Plus: Zohran Mamdani’s millionaire tax, Billy Long is sworn in as the 51st IRS Commissioner, IRS continues to shed employees, contacting the Taxpayer Advocate Service (TAS), filing deadlines, tax trivia, and more. |
July 4th is just around the corner. For most Americans, it traditionally involves flags, parades, fireworks, and if you’re lucky, some really great corn on the cob. But Republican members of Congress are hoping that it will include some additional pomp and circumstance as President Trump signs the “One Big Beautiful Bill Act” (OBBBA) into law.
The President has made no secret of his desire to sign the bill on that day. There is, however, quite a bit standing in the way of making that happen–there is still a lot of work to do. The Senate has not yet passed a version of OBBBA, and once it does, it must precisely match the House-passed version (or the House must vote again to approve the Senate version) before this can become law. Republicans in the Senate remain optimistic about their chances, but they first need to wait for the final word on what’s allowed in the bill before voting. Elizabeth MacDonough, the Senate Parliamentarian, has been reviewing the hundreds of pages in the proposed bill and has already flagged several problematic provisions that would be prohibited under the Byrd Rule. I’ve been keeping track of the Byrd Bath here.
OBBBA proposes tax and policy changes that could significantly impact how people and businesses plan, invest, and grow—and importantly, it’s considered the signature legislation of Trump’s second term. In other words, it’s something Republicans feel they must pass. As with any major legislation, the path forward is shaped as much by politics as by policy. Last week, Janet Novack and I sat down with Dave Camp, former chairman of the Ways and Means Committee, and Dean Zerbe, former Senate tax counsel, to talk about the future of the bill.
(The replay of the webinar is available for members here.)
Both Camp and Zerbe are confident that the bill will make it to the finish line–it just may not be by July 4th.
In the meantime, both the House and Senate have a lot to think about, including addressing those controversial state and local tax (SALT) and pass-through entity tax (PTET) provisions. Unlike the House version, which aggressively targets specified service trades or businesses (SSTBs), the Senate draft restores PTET deductions for all pass-throughs, offering relief to traders, CPAs, and other professionals.
Congress will also have to tackle international provisions in the bills–the House and Senate versions vary considerably in some key areas. One international tax provision, in particular, left stakeholders concerned—the proposed Section 899, which would have allowed the executive branch to raise taxes on taxpayers connected to countries believed to have discriminatory or extraterritorial tax regimes. A last-minute change has made worries over Section 899 moot. As trade groups warned of chilling effects on capital markets and foreign governments viewed it as a backdoor sanctions regime, Treasury Secretary Scott Bessent publicly called for the provision’s removal, citing diplomatic progress. The so-called “revenge tax” has now been scrapped.
Overall, the Senate version of the bill would reduce household taxes by an average of approximately $2,600 in 2026, slightly less than the House-passed bill, according to a new analysis by the Tax Policy Center. However, like its House counterpart, the bill would primarily benefit higher-income households.
There’s a lot to consider, much of which has the potential to complicate tax filing and tax administration. At the same time, major cuts are happening at the IRS. Among the casualties in the fiscal pruning is the IRS Criminal Investigation (CI) division—one of the few federal agency divisions that, rather than costing money, regularly recovers more money than it spends. In 2024 alone, CI helped claw back $9.1 billion in fraudulent proceeds—all on a budget of less than $800 million. In addition to its focus on tax compliance, IRS-CI plays a central role in dismantling financial networks behind a range of illicit activities, including international drug trafficking, terrorism, pandemic-related fraud, and offshore tax shelters.
CI isn’t the only division in the IRS that will be feeling the pinch. Following a season that Erin Collins, the National Taxpayer Advocate (NTA), called one of “the most successful filing seasons in recent history,” she raised a warning flag in her annual report to Congress over IRS job cuts. As of June, the IRS workforce had decreased by over 25% to fewer than 76,000 employees from the 102,000 employees at the agency at the start of the filing season. The figure takes into account employees who accepted an offer to resign, but remain on the payroll through September 30. That could make the 2026 filing season… challenging (more on those cuts later).
It’s a lot to think about. As Congress finalizes the budget, including the impact that the various provisions may have on taxpayers and the tax community, we’ll be watching at Forbes–so that you don’t have to.
Go grab some ice cream and enjoy your weekend,
Kelly |
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This week, a taxpayer asked:
I’m stuck in a loop at the IRS, and getting the run-around. A friend told me to contact the Taxpayer Advocate Service. How do I do this?
