irs

The Big Tax Update You Haven’t Heard About

Recently, I was catching up on tax updates in the latest issue of Accounting Today, and I came across an article that stopped me in my tracks. Have you all heard about the Internal Revenue Service Math and Taxpayer Help Act (IRS MATH Act, or H.R.998)?

In the midst of the confusion that happened with the federal government shutdown (which I’ve already written about here and here), this bill was quietly passed by Congress and sent to President Trump for his signature. This bill aims to promote more clarity with IRS notices, particularly with math or clerical notices that are sent to taxpayers after filing their returns.

While I’m usually skeptical of any tax legislation that is passed (as we all should be), I think H.R. 998 is an excellent step in the right direction. When I worked for IRS, I spent a large amount of time explaining notices to taxpayers, both as a contact representative and as an auditor and tax specialist. Even with the push for plain English writing (no jargon allowed), taxpayers were still confused about what certain notices meant, as well as the appropriate response after getting those notices.

H. R. 998 outlines a number of requirements for IRS contact with taxpayers via notices. When the IRS issues a notice for a math/clerical error, it must:

  • Deliver the notice to the taxpayer’s last known address.  
  • Provide a clear description of the error including the specific type of error, the applicable Internal Revenue Code section, and the exact line of the tax return it pertains to.
  • Include an itemized computation showing the adjustments required to correct the error.
  • Provide the telephone number for the IRS automated transcript service so taxpayers can follow up.
  • Clearly state the deadline for the taxpayer to request an abatement of any tax assessed because of the error.

Additionally, the bill clarifies the penalty abatement procedure and subsequent notices, letting taxpayers know that they can use their formal, flexible right to request abatement in any case where they believe that the tax calculation is incorrect. Further, the bill instructs the IRS to design and implement a pilot program exploring alternative delivery methods for math/clerical-error notices (such as certified or registered mail).

The beauty of this bill is that if your return triggers a math/clerical error notice from the IRS, you should expect more detailed information in subsequent notices. This will help you – or your tax professional – assess and respond more effectively. This clearer notice and abatement process strengthens taxpayer rights and transparency: it makes it easier to understand where the error lies, how to respond, and what timeframe applies.

I’m curious about how the IRS will implement the pilot program and ensure compliance with the new standards. I’ll be looking out for updates on this program in the future. In any case, I’m excited for how improved IRS communications will impact compliance, and I’m thrilled to see how the tax system is evolving in favor of more clarity for taxpayers.

There’s only one thing missing from this fantastic bill: a presidential signature! This bill passed Senate unanimously on October 20, 2025, and has been sent to the President for his signature. As we wait for the bill to become a law, we can peruse Congress’s website, which lists all of the bills currently in process. If you want to see which tax bills are on the horizon, check out the Ways & Means committee. They write the legislation that ends up as tax law.

There are several other tax updates that I’m excited to share with you all. Look out for those post soon! Take care.

Shutdown Updates – What’s Happening With The IRS

Well, as this federal government shutdown toils on, many people may have questions regarding their tax obligations. After all, October 15th is the deadline for submitting tax returns after requesting an extension of time to file. What will happen to those returns that are submitted while nearly half of IRS’s employees are furloughed? And, what if you have some other tax questions that you need answered?

If you aren’t aware, IRS had a contingency plan that covered five shutdown days, but with the shutdown extended into its second week, nearly half of the workforce has been furloughed. You can expect that any IRS contact you need to make may be impacted by the reduced workforce. (You can read more about some of the general details here: IRS Shutters ‘Most Operations’, Furloughs Employees as Shutdown Continues). Fortunately, IRS published its contingency plan on its website, which spells out which functions will continue to operate, and which will cease. You can view the contingency plan here.

