SB 711, which would update California’s specified conformity date from January 1, 2015, to January 1, 2025, moved out of the California Assembly’s Appropriation Committee on August 29, 2025. This means it will be voted on by the California Assembly next week and then will go back to the Senate to concur on the changes made in the Assembly.

It’s important to note that if SB 711 is enacted, the January 1, 2025, conformity date means that California will not conform to the changes made by the One Big, Beautiful Bill Act (P.L. 119-21), because that was enacted on July 4, 2025.

However, SB 711 would conform to hundreds, but not all, of the federal tax changes that were enacted since January 1, 2015, including:

• SECURE Act and SECURE 2.0 Act provisions that allow deductions for IRA contributions for individuals age 70½ and older as well as increased deductible catch-up contribution amounts and SIMPLE contribution amounts;
• The TCJA’s treatment of alimony; and
• The federal alternative simplified Research Credit (with modifications).

SB 711 specifically does not conform to many of the big ticket items enacted by the TCJA, such as the:

• Qualified business income deduction under IRC §199A;
• Repeal of the 2% miscellaneous itemized deduction;
• Business interest limitation under IRC §163(j); and
• $750,000 cap on mortgage interest expenses.

In addition, California would still not conform to health savings account treatment, MACRs for corporations, bonus depreciation, and increased IRC §179 expenses.

Taxpayers and tax professionals who would like to see California tax preparation simplified as a result of this proposed conformity legislation should contact their state assemblymembers and senators as soon as possible to request their support for SB 711.

You can look up your state legislator’s contact information at:

http://findyourrep.legislature.ca.gov

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get more information on California conformity to federal tax provisions. Click here and register today.

The IRS has issued guidance on how taxpayers can deduct domestic research expenses as a result of changes made by OBBBA. (Rev. Proc. 2025-28) The guidance addresses how small businesses can currently deduct these expenses retroactive to the 2022 tax year, as well as the accounting method changes required for all taxpayers as a result of the OBBBA changes (which also allow taxpayers to amortize such expenses over a period of at least 60 months rather than deducting them in the year incurred).

Revenue Procedure 2025-28 describes two methods for eligible small taxpayers to make the election:

1. Attach an election statement to their amended 2022, 2023, or 2024 income tax returns (AARs for partnerships); or
2. For taxpayers who haven’t yet filed their 2024 income tax returns (such as calendar-year taxpayers currently on extension), if they deduct their 2024 research expenses on their timely filed returns, then they are deemed to have made the election, even without attaching an election statement to their return. For this deemed election, returns must be filed by November 15, 2025.

Caution: Eligible small taxpayers who make the election to deduct their research expenses on their 2024 income tax returns, who also had research expenses in 2022 and 2023, must also file amended 2022 and 2023 income tax returns to deduct their research expenses from those years because the election applies to all retroactive tax years in which research expenses were paid or incurred.

For the 2022 taxable year, eligible calendar-year small taxpayers are subject to the standard three-year statute of limitations period to file a refund claim. For the 2023 taxable year, taxpayers only have until July 6, 2026, to amend their returns to apply this election.

Alternatively, all taxpayers, including small taxpayers, can elect to deduct their remaining unamortized research expenses from the 2022, 2023, and 2024 taxable years on either their 2025 income tax return or spread the deductions over their 2025 and 2026 taxable years. This election is made on the taxpayer’s 2025 income tax return.

Note that the IRS’s processing times for amended income tax returns is at least nine months, so amended prior-year returns may not provide refunds faster than applying the alternate election to deduct unamortized domestic research expenses on the taxpayer’s originally filed 2025 income tax return.

There are many more points of guidance available under Revenue Procedure 2025-28, which we will cover in future webinars and seminars, including our Federal and California Tax Update.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get more information on Revenue Procedure 2025-28 and OBBBA’s many tax provisions. Click here and register today.

The IRS has confirmed that the mailing address for IRS Form 1040-V, Payment Voucher for Individuals, has been changed to P.O. Box 931000, Louisville, KY, 40293-1000, for taxpayers in the following states:

This is similar to the changes made for other forms that we announced last week (see Flash E-Mail #2025-51) and was announced in IRS Publication 3891, Lockbox Addresses for 2026. However, the IRS has verified that this applies to Forms 1040-V for the 2024 tax year as well as the 2025 tax year (absent any further changes).

Previously, taxpayers in these states sent their payments along with Form 1040-V to a P.O. Box in Cincinnati, Ohio.

Payments for the 2024 tax year that are sent to the Cincinnati P.O. Box should be automatically forwarded to the Louisville P.O. Box and no late-payment penalties should be imposed. However, should this not occur, and penalties are imposed, taxpayers will have any associated penalties abated if they can provide proof of timely payment.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

Because California’s loan of over $18 billion from the federal government to cover California’s unemployment insurance claims during the COVID-19 pandemic has not been paid, employers will face a 0.3% credit rate reduction (a.k.a. rate increase) for 2025, which will be paid by employers in 2026. Similar increases were imposed for 2022 through 2024. This will bring the cumulative rate increase to 1.2%, which is the equivalent of an additional $84 per employee ($7,000 wage base × 1.2%). When combined with the standard 0.6% rate, this will be a total rate of 1.8%.

This means most employers will be paying $126 per employee next year for California employees with $7,000 or more in wages (less for those with wages under $7,000).

In addition, because the loan has been outstanding for over five years now, employers may face an additional 3.7% rate hike, referred to as a Benefit Cost Reduction (BCR) add-on. If imposed, this would amount to a total rate of 4.9%, or up to $238 per employee.

Governor Newsom has submitted a request to the U.S. Department of Labor to waive the BCR add-on; similar requests were submitted and approved in the past (2015–2017). The federal government has until November 10, 2025, to either approve or reject the waiver, which means that employers are currently in limbo as to how much they must set aside to pay for the tax next year.

We will send another Flash E-mail when a decision is made on California’s waiver request.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

The IRS has confirmed that it is now requiring taxpayers in certain states to send payments with the following forms to new mailing addresses (noted below):

• Form 1040-ES, Estimated Tax Payments for Individuals; and
• Form 941, Employers Quarterly Federal Tax Return.

Previously, taxpayers in the states listed below made these payments to P.O. boxes in Cincinnati, Ohio. Tax professionals should verify whether their software has updated these addresses and if not, should override the address listed. Tax professionals may need to contact their clients to inform them of the address change.

