Treasury Labor Union Challenges Trump on Collective Bargaining Order:
The National Treasury Employees Union (NTEU) filed a complaint on 3/31/25 against President Trump and agency leaders in the U.S. District Court for the District of Columbia seeking declaratory and injunctive relief from an executive order signed by the president on 3/27/25. The order ends collective bargaining agreements with 37 government agencies that serve a primary function involving “intelligence, counterintelligence, investigative, or national security work.” According to a White House fact sheet, the Treasury Department was included in the order for economic defense purposes, using the rationale that tax collection fits within the definition of national security. The Office of Personnel Management issued guidance to covered agencies stating the agencies are “no longer required to collectively bargain with Federal unions.” The NTEU complaint argues the “IRS does not primarily perform security, investigative, or intelligence work” and says roughly two-thirds of the approximately 160,000 employees it serves will lose their collective bargaining rights because of the order. National Treasury Employees Union v. Donald J. Trump, No. 1:25-cv-00935, (D.D.C.); https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-exempts-agencies-with-national-security-missions-from-federal-collective-bargaining-requirements/ .
IRS Updates Employee Retention Credit FAQs:
The IRS updated its list of employee retention credit (ERC) frequently asked questions (FAQs) on 3/20/25. The agency’s 3/28/25, e-News for Tax Professionals explains that the FAQs clarify how a business can resolve issues with its income tax return if the business did not reduce its wage expense and its ERC claim was allowed, or alternatively, it reduced its wage expense and its ERC was disallowed. The IRS also updated a FAQ on how to report fraud regarding the ERC. To report such activities, one should complete Form 14242 , Report Suspected Abusive Tax Promotions or Preparers and include any supporting materials. While optional, providing contact information can be helpful for follow-up purposes. The completed form and materials should be sent to the IRS Lead Development Center in the Office of Promoter Investigations, either by mail to their Ogden, Utah, address or by fax to 877-477-9135. This reporting mechanism aims to help the IRS identify and address fraudulent activities related to ERC claims. The FAQs can be viewed on the IRS website here: https://www.irs.gov/coronavirus/frequently-asked-questions-about-the-employee-retention-credit#income .
Executive Order Directs Treasury to Phase Out Paper Checks:
In an executive order signed 3/25/25, President Trump ordered the Department of Treasury to cease issuing paper checks for all federal disbursements, including tax refunds, and to process all receipts, including tax payments, electronically, effective 9/30/25. Limited exceptions will be granted for 1) individuals who do not have access to banking services or electronic payment systems; 2) emergency situations where electronic disbursement would cause undue hardship; and 3) certain national security or law enforcement related activities. The order directs Treasury Secretary Scott Bessent to submit an implementation plan within 180 days from the date of the executive order. The Department of the Treasury will support other federal agencies in this transition and will provide access to the Treasury’s centralized payment systems for direct deposits; debit and credit card payments; digital wallets and real-time payment systems; and other modern electronic payment options. The full executive order can be read here: https://www.whitehouse.gov/presidential-actions/2025/03/modernizing-payments-to-and-from-americas-bank-account/ .
OPR Provides Guidance on Due Process Protections in Circular 230 Cases:
The IRS Office of Professional Responsibility (OPR) has published guidance on legal safeguards available to tax practitioners facing sanctions over alleged Circular 230 violations. Circular 230 specifies the requirements practitioners must meet, defines their duties, and provides sanctions for those who do not comply. This applies to attorneys, certified public accountants, enrolled agents, enrolled retirement plan agents, and enrolled actuaries who practice before the IRS. The OPR explained that upon receiving a referral alleging Circular 230 violations, it first determines whether it has jurisdiction over the practitioner in question, then evaluates whether the alleged violations concern the practitioner’s fitness to practice before the IRS. It then describes due process procedures for sanctionable conduct and non-sanctionable conduct; potential disciplinary action; and the proceeding and appeals process. For more information on Circular 230 sanctions for practitioners who do not comply with the rules of practice, see section 1905 in the Tax Planning and Advisory IRS Tax Resolution and Representation topic. Alerts from the Office of Professional Responsibility 2025-03.
Taxpayer Not Liable for Taxes on IRA Forfeiture:
The 6th Circuit Court of Appeals ruled that a taxpayer was not liable for taxes on a distribution from an IRA forfeited to the IRS. The funds distributed from the taxpayer’s IRA belonged to the IRS, not the taxpayer, due to the way the account was forfeited. A forfeiture order against the taxpayer granted the IRS ownership of his IRA, but it did not enter a money judgment against him. Accordingly, when the IRS withdrew the funds from the IRA, it was simply withdrawing its own money from the account. The taxpayer did not take a distribution from the IRA, nor did he receive any economic gain or discharge of debt from the distribution, because the account belonged to the IRS. The ruling clarifies that forfeited assets do not automatically translate into taxable income for the original owner and underscores the importance of understanding the specific nature of forfeiture orders. Hubbard, 135 AFTR 2d 2025-484 (CA 6).
