For the second consecutive year, a government watchdog found the IRS’s cybersecurity program ineffective. TIGTA warned that taxpayer data could be vulnerable if security weaknesses are not addressed.
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TOPICS / TAX
IRS practice & procedure
Unclear instructions, limited awareness plagued CP53E rollout, TIGTA says
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.
Government says Kwong court misread COVID tax relief law
In its opening brief to a federal appeals court Wednesday, the federal government said a lower court ruling in Kwong improperly turned a 60-day extension into a postponement period lasting over three years.
IRS delayed action on thousands of high-income nonfiler cases, TIGTA says
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.
AICPA seeks IRS clarity on AI guidelines, CPA fees
The AICPA is seeking clarification from the IRS on guidelines suggesting that tax practitioners should pass AI-related cost savings on to clients. Concerns about language in the guidelines include the implication of not allowing for a value-pricing model and overlooking the costs of implementing and governing the technology.
Congress approves funding bill that maintains IRS budget
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.
Sixth Circuit holds home-distilling ban is constitutional
The Sixth Circuit held that the Internal Revenue Code’s ban on distilling alcoholic spirits in a dwelling house is a necessary and proper means of collecting the federal excise tax on spirits and therefore the ban is constitutional under the U.S. Constitution’s Necessary and Proper Clause.
TIGTA: IRS unable to prevent $213 million in improper EITC payments to individuals with nonwork SSNs
The Treasury Inspector General for Tax Administration reported that the IRS lacks sufficient or reliable data to systemically prevent individuals with ineligible nonwork Social Security numbers from receiving the earned income tax credit.
Motion for a more definite statement denied
The IRS’s motion for a more definite statement was denied because it had sufficient information to respond to the taxpayers’ complaint for a refund claim.
IRS enforcement activity fell despite record tax collections, TIGTA says
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.
IRS should automate name, address changes, AICPA says
A letter to the IRS says that processing times of six to eight weeks or longer for taxpayer name and address changes can create compliance risks and should be reduced through automation.
Taxpayers can now access IRS compliance report online
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.
Proposed rules would restrict Trump account eligible investments
The IRS proposed regulations that would limit Trump account investments to low-fee stock index funds and ETFs during the growth period.
IRS shifts approach to conservation easement disputes
The agency said it has ended its latest conservation easement settlement initiative and is creating a new office to coordinate strategy for such cases.
IRS provides guidance on rollovers between retirement plans and IRAs
Use of the sample forms and proposed rollover procedures in the guidance is optional for plan sponsors.
IRS staffing cuts delayed paper returns and refunds, report says
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.
Trump account prop. regs. clarify $2,500 limit for workers
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.
IRS updates overtime deduction FAQs, adds reporting details
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.
IRS adds notices, payment features to business tax accounts
Eligible businesses and organizations can now view more digital notices, make payments on installment agreements, and obtain EIN verification documents online.
IRS guidance addresses expanded paid family and medical leave credit
The guidance explains how employers can claim the expanded credit for paid family and medical leave beginning in 2026 using a premium-based method.
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