The functions that will continue during the furlough are:

  • Criminal Investigations (CI) (law enforcement operations, ongoing investigations, and protection of officials)
  • Data and property protection (computer systems management and taxpayer remittances)
  • Limited taxpayer services (disaster relief or safety focused only)
  • Filing season preparation (forms design, IT testing and modernization)
  • Contract oversight (for contacts necessary for life/property safety or exemption functions)

The functions that will cease during the furlough are:

  • Routine taxpayer services (call centers, walk-ins)
  • Non-disaster transcript processing
  • Non-automated collections and legal counsel for non-exempt matters
  • Research, planning and training not related to exempt activities
  • Most administrative and HQ functions not tied to safety or property protection

For those that have tax concerns, you may be wondering what should you do while you wait for IRS to go back to fully operational status. I tried the 1-800 number for IRS earlier today and found that indeed they are receiving calls, but you won’t be able to connect to a live person unless its related to disaster relief or some major safety concern. Also, as I mentioned earlier, the October 15th extension deadline is looming, and this furlough is unlikely to be a valid reason for not submitting your tax returns. So you will want to remit your returns anyway, since the data and property protection teams are still operating during this time (they will receive the documents, but processing wont’ resume until the furlough ends). Unfortunately, if you need a transcript and you’re not living in a disaster area, your request will not be processed during this time (keep this in mind if you were completing a process that requires income verification, like asset purchases).

Please know that in cases of shutdown, there are usually no pauses in automated collection actions: the time frames and system-generated documents generally continue as normal. So if you are currently under a payment plan, the shutdown will not stop or prevent you from having to pay on your balance owed. Also, if you were anticipating a refund, there is a good chance that that too will be automatically (systemically) issued if you were anticipating a direct deposit. I am unsure how this will impact paper checks. Additionally, if you are under criminal investigation (hopefully not!) and were hoping that the furlough meant you’d get a break, I hate to be the one to tell it to you, but the CI team is still hard at work and investigations will continue.

These reduced services can be a bit frustrating, but the shutdown is temporary and will be resolved at some point. Right now is a great time to sort through your documents in anticipation of your next year filing, or you can review some of the changes from the One Big Beautiful Bill Act (if you want me to share my notes in a future post, let me know!) Previously, we heard talks of tax collections being reduced or the IRS being eliminated. But with an estimated 80% or so of government funding coming from the IRS, the chances of a completely dissolved Internal Revenue Service are slim. So if you’re hoping that the temporary government shutdown will lead into a permanent shutdown of Internal Revenue Service, I wouldn’t bet on it. But who knows? Anything is possible.

Do you have any tax questions or are you still wondering what’s next for the federal government? Leave your questions below, and I’ll do my best to answer them!

Why The Previous IRS Commissioner Was Perfect For The Job

Upon hearing that IRS recognizes that they need more staff but doesn’t seem to be clear how to best accomplish this, I decided to research the current leadership, to see if the organization had the right people to realize their goals. The things I learned about Internal Revenue Service Commissioner Billy Long initially made me raise a brow, but since I believe in nuanced interpretations, I carefully considered what I learned about him and comfortably concluded that he is actually a very good fit for this role. Unfortunately, as I was completing my analysis, Long was removed from the position of Commissioner! That being said, a little background on Long is still worth considering, even if it’s just for the purpose of comparing the qualifications of future appointees.

Commissioner Long is a former congressman from Missouri, and he previously supported initiatives to abolish IRS. Additionally, there have been questions about Long’s ethical background, as he was once employed by a firm that obtained fraudulent Employee Retention Credits (ERC) on behalf of their clients. Long has stated that he did not partake in any wrongdoing, and Senate agreed with him, confirming him as commissioner in June 2025. Long was removed from his role as Commissioner in August 2025, less than 60 days after he started.

