, and payment amount. Applicable fees for credit cards range from 1.75% to 2.95% (minimum fees apply)—that’s in addition to any fees or interest that your bank may charge.
High-dollar payments—those over $1,000,000—must be coordinated with the service provider (you may also need a new tax preparer, just saying).
Paying by credit card is a good option if you know you can pay the bill off eventually. Plus, you might earn miles or points to help you book a trip to somewhere amazing to lessen the pain of paying your taxes. That’s the plus side. On the not-so-plus side, credit card interest and other fees can add up, so if you know you won’t be able to pay off the balance, consider other options, like an installment agreement with the IRS. An installment agreement lets you pay what you owe over time. Depending on how much you owe, you won’t even have to speak with a real person—if you owe $50,000 or less in combined individual income tax, penalties, and interest, you can apply for an installment agreement online. (If you don’t qualify for an online installment agreement or if you want to apply for an installment agreement by mail, use Form 9465.) Fees apply. Keep in mind that it’s cheaper if you sign up online and even less expensive if you agree to pay by direct debit.
Other options may be available, too. If you are insolvent or unable to pay due to circumstances beyond your control, the IRS will work with you. Give them a call at 1.800.829.1040 or use the phone number on any notice that you might have received in the mail.
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Statistics, Charts, And Maps (Oh My!)
IRS numbers from the tenth week of the tax filing season—the week ending April 4, 2025—suggest that taxpayers are finally ready to file their tax returns.
The data shows that the IRS received 101,422,000 individual income tax returns as of April 4, 2025, compared to 101,849,000 as of April 5, 2024. The dip is just .4%, with 427,000 fewer individual tax returns filed to date in 2025 compared to 2024.
Most of those returns were e-filed. In 2025, the IRS received 98,184,000 e-filed returns, compared to 98,421,000 in 2024. That’s a drop of .2%. Of those, the IRS reported that it received 53,392,000 individual income returns e-filed by tax professionals and 44,792,000 self-prepared e-filed returns.
Most tax professionals will e-file your return—not only are some required to e-file (a 2010 requires specified tax return preparers to e-file certain federal income tax returns), the IRS says that e-filing is more secure and more likely to be accurate. As National Taxpayer Advocate Erin Collins put it when recommending e-filing: “Paper is the IRS’ kryptonite.”
While a few weeks ago, the number of e-filed returns prepared by professionals was nearly neck and neck with the number of self-prepared e-filed returns, tax professionals now have the edge. Taxpayers with simple returns often e-file early, while those taxpayers with more complicated returns tend to rely on their tax professionals to file.
The IRS began the e-file program in 1986 as a pilot project in three cities: Cincinnati (Ohio), Phoenix (Arizona), and Raleigh-Durham (N.C.). That year, there were 25,000 tax returns filed electronically. Last year, the IRS received 151,781,000 e-filed individual returns.
A Deeper Dive
Admit it: You haven’t heard about tariffs this much since freshman U.S. history. But with tariffs on again/off again this week, it’s all that many business owners were talking about.
(You can find a quick primer on tariffs here.)
One of the motivations behind the tariffs is revenue. Peter Navarro, a senior White House trade official, projected that tariffs announced since January would generate about $6 trillion to $7 trillion over 10 years. That would generate enough revenue to fund an extension of the 2017 Tax Cuts and Jobs Act and some of Trump’s campaign promises, such as tax-free tips, overtime, and Social Security benefits. However, according to a new Tax Policy Center estimate, the tariffs will generate far less tax revenue than the administration claims. TPC estimates Trump’s taxes on imported goods would raise about $3.3 trillion from 2026 to 2035, plus an additional $190 billion for the remainder of 2025, roughly half of Navarro’s prediction.
Of course, that was before the pause. That–and raising import taxes on Chinese goods–would cut in half the amount of revenue Trump’s April 2 levies could increase, according to a new TPC analysis. TPC found Trump’s latest plan would raise about $1.7 trillion for the 10 years from 2026 through 2035, plus an additional $125 billion for the remainder of 2025. The analysis assumed that Trump’s latest tariff policy would be permanent, although he said his newly announced delay would last only 90 days. It also assumed the President would eliminate his “reciprocal” import taxes but continue his 10% tariff on worldwide trade and maintain higher tariffs on many goods from Canada and Mexico and on products such as steel, aluminum, and autos and auto parts and raise tariffs on Chinese goods to 145%.
Trump has suggested that the tariff revenue could replace income tax revenue. Earlier this year, he mused that the IRS could be replaced by the External Revenue Service, a new government agency that could be established to oversee the collection of tariff revenue. While abolishing the IRS and eliminating income taxes may sound good to some taxpayers, the practicality of fully replacing tax revenue with tariff revenue is very complex.