According to the IRS, they will forward any returns and payments inadvertently mailed to the wrong address and no late-filing or late-payment penalties should be imposed. However, if the IRS erroneously imposes penalties, taxpayers or their tax professionals can contact the IRS customer service or tax practitioner hotline to have the penalties abated. Proof of timely payment must be provided.

This change was announced in IRS Publication 3891, Lockbox Addresses for 2026. However, we have confirmed with the IRS that these changes do apply to 2025 filings and payments. The mailing addresses for the following forms for taxpayers in the listed states have changed to the address noted.

Form 1040-ES (Estimated Tax) with payment

Alaska, California, Colorado, Hawaii, Idaho, Kansas, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Utah, Washington, Wyoming:

P.O. Box 1300, Charlotte, NC 28201-1300

Form 941 (Employer’s Quarterly Tax) with payment

Connecticut, Delaware, District of Columbia, Georgia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, West Virginia, Wisconsin:

P.O. Box 932100, Louisville, KY 40293-2100

Note: It is interesting that the IRS is changing the mailing addresses for these forms that are submitted with payments, given President Trump’s Executive Order 14247 to have tax payments made electronically by September 30, 2025. To date, we have not received any guidance on this new mandate. We will send a Flash E-mail as soon as guidance is issued.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

The IRS issued updated FAQs addressing issues related to the early termination of various energy incentives under the One Big, Beautiful Bill Act (OBBBA; P.L. 119-21). (FS-2025-05)

OBBBA terminates all three clean vehicle credits for vehicles acquired after September 30, 2025. The IRS’s FAQs define the term “acquired” to mean that the taxpayer has entered into a binding written contract to purchase a qualifying vehicle and made a payment. A payment can include a nominal downpayment or a vehicle trade-in. As long as the taxpayer has acquired a qualifying vehicle under this definition, then the taxpayer can claim a clean vehicle credit even if they take delivery of the vehicle after September 30, 2025.

OBBBA terminates the Residential Clean Energy Credit under IRC §25D (solar, etc.) with respect to any expenditures made after December 31, 2025. Many people have taken the language of OBBBA to mean that a taxpayer can pay for their residential clean energy project by December 31 and still claim a credit if the project is completed after December 31, 2025. The IRS’s FAQs lay waste to this claim by pointing out that IRC §25D(e)(8) was left unchanged by OBBBA. That section provides that all expenditures with respect to a residential clean energy project are deemed paid when the original installation of the project is completed.

For car dealers, new user registrations for the IRS’s Energy Credit Online portal will close on September 30, 2025. The portal will remain open after that day for limited usage by previously registered users to submit time-of-sale reports and updates to such reports, such as when a vehicle has been returned.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

Guidance outlining the “beginning of construction” requirements that must be met for a solar or wind facility to qualify for the nonresidential IRC §45Y Clean Electricity Production Credit or §48E Clean Electricity Investment Credit has been issued. (IRS Notice 2025-42) The guidance applies to applicable wind and solar facilities, where construction begins after September 1, 2025.

Under OBBBA, solar and wind facilities are generally only eligible for the credits if they are placed in service by the end of 2027. (OBBBA §§70512, 70513) However, an exception applies if the construction of the facility begins prior to July 5, 2026, referred to as the beginning of construction deadline.

Prior to OBBBA’s passage, the IRS had provided guidance via various notices as to when construction begins, which could be satisfied by either meeting:

• A physical work test (which also requires taxpayers to satisfy a continuity requirement); or
• A 5% safe harbor test.

Notice 2025-42 eliminates the 5% safe harbor test for all facilities other than low-output solar facilities, which are defined as facilities generating 1.5% megawatts or less. Under the 5% safe harbor test a taxpayer can establish that construction has begun when the taxpayer incurs 5% or more of the total cost of the energy property.

For all other facilities, taxpayers must now establish via a facts and circumstances analysis that physical work of a “significant nature” has begun to qualify for the credits. Highlights of the guidance include:

• Specifying that, as before, the focus is on the nature of the actual work performed (other than preliminary activities), not the amount or the cost, and both off-site and on-site work may be taken into account. The notice provides nonexclusive lists of types of activities that would constitute work of a significant nature and ineligible preliminary activities (e.g., planning and permitting); and
• Clarifying that the continuity requirement, which requires that the taxpayer continue to make progress toward completion of the project, will continue to be satisfied if the facility is placed in service by the end of the fourth calendar year after construction began. The notice also provides a list of excusable disruptions to the continuity requirement.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

The FTB has confirmed that California will conform to the IRS disaster filing and payment postponement relief available to victims of disasters outlined in the following chart:

This means that California residents who were affected by these disasters qualify for postponement relief for their California filing and payment requirements, as well as nonresidents who have a California filing and payment requirement.

For the latest list of out-of-state disasters for which California provides filing and payment postponement relief, see the FTB’s webpage at:

www.ftb.ca.gov/file/when-to-file/disasters-outside-california.html

Sign up for Spidell’s Critical California Tax Issues webinar and learn about tax topics including conformity, residency, community property, and more. Click here and register today.

As part of the IRS’s phased implementation of the One Big, Beautiful Bill Act, they have announced that there will be no changes to certain 2025 tax year information returns or withholding tables related to the new law. (IR-2025-82)

Pursuant to the IRS announcement:

• Form W-2, existing Forms 1099, and Form 941 and other payroll return forms will remain unchanged for tax year 2025;
• Federal income tax withholding tables will not be updated for these provisions for tax year 2025; and
• Employers and payroll providers should continue using current procedures for reporting and withholding.

Taxpayers have been particularly concerned about whether changes to information returns or withholding tables would be made to reflect the new deductions for tips, overtime, and passenger vehicle loan interest. Though there will be no changes to the information returns for 2025, the IRS did state that it will be providing additional information in the coming months about how taxpayers can claim OBBBA-related tax benefits when they file their returns.

In addition, the IRS is working on new guidance and form updates for the 2026 tax year.

The IRS directs taxpayers and tax professionals to its new web page covering the OBBBA 2025 tax provisions:

www.irs.gov/newsroom/one-big-beautiful-bill-act-of-2025-provisions

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

The IRS has updated its FAQs on the One Big, Beautiful Bill Act’s (OBBBA’s) new deduction for interest paid on auto loans. (FS-2025-03)

The new auto loan interest deduction is available to individual taxpayers for personal use vehicles purchased after December 31, 2024. (OBBBA §70203; IRC §§63(b)(7), 163(h)(4)) The deduction is available for the 2025 through 2028 taxable years only. Among other requirements, the loan must be for the acquisition of a vehicle with a final assembly point in the United States.