Here is why I think Commissioner Long was perfect for the role:

  • He has very little actual experience working in tax administration. This may be unusual for IRS commissioners but not for other public roles: there are a number of elected officials that have ZERO experience that qualifies them to participate in the committees in which they serve. The lack of relevant experience isn’t the disadvantage you would expect: it often serves as a prompt to dive deeper and really do the work of understanding how things work from the inside out. Long was in a perfect position to see IRS through fresh eyes.
  • In this role, he could have reconfigured the IRS in a way that best supported his vision for a fair, efficient revenue generator for the US. As a critic of the current IRS setup, he has a much deeper understanding of the flaws that can be fixed within the system. By focusing on fixing those issues, he could have set in motion the kind of changes that would actually make IRS a much better vehicle for financially supporting its goals and objectives.
  • I believe in the Emperor Sung effect when it comes to putting critics in positions that were initially opposed to (see The 48 Laws of Power by Robert Greene, Law 2, “Observance of the Law” for more context). There’s something transformative that happens when critics inhabit the roles they initially opposed. This gives them the opportunity to see firsthand where processes break down and how they can actually fix the problem. It’s very rare that someone gets into these positions and doesn’t have a shift in their perspective and interpretations. I believe that Commissioner Long was far more invested in cementing his legacy as a brilliant leader that transformed the behemoth that is IRS, than to be the one that dismantled the agency because of previously held viewpoints.

In any case, we won’t get to see Long usher in changes to the IRS. He has been appointed as Ambassador to Iceland (I can’t say whether that’s a promotion or not: I’ll let you be the judge of that) so we’ll just have to keep an eye out for the next commissioner and wait to see what changes will come. Long seems excited about his new role and I’m sure he’ll share many updates as he settles into his ambassadorship.

I’m interested in who will be appointed next. In the meantime, I’ll watch for updates on IRS’s hiring initiatives and implementation of the OBBBA in the weeks and months to come.

Winning the IRS Employment Game: A Strategic Guide

I recently shared a post regarding the Internal Revenue Service’s “hiring” push that is unlikely to result in any material impact on agency goals and objectives. However, at the end of the post, I mentioned how there would be some terminated or laid-off IRS employees that may be considering returning to the Service for the upcoming filing season, and how these employees could maximize the opportunity regardless of how indeterminate their employment time may be. Here are my recommendations for getting maximum benefit as a re-hired IRS employee:

  • Prior to returning to the office, schedule any doctor and specialist appointments so that your reinstated federal health insurance can cover those visits. For instance, if I was a former IRS employee that intends to be rehired before the filing season begins, I’d start scheduling doctor appointments for February and March 2026. I’d be sure to focus on those specialists that have a 6-9 months wait list, as well as any doctors that I have been unable to visit while I’ve been unemployed. I’d put those appointments on President’s Day if possible (this is a federal holiday that is open for many businesses, including a good number of medical offices). If, for some reason, I am not hired or my insurance is not reinstated within a few days of the appointment, I’d call and reschedule. I’ve lost nothing, and the medical office still has time to offer that space to another patient.
  • Leverage your lunch time and after work hours to complete free Skillsoft training to qualify you for a different job. Since it’s been more than a decade since I worked for IRS, I’m unsure how much access employees have within Skillsoft. However, if you are a rehired employee, confirm the Skillsoft access information in your employee handbook or through intranet pages. See if there is an option to download the Skillsoft app to your personal device, where you can use your agency log-in information to complete training when you’re off the clock. If so, explore the training paths that are most beneficial to your goals and use this re-employment period to complete the training. As you complete courses, make sure you retain copies of your completion records, lest they become unavailable to you in the future. Some programs I’d recommend are the project management and business analysis tracks (successfully completing Skillsoft training in either area is accepted by the Project Management Institute and the International Institute of Business Analysis). However, if you’d like to know of additional Skillsoft training that I recommend, let me know, and I’ll do another post.
  • Research the tuition reimbursement and student loan repayment options available to you. It’s uncertain whether these programs are going to be available when rehired employees return, but if I came back to the agency, this would be one of the first things I’d confirm. Generally, you must have at least one year of employment to qualify, but you’ll have to confirm whether there are additional criteria, such as whether the year of employment must be 12 consecutive months, if you must be a permanent employment (as opposed to seasonal) to qualify, if the benefits are available only to certain job series (positions), etc.,.
  • This is a perfect opportunity to utilize Employee Assistance Program (EAP) resources. Whatever you need that is available through EAP, go ahead and use it. I cannot remember the full extent of the resources available through IRS’s EAP, but these programs usually offer counseling and therapy services, financial and legal advice for personal purposes, and expedited referrals to various specialists. It’s a complimentary service so get as much as you can while you’re there.
  • Prioritize completing internal required and supplemental training and save documentation of it. Outside of Skillsoft, IRS used to maintain its own training materials. I advise you to take advantage of these training programs if still available and, should you find yourself laid off again, you’ll be able to prove that you’ve completed tax-relevant and other specialized training programs. These can be great if you enjoy working in finance or tax, and want to distinguish yourself from other applicants for other positions.
  • If at all possible, invest heavily in your Thrift Savings Program account. Socking away some retirement funds is always a good idea, and the effect of compound interest can work to your advantage. The sooner you put funds in, the longer you can benefit from the time advantage. So if you can put in a little (or a lot!), do it. Your future financial security will thank you for whatever you do now.

