XQ CPA

Tax revenues reached a record level during fiscal year (FY) 2025, but revenue from tax audits took a hit, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA). Taxpayers paid the IRS $5.3 trillion, a 4.2% increase from FY 2024 and the most tax revenue ever paid by taxpayers, without adjusting for inflation. However, TIGTA reports IRS enforcement revenue decreased to $93.8 billion in FY 2025. TIGTA said this is mainly attributable to a 35% decline in examination-related revenue from FY 2024 to FY 2025. Also of note: The IRS lost nearly 27% of its Examination and Collection staff from FY 2024 to FY 2025. Read TIGTA’s report: https://bit.ly/4zOCESZ

Football season is about to kick off. If you’ll be betting on college and NFL games this year, it’s time to brush up on the tax rules associated with gambling. Federal tax law requires taxpayers to report winnings on their tax returns, even if they don’t receive a Form W-2G for gambling winnings. Also a major gambling rule change went into effect this year: Gamblers can deduct from their winnings only 90% of their losses for a tax year. This means some gamblers could owe tax even if they break even or incur a net loss. And losses generally are deductible only if you itemize deductions. If you’re unsure of the tax rules regarding gambling, please contact us or visit: https://bit.ly/4zQQ2pS

The American Institute of CPAs (AICPA) has asked the IRS to act on a seemingly small but troublesome issue affecting some taxpayers. Currently, people and businesses that want to change their address with the IRS must mail paper forms. Businesses needing to change their name must submit a letter and supporting documents. Processing such requests can take weeks, and the IRS may, in the meantime, send letters to incorrect addresses. In fact, taxpayers may be assessed penalties and interest if time-sensitive notices are sent to old addresses. Refunds can also be delayed. The AICPA is proposing a fully automated electronic process that taxpayers can access quickly through their online accounts.

If you have a traditional IRA, you may want to consider converting some or all of the balance to a Roth IRA. Such moves typically allow people to turn tax-deferred future growth into tax-free growth and take advantage of a Roth IRA’s estate planning benefits. The converted amount is taxable the year of the conversion. But income tax is currently at historically low rates, potentially making this a smart time to convert. Whether a Roth conversion makes sense for you depends on such factors as your age, whether you can afford to pay the tax now, your current tax bracket, the tax bracket you expect to be in when you retire and your estate planning objectives. Contact us for advice.

Improving accessibility at your business may come with a valuable tax break: Eligible small businesses can claim the Disabled Access Credit for certain costs related to improving accessibility for individuals with disabilities. A business may qualify if, in the prior tax year, it had gross receipts of $1 million or less or no more than 30 full-time employees. The credit equals 50% of eligible expenses above $250 but not above $10,250. Examples of potentially eligible costs include providing interpreters for people with hearing impairments, providing readers for people with visual impairments, and acquiring or modifying equipment or devices. We’re here if you need guidance on the credit.

The IRS has launched a digitally authenticated Tax Compliance Report that taxpayers can access through their IRS Individual Online Accounts. A tax compliance report shows whether an individual has filed tax returns and paid taxes on time. The report helps protect privacy by not showing the individual’s income, dependents or filing status. You can securely download the report when applying for a job or government benefits or completing a loan or mortgage application that requires tax compliance information. Organizations that receive the report can use its built-in digital certificate to confirm authenticity. For additional information, contact us or visit https://bit.ly/4gOIpsr

Are long-term care (LTC) insurance premiums tax-deductible? It depends. Qualified LTC policies are considered health insurance under federal income tax rules. So if you buy a policy, your premiums are treated as medical expenses for itemized deduction purposes. But your total eligible medical expenses for the year must meet the 7.5% of adjusted gross income threshold before you can start deducting LTC premiums. And there are age limits on how much you can deduct — for example, $500 for individuals age 40 and under and $6,200 for those 70 and over. Other age groups’ 2026 maximums fall between these two. Contact us for more information.

One of the items contained in the IRS’s Taxpayer Bill of Rights is the right to finality. Although finality may sound a little obscure, this right is critical if you’re being audited. For example, the IRS usually has a limit of three years from your filing date to assess additional tax (but it has unlimited time for a fraudulent return). What’s more, the IRS generally has a limit of 10 years from assessment to collect any tax due. And you can be subject to only one audit per tax year (although the IRS can reopen a previously audited return). You also have the right to know when an audit is complete. If you disagree with an IRS assessment or action, we can help.

U.S. businesses that export goods to Canada should prepare for tariffs taking effect Sept. 8, 2026. Canada will impose tariffs of 15%, 25% or 50% on certain U.S.-origin products, with rates varying by product. Affected sectors include agricultural equipment, appliances, dairy, electronics, pulp and paper, and steel. The measures apply only to goods originating in the United States. U.S. goods already in transit to Canada when the tariffs take effect generally won’t be subject to these tariffs. If your products are subject to the tariffs, Canadian importers may seek price concessions to offset tariff costs, or you might become less competitive there. Contact us to discuss the potential impact.

The IRS has established an Office of Conservation Easements to centralize expertise and coordinate policy, enforcement and case resolution involving conservation and historic preservation easements. As part of the transition, the IRS has ended its uniform settlement initiative (announced on May 13, 2026) and withdrawn deadlines for accepting previously issued offers. Prior elections remain in effect. Taxpayers with pending eligible cases may still request settlement under the May 13 framework through their assigned IRS examination or chief counsel representative, though different terms may apply in individual cases. We’re here if you have questions.