The IRS’s updated FAQs provide that taxpayers can rely on either:

• The window sticker of a new vehicle, which must identify the vehicle’s final point of assembly; or
• The vehicle’s plant of manufacture as reported on the vehicle identification number (VIN).

Taxpayers can look up a vehicle’s plant of manufacture using its VIN number at the United States Department of Transportation website:

https://vpic.nhtsa.dot.gov/decoder

The IRS’s updated FAQs are available at:

www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get details on OBBBA’s many tax provisions. Click here and register today.

The IRS announced yesterday that a business’s designated officials who access the IRS’s Business Tax Account online must revalidate their accounts by July 29 in order to maintain access. (FS-2025-04) The revalidation process applies only to those designated officials who originally gained account access in December 2024 or earlier.

Designated officials who fail to revalidate their account by July 29 must restart the identity verification process through ID.me

In order to revalidate an account, designated officials must log in to their Business Tax Account online and follow the revalidation prompts.

Designated officials include:

• Partners;
• LLC members;
• Corporate officers (but only if they also received a W-2 from the business for the most recent tax filing year and are authorized to bind the business or entity).

The IRS’s announcement can be found at: www.irs.gov/newsroom/designated-officials-must-revalidate-their-business-tax-account-by-july-29-or-risk-losing-access

Taxpayers can login to their business tax account online to revalidate their access at: www.irs.gov/businesses/business-tax-account

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get additional details on these crypotocurrency bills and other new tax legislation. Click here and register today.

Two major cryptocurrency bills have now passed the House: the Guiding and Establishing  National Innovation for U.S. Stablecoins Act (GENIUS Act, S. 1582) and the Digital Asset Market Clarity Act (Clarity Act, H.R. 3633). President Trump signed the GENIUS Act this afternoon and the Clarity Act still has to pass the Senate.

The GENIUS Act addresses the treatment and regulation of stable coins and the Clarity Act would address whether cryptocurrency will be treated as commodities or as securities, depending on various factors.

Together both bills, if enacted, will impact the tax reporting and tax treatment of cryptocurrencies.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get additional details on these crypotocurrency bills and other new tax legislation. Click here and register today.

The IRS has released FS-2025-03, which provides an overview of the eligibility requirements for the new personal exemption deduction for seniors and the following new deductions that were enacted by the One Big, Beautiful Bill Act (OBBBA):

• “No tax on tips;”
• “No tax on overtime;” and
• “No tax on car loan interest.”

The fact sheet summarizes the basic eligibility requirements for claiming these new deductions and also clarifies that for purposes of:

• All of the new deductions, other than the personal exemption deduction, the IRS will provide transitional relief for tax year 2025 for taxpayers claiming the deductions and for employers and other payors subject to the new reporting requirements, but the Fact Sheet does not specifically outline what the relief will entail; and
• The “no tax on overtime” deduction, the amount that qualifies for the deduction is only the pay that exceeds a taxpayer’s regular rate of pay, such as the “half” portion of “time-and-a-half” compensation, that is required by the Fair Labor Standards Act.

Sign up for Spidell’s Understanding the New One Big, Beautiful Bill Act webinar and get additional details concerning these new deductions as well as the other domestic tax provisions of OBBBA. Click here and register today.

The Filing Relief for Natural Disasters Act (H.R. 517) was passed by Congress and is now awaiting the President’s anticipated signature.

The Act will:

• Extend the mandatory 60-day filing and payment extension period to 120 days for disaster victims, regardless of whether the IRS grants additional filing and payment relief; and
• Grant the Secretary of the Treasury the authority, upon request by a state’s governor, to apply the disaster-related filing and payment relief available to federally declared disasters to state-declared disasters as well.

The Act will apply to all state and federal disaster declarations made after the date of the Act’s enactment.

Additional Texas counties eligible for relief

The IRS has added the following Texas counties to their disaster relief declaration:

• Burnet;
• Kendall;
• Kimble;
• Menard;
• San Saba;
• Tom Green;
• Travis; and
• Williamson.
  (TX-2025-04)

This means affected taxpayers in these counties now have until February 2, 2026, to file and pay taxes normally due between the period July 2, 2025, and February 2, 2026. See Spidell’s July 10 Flash E-mail for more details.

Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get the latest information on disaster relief, new legislation, and more. Click here and register today.

Taxpayers located in Kerr County, Texas, have until February 2, 2026, to meet filing and payment deadlines that normally fall within the July 2, 2025, through February 2, 2026, time period. (IRS TX-2025-04)

Note: With the additional storms and flooding that occurred after July 2, 2025, this disaster relief may be expanded beyond Kerr County. We will send updates should this occur.

The disaster relief includes, but is not limited to:

• Any individual, business, or tax-exempt organization that has a valid extension to file their 2024 return due to run out on October 15, 2025;
• Quarterly estimated income tax payments normally due on September 15, 2025, and January 15, 2026;
• Quarterly payroll and excise tax returns normally due on July 31 and October 31, 2025, and January 31, 2026;
• Calendar-year partnerships and S corporations whose 2024 extensions run out on September 15, 2025;
• Calendar-year corporations whose 2024 extensions run out on October 15, 2025; and
• Calendar-year tax exempt organizations whose extensions run out on November 17, 2025.

The IRS notes, however, that payments for returns on a filing extension are not eligible for additional time to pay as filing extensions only apply to the filing of the return and not to payments.

Taxpayers who have an address of record in Kerr County will automatically qualify for relief. Taxpayers who live outside of Kerr County whose records are located in Kerr County, such as taxpayers with tax preparers in Kerr County or who own businesses located in Kerr County, also qualify for relief, but must contact the IRS disaster hotline at (866) 562-5227 to obtain relief.

Disaster area tax preparers with clients located outside the disaster area can choose to file bulk requests. Information about bulk requests is available at:

www.irs.gov/tax-professionals/bulk-requests-from-practitioners-for-disaster-relief

Sign up for Spidell’s Quarterly Tax Update and get the latest information on disaster relief and other important topics. Click here and register today.

Today, the House of Representatives passed the One Big, Beautiful Bill Act (OBBBA; H.R. 1) and sent the bill to President Trump for his signature by his July 4th deadline.