If you can think of additional strategies for rehired IRS employees, please leave those suggestions in the comments, so that others can benefit. Also, if there are any points that need correction, please let me know and I’ll be sure to update. Let’s help each other to make the best of this situation!

The IRS “Hiring” Fiasco: The Least Surprising Development of 2025

I will apologize in advance for any snark that you detect in this post. I try to keep things elevated and fairly neutral, but this latest chaotic development from the Internal Revenue Service concerns me, and I don’t want to dilute my thoughts as I address the issues that I see when it comes to the latest hiring “push” from the Service.

Last week, the Internal Revenue Service announced that it would be hiring several thousand employees as contact representatives and tax examination technicians, while simultaneously getting rid of direct filing capabilities (taxpayers are once again going to have to figure out how to use commercial tax filing software if they want to submit electronic returns). This hiring “push” comes after months of intentionally reducing a number of the employees that were already doing collection and tax resolution tasks. Many of these employees were not at the top of their pay scales – they were fairly newer hires – and now the Service will be tacking on the cost of re-hiring people at the same levels of the ones that were just terminated earlier this year.

If that isn’t wacky enough, it gets even more chaotic. The job announcement for contact representatives was posted on July 29th, and canceled on July 31st. Yes, you are reading that correctly: within 72 hours of posting the job, it was canceled on the federal government’s hiring platform, USAJobs. Why was it canceled so quickly? It’s possible that IRS had already gotten the maximum number of applications they were seeking. But, it’s far more likely that the post was published hastily, and it likely was missing a number of critical details. Whenever I’ve seen jobs posted and taken down quickly, it’s usually because the HR Department was ill-prepared and put up an inaccurate, incomplete announcement (most likely scenario) or the requested number of applications (let’s say, no more than 200 or 500) was received (this is very unlikely). The whole thing smacks of impulsive decision making and poorly completed, rushed work.

Oh, that quickly removed announcement? It was only eligible for certain categories of IRS employees anyway: specifically, current IRS employees, and IRS career transition employees (those were previously fired or otherwise subjected to reduction-in-force actions [layoffs]). So, they terminated people, only to attempt to hire the same folks back, at the same pay rates that they were using before. In summary, this whole game of layoffs and rehires is an expensive exercise in futility.

I also mentioned that there is an announcement for tax examination technicians. That post is still available, but it’s for that same limited group of IRS employees (current IRS and career transition IRS employees), which, again, makes the vast majority of people ineligible to apply. Additionally, the tax exam tech posting was done so hastily that the hyperlinked video on the job announcement doesn’t work at the time of this posting: the promotional video generally provided to potential employees isn’t even viewable! All of this smacks of rush work and poor execution from IRS. And of course, the tax exam tech job caps at roughly $60,000, with no telework or remote work options, and the expectation of developing into a technical advisor, classroom instructor or on-the-job trainer (with no additional pay: you’d be getting the same compensation as someone that didn’t train fellow employees).

