Immigration & Customs Enforcement, Form 6765 Changes, and the Environmental Protection Agency
Probity Tax Recovery is a tax consulting firm specializing in tax credits and incentives for small to mid-sized businesses. We work with business owners and their CPAs to identify tax credits and incentives while saving them time and money. As of November 1, 2024, Probity began operating as a division of MS Consultants. Read more about the exciting news here.
Tax Policy/News:
March 24: IRS reportedly nears deal to share info with ICE
The Internal Revenue Service (IRS) is reportedly close to an agreement to share taxpayer information, such as addresses, with the Department of Homeland Security's Immigration and Customs Enforcement (ICE) unit upon request.
This information sharing would be more limited than initially proposed and led to the removal of the IRS's former chief counsel, William Paul, who opposed sharing confidential taxpayer information with ICE. Under the deal, ICE would submit names to the IRS, which would cross-reference the data against confidential taxpayer databases to confirm the names and addresses of individuals suspected of being in the U.S. illegally.
Last Wednesday, a federal district court refused to issue a temporary restraining order to bar the IRS from sharing such data with immigration officials, following a complaint filed by two immigrant advocacy groups. Nandan Joshi, an attorney with Public Citizen Litigation Group, stated that attempts to access confidential taxpayer databases for mass removal of workers would violate tax laws protecting taxpayer privacy.
In a separate case, a federal judge blocked the Elon Musk-led U.S. DOGE Service from accessing private data at the Treasury Department, Education Department, and Office of Personnel Management. It is unclear how this ruling might affect the case involving access to taxpayer information at the IRS and Treasury.
March 24: Tax revenue collected by the IRS set to plummet, report says
Officials at the IRS and Treasury Department are anticipating a more than 10% drop in tax revenue by April 15 compared to last year, according to The Washington Post.
The loss of tax receipts, potentially exceeding $500 billion, is attributed to shifting taxpayer behavior and President Donald Trump’s cuts at the IRS.
Thousands of IRS employees are expected to lose their jobs as part of Elon Musk’s Department of Government Efficiency spending reductions, which experts warn could impact filers during tax season.
Increased online chatter suggests that more individuals and businesses may avoid paying taxes or make aggressive claims they aren’t eligible for, hoping to avoid audits. The Treasury Department dismissed the report as “sensational and baseless,” urging readers to disregard anonymous sources.
March 24: Trump tax bill takes center stage as GOP debates cuts
Congressional Republicans are negotiating a massive tax bill package to deliver President Donald Trump a legislative victory. Efforts to renew Trump's 2017 tax cuts and secure additional reductions were temporarily sidelined while lawmakers worked to avert a government shutdown.
Treasury Secretary Scott Bessent and Trump's National Economic Council director, Kevin Hassett, are set to meet with House and Senate Republican leaders to resolve differences over the scale of cuts and ways of paying for them. The party aims to cut tax bills by trillions of dollars, requiring difficult decisions and near unanimity as Republicans navigate narrow majorities in both chambers. Discussions include eliminating the carried interest tax break for hedge fund managers, expanding a tax on university endowments, and limiting the amount of state and local taxes corporations can deduct.
They are also considering using a budget gimmick to claim that extending the 2017 tax cuts costs nothing, which could let them count the renewal of the cuts as free. The difficulty in finding ways to pay for the bill could delay the Senate's efforts on the budget outline. Republicans broadly agree that the heart of the package will be the extension of the 2017 cuts, which include rate cuts for individual taxpayers and deductions for small business owners.
Trump wants to end taxes on tips, overtime pay, and Social Security benefits, and has floated a lower corporate rate for companies that manufacture domestically. There are also demands for new tax breaks, such as ending the estate tax and expanding Opportunity Zone tax benefits. The Congressional Budget Office found that a permanent extension of the tax cuts would explode the national debt, leading to debt held by the public to reach 250% of GDP by 2054.
March 20: Changes to Form 6765: What accountants need to know
The IRS has made significant changes to Form 6765, "Credit for Increasing Research Activities," with new requirements set to take effect this tax year. These revisions emphasize enhanced qualitative reporting and will impact how businesses file for the credit.
Historically, companies have used Form 6765 to report numerical data, but the revised form now requires businesses to include more qualitative data directly with the tax return to explain their claims. Key changes include preliminary questions before Section A, new Sections E, F, and G, and special treatment for software R&D. Section G, which will require detailed information about business components, is optional for tax year 2024 but will become mandatory for most taxpayers in 2025.
These changes reflect the IRS's increased focus on qualitative R&D information, potentially leading to greater scrutiny of claims. Accountants should prepare for increased administrative burdens and ensure thorough documentation to maintain compliance.
Proactive communication with clients will be necessary to avoid last-minute surprises during tax season. Early preparation and proper documentation can help businesses continue benefiting from the R&D tax credit while minimizing audit risks.
March 18: Treasury Department to cut IRS taxpayer advocate staff
The Trump administration is planning to reduce the workforce of the National Taxpayer Advocate (NTA) office, marking the third staffing cut at the Internal Revenue Service (IRS) as part of a broader initiative to significantly decrease the federal workforce.
A Treasury Department spokesperson stated that these adjustments aim to "right-size" the NTA without negatively impacting its mission or taxpayer services. The NTA layoffs, which follow a report indicating a 25 percent staff reduction, come amid reports of a planned 20 percent reduction in the overall IRS workforce.