The House agreed to the 870-page Senate bill, which would not only make the TCJA individual provisions permanent (with some modifications), but would also make permanent 100% bonus depreciation, IRC §174 domestic research expensing, and the easing of the business interest limitations . The SALT limitation is increased to $40,000 without any restrictions for passthrough entity elective taxes or other SALT limitation workarounds.

Also included are the President’s campaign pledges of “no tax” on tips, “no tax” on overtime, a personal interest deduction for loans on domestic vehicle purchases, and an early end to many of the energy credits and incentives enacted by the Inflation Reduction Act.

The bill also provides expanded disaster relief for victims of federal disasters that occurred this year and prior to 60 days of OBBBA’s enactment (if the disaster incident period ends within 30 days of OBBBA’s enactment). This will allow Los Angeles and Kentucky wildfire victims and storm victims in various states where federal disasters occurred in 2025 to claim personal casualty losses even if they don’t itemize deductions and would eliminate the 10% AGI limit and increase the $100 limit per casualty to $500.

Spidell is offering a two-hour webinar on July 15 to cover key highlights and planning opportunities from the bill. Register here.

This morning the Senate passed their version of the One Big, Beautiful Bill Act that mirrors much of the House’s bill (H.R. 1) in terms of the tax provisions. However, there are differences in some of the provisions that will have to be resolved. Some of the key differences include:

• Although both versions would increase the SALT limitation to $40,000, the House version, but not the Senate version, would place restrictions on the SALT limitation for passthrough entity owners;
• The House version would increase the IRC §199A deduction to 23%, while the Senate version would keep it at 20%;
• The House version provides for a temporary senior bonus deduction of $4,000, while in the Senate version the deduction is $6,000; and
• The House version would only temporarily reinstate 100% bonus depreciation, full expensing of IRC §174 research expenses, and easing of the business interest limitation, whereas the Senate version would make these changes permanent.

The fastest path for the House to take to meet President Trump’s self-imposed July 4 deadline is for the House to pass the Senate version of the bill. It is unclear whether this is the course of action the House will take or if they will seek a compromise bill that will require an additional vote before both the House and Senate. We will continue to provide updates with the latest developments.

The latest version of the bill is available at:

www.spidell.com/files/2025/taxbilldraft4.pdf

Sign up for Spidell’s Quarterly Tax Update and get the latest information on the One Big, Beautiful Bill Act. Click here and register today.

SB 132 (Ch. 25-17) was signed by the Governor on June 27, 2025, as part of the larger budget deal negotiated between California legislators and the Governor. As we reported earlier, key items included in the bill are provisions that:

• Extend the passthrough entity elective tax and Passthrough Entity Elective Tax Credit for an additional five years if the federal SALT limitation is extended. During this extended period, entities that do not make the required June 15 prepayment would still be able to make the election, but the amount of credit that can be claimed by the owners would be reduced by 12.5%. Note: Under both the House and Senate versions of the One Big, Beautiful Bill Act under consideration, the SALT limitation would be extended, but at higher amounts;
• Enact a new $20,000 military retirement pay exclusion for taxpayers with AGI of $125,000 or less ($250,000 MFJ and surviving spouses) for the 2025 through 2029 tax years;
• Exclude wildfire settlements received from a class action settlement administrator during the 2021 through 2030 taxable years; and
• More than double the allocation available for the Motion Picture and Television Credits.

We will provide further details in an upcoming issue of Spidell’s California Taxletter.^®

Sign up for Spidell’s Quarterly Tax Update and get the latest information on California’s budget bill and other legislation. Click here and register today.

Today the Senate is debating a revised One Big, Beautiful Bill Act (H.R. 1) that contains significant changes from some of the provisions contained in the draft bill released Friday. The changes that will have the most impact on our clients include:

• An increase in the SALT limitation of up to $40,000 for the 2025 through 2029 tax years (adjusted annually for inflation). The proposals that would have limited the deduction for passthrough entity owners and other SALT limitation workaround strategies have been removed from the bill;
• Retention of the current treatment of excess business loss carryovers. This means the carryovers would continue to be treated as a net operating loss;
• An acceleration of the repeal of various energy credits as follows:
  • The New Clean Vehicle Credit, the Previously-Owned Vehicle Credit, and the Qualified Commercial Clean Vehicle Credit would all be repealed for vehicles acquired after September 30, 2025;
  • The Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit would be repealed for property placed in service after 2025; and
  • The Clean Electricity Investment Credit and the Clean Electricity Production Credits would be repealed for solar and wind energy technology facilities placed in service after 2027. In addition, restrictions on supply sourcing for foreign countries of concern may make many of these investments ineligible once OBBBA is enacted.

The bill must be passed by the Senate and then sent back to the House for approval. It is unclear what, if any, additional changes will be made by the House. If changes are made by the House, they will have to be sent back to the Senate once again for approval.

We will send additional updates as the bill moves through this process.

The latest version of the bill, released on Friday, June 27, 2025, is available at:

www.spidell.com/files/2025/taxbilldraft3.pdf

Sign up for Spidell’s 2025 Summer Tax Webinar and be ready to tackle today’s most pressing tax challenges. Click here for more information.

AB 132 and SB 132 were introduced on June 24, 2025, as part of the larger budget deal being negotiated in Sacramento between California legislators and the Governor. Key items included in the bills are provisions that would:

• Extend the passthrough entity elective tax and Passthrough Entity Elective Tax Credit for an additional five years if the federal SALT limitation is extended. During this extended period, entities that do not make the required June 15 prepayment would still be able to make the election, but the amount of credit that could be claimed by the owners would be reduced by 12.5%;
• Enact a new $20,000 military retirement pay exclusion for taxpayers with AGI of $125,000 or less ($250,000 MFJ and surviving spouses);
• Exclude wildfire settlements received from a class action settlement administrator during the 2021 through 2030 taxable years; and
• More than double the allocation available for the Motion Picture and Television Credits.

We will provide updates concerning these bills as they move through the legislative process.

Sign up for Spidell’s Quarterly Tax Update and get the latest information on California’s budget bill and other legislation. Click here and register today.

The EDD has announced that employers in Malibu directly affected by the 2024 Franklin Fire which ignited between December 9 and December 18, 2024, may request up to a two-month extension of time from the EDD to file their state payroll reports and/or deposit payroll taxes without penalty or interest. (UIC §1111.5)

A written request for extension must be received within two months from the original delinquent date of the payment or return.