I’ve seen disorganized hiring efforts before, but this one has to be one of the most comical, considering how the IRS wants to hire back the same people that were unceremoniously discarded several months ago. If I was one of those terminated employees, this game of “keep away” that IRS is playing with people’s livelihoods would completely turn me off to working for them again. However, for those that decide that they want to try it again, and find a way to make these games work for them . . . I have some strategies coming for you later this week. Make sure to come back so I can explain exactly how to WIN while working an IRS job. I’ll talk to you all soon!

Why I’m Diving Deeper into Tax Law Right Now

Sometimes legacy work calls you into new terrain.

Or, more accurately, into old terrain with fresh urgency.

I’ve described myself as a tax alchemist, someone who reads and interprets codes and designs wealth strategies that are sacred and sophisticated.

But in light of recent developments, I’ll be turning even more of my attention to the evolving world of tax law — and I want to bring you along for the journey.

The landscape is shifting

A newly passed comprehensive bill — the “One Big Beautiful Bill” — has introduced sweeping changes that will ripple through tax planning, compliance, and wealth structuring for years to come.

Simultaneously, a recent Supreme Court decision regarding the IRS, the tax court, and collections due process has redefined certain guardrails that taxpayers have long relied on.

Translation?

The frameworks that protect your wealth, your legacy plans, and even your day-to-day financial serenity are all being re-negotiated in real time.

What this means for you

Most people only discover these shifts when it’s too late — when they’re hit with unexpected liabilities, audits, or discover that their previously sound strategies no longer hold.

But in the Aureum Sanctum, we approach this differently.

We stay ahead by weaving regulatory changes into our rituals of wealth stewardship before they become crises.

This is why I’ll be dedicating more of my offline time to unpacking these new legal currents — what they mean, how they might impact your trusts or business entities, and how we can continue to shape them into elegant, protective structures for your family’s future. And, as I uncover crucial details, I’ll bring these insights back to the Sanctum.

The Aureum Sanctum approach: calm, clear, strategic

If the idea of diving into dense tax law makes you anxious, take a breath.

We approach this the same way we approach everything here: with calmness, clarity, discernment, foresight, and the steady reminder that wealth design is both art and architecture.

Together, we’ll navigate these changes without panic — only with precision and the quiet confidence of knowing your financial house rests on solid, beautifully crafted foundations.

What’s next

So expect to see more updates in the coming weeks and months:

  • Thoughtful explorations of the new bill’s most impactful provisions
  • Insights on the Supreme Court’s most recent collection due process decision and what it might mean for audits and collections
  • And practical, graceful guidance on how to pivot your tax and legacy planning strategies in light of it all.

Because at the end of the day, my mission remains unchanged:

To help you build wealth that is elegant, enduring, and exquisitely aligned with the life you’re here to live — no matter what the laws of the land decide to rearrange.

What I’ve Learned From Ten Years As An Enrolled Agent

This year, I celebrate TEN years of being an enrolled agent! I don’t discuss my previous IRS career often, so this seemed like a good time to talk to you all about it, as well as to reflect on what I learned over this past decade.

I started working at the IRS in the call site, then I became a correspondence auditor on a whim (I put in one application in Washington, DC, and I got selected for the role). I eventually got promoted to an international tax specialist role, where I completed hundreds of audits of foreign nationals living in DC, as well as audits of US citizens living abroad. I loved the work, but I disliked many of the managers (this was most pronounced at the beginning of my IRS career as well as the end of my time there: the in-between years were better). The managerial abuse was insane, and I knew I needed to leave for my mental health. Once I started my family, I left IRS and applied for my enrolled agent license (I had the requisite experience to apply without having to take the exam).

I was awarded my license in 2013, and I’ve been in good standing ever since. Here is some of what I’ve learned from being an enrolled agent.

