It feels like just yesterday we were getting our tax heads around the latest changes, and already, the IRS is signaling more shifts for 2026. For those of us keeping a close eye on tax news, it’s a constant dance of adaptation. This year, there's a significant proposal to scrap the basis-shifting Transaction of Interest (TOI) reporting regulations from January 2025. If this goes through, it's essentially a reset, treating those rules as if they never happened. That’s a big deal for certain financial transactions.
Speaking of evolving schemes, the IRS has added a new item to its notorious "Dirty Dozen" list for 2026: a capital gains scheme. Apparently, a surge in fabricated Form 2439 filings prompted this addition, a stark reminder of how quickly tax fraud can morph. It’s a good nudge to be extra vigilant and ensure everything you're filing is legitimate.
On the digital asset front, there’s a proposal to ease the delivery of 1099-DA statements. The idea is to move towards electronic-only delivery, loosening consent requirements for brokers. This could streamline things, but it’s worth noting how quickly digital assets are becoming a focus for reporting.
For those driving for work or just keeping track of vehicle expenses, good news: the IRS has issued higher depreciation limits for passenger automobiles for 2026, including those benefiting from bonus depreciation. It’s a detail that can make a difference for many businesses.
We're also seeing a new Schedule 1-A, which will cover tips, overtime, car loans, and senior deductions. While the schedule itself isn't new from last year's draft, the instructions for Form 1040 are expected to flesh out the details and provide examples for these four temporary deductions. It’s always helpful when the IRS clarifies how these specific provisions work.
There’s also movement on the legislative front. A Senate bill is targeting tax preparers who break the law and aims to expand IRS reforms. The AICPA is supporting this Taxpayer Assistance and Service Act, though they’re also looking for further improvements. It highlights the ongoing effort to ensure integrity in tax preparation.
Interestingly, the AICPA has also suggested that the IRS should automatically open Trump accounts for eligible children. Their reasoning is sound: it would promote equitable access, reduce barriers, and strengthen the program's intended reach. It’s a thoughtful proposal aimed at making sure benefits get to those who need them.
In other news, a GAO report indicates that tax professionals played a key role in shaping the IRS's response to Employee Retention Credit (ERC) issues. The report also offers recommendations for the IRS to wrap up the pandemic-era credit.
For those planning for retirement, the IRS has announced an anticipated applicability date for future final Required Minimum Distribution (RMD) regulations. The good news is that these final regulations are expected to apply for distribution calendar years beginning no earlier than six months after they are published in the Federal Register. This gives folks a bit more breathing room.
And in a fascinating shift, a recent survey suggests that AI is losing ground to human tax professionals. Taxpayers are rethinking who should handle their taxes, with trust in AI for filing slipping across all generations. It seems that when it comes to something as important as taxes, the human touch still holds significant value.
There are also requests for guidance on Sec. 174A(c) capitalization and amortization of R&E, with the AICPA suggesting modifications to existing revenue procedures. On the documentation front, the AICPA is urging Treasury and the IRS to simplify Sec. 951 documentation rules, calling the current "determine and document" requirement ambiguous and potentially onerous.
Businesses are also making their voices heard, with over 100 associations asking Treasury to destroy Beneficial Ownership Information (BOI) data and finalize an exemption for U.S. companies from BOI reporting. This is a significant pushback on data collection.
Amidst all these policy discussions, there's the practical reality of government operations. Treasury has posted a contingency plan indicating the IRS will remain fully staffed for the first five days of a potential shutdown. However, separate reports from oversight bodies are raising red flags about IRS service levels due to new laws and workforce cuts, warning of potential delays in refunds and response times.
On a more positive note for retirement savers, the deadline for SECURE 2.0 related amendments to IRAs, SEPs, and SIMPLE IRAs has been extended to December 31, 2027. This gives everyone more time to get those amendments in order.
Finally, the IRS has released FAQs on the qualified overtime pay deduction under H.R. 1, clarifying how it applies and how Fair Labor Standards Act rules factor in. And in its annual report, the IRS Advisory Council defended IRS workers while criticizing budget and staff cuts, noting the agency has faced an "extraordinarily difficult year."