For more information, go to:

https://edd.ca.gov/en/payroll_taxes/emergency_and_disaster_assistance_for_employers

The IRS confirmed that, due to delays in processing electronic payments, it has been sending out erroneous balance due notices even though taxpayers timely made their payments. Taxpayers who paid tax reported due on their tax return electronically may see payments on their accounts as pending, although the IRS has received payment through the taxpayer’s banking institution.

According to the IRS, taxpayers who receive a notice but electronically paid the tax they owed in full and on time do not need to respond to the notice at this time. Taxpayers may monitor the status of their payments by viewing the payment activity page in their IRS online account. If the online account does not show the payment as processed by July 15, 2025, they may call the number on the notice.

The IRS has stated that any associated penalties and interest will be automatically adjusted when the payment(s) are applied correctly by the IRS.

Additional information is available at:

www.irs.gov/newsroom/irs-statement-on-delay-in-processing-some-electronic-payments

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

Yesterday the Senate Finance Committee released their proposed tax changes to include in the reconciliation bill (aka the One Big, Beautiful Bill Act). Many of these provisions are similar to those that were passed by the House. However, there are some substantial differences, as outlined below.

At this stage it is unclear which version may make it across the finish line or when (if at all). We will continue to provide updates as these developments unfold.

Key differences from the House bill that are contained in the Senate version that would have the greatest impact on our clients include:

• An additional $1,000 ($1,500 HOH and $2,000 MFJ) increase in the standard deduction and a $6,000 deduction for seniors (rather than the $4,000 senior bonus deduction in the House bill);
• The SALT limitation would remain at $10,000 and be made permanent (rather than the $40,000 limitation contained in the House bill), although similar to the House bill there would be limitations on how passthrough entity elective taxes are treated;
• The Child Tax Credit would be increased to $2,200 beginning with 2025 tax year (increased from the $2,000 CTC adopted by the TCJA) and increased for inflation thereafter. The House version would make the TCJA inflation-adjusted $2,000 credit permanent, but would also increase the credit further to $2,500 for the 2025 through 2028 tax years;
• The IRC §199A qualified business income deduction would be made permanent, but would retain the current 20% deduction cap rather than increase it to 23%, and a minimum deduction would apply to small businesses;
• The No Tax on Tips deduction would be capped at $25,000 per individual, No Tax on Overtime would be capped at $12,500 ($25,000 MFJ), and both would begin to phase out at $150,000 ($300,000, MFJ);
• The 100% bonus depreciation deduction, IRC §174 current expensing for domestic research activities, and decreased business interest limitations would be made permanent, rather than temporary as in the House bill, but retroactive provisions would apply for the IRC §174 current expense deduction for certain taxpayers;
• The dependent care assistance exclusion would increase from $5,000 to $7,500 beginning with the 2026 tax year and the Child and Dependent Care Tax Credit would increase from a maximum 35% to 50%;
• Nonitemizers would be able to claim charitable deductions of up to $1,000 ($2,000 MFJ) rather than the $300/$600 cap in the House bill, but the deduction would be subject to additional limits for both individuals and corporations;
• The Senate bill does not contain many of the health savings account expansion provisions contained in the House bill;
• The qualified small business stock gain exclusion would be revised; and
• Different repeal dates would apply to the various clean vehicle and clean energy credits and deductions.

The draft language from the Senate Finance Committee is available at:

www.finance.senate.gov/imo/media/doc/finance_committee_legislative_text_title_vii.pdf

Sign up for Spidell’s Quarterly Tax Update and get the latest information on the One Big, Beautiful Bill Act. Click here and register today.

In Notice 2025-33, the IRS extended some transitional relief for digital asset brokers by one additional year, meaning no penalties will be imposed for an additional year related to the backup withholding requirements.

Under the final regulations adopted in 2024 (89 FR 56480), digital asset brokers are not only required to report digital asset sales on Form 1099-DA but also perform backup withholding.

The relief in Notice 2025-33 extends certain relief provided last year in Notice 2024-56, including:

• Extending through the 2026 tax year an exemption from backup withholding requirements generally; and
• Extending through 2027:
  • The relief from backup withholding if the broker utilizes the IRS TIN Matching Program alternative procedure for obtaining taxpayer identification numbers (TINs) from preexisting customers who opened accounts prior to 2026;
  • The ability to treat certain preexisting customers as exempt foreign persons based solely on non-U.S. addresses; and
  • The ability to limit the amount of backup withholding in situations involving sales of digital assets for other digital assets.

The relief provided only applies to the backup withholding requirements. The broker reporting requirements remain unchanged. Brokers were required to file Form 1099-DA to report gross proceeds received from post-2024 sales of digital assets and will continue to be required to report the adjusted basis on certain digital assets after 2025 unless the sales are undertaken for a customer that is an exempt foreign person.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

The FTB has just announced that all of their online services are now back up and running. This includes MyFTB. FTB staff should now also be able to provide taxpayer information over the phone again.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

The FTB has announced that they are experiencing technical difficulties with some of their online services, such as MyFTB and the Minimum Essential Coverage information reporting. The biggest issues for tax professionals as the June 16 deadline approaches for passthrough entity elective tax prepayments and LLC fee estimated payments are:

• They cannot access MyFTB and will not be able to make payments on behalf of their clients through MyFTB, although they can continue to make payments through WebPay and electronic fund withdrawals (EFW) through their software; and
• FTB phone staff may not be able to access needed information to provide to tax professionals.

According to the FTB, these technical difficulties should not impact the ability to e-file returns or to accept payments through Web Pay and EFW.

The FTB is working diligently to get these systems back up as soon as possible.

In addition, FTB’s Santa Ana and Los Angeles field offices are temporarily closed, and as such, walk-in payment services in these offices may not be available.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

On June 12, 2025, California will begin offering grants of up to $20,000 to qualifying homeowners whose homes were destroyed or left uninhabitable in various fires, floods, and other disasters that have occurred from January 1, 2023, to January 8, 2025 (click here for a list of eligible disasters).

Under the CalAssist Mortgage Fund program, qualified homeowners can receive grants for three months of mortgage payments, up to a $20,000 maximum, that would be paid directly to participating mortgage servicers. These grants do not have to be repaid, and we believe they would qualify for the IRC §139 disaster relief exclusion on both the federal and California returns.

To qualify, a taxpayer’s primary residence must have been destroyed by a qualifying disaster and the taxpayer’s household income (essentially gross income for all persons on the mortgage or deed) must not exceed the program income limits, which are based on the county’s median income level.