  • Maintaining my license is pretty straightforward and fairly inexpensive. I complete the majority of my 24 hours of continuing professional education (CPE) on CPA Academy, one of the few websites that offers a lot of free classes that count toward CPE. There was a brief, shining moment during the Trump administration, when renewing my tax preparer ID number was free (there is no law that requires IRS to charge fees for these numbers), but that ended with Biden’s administration. There is a $30 annual fee to renew the tax preparer ID number, and I also pay an enrolled agent fee once every three years ($140). So, my average annual costs for maintaining my license is around $80.
  • Tax preparation is my least favorite part of taxes. I liked it when I initially began as an enrolled agent, but now I don’t do it at all. I prefer resolving tax discrepancies, or providing tax advice. Being an enrolled agent helped me learn what I really enjoyed about taxes, and which parts are better left to others. I learned that there are some people that love preparing taxes, and I don’t cross over into their territory.
  • Most tax work is underpaid, so it’s a good idea to work for yourself. You may not get the volume of customers you’d expect by working through a major tax company, but you earn more. With my expertise, I got an offer for a part-time senior tax consultant earning (drumroll please) $25 per hour. Not bad for part time work, and the ease of being an employee (no 1099-MISC payments, so less bookkeeping work for me). But, as someone that doesn’t need immediate income, AND as someone that has a client roster that pays $30+ for a half hour of my time, it wasn’t worth it.
  • Being an enrolled agent is a fiduciary-level role. You have to put your client’s interests first, and you are bound to the same ethical standards as most financial advisor/consultant roles. Just because you haven’t completed any of FINRA’s exams doesn’t mean that you’re able to bypass those standards. You are required to operate ethically at all times (both when working with clients and during your off-time).
  • You’re one of the few roles that can adequately represent people at the US Tax Court. I didn’t learn about this until I had been an EA for a while, but US Tax Court allows non-attorneys to represent clients in court, so long as the non-attorney has passed the Tax Court’s admission process. Being an EA offers a lot of credibility to your application to represent people in tax court. If you’ve always wanted to know what it’s like to work in a legal capacity, being an EA can position you to have this experience.
  • This job is what you make of it. You can do so much with this license: tax preparation, tax consulting, tax resolution, digital product creation, webinars & other instructional sessions, keynote speaking, tax research, and so much more. I have seen people pivot their EA license into all sorts of fascinating careers that go beyond the typical things we think of when talking about tax licenses. Your career is limited to your imagination.

Those are just some of the things I’ve learned from 10 years as an enrolled agent. So tell me: are you familiar with EAs? Would you be interested in getting this license? Let me know your thoughts below!

Why the Inflation Reduction Act of 2022 Should Worry You

You’ll have to journey with me a bit, before you see that this post is not quite what it seems. . .

No, Internal Revenue Service (IRS) will not be hiring 87,000 special agents. I’ve written about this in several places (beyond this blog), because I cannot stand sensationalism. It’s an abundance of emotion and an absence of sound, factual research that makes me shake my head in disappointment. I usually point to it as a failing of the US education system, but it is often information spread by “learned” people that are experts at exploiting the vulnerabilities of others (including the lack of critical thinking displayed by many) behind the outrage and fallacies being shared. I explained all about the misinformation regarding IRS hiring over on LinkedIn, but I’ll share a copy of that text below, as well.

Photo by energepic.com on Pexels.com

As written August 11:

In July, I posted on my blog that the Inflation Reduction Act, if passed, would allocate $124 billion for IRS tax enforcement. I also stated that this meant more IRS collection jobs would be announced. These jobs would be revenue agents and officers, auditors and specialists, etc.,.

Imagine my surprise when today, I saw the rumors of 87,000 SPECIAL agents being added to IRS. I laughed immediately, because I know the difference between a special agent and a revenue agent, and I also chuckled because I knew that there was NO WAY that IRS would double their workforce by hiring special agents exclusively. Special agents do not consistently collect enough money for IRS – with a current staff of 82,000 – to bring on a group SPECIAL agents than exceed the number of staff they have currently.

