Tax News and Industry Updates
2025 Tax News and Industry Updates (Vol. 13, Iss. 4)
Inside This Issue
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No More Paper Checks After September 30th (Page 1)
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No Changes to Information Returns for 2025 Despite OBBBA Changes (Page 1)
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Filing Relief for Natural Disasters Act (Page 2)
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IRS FAQs on Termination of Energy Credits (Page 2)
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IRS Terminated Employees Without Following Internal Procedures (Page 3)
No More Paper Checks After September 30th
Cross References: treasury.gov
On August 14, 2025, the U.S. Department of the Treasury announced that the federal government will stop issuing paper checks for most federal payments on September 30, 2025. If you are one of the few people who still receives a federal benefit check, it’s time to switch to an electronic payment method.
“Reducing paper checks has been a longstanding bipartisan goal that our administration is finally putting into action. Thanks to President Trump, this will help reduce fraud and theft. It will also remove delays that prevent hardworking Americans from receiving their vital payments,” said Secretary of the Treasury Scott Bessent.
No action is required for the vast majority of Americans who already receive federal benefit payments electronically. If you are still receiving a paper check for Social Security, Veterans benefits, or any other federal benefit, enroll in direct deposit using one of the following options:
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Call the federal agency that pays your benefits and follow their instructions for enrolling in direct deposit.
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Enroll online at GoDirect.gov.
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Call the Electronic Payment Solution Center at 800-967-6857, Monday – Friday 9:00 a.m. – 7:00 p.m. ET.
If you do not have a bank account to receive direct deposit, you can safely access resources to open an account at FDIC: GetBanked or MyCreditUnion.gov. You can also sign up for a Treasury-sponsored Direct Express® Debit Mastercard® by calling Treasury’s Electronic Payment Solution Center or by contacting your paying agency directly.
Scam Warning: Always beware of government impersonation scams. Before responding to a request, check it out and verify it by contacting the agency using a website or phone number you know is real. If you’re unsure, ask a trusted source, like your bank, a friend, or a family member for help.
No Changes to Information Returns for 2025 Despite OBBBA Changes
Cross References: IR-2025-82
The IRS has announced that, as part of its phased implementation of the One Big Beautiful Bill Act (OBBBA), there will be no changes to certain information returns or withholding tables for tax year (TY) 2025 related to the new law.
Key Points for TY 2025 Relating to OBBBA Provisions:
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Form W-2, existing Forms 1099, Form 941, and other payroll return forms will remain unchanged for TY 2025.
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Federal income tax withholding tables will not be updated for these provisions for TY 2025.
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Employers and payroll providers should continue using current procedures for reporting and withholding.
These decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business, and tax professionals enough time to implement the changes effectively.
Looking Ahead to TY 2026: The IRS is working on new guidance and updated forms for TY 2026, which will include changes to how tips and overtime pay are reported. The IRS will coordinate with employers, payroll providers, and tax professionals to ensure a smooth transition. More information will be shared in the coming months regarding how taxpayers can claim OBBBA-related tax benefits when filing.
Note: OBBBA enacted new deductions for qualified tips, qualified overtime pay, and qualified passenger vehicle loan interest that are effective for tax year 2025. The law requires payers to report separate amounts on the recipient’s W-2 or 1099 to determine the deductible amount. The IRS is waiving this requirement for tax year 2025, presumably because of the complexity for payors needing to account for these amounts halfway through the tax year. Future guidance will likely allow payors to estimate these amounts on separate statements using a reasonable method.
Filing Relief for Natural Disasters Act
Cross References: H.R. 517 (Public Law 119-29)
Signed into law on July 24, 2025, the Filing Relief for Natural Disasters Act authorizes the IRS to postpone federal tax deadlines for taxpayers affected by a qualified state-declared disaster, upon written request by the state governor. The new law also increases the automatic extension of federal tax deadlines for certain taxpayers.
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Prior Law: The IRS could postpone federal tax deadlines (such as filing returns, paying taxes, making retirement contributions, and tax assessments/collections) for taxpayers affected by a federally-declared disaster. An automatic 60-day extension applied to relief workers, individuals killed or injured, and taxpayers whose primary residence, business, or records were located in the federal disaster area.
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New Law: Authorizes the same postponements for a qualified state-declared disaster upon written request by the state’s governor (or the District of Columbia mayor). A state includes the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands. Additionally, the automatic extension period for these affected taxpayers has been increased from 60 days to 120 days.
A qualified state-declared disaster is defined as any natural catastrophe, fire, flood, or explosion that causes damage of sufficient severity and magnitude to warrant a request.