And while most of the current tariffs–and revenue raisers–are focused on China, tariffs targeted to Canada have raised eyebrows. Trump has suggested that there’s an easy fix, writing on Truth Social, “The only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear.”
Those comments have rankled Canadian politicians, including Canada’s new prime minister, Mark Carney, who said, “The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over. It’s clear the US is no longer a reliable partner.”
And while it’s easy to dismiss the back and forth as political grandstanding, this isn’t the first time Americans have weaponized tariffs. In the late 19th century, President Benjamin Harrison’s secretary of state, James G. Blaine, had a plan: By saddling Canadian imports with heavy new tariffs, the United States could force Canada to seek American statehood. Will history repeat itself? (Spoiler alert: The 1890 tariffs didn’t result in Canada becoming what would have been, at the time, the 45th state.)
Tax Filings And Deadlines
📅 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.
📅 June 16, 2025. Due date for individuals living and working abroad to file their 2024 federal income tax return and pay any tax due.
📅 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
Who released an album titled “The IRS Tapes: Who’ll Buy My Memories?” to help pay off his tax debts?
(A) Chuck Berry
(B) Johnny Cash
(C) Willie Nelson
(D) Prince
Find the answer at the bottom of this newsletter.
Positions And Guidance
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—you have until April 15, 2025, to file and claim your money.
The IRS reminds self-employed individuals, retirees, investors, businesses, and corporations that April 15 is the deadline for first-quarter estimated tax payments for the 2025 tax year.
In a letter to Senate Majority Leader John Thune (R-SD) and Senator Catherine Cortez Masto (D-NV), the American Institute of CPAs (AICPA) commended the leadership of these two Senators on behalf of American businesses and employees through the introduction of the bipartisan Mobile Workforce State Income Tax Simplification Act of 2025. This bill provides uniformity for nonresident state and local income tax withholding and a reasonable de minimis exception from assessing state and local income tax in a jurisdiction where an employee does not reside.
The IRS has published Internal Revenue Bulletins 2025-15 and 2025-16.
Noteworthy
Law firm Sullivan & Worcester announced that Cameron N. Cosby has joined the firm’s REITs and tax practices as a partner in the Washington, D.C., office. Previously with Fried Frank, Cosby brings over 35 years of experience with tax aspects related to real estate investment trusts (REITs), partnership transactions, and mergers and acquisitions.
Remember last week when I wrote that Italy believed they could tax social media? Lawmakers in Minnesota think so, too. Key Minnesota Democrats on legislative tax committees want popular social media platforms to pay tax on the use of consumer data. Under the bill, large companies with more than one million users in the Gopher State would pay $165,000 per month plus $0.50 per person on the sites, while those with fewer than 100,000 users would not pay any tax (those in between would have varied rates). Facebook, owned by Meta, is considered to be the largest social media platform in the world—with over 3.049 billion monthly active users globally. YouTube is the second most used social media platform, with around 2.49 billion monthly active users.
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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 (C) Willie Nelson.
In the 1980s, Nelson was hit with a staggering $16.7 million tax bill, thanks to his involvement in tax shelters. It was one of the largest individual federal income tax bills ever generated by the IRS at the time. The debt was negotiated to a mere $6 million by Nelson’s lawyer, but Nelson still didn’t have the money to pay.
On November 9, 1990, the feds raided Nelson’s home, taking everything he owned except Trigger, Nelson’s favorite guitar, which he had his daughter, Lana, take out of his home in anticipation of the raid. “As long as I got my guitar,” Willie Nelson said, “I’ll be fine.”
The IRS auctioned off some of Nelson’s belongings but didn’t dent Nelson’s bill. So, the two sides reached a rather unusual compromise: Nelson would release a compilation album and would share the proceeds with the IRS. The album, “The IRS Tapes: Who’ll Buy My Memories?,” was entirely written by Nelson and performed using—what else?—Nelson’s trusty guitar, Trigger. It was the first (and maybe only) record album ever released under a strict revenue-sharing agreement with the IRS. The album, which could be purchased by dialing (800) IRS-TAPE, retailed for $19.95.
The IRS only collected $3.6 million from the sales of the album. However, by that time, Nelson had settled his lawsuit with Price Waterhouse (whom he had blamed for his tax woes in the first place), and with other projects in the works, Nelson paid off his debt.
An IRS spokesperson said about the deal at the time, “We try to work with taxpayers… And if we have to come up with some creative payment plan, that’s what we’re going to do because it’s in everyone’s best interest.”
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