You have a few options for reaching out to the Taxpayer Advocate Service (TAS):
➤ You can call the local Taxpayer Advocate Office. Each state—plus D.C. and Puerto Rico—has at least one TAS office (for now). You can find your local office's phone number here. (Be prepared to leave a message.)
➤ You can call the national TAS hotline at 1.877.777.4778. Calls are answered Monday–Friday, 8 a.m. to 8 p.m. (local time). You’ll want to have your information handy, including your tax ID number (Social Security number or Individual Taxpayer Identification Number (ITIN)), a copy of any IRS correspondence that you’ve received, and a copy of the tax return related to the problem.
➤ You can also submit Form 911, Request for Taxpayer Advocate Service Assistance by faxing or mailing the form to your local TAS (you can find the fax number or address here). Overseas taxpayers should fax the form to 1.304.707.9793.
TAS is an independent office within the IRS and works to protect taxpayer rights. It’s a free service–but should not be your first contact with the IRS. You should try to resolve your issue through the traditional IRS channels first (the TAS will ask you whether you’ve done this before agreeing to help you with your matter).
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Do you have a tax question or matter that you think we should cover in the next newsletter? We'd love to help if we can. Check out our guidelines and submit a question here. |
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Statistics, Charts, and Maps |
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Each year, the National Taxpayer Advocate delivers two reports to Congress—one in January and another in June. This year, Erin Collins, the National Taxpayer Advocate since 2020, touted IRS successes following the pandemic, suggesting that the most recent filing season was the “smoothest yet.” For most Americans, she notes, the annual filing season is the only time they interact with the IRS—that makes it imperative for the IRS to get it right.
Collins says that IRS employees did get it right this year, collecting approximately $5 trillion in revenue, processing around 180 million income tax returns, and over five billion information forms. Most taxpayers filed their returns, paid their taxes, or received their refunds without any delays or intervention from the IRS. That should happen when the system is working.
The above table shows what the numbers from the last filing season look like—and it's positive.
But Collins warns that the 2026 filing season may look very different. Deep cuts to IRS personnel (you can find a detailed chart of what those cuts look like so far in 2025 here) and the budget–with more likely on the way could mean that taxpayers will see reductions in service.
In addition to the nine systemic advocacy objectives for the Taxpayer Advocate Service this year (what the TAS will advocate for with the IRS to enhance tax administration on behalf of taxpayers and address systemic issues that cause taxpayer burden, harm, or a negative impact on taxpayer rights) that Collins presented to Congress, she also made the case for lifting the hiring freeze at IRS and allowing the agency to begin getting ready for the next filing season. |
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One thing is for sure following Zohran Mamdani’s Democratic primary win in the New York City mayoral race: People are talking about it.
The 33-year-old Democrat garnered 44% of the vote running on a progressive agenda focused on making life in New York City more affordable, exciting some voters, and ruffling the feathers of others, including billionaire Bill Ackman, founder and CEO of Pershing Square Capital Management, who posted on social media, “New York City under Mamdani is about to become much more dangerous and economically unviable.”
Mamdani has a plan to raise revenues without tapping the middle class. In addition to bumping up the corporate tax, Mamdani has proposed a 2% tax on what his campaign calls “the wealthiest 1% of New Yorkers—those earning above $1 million annually.” His platform estimates this “millionaire tax” will raise $4 billion annually to help fund projects like universal free early childcare, free bus rides and more affordable housing.
The numbers, Mamdani says, mean that the tax would impact about 34,000 households. “This tiny share of the city population,” he says on his website, “takes home 35 percent of all income earned by New York City residents.”
Under Mamdani’s plan, the tax would be tacked on at the top, taking an additional 2% of incomes over $1 million, making the tax more progressive. He also points to success stories in states like Massachusetts–though very few cities enforce their own individual and corporate income tax, making comparisons about how this increase will affect taxpayers opaque.
(Not all states are equally enthusiastic about raising taxes at the top. In 2013, North Carolina replaced its graduated income tax with a top rate of 7.75% with a flat tax of 4.5%, while voters in California rejected a surtax on millionaires in 2022. In both cases, those opposed to increasing tax rates cited concerns about retaining rich taxpayers within their borders.)
New York City residents don’t get the last word on this issue. Gov. Kathy Hochul, a Democrat, would need to sign off on a bill passed by the state legislature. Earlier this month, Hochul rejected the plan, saying, “I don’t want to lose any more people to Palm Beach. We’ve lost enough. We had a major out-migration when Republicans in Congress eliminated the state local tax deduction…Driving them to Florida does not help us, so let’s be smart about this.” |
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Tax Filing Dates And Deadlines |
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