IRS practice & procedure

Many CPAs and their clients experienced confusion over IRS CP53E notices during the 2026 filing season. A TIGTA report confirms those concerns and sheds new light on how the IRS implemented its paperless-payment initiative.

A TIGTA report found that nearly 39,000 high-priority nonfiler cases were delayed in the IRS’s high-income nonfiler initiative because of resource concerns. The IRS said it has since advanced all affected cases.

A stopgap funding bill headed to the president would maintain the IRS’s $11.2 billion annual budget through Dec. 11 and prevent a second $11.6 billion funding rescission for now.

Individual audit starts fell 30% in fiscal 2025, including a 27% drop among taxpayers with income above $400,000, as IRS staffing levels declined, TIGTA said.

A new IRS Individual Online Account feature lets taxpayers download a digitally authenticated compliance report for use when applying for jobs, loans, government benefits, and other services.

The IRS proposed regulations that would limit Trump account investments to low-fee stock index funds and ETFs during the growth period.

The agency said it has ended its latest conservation easement settlement initiative and is creating a new office to coordinate strategy for such cases.

For most taxpayers, the 2026 filing season was normal, a government report says. Those who filed paper returns or relied on paper refund checks faced delays because of a smaller IRS workforce and technology problems.

The proposed regulations, which the IRS said would affect millions of children, families, and employers, also address self-employed owners, Sec. 125 cafeteria-plan contributions, and employer matching of the government’s $1,000 pilot-program contribution.

Workers generally may claim the overtime pay deduction only for amounts reported on Form W-2, Wage and Tax Statement, beginning in tax year 2026, according to updated IRS FAQs. The IRS also clarified that the deduction does not make overtime pay exempt from gross income.

Eligible businesses and organizations can now view more digital notices, make payments on installment agreements, and obtain EIN verification documents online.

The guidance explains how employers can claim the expanded credit for paid family and medical leave beginning in 2026 using a premium-based method.

The IRS said fraudsters are mailing letters that direct digital asset holders to a bogus “Digital Asset Compliance Portal” that mimics IRS.gov to collect personal information.