Just when tax practitioners thought they’d mastered the Corporate Transparency Act requirements, everything changed. The Treasury Department’s recent announcement that it won’t enforce penalties associated with beneficial ownership information (BOI) reporting represents yet another shift in the constantly moving target that tax professionals face this busy season.
In a recent episode of the Federal Tax Updates podcast, hosts Roger Harris and Annie Schwab discuss several developments affecting tax practitioners amid the 2025 filing season.
BOI Relief: What Practitioners Need to Know
The Treasury Department made a major announcement regarding BOI reporting that affects all tax practitioners and their clients.
“In early March the Treasury Department announced they will not enforce any penalties or fines associated with the Corporate Transparency Act,” Annie explained. “The Treasury’s planning on issuing proposed rulemaking that will narrow the scope for BOI reporting, focusing mainly on foreign reporting companies rather than the US reporting companies.”
This creates an unusual situation where the law still exists but won’t be enforced. As Roger noted, “The law is still there…but until and unless Congress acts to repeal it, I guess a court could say you have to enforce it.”
For practitioners who already invested time collecting client information and filing reports, this raises practical questions about next steps. Roger and Annie recommend a straightforward approach:
“If you’ve already filed, great. Sit tight. If it gets repealed, we’ll figure out what’s going to happen with the information there,” Annie advised. “If you’re midway—you’ve maybe collected some data or you’ve started the process and you’re waiting on something—I would say, just wait.”
For practitioners who charged clients for BOI services that are now unnecessary, Roger takes a firm stance: “If a client came to me and wanted their money back, I’d almost feel like that’s a client I don’t want anymore, because they don’t appreciate the fact that we did what the law required when the law required it.”
Government Shutdown Concerns
As of the March 7 podcast recording date, a potential government shutdown loomed about a week away.
“I’ve not seen a lot of progress,” Annie commented, noting negotiations were not going smoothly.
For tax practitioners concerned about the impact on tax filing season, Roger offered reassurance: “Government shutdowns don’t close everything. You still have to file your tax returns.” The IRS is considered a critical function during filing season, so it would still process returns and issue refunds, though some delays might occur.
This government funding issue is separate from the tax reform reconciliation process, with Annie clarifying, “This is funding the government…kind of like paying the bills. The reconciliation is next year’s budget.”
The Complex Path to Tax Reform
Understanding Congress’s reconciliation process is essential for anticipating how and when tax code changes might materialize. Annie broke down the six-step process:
- Both chambers pass broad reconciliation packages (completed)
- House and Senate agree on whether to use one bill or two bills (in progress)
- Committees develop specific tax proposals within the framework
- Each chamber passes their specific plans
- The plans are merged into a single final bill
- Both chambers pass the final bill, and the president signs it
What complicates the current process is a fundamental disagreement about approach. “The House package is one big bill. It’s everything,” Annie explained. “The Senate is the first of two bills.” Lawmakers must resolve this misalignment before they can even discuss specific details of tax reform.
Republicans have set a Memorial Day deadline for completing tax reform legislation, but the hosts expressed doubt about this timeline.
“Trump is hinting about putting a priority on fully restoring many of the provisions in the Tax Cuts and Jobs Act, including the state and local tax (SALT) deduction, bonus depreciation, and section 199A,” Annie noted. However, until the reconciliation process progresses further, practitioners have little concrete information to guide planning.
If Congress fails to act, the Tax Cuts and Jobs Act provisions will simply expire, reverting to prior law—an outcome that would create big planning challenges for clients.
IRS Restructuring Proposals
Practitioners also face potential shifts in how they interact with the IRS amid proposals for dramatic workforce reductions.
“They’re about to fire 50% of the IRS workforce,” noted Annie, referencing media reports. “Currently 90,000-ish employees. And to cut 50%, you’re talking about 45,000 people.” Beyond staffing reductions, additional reports suggest the closure of over 110 IRS Taxpayer Assistance Centers.
Such drastic cuts would alter practitioner-IRS interactions at a time when tax complexity continues to increase. “I cannot imagine how long the processing times and wait times at the service centers or on the calls will be,” Annie observed.
Roger noted that more recent communications have begun to temper these ambitious cuts. “You’re beginning to see a little bit of it walked back because I think people realize that…the government gets funded by what the IRS collects.”
Both hosts expressed concern about potential reductions to practitioner-focused services. “What I’m really concerned about is that we cut out some of the outreach and some of the programs that practitioners need,” Roger emphasized. These include forums, webinars, and advisory panels that provide vital channels for real-world input.
There was also mention of a concept where tariffs could replace income tax. “There is talk of ultimately having a system where we abolish the IRS and create, not the Internal Revenue Service, but the External Revenue Service,” Roger explained. However, he expressed skepticism about the feasibility of funding the government entirely through tariffs.
IRS Technology Improvements
Despite restructuring concerns, the IRS continues to make technological improvements that could benefit practitioners and taxpayers.
W-2s and 1095-As (health insurance marketplace statements) are now available in the online portal for individual accounts. Even more promising, the IRS has set a goal of making 2024 tax transcripts available by March 31st.
“That means you could technically pull a transcript of your 2024 tax information before you even file the 2024 return,” Annie explained. “Think of all the mismatching and ‘Oh, I forgot’ or ‘I didn’t get this’…it would be really nice to be able to see what the IRS has on file.”
While these transcripts won’t include state tax information, they would provide a comprehensive view of federal information reported to the IRS, potentially reducing errors. For practitioners still preparing returns in early April, having access to this information could significantly improve accuracy.
The hosts strongly encouraged practitioners to set up online accounts and have their clients do the same. “We’re just kind of being short-sighted if we don’t encourage our taxpayers to have online accounts and our businesses to have business accounts and us to have practitioner accounts,” Roger advised.
Upcoming Circular 230 Changes
The hosts briefly discussed upcoming changes to Circular 230, which provides guidelines for tax practitioners. A public hearing on proposed regulations was held recently, with final regulations to follow.
“We’re going to do a podcast sometime shortly…about what the proposed changes are and what they may mean to you,” Roger mentioned. The changes address contingent fees, succession planning, disaster planning, and technology safeguards.
Roger encouraged practitioners to review the proposed regulations and compare them to how their businesses currently operate, noting they plan to bring on a guest who attended the hearing for their next podcast to provide more detailed insights.
Navigating the New Normal of Tax Practice
BOI enforcement relief, government shutdown concerns, potential tax reform, proposed IRS restructuring and Circular 230 updates create a perfect storm of uncertainty for tax practitioners already navigating a challenging filing season.
The most successful practitioners are those who maintain perspective amid these changes. Rather than viewing each regulatory shift as a crisis, recognize these changes as part of a broader evolution in tax administration.
By staying informed about developments, practitioners can position themselves as indispensable advisors during this period of transition. To hear the complete discussion on these critical developments, listen to the full podcast episode.