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Ext. PublicationThe Tax Navigator – Key Updates on Refund Delays, Electronic Reporting and Tariffs
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Join Sean Muller, The Tax Navigator, as he covers several timely federal tax developments, including recent IRS leadership changes and ongoing delays tied to electronic filing requirements. The discussion also highlights recent court rulings on partnership basis rules and tariff refund processing. Finally, the video explores relief from interest and penalties associated with federally declared disaster periods, offering practical context on how current IRS and court actions may affect taxpayers and filing considerations.
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Detailed Description of The Tax Navigator – Key Updates on Refund Delays, Electronic Reporting and Tariffs
00:00:00
Sean: We talked last week about Treasury Secretary Scott Bessent not being able to be the acting commissioner anymore.
00:00:08
Sean: They decided on Friday to remove the acting commissioner role from his title, and now he’s just going to function as the lead because there’s no person in line to take over the IRS.
We predicted that, and it played out.
00:00:22
Sean: We’re already seeing complaints around IRS refunds being electronic. They’re now sending notices to taxpayers for 2025 filings that did not include their bank account information.
00:00:35
Sean: It’s affecting [roughly] 800,000 people, and they’re getting a notice that says, “Please fill out this information and forget your direct deposit.” It’s a very vaguely worded statement.
And if you don’t respond within 30 days, then you’re going to get a check in about six weeks.
00:00:50
Sean: These are folks who were used to getting a check in two to three weeks and now they may not get a check for two to three months from the IRS if they did not register for direct deposit. So, once again, register for direct deposit if you need to get a refund or just be prepared to apply it to next year.
00:01:07
Sean: They are trying to simplify reporting going forward. Form 1099-DA, which deals with digital assets — in 2027, they’re going to try to make it basically the rule that you’ll get an electronic statement versus a paper statement. And similarly, they put out a notice asking for assistance or comments about certain forms like Form 1099-B.
00:01:30
Sean: Right now, Form 1099-B, if you want an electronic statement, you have to consent to it. Otherwise, you get a paper statement. They’re trying to go away from that now with everybody having access to computers, you can do electronic consent automatically on 1099-B.
So, they’re trying to streamline a lot of those different things so you don’t get all this mailing of paper filing or have to consent to it.
00:01:54
Sean: There was a case last week that just reiterated what taxpayers have known for a long time: a promise to pay is not a capital contribution for a partnership. If you’re agreeing to put $100,000 into a partnership, the fact that you just agree to promise to pay if it ever comes up, doesn’t give you $100,000 of basis in the partnership.
00:02:19
Sean: You actually have to put the money in or actually have a legal right through a nonrecourse note, etc., etc. You can’t just have a promise to pay.
00:02:29
Sean: The court’s update on the tariff update, courts required the government to have a way to process refunds. The administration came out last week and said their portal they’re going to have for refunds is at 70% complete. They’re going to get another two to three weeks to try to complete that, with no end date.
00:02:51
Sean: But they claim they’re [roughly] 70% complete to process tariff refunds. For some of the $170 billion, whatever the huge number is, they’re doing that.
00:03:00
Sean: Something we haven’t really talked about here but is a bit of a reminder — and it probably doesn’t affect very many taxpayers — but there was a case dealing with federal disaster periods.
And during a federal disaster period, you don’t have to pay any interest and penalties during that period. That affected a lot of taxpayers during COVID.
00:03:18
Sean: From January 2020 through July 2023, if you paid any interest and penalties related to those periods — any IRS interest and penalties related to that period — then you shouldn’t have owed that tax, and so you have a refund claim.
00:03:33
Sean: There is a limited time, though. You can only get a refund claim within two years of getting a refund or making a payment. So unless you’ve made a payment in the last year or so, you’ve probably already expired that.
00:03:45
Sean: But there actually was a case here in the last week or two that the actual IRS did not charge the interest. So they subjected the taxpayer to all the unpaid tax, but they waived the interest for the period up through July 2023.
So they’re already following their rules there.
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.