There is a difference between revenue agents and special agents. Revenue agents are auditors and unarmed. They do the bulk of the audits conducted by IRS. Special agents are law enforcement, just like FBI and CIA agents. FBI special agents have strikingly similar job duties. IRS’s special agents are armed, because they go to FLETC in Georgia. No official sources have confirmed this 87k hiring boom, and several sources indicate that this is a rumor at best. This rumor came from a poorly comprehended report and a desire to sensationalize a hot topic that few people actually understand.

But, I’ll play along and pretend the 87k hiring rumor is true. Assuming that IRS does hire 87k ppl, I assure you that the majority of those ppl will be tax specialists, revenue officers and revenue agents, not special agents, who really don’t generate revenue consistently enough to justify this type of hiring push.

Please continue to read, read, read, and use your power of discernment. Don’t go by what one source says (even if the source is this post!) If I’m wrong, then I’ll personally put up another post admitting it. But I’m pretty sure I’m not. I just want you all to continue to be wise, be alert, and watch out for those that monetize and exploit your outrage.

I wrote a detailed post in late July about the potential impact of the Inflation Reduction Act of 2022 (IRA 2022), and it’s most likely effects on tax law (you can read that here). Yet still, several days after IRA 2022, I see lawmakers actually spreading the same tripe as quoted by careless Twitter users that have never worked at IRS and, prior to IRA 2022, were completely unaware that IRS has special agents, which are not the same as revenue agents.

Photo by Karolina Grabowska on Pexels.com

The whole quote of 87,000 agents that IRS will be hiring? It was an estimate proposed last May, that is in no way a definite plan for this year, just a “wish list” that I, as a federal employee, can confirm is hopeful at best, and IRS would be lucky to hire and retain half of this amount. The hiring levels rarely meet the amounts that agencies project, simply because turnover still happens, other hiring takes priority, and some people will leave because of termination, resignation, or transfer to other agencies. Also, this is a projection for a 10 year hiring plan, because there isn’t enough staff or resources to possibly train 87,000 agents within the next year. The IRS has recorded a record low of auditors and agents, with numbers being the lowest they’ve been since World War II.

Cries about these auditors and agents targeting people earning less than $400,000? Accurate on the surface, but it takes a little digging to understand a critical point. The assertions about people earning less than $400,000 came from Secretary of the Treasury Janet Yellen, who stated something that many completely disregarded (or simply were unable to comprehend): she directed that, “any additional resources—including any new personnel or auditors that are hired—shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.” That historical levels part really tripped up the speedy (non-critical) readers, and caused all manner of histrionics. According to IRS, these agents, “cannot simply be assigned to global high wealth, partnership, or large and complex business examinations without the requisite skills, training, and experience to analyze returns that are highly complex[…]”; that means they will have to practice honing their audit skills prior to get these $400K+ returns. And, since the historical levels have been much higher than they are currently, you can reasonably expect that some individuals earning less than $400K per year will be audited because, historically, they were. I’d be worried if you follow advice from people who refuse to read for clarity, and who jump on catchy soundbites that suit certain narratives.

Again, to be clear, no one said that all individuals earning less than $400K would be audit free: EVERYONE has noted that the audits for this group shouldn’t go up disproportionately. Only time will tell whether this will happen, but on the outset, realize that Yellen never said that people earning less than $400K were exempt from audits. Many skipped over this part because it didn’t serve a narrative about IRS being the horrible bullies that mistreat every American that cross their paths.

As I stated above in my post from LinkedIn, one source is not enough, and exploitation and monetization of outrage is exactly what certain influential groups desire. I’ve read information from IRS, Government Accountability Office (GAO), and Congressional Budget Office (CBO), as well as groups that disagreed with the measures, such as The Heritage Foundation and a statement from the Republican House Budget Committee Members. I’d caution most people to read multiple sources – from a variety of perspectives – and to ask, “Qui bono?” (Who benefits?) as you read. The same people criticizing certain tax legislation often organize groups, movements, and products designed to get money from their supporters/readers. The same can absolutely be said for those that are eager to support tax legislation, without offering critical analyses of how they have reached the conclusions they so eagerly share on their platforms and social media at large. In short, hot takes are rarely supported by the amount of analysis needed to make a balanced and fair assessment. These groups KNOW that, and capitalize on it.

