Forbes - A Deep Dive On IRS Layoffs And DOGE’s Access To Taxpayer Information
The host, Kelly Phillips Herb, covers several tax-related topics, including significant job cuts at the IRS as part of governmental efficiency efforts led by Elon Musk's department. These cuts could impact the tax filing season, which began on January 27, 2025. Additionally, the Corporate Transparency Act's beneficial ownership reporting requirements are back in effect, with a new deadline of March 21, 2025. The video also discusses the ongoing budget negotiations in Congress, focusing on tax cuts and spending, with potential implications for the 2025 economy. The host highlights the importance of aligning tax return names with Social Security records to avoid issues when filing taxes. Furthermore, the video addresses the taxation of tips and the disparity in tax credits available to different service industries, with ongoing lobbying efforts to extend benefits to more sectors. Finally, the video touches on recent IRS job losses and the impact on taxpayer services, with organizations offering resources to affected professionals.
Key Points:
- IRS job cuts could affect tax filing season; 3,500 employees in small business division impacted.
- Corporate Transparency Act reporting requirements reinstated; deadline set for March 21, 2025.
- Congressional budget negotiations focus on tax cuts, spending, and potential government shutdown.
- Tax return names must match Social Security records to avoid filing issues.
- Lobbying efforts aim to extend FICA tip credit benefits to more service industries.
Details:
1. 🎙️ Welcome to Tax Insights with Kelly Phillips
- Significant IRS job losses could impact taxpayer services, highlighting the need for strategic adaptation by both the agency and taxpayers.
- The importance of taxpayer privacy is emphasized, suggesting a focus on safeguarding personal data amidst changing regulations.
- Progress in budget discussions in the House and Senate could lead to policy changes affecting tax structures and enforcement.
- Changing your name can have complex implications for tax obligations, necessitating updated records with the IRS to ensure compliance.
- Taxes on tips remain a critical issue, particularly impacting hospitality workers who must accurately report earnings.
- Upcoming tax filing deadlines require attention, with recent updates providing essential compliance timelines.
2. 🌍 Tax Filing in Alaska: A Unique Adventure
2.1. IRS Workforce Changes and Legal Developments
2.2. Government Budget Issues
2.3. Privacy and Legal Concerns
3. 🔄 Navigating Name Changes for Tax Filing
- You do not need to change your name after marriage to file taxes as married; the key is to ensure the name on your Social Security card matches the name on your tax return.
- If you've changed your name with the Social Security Administration, use the updated name on your tax return to match your new Social Security card.
- If you are using your married name but haven't changed it with the Social Security Administration, file taxes using your former name for consistency with the Social Security records.
- The same rule applies after divorce; use the name on your Social Security card for tax filings.
- Changing your name with the Social Security Administration is straightforward; visit their name change page online and follow the instructions.
4. 📉 Impact of IRS Job Cuts on Tax Season
- The IRS has cut thousands of workers on probationary status due to cost-reduction efforts initiated by the Trump Administration, impacting at least 3,500 employees in the Small Business Self-Employed (SBSE) division.
- The SBSE division, serving over 57 million small business owners and self-employed taxpayers with less than $10 million in assets, will be significantly affected.
- Overall, up to 7,000 IRS employees, accounting for 7% of the workforce, are expected to lose their jobs.
- These cuts primarily affect probationary employees, who are often recent hires or those recently promoted, potentially impacting service delivery.
- The cuts align with a Trump executive order freezing hiring for most federal agencies, complicating the IRS's ability to expand its workforce as previously planned under the Inflation Reduction Act of 2022.
- Plans to hire 87,000 new workers over the next decade are under threat, with Republican-led budget cuts reducing around $40 billion of the $80 billion authorized for IRS funding.
- Former IRS commissioner indicates that the IRS's current full-time workforce is nearing 90,000, comparable to a decade ago but below the 1990s peak of over 110,000 employees.
- Despite social media claims, the IRS has not hired tens of thousands of armed agents since 2022.
- The job cuts and budget constraints may hinder the IRS's ability to efficiently process tax returns and assist taxpayers, potentially leading to delays and reduced service quality.
5. 🤔 Tax Trivia Time: What's Missing on Your 1040?
- Your birth date does not appear on the first two pages of Form 1040, although you must check a box if you or your spouse qualify for the extra standard deduction for seniors, applicable if born before January 2, 1960.
- Your occupation is listed next to the signature line on page two.
- Your social security number appears at the top of page one.
- If expecting a tax refund and requesting direct deposit, your bank routing and account numbers appear near the bottom.
6. 💡 Unpacking the Tax on Tips Debate
- The 'no tax on tips' proposal has not gained significant congressional support despite being promoted by political figures such as Donald Trump and Kamala Harris.
- Since 1966, tips have been subject to payroll taxes, initially affecting employees and later impacting employers in 1977.
- The FICA tip credit, introduced to offset payroll taxes on tips, is exclusively available to food and beverage businesses, leaving out other service industries like hair salons.
- In 1993, restaurants successfully lobbied for the FICA tip credit, highlighting a persistent tax disparity across industries.
- The Professional Beauty Association is actively lobbying for the extension of the FICA tip credit to salons and spas, with proposed legislation currently in committee in both the House and Senate.
- Expanding the FICA tip credit to other industries could potentially reduce operational costs and improve fairness in taxation, but legislative success remains uncertain.
- Understanding the legislative process and its potential impacts on various sectors is crucial for stakeholders advocating for changes in tip taxation policies.
7. 📰 Latest Updates: Tax News and Resources
7.1. IRS Functionality Needs
7.2. Job Resources for IRS-Affected Professionals
7.3. Healthcare Flexible Spending Accounts for Military
8. 📅 Wrapping Up & Looking Ahead
- The show will not air next week but will resume the following week, ensuring continuity in content delivery.
- Listeners are encouraged to provide feedback via email at curb@kerbs.com, emphasizing the show's commitment to audience engagement and improvement.
- Episodes' audio is accessible on forbes.com, which broadens the availability and reach of the content.
- The audience is encouraged to share the show, highlighting a strategy to expand the show's reach and influence.