The Tax Navigator – ERC Updates, 45Z Clean Energy Guidance and Hobby Loss Case

In this episode of The Tax Navigator, Sean Muller covers recent federal tax updates, including new findings from the Government Accountability Office (GAO) on the employee retention credit (ERC) and the IRS’s proposed regulations for the 45Z clean fuel production credit. He also highlight a recent hobby loss court case that underscores the importance of maintaining strong books, records and business plans.

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Detailed Description of The Tax Navigator – ERC Updates, 45Z Clean Energy Guidance and Hobby Loss Case

00:00:00
Sean: Alright. It was a pretty slow week.

00:00:03
Sean: One report that came out — the Government Accountability Office came out with an ERC report and kind of wrapped up the case around ERC.

$283 billion was sent out by the government for ERC benefits. There were 41,000 cases as of December 31, 2025, that are still outstanding.

00:00:19
Sean: So, if you filed a good claim and you haven’t heard back, you may still get some money. Actually, I have a client that received some funds last week, which I did not expect them to receive at all.

00:00:29
Sean: Last week, the IRS released proposed regulations on 45Z clean fuel production energy credits — some proposed regs on that.

00:00:39
Sean: Lots of changes from OBBBA about clean energy, and so they want to come out with proposed regs on that. We will probably have more on that later, but not for the purpose of this update.

00:00:48
Sean: There was a case last week on a hobby loss. A husband and wife had three or four different businesses, and they had all their losses — all their expenses — disallowed.

00:00:57
Sean: They had to argue what they were doing for this, and they actually got most of their expenses as deductible because they had a valid business plan, they had good books and records and had technical expertise.

And they adjusted their business plans along the way to show there was actually a business profit even though they did not have a business profit at all.

00:01:16
Sean: So, other than that, it was a pretty slow week. Thanks.

This episode of The Tax Navigator was recorded prior to publication. Some references or updates discussed may reflect information current as of the recording date.