Photo by RODNAE Productions on Pexels.com

Our rapt attention is currency (hence the phrase, “Pay attention”). Be mindful of how your attention has been monetized by the people whose opinions you adore: most of them are pandering to our worst fears because it is (and always has been) a lucrative gig, and it’s a far more profitable angle than giving balanced, neutral opinions that neither stir hope nor fear in our hearts. Our biggest worry about IRA 2022 should be all of the people trying to cash in on our worries: they’ve figured out how to “sell shovels” to us and many of us don’t even know it.

Avoiding Gift Tax – Make Sure The Checks Clear!

Recently, I discussed the issues surrounding the estate of Aretha Franklin. From the sources that I reviewed, it appears that she did not intentionally reduce the size of her estate through gifting to her heirs before her death. It isn’t required that people reduce their estates through giving, however. . . With an annual ceiling of $15,000, affluent individuals of advanced age may prefer to distribute a portion of some inheritances before their death, to avoid taxes to both themselves as well as the recipients.

For those that choose to give before death, whatever you do, make sure your heirs cash those checks as soon as they receive them! A recent tax case (Estate of de Muth v Commissioner) determined that if a check isn’t cleared before a person dies, the checks become part of the estate, and therefore subject to estate tax. Of course, gifters can’t force recipients to quickly cash checks given to them, but if the intent is to ensure that the size of the estate is reduced, then time is truly of the essence.

I was interested in Estate of de Muth because it was always my understanding that it was the date of gifting, and not the date of cashing, that determined when a gift was given. But with the tax courts determining that the act of gift giving occurs upon cashing the check, I now have a different perspective regarding gifts and what constitutes receipt. This is why I love staying aware of the changes with the tax law: you never know what you’ll learn!

Aretha Franklin’s Messy Estate – Key Takeaways

A couple of weeks ago, it was announced that Aretha Franklin’s estate has settled a nearly $8 million tax bill, and the way has been cleared for her four sons to start receiving payments from the revenue generated from the use of her image and music. This outcome was a long time coming: Franklin passed four years ago, and her heirs have been unable to settle the estate issues until recently. This development is excellent news, as this opens the way for her sons to start receiving the benefits to which they are entitled.

I won’t rehash all of the details of the case, however, I will highlight some key takeaways that I gleaned as I learned about the messy estate left behind by the Queen of Soul:

  • Destroy previously executed wills. For most people, their end-of-life planning only covers the execution of a will (if they’re proactive). Sadly, some people don’t even do that much planning: far too many people die intestate, leaving their estate planning in the hands of the state where they lived and died. But I digress . . . Leaving a will clarifies how you want your property to be distributed after your death. However, this distribution becomes unclear if you have multiple versions of your will floating around. So, consider destroying previously executed wills whenever you make a revision. The estate is currently comparing 3 different versions of Ms. Franklin’s will, and I’m sure the probate courts will have a field day trying to figure out which one is the one that will be honored.
  • Set up a trust. If you only have a will, you’re doing better than many people. But if you really want to simplify how your assets will be handled, a trust is what you need. Trusts can be established to distribute assets before and after death, they can help avoid certain types of taxes, and they can provide an extra level of clarity that may not be accomplished through the execution of a will alone. Consulting with a trust attorney is a great idea, even if it turns out that a trust isn’t advantageous for your specific circumstances. These attorneys can answer many of the questions you may have related to other estate or end-of-life financial issues.
  • Consider gifting some of your possessions while you’re still alive. The current ceiling for tax-free gifting is $15,000 per person that you choose to gift. Even if you aren’t giving everyone you know $15,000, you can certainly gift some of your possessions now, so that your heirs can avoid gift and estate taxes later.

Those are three of my takeaways from the tax agreement between IRS and Aretha Franklin. I’ll keep an eye on this case to see if any additional developments arise, and if so, I’ll be back with updates. Take care!