IRS FAQs on Termination of Energy Credits
Cross References: FS-2025-05, August 21, 2025
The IRS recently issued new frequently asked questions (FAQs) providing general information on the accelerated termination of certain energy credits under the One Big Beautiful Bill Act (OBBBA).
Legal Status of FAQs: Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case, and the law will control if an FAQ is found to be inaccurate. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to negligence or accuracy-related penalties if that reliance results in an underpayment. Prior versions of the FAQs will be maintained on IRS.gov with historical dates to protect taxpayers who relied on them.
Q1. Which energy credits and deductions are expiring under OBBBA, and what are their new termination dates?
A1. OBBBA accelerated the termination of several provisions. The incentives expire as follows:
| Code Section | Section Title | Termination Date |
| 25C | Energy efficient home improvement credit |
Credit not allowed for property placed in service after December 31, 2025. |
| 25D | Residential clean energy credit |
Credit not allowed for expenditures made after December 31, 2025. |
| 25E | Previously-owned clean vehicles credit |
Credit not allowed for any vehicle acquired after September 30, 2025. |
| 30C | Alternative fuel vehicle refueling property credit |
Credit not allowed for property placed in service after June 30, 2026. |
| 30D | New clean vehicle credit |
Credit not allowed for any vehicle acquired after September 30, 2025. |
| 45L | New energy efficient home credit |
Credit not allowed for any qualified new energy efficient home acquired after June 30, 2026. |
| 45W | Qualified commercial clean vehicle credit |
Credit not allowed for any vehicle acquired after September 30, 2025. |
| 179D | Energy efficient commercial buildings deduction |
Deduction not allowed for property where construction begins after June 30, 2026. |
Q2.For purposes of the expiring clean vehicle credits under sections 25E, 30D, and 45W, what does “acquired” mean?
A2. A vehicle is “acquired” as of the date a written binding contract is entered into and a payment (including a nominal downpayment or trade-in) has been made.
Q3.What effect does “acquisition” of a vehicle have on a taxpayer’s ability to claim a credit under sections 25E, 30D, and 45W?
A3. Acquisition alone does not immediately entitle a taxpayer to a credit; the vehicle must be “placed in service” (meaning the taxpayer takes possession of the vehicle) to claim it. If a vehicle is legally acquired on or before September 30, 2025, the taxpayer can claim the credit when it is placed in service, even if that occurs after September 30, 2025. A time of sale report must be received from the dealer within three days of taking possession.
Q4. Can an election to transfer a clean vehicle credit be made at the time of acquisition?
A4. No. Taxpayers should wait until the time of sale (when possession is taken) to make the credit transfer election.
Q5. What will happen to the Energy Credits Online portal with the new termination periods for the clean vehicle credits?
A5. New user registration through the portal will close on September 30, 2025. The portal will remain open past that date for limited usage by previously registered users to submit or update time of sale reports (e.g., if a vehicle is returned).
IRS Terminated Employees Without Following Internal Procedures
Cross References: TIGTA Report No. 2025-IE-R028, August 14, 2025
In February 2025, following a Department of Treasury directive to reduce the federal workforce, the IRS sent termination notices to 7,315 probationary employees, citing performance reasons and mission needs.
Senior IRS officials raised concerns and refused to sign the notices because many of these employees lacked documented performance issues. Following congressional inquiries and court challenges, IRS and Treasury leadership reversed course, placing the employees on administrative leave in March 2025 and mandating their return to full work status by May 2025.
A Treasury Inspector General for Tax Administration (TIGTA) evaluation confirmed that the IRS failed to consider individual performance:
Timeframe: Only 29 days elapsed between identifying probationary employees and sending notices.
Performance Realities: Nearly all terminated employees had no negative ratings on file. In fact, 51% had no rating recorded, 90% of those with a rating were marked “Fully Successful,” and 8% were rated “Outstanding” or “Exceeded Fully Successful”. Only 43 employees were rated below fully successful.
| Performance Rating | Number of Probationary Employees |
| Below Fully Successful |
43 |
| Fully Successful and Above |
3,556 |
| No Performance Rating |
3,716 |
Furthermore, the IRS failed to correctly identify all exempt mission-critical personnel and later had to attempt to rehire mistakenly terminated employees. In July 2025, the U.S. Supreme Court stayed a lower court’s prohibition on federal agency reduction in force (RIF) plans. At the time of the TIGTA report, it remains unclear whether these probationary employees will stay reinstated or face future large-scale RIF terminations.