The program is capped at $105 million and will be awarded on a first-come, first-served basis.

Additional information concerning the program is available at:

www.calassistmortgagefund.org/program-details#faq

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

The FTB is offering the following new self-service options for taxpayers. 

Personal Income Tax Self-Correct 

This new service allows taxpayers to respond online to Form FTB 5818, Notice of Tax Return Change when Form FTB 3514, California Earned Income Tax Credit, is missing. Taxpayers can respond through their MyFTB account with the unique URL provided on the notice received, or by mailing Form 3514 to the address indicated on the notice. 

MyFTB for Withholding Agent Representatives 

This new service allows withholding agent representatives to electronically file the following forms: 

• Form 592, Resident and Nonresident Withholding Statement 

• Form 592-PTE, Pass-Through Entity Annual Withholding Return 

• Form 592-F, Foreign Partner or Member Annual Return 

Withholding agents now have the option to file by mail, online through MyFTB for Withholding Agent Representatives, or by SWIFT. Users must file through SWIFT when there are 250 or more payees. 

Withholding agents also have the option to submit payments electronically when filing Form 592, Form 592-PTE, and Form 592-F. In a future enhancement to the service, withholding agents will be able to submit payments without submitting a withholding form. 

Withholding agents must register for a MyFTB account prior to submitting online. Once the withholding agent completes the authentication process and has a valid account, they can file nonresident withholding forms through MyFTB for Withholding Agent Representatives. 

It takes approximately five to seven business days to complete registration. 

Over the last two weeks we’ve heard from numerous tax practitioners that their clients have been receiving erroneous notices from the IRS and the FTB. These agencies have confirmed that some notices were sent in error.

According to the FTB, in late April, they were alerted to an issue impacting entities filing their first-year return receiving erroneous notices related to the $800 minimum franchise tax. The FTB corrected the problem on April 30, 2025. As of May 1, 2025, all first-year corporation returns are being processed correctly. The FTB is identifying those entities impacted and correcting the accounts. If an entity or their representative receives a bill related to this issue, they should call the telephone number listed on the notice or check MyFTB to see if the issue has been resolved.

Additionally, the IRS has confirmed that CP161, Request for Payment or Notice of Unpaid Balance, is being erroneously sent to trust taxpayers for underpayment of estimated taxes. The IRS stated that this is a programmer error that the IRS is working to correct and that adjustments to impacted taxpayers should be resolved within a month. Taxpayers and/or tax practitioners can proactively call the IRS to request penalty abatement.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

The tax provisions of the One Big, Beautiful Bill Act (OBBBA; H.R. 1), which passed the House of Representatives on May 22, 2025, are largely the same as the version of the bill that was released on Monday, May 12, 2025. See Spidell’s Flash E-mail from May 12 for a summary of the bill’s major provisions.

Two significant changes that were made in the last-minute tax amendments to the OBBBA version that was passed by the House include:​​​​​

• An increase in the SALT itemized deduction limitation to $40,000 ($20,000 for married taxpayers filing separately) and an increase in the modified adjusted gross income phaseout threshold to $500,000 ($250,000 MFS); and
• Modifications to the excess business loss rules under IRC §461(l) that create a separate category of carryovers for excess business losses instead of treating them as net operating losses.

The bill passed by the House did not delete the modifications to the SALT limitation that effectively remove the benefits of state passthrough entity elective tax laws.

The final version of the bill, without the last-minute amendments, is available at:

www.congress.gov/bill/119th-congress/house-bill/1/text

And the supplemental amendments that were a part of the final bill are available at:

http://rules.house.gov/sites/evo-subsites/rules.house.gov/files/documents/rulesreport05212025_.pdf

This is just the next step in the evolution of this legislation, and we will continue to keep you posted as news develops on these pending provisions.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on this act and other expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

A unanimous Senate passed the No Tax on Tips Act (S. 129), which, if enacted, would allow taxpayers to claim an above-the-line deduction of up to $25,000 in qualified tips beginning with the 2025 taxable year for those tips reported to their employer for payroll tax purposes. Qualified tips would be defined as cash tips received by an individual in the course of their employment in an occupation that traditionally and customarily received tips prior to 2024. These occupations would be determined by the Secretary of the Treasury.

Taxpayers who were considered highly compensated employees in the prior year ($155,000 for 2024, $160,000 for 2025) would be ineligible to claim the deduction.​​​​​

The bill would also expand the Employer Tax Credit for FICA paid on tip income to apply to tips provided to beauty service workers. Beauty services would be defined as barbering and hair care, nail care, esthetics, and body and spa treatments.

The No Tax on Tips Act is similar to the no tax on tips provision contained in the House’s The One, Big, Beautiful Bill Act (OBBBA). However, unlike the OBBBA provision, there is a cap on the amount of the deduction and there is no Social Security number requirement or sunset clause contained in the Senate’s bill.

Sign up for Spidell’s 2025/26 Federal and California Tax Update and get the latest news on this act and other expected legislative changes resulting from expiring TCJA provisions. Click here and register today.

The 28-page draft bill originally released by the House Ways and Means committee has been expanded to a 389-page version officially titled The One, Big, Beautiful Bill. This expanded version makes changes to some of the provisions we originally announced, including:

• Increasing the IRC §199A deduction from 20% to 23% (previous version was 22%);
• A modified $30,000 cap on state and local tax deductions ($15,000 for married filing separately), with a phasedown for higher-income taxpayers (over $400,000/$200,000);
• Extending 100% bonus depreciation for qualifying property acquired January 20, 2025, through December 31, 2029;
• Reinstating immediate expensing of domestic research and experimental expenditures for tax years 2025 through 2029; and
• Reinstating a modified version of the overall limitation on itemized deductions.

This draft also introduces some new provisions, which include:

• Terminating all three clean vehicle credits (two in 2026 and one in 2027);
• Creating new “Money Account for Growth and Advancement” (MAGA) accounts, which are tax-advantaged savings accounts for children under age 8;
• New above-the-line deductions for qualified tips, qualified overtime compensation, and interest on passenger vehicle loans, through 2028;
• Reinstating the above-the-line deduction for cash charitable contributions ($150 for single filers and $300 for joint);
• Additional standard deductions of up to $4,000 for aged and/or blind with an AGI phaseout on this addition; and
• Increasing the 1099-K threshold to $20,000 and greater than 200 transactions, and the 1099-NEC/1099-MISC filing requirement from $600 to $2,000.​​​​​

There is still no mention of an increased exclusion or deduction for Social Security benefits, though many of these new provisions will only apply to taxpayers with a valid Social Security number.