Beneficial Ownership Information Reporting Changes:
The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule removing the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA). Only foreign companies that have registered to do business in any U.S. State or Tribal jurisdiction are required to report BOI. These foreign entities are not required to report any U.S. persons as beneficial owners, and U.S. persons are not required to report BOI with respect to any entity for which they are a beneficial owner. Foreign reporting companies registered to do business in the U.S. before 3/26/2025 must file BOI reports within 30 days from that date. Foreign reporting companies registered to do business in the U.S. on or after 3/26/2025 have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective. RIN 1506-AB49.
FATCA Report Filing/Extension Deadline is 3/31:
The 3/31/2025 deadline to file 2024 Form 8966, FATCA Report, is approaching fast. Filers that need longer may request a 90-day extension of time to file on Form 8809-I. Form 8809-I replaces the 2024 process that allowed Form 8966 filers to request extensions through the International Data Exchange Service Help Desk. The Foreign Account Tax Compliance Act (FATCA) requires U.S. taxpayers to report certain foreign financial accounts and offshore assets. It also requires foreign financial institutions (FFIs) to report on financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. Form 8966 is used to report to the IRS information on U.S.-owned financial accounts. Filers may be subject to a late filing penalty if Form 8966 is filed late, and they havenÆt applied for and received an approved extension of time to file. In addition, a 30% withholding tax on certain U.S. source payments made to FFIs and non-financial foreign entities that do not file Form 8966.
Manual Refunds for Deceased Taxpayers Delayed; Interest Calculations May be Erroneous:
The Treasury Inspector General for Tax Administration (TIGTA) has found that that the IRS took on average 444 calendar days to issue manual refunds for deceased taxpayers. When a tax return is filed on behalf of a deceased taxpayer, the IRS will systemically issue the refund to the claimant. However, if the IRS cannot systemically refund a deceased taxpayer’s overpayment, a Form 1310 , Statement of Person Claiming Refund Due a Deceased Taxpayer, or court certified documentation may be required to have the refund issued. From January 2021 through July 2024, the agency processed some 610,000 manual refunds for deceased taxpayers. In addition to problems with delays, TIGTA found deficiencies in IRS interest-calculation procedures for deceased taxpayers’ refunds. Interest on the 610,000 manual refunds issued over the January 2021ûJuly 2024 period totaled $237 million. 47,542 claimants may have been impacted by erroneous interest calculations and received either too much or too little in interest owed. Report No. 2025-IE-R012.
Judge Won’t Block IRS Sharing of Immigrant Data:
An immigrant rights advocacy groups’ motion to temporarily enjoin the IRS from sharing tax records with other agencies for immigration enforcement purposes was denied. The court stated that the plaintiffs “have not established a likelihood of success on the merits” in their lawsuit against the Trump Administration. The organizations sought relief in claiming the Treasury Department and IRS would violate IRC Sec. 6103 taxpayer data privacy laws by disclosing protected tax information to officials at the Department of Homeland Security (DHS), Department of Government Efficiency (DOGE), or elsewhere. According to the complaint, the administration’s plans for cross-agency data sharing would unlawfully include sensitive tax records. “To carry out the deportation policies articulated by President Trump, DHS and [Immigration and Customs Enforcement] must first identify and locate individuals who are subject to removal,” which is where the IRS comes in, they said. The groups had requested a temporary restraining order to prevent this. Centro de Trabajadores Unidos v. Bessent, No. 25-cv-0677 (DLF).
Retirees That Turned 73 in 2024 Must Begin Receiving Retirement Distributions by 4/1/25:
The IRS issued a reminder that retirees who turned 73 in 2024 must begin taking required minimum distributions (RMDs) from their retirement accounts by 4/1/25. This rule applies to those born after 12/31/1950, and affects various retirement plans like IRAs and 401(k)s, excluding Roth IRAs. Typically, RMDs are due by year-end, but first-time distributions can be delayed until April 1. This results in two taxable distributions in 2025. The April 1 deadline is generally mandatory, though some exceptions exist for certain workplace plans. The IRS provides resources for RMD calculations and inquiries on its website (https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs) and there are also life expectancy tables in Appendix B of IRS Publication 590-B (https://www.irs.gov/forms-pubs/about-publication-590-b). News Release IR 2025-33 .