This is still not a final bill, and we will continue to keep you updated as news develops on these provisions.

The full draft bill is available at:

www.spidell.com/files/2025/taxbilldraft2.pdf

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and get a breakdown of the provisions listed here, other provisions contained in the draft legislation, and breaking news as additional legislative provisions are released. Click here and register today.

Late in the evening on Friday, May 9, the House Ways and Means committee released a partial draft of the tax legislation we have all been waiting for. We expect the final bill to be much larger than this initial 28-page draft.

The three provisions containing the most important tax changes in the partial draft are:

1. Increasing the IRC §199A deduction from 20% to 22% of qualified business income and expanding the deduction to include certain investment income;
2. An increase in the Child Tax Credit from $2,000 per child to $2,500 per child for 2025 through 2028 (then reverting back to $2,000 with an annual inflation adjustment thereafter); and
3. Permanently increasing the uniform estate and gift tax exemption to $15 million per taxpayer, with annual inflation adjustments starting in 2026.

Other provisions contained in the partial draft legislation include permanent extensions of less controversial TCJA items scheduled to expire at the end of 2025, including:

• Tax rate schedules with the highest marginal rate remaining at 37%;
• The higher standard deduction (with an additional temporary bump for tax years 2025 through 2028 of $2,000 for married taxpayers filing jointly, $1,500 for head of household, and $1,000 for single filers);
• Elimination of the personal exemption deduction;
• Alternative minimum tax exemption and exemption phase-out thresholds;
• Limitation on the deduction for qualified residence interest;
• Limitation on casualty loss deductions;
• Elimination of 2% miscellaneous itemized deductions; and
• Elimination of the overall limitation on itemized deductions.​​​​​

This draft does not contain any provisions dealing with the state and local tax (SALT) provisions, which is expected to be a hotly contested issue, or any of the items promised by President Trump on the campaign trail, such as no tax on tips, overtime, or Social Security, among other provisions.

The 28-page partial draft bill is available at: www.spidell.com/files/2025/taxbilldraft.pdf

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and get a breakdown of the provisions listed here, other provisions contained in the partial draft legislation, and breaking news as additional legislative provisions are released. Click here and register today.

The California Secretary of State’s (SOS) office is now issuing 12-character identification numbers to newly registered corporations, LLCs, and limited partnerships. These new identification numbers will all start with the letter “B”. (SOS Customer Service Update, February 25, 2025)

Entities that were previously issued an entity number will continue to use the same number and will not be reissued a new 12-character identification number.

According to the SOS’s office:

• Entity numbers for general partnerships and limited liability partnerships will not change; and
• Entities that file a continuing conversion (e.g., corporation to LLC or LP) will keep their original number as well.

The FTB has stated that they will be able to accept the new and existing numbering formats. This means for completing forms and most FTB website interfaces, the entity will put in the complete identification number, including the letter “B”, but as before, would not put in the letter “B” when entering the entity ID for WebPay. This is consistent with prior practice, wherein corporations would not enter the letter “C” when entering the entity ID on WebPay.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

We are saddened to announce the passing of Robert Spidell, founder of Spidell Publishing, Inc., who died on April 26 at the age of 91.

In 1975, Bob and his wife, Janet, founded Spidell Publishing in a vacant 7-Eleven store in Anaheim, California. From those humble beginnings, Bob became a pioneering force in California tax education and was affectionately known throughout the industry as “Mr. California Tax.” His work transformed how professionals across the state understood and applied complex tax laws.

Bob’s legacy includes:

• Making complex tax law understandable. Through his California Taxletter^®, forms books, tax guides, and client letters, Bob had a unique gift for making the most complicated aspects of California tax law accessible and clear.
• Creating a vital tax education community. Spidell’s tax update seminars became the gold standard across the state, drawing thousands of tax professionals each fall to prepare for the new season and reconnect with colleagues.
• Fighting for fairness in taxation. A tireless advocate, Bob frequently met with state agencies and lawmakers. Among his most notable accomplishments was helping stop the Franchise Tax Board from taxing nonresident military personnel.

Bob was also a champion for women in the workplace. Under his leadership, Spidell Publishing was a place where talent and merit determined success. He promoted women to key roles, hired Gina Rodriquez as Sacramento Editor, sold the company to Lynn Freer, and mentored Renee Rodda, JD, now Senior Vice President of Tax and Accounting Education at CeriFi.

Bob and Janet believed strongly in giving back. Their generosity and civic engagement included:

• Investing in education. They established an endowment that helped create a state-of-the-art classroom/lab in the CSULB University Library, supporting hundreds of students with access to computers and resources. In recognition of their contributions, Bob and Janet were awarded honorary Doctor of Humane Letters degrees by the CSU Board of Trustees and Cal State Long Beach, where Bob earned his economics degree in 1965.
• Supporting local heritage. Bob and Janet volunteered at Mission San Juan Capistrano, where Bob served as a tour guide for fourth-grade students studying California history, and Janet, who died in 2016, cared for the mission’s iconic gardens.

We will miss Bob deeply — his humor, his passion, and his unwavering ability to make things happen. His legacy will continue to impact the tax profession and the lives of so many he inspired.

Today, the House agreed to the Senate’s budget resolution parameters. This means Congress can now turn to passing tax legislation, including TCJA extensions and other tax reform measures promoted by President Trump and congressional members. This will be done through the budget reconciliation process, which will allow both chambers of Congress to pass significant tax legislation by simple majority vote.

There is no set time period by which Congress must pass the budget reconciliation bill, but we will keep you posted as news develops.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

In an executive order, President Trump directed the U.S. Treasury Secretary to develop a plan over the next 180 days to phase out the use of paper checks. This would apply to both the IRS’s payments of tax refunds as well as taxpayers’ tax payments to the IRS.

According to the White House fact sheet accompanying the executive order’s release, effective September 30, 2025, the IRS will cease issuing paper check tax refunds. However, it is unclear when the mandate that all tax payments be made to the IRS electronically would go into effect. We will have to await further guidance from the IRS and the U.S. Department of Treasury as to when and how the electronic tax payment mandate will be implemented.

The executive order does authorize exceptions from the mandate in certain circumstances, such as when individuals do not have access to banking services or electronic payment services, or for certain emergency payments where electronic disbursement would cause undue hardship. The order also authorizes the Treasury Secretary to identify other circumstances in which exceptions would be allowed.

We will provide updates when additional guidance is issued.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

Beginning with the 2024 tax year, to claim either a New Clean Vehicle Credit or the Previously-Owned Clean Vehicle Credit, registered dealers must submit an IRS Form 15400, Clean Vehicle Seller’s Report, to the IRS on its Energy Credits Online portal within 72 hours of the sale of a qualifying vehicle. Both the taxpayer and the dealer must have a copy of this report to:

• Claim either of these credits on the taxpayer’s tax return; or
• Transfer either of the credits to the dealer at the time of sale (referred to as an advance credit).

Unfortunately, many dealers were not submitting this report to the IRS in a timely fashion (if at all), which resulted in the taxpayer being denied the credit and/or the dealer being denied the advance credit.

According to an alert issued by the National Automobile Dealers Association, the IRS has now reopened the portal for dealers to submit the 2024 Form 15400 and is waiving the 72-hour submission deadline. To date, we are not aware of a specific timeline by which these reports must be submitted.

Taxpayers who were unable to claim the credit previously for the 2024 tax year due to the lack of a Form 15400 should contact their automobile dealer now to obtain the report while the portal remains open for dealers to submit their 2024 seller reports.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

In updated FAQs, the IRS has announced a new procedure for taxpayers who receive an ERC refund related to wages paid in prior tax years, but have not filed an amended return to reduce their wage expenses for the year the wages were paid (2020 and/or 2021). (www.irs.gov/coronavirus/frequently-asked-questions-about-the-employee-retention-credit#incometax)

ERC refunds issued

For situations where the prior-year return is a closed year, taxpayers must include the overstated wage expense amount as gross income on their income tax return for the tax year the ERC refund was received. This means that if a taxpayer receives an ERC refund in 2024 related to 2021 wage expenses, they must include the 2021 overstated wage expenses as gross income on their 2024 tax return. The IRS also reiterates that taxpayers in this situation remain eligible for penalty relief. (IR-2022-89)

For open tax years, taxpayers may file an amended return, administrative adjustment request (AAR), or protective claim for refund to deduct their wage expense for the year in which the ERC was claimed. Alternatively, these taxpayers could elect to report the refund as income in the year it is received.

Many taxpayers were filing amended returns and paying associated taxes due for the closed tax year only to have the IRS return the tax payments because the tax year was closed. These taxpayers now know that they can cash these refund checks without repercussion and use these payments to pay the resultant taxes due when the wages are reported on the tax return for the year the ERC refund was received.

ERC credits disallowed

The IRS also provided guidance for taxpayers whose ERC was disallowed, who had previously reduced the wage expense on their return for the year the ERC was claimed. These taxpayers may, in the year the ERC claim disallowance is final, increase their wage expense on their income tax return by the same amount that it was reduced when they made their original ERC claim.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

The FTB began sending out corrected 1099-Gs on March 19, 2025.

As we previously reported, due to a calculation oversight, some of the Forms 1099-G, Certain Government Payments, issued by the FTB for the 2024 tax year contained incorrect information. According to the FTB, this issue was limited to taxpayers who itemized their deductions and transferred estimates from the 2023 tax year to the 2024 tax year. The transferred amount may not have been included in the 1099-G amount.

The FTB estimates that this impacted about 3% of the 1099-Gs, which according to our calculations comes to about 100,000 forms.

Tax professionals should verify that the information reported on previously received 1099-Gs is correct. If not, they should hold off filing until they receive the corrected 1099-Gs. Tax professionals can also check their client’s MyFTB account to see if the corrected 1099-G has been posted.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

The Federal Emergency Management Agency (FEMA) has extended the deadline for survivors of the Los Angeles County fires to register for federal aid. (Governor’s Press Release (March 7, 2025), available at: www.gov.ca.gov/2025/03/07/governor-newsom-announces-deadline-extension-to-apply-for-federal-assistance-for-los-angeles-fires) The deadline to apply for Disaster Unemployment Insurance with the EDD has also been extended.

FEMA assistance

Homeowners and renters who have incurred damage or losses from the Los Angeles County wildfires now have until Monday, March 31, 2025, to apply for FEMA Individual Assistance and Small Business Administration assistance. The previous deadline for registration for disaster aid was March 10, 2025.

Affected taxpayers can apply at:

www.disasterassistance.gov

EDD Disaster Unemployment Insurance

The deadline to apply for Disaster Unemployment Assistance has also been extended until March 31, 2025. Taxpayers can apply at:

www.edd.ca.gov/en/unemployment/Disaster_Unemployment_Assistance

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.

The IRS will begin adding information return documents to taxpayers’ IRS Individual Online Account, which will consolidate important tax records in one place. (IR-2025-28) The first information returns to be added are: 

• Form W-2, Wage and Tax Statement; and
• Form 1095-A, Health Insurance Marketplace Statement.

These forms will be available for tax years 2023 and 2024 under the Records and Status tab in the taxpayer’s Online Account.   

Only information return documents issued in the taxpayer’s name will be available in their Online Account. The taxpayer’s spouse must log into their own Online Account to retrieve their information return documents. This is true whether the taxpayers file a joint or separate return.  

State and local tax information, including state and local tax information on Form W-2, will not be available on Individual Online Account.

On Sunday, March 2, 2025, FinCEN continued with its rollercoaster guidance by announcing that it will not enforce any penalties or fines associated with the beneficial ownership information (BOI) reporting rules under existing regulations. Additionally, FinCEN will not enforce any penalties or fines against U.S. citizens or domestic reporting companies, or their beneficial owners.

The reason for the relief is that the Department of the Treasury will propose new rulemaking that will narrow the scope of the beneficial owner reporting rules to apply to foreign reporting companies only. This means that domestic entities will not be required to file any BOI reports.

At this time there is no information on what, if anything, will need to be done for domestic entities that have already filed. We will continue to update you as information is released on this issue.

The full text of the Treasury press release is available at:

https://home.treasury.gov/news/press-releases/sb0038

As a result of this development, Spidell’s BOI Reporting Update webinar has been canceled. Customers who were registered for the March 25, 2025, webinar will receive an e-mail from us today with options to transfer to another webinar or request a refund.

Sign up for Spidell’s 2025 Post-Tax Season Update and Review and prepare yourself to tackle extensions with confidence. Click here for details.