The IRS has already dismissed nearly 7,000 trial employees, with over 5,000 focused on tax compliance. These reductions occur during the 2024 tax filing season, a period when many taxpayers seek assistance with the complex U.S. tax system. Service levels have been low, with only 31 percent of calls answered by live IRS agents in 2024.
Despite no growth in caseloads, the NTA's budget increased by nearly 30 percent from 2021 to 2024. The IRS's total budget request for fiscal 2024 was $14.1 billion, while the agency fails to collect approximately $700 billion in taxes annually, potentially up to $1 trillion according to former IRS Commissioner Charles Rettig.
Economic News/Policy:
March 24: FinCEN Eliminates Corporate Transparency Act’s Reporting Obligations for U.S. Persons
On March 21, 2025, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) released an interim final rule that broadly eliminates Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA) for all U.S. reporting companies and U.S. beneficial owners of foreign reporting companies.
Now, only companies created under foreign law and registered to do business in the U.S. will be required to submit BOI reports, and only foreign beneficial owners of such nonexempt foreign entities will be reportable. This change drastically reduces the compliance universe by 99.8 percent.
The policy shift follows a series of legal and regulatory changes, including the suspension of CTA enforcement against U.S. persons. FinCEN aims to focus on foreign entities that could engage in illicit transactions from abroad. The interim rule is open for public comment, and FinCEN intends to issue a final rule later this year. The CTA saga is expected to continue with potential legal challenges and state-level legislative developments.
March 24: Trump: ‘I may give a lot of countries breaks’ on reciprocal tariffs
President Trump signaled on Monday that he may provide exemptions for certain countries when his administration imposes reciprocal tariffs on imports next week.
Trump indicated that while the tariffs are reciprocal, the U.S. might be more lenient, citing the country's long history of being generous to other nations. The president has been planning to impose reciprocal tariffs starting April 2 on any nation with duties on American goods, but some administration officials have suggested there could be flexibility.
Trump also mentioned additional tariffs on specific goods, such as automobiles, lumber, and semiconductors, could be implemented soon. Earlier, Trump announced a 25 percent tariff on goods from countries purchasing oil or gas from Venezuela, due to concerns over alleged members of the Venezuelan gang Tren de Aragua.
Economists have warned that Trump's reliance on tariffs could lead to higher costs for U.S. consumers, and the Federal Reserve projected slower economic growth. Trump dismissed these concerns, arguing that tariffs will increase government revenue and incentivize companies to relocate to the U.S. to avoid penalties.
March 21: Small Business Administration cutting 43% of staff in latest move to downsize executive branch
The Small Business Administration (SBA) announced it will cut more than 40% of its staff as part of the Trump administration's effort to reduce the federal bureaucracy.
The agency, which employs roughly 6,500 people, stated that the workforce reduction would save over $435 million annually by the next fiscal year. The reorganization aims to restore efficiency and focus on promoting small businesses without impacting core services such as loan guarantees and disaster assistance programs.
Former Sen. Kelly Loeffler, confirmed as the SBA's administrator in February, emphasized the need to "rightsize the agency" and eliminate fiscal mismanagement. President Trump also announced that the SBA will handle federal student loan programs, following an order to wind down the Department of Education.
Established in 1953, the SBA provides loans to businesses affected by natural disasters and supports international trade issues. The agency's loans and grants were crucial for small businesses and nonprofits during the COVID-19 pandemic.
March 21: Trump doubles down on Fed rate cut pressure
President Trump has intensified his pressure on the Federal Reserve to lower interest rates, arguing that the costs of eggs, groceries, and gas have decreased, making it an opportune time for rate cuts.
On Truth Social, Trump emphasized that with prices down, the Fed should lower interest rates. Despite some signs of an economic slowdown, the Fed announced it would keep rates steady at a 4.25 to 4.5 percent range. Trump also highlighted the upcoming reciprocal tariffs set to be implemented on April 2, suggesting that the Fed should cut rates as these tariffs transition into the economy.
Federal Reserve Chair Jerome Powell cited the looming tariffs as a threat to economic growth, potentially increasing inflation to an annual 3 percent mark. Trump's comments come amid his dismissal of two Democratic members of the Federal Trade Commission, raising questions about the future of independent agencies.
Powell, whose term ends in 2026, has stated he would not step down early if asked by Trump, as it is not permitted under the law for the president to fire or demote Fed governors. Trump has indicated he would let Powell serve out his term but would not reappoint him for another term.
March 20: New Updates to ERC FAQs
The IRS has clarified that taxpayers must reduce their wage expense on their income tax return when filing for the Employee Retention Credit (ERC).
If taxpayers did not reduce their wage expenses and their ERC claim was paid in a subsequent year, they should include the overstated wage expense amount as gross income on their income tax return for the year they received the ERC.
Conversely, if the ERC claim was disallowed and the wage expense was already reduced, taxpayers can increase their wage expense on their income tax return in the year the disallowance is final or file an amended return.
The IRS emphasizes the importance of accurate documentation to avoid unwarranted double benefits and provides guidance on resolving issues with income tax returns related to ERC claims. Taxpayers may also be eligible for penalty relief related to ERC claims.
Energy and Environmental Policy/News:
March 20: California announces it has more electric charging stations than gas station nozzles
California's electric vehicle infrastructure has reached a significant milestone, with 25% of new cars sold in the state being electric. State energy officials report that there are about 120,000 gas station nozzles and over 178,000 electric charging stations.
Orville Thomas, CEO of California Mobility Center, noted that this increase in charging stations helps change perceptions about driving electric vehicles, making it easier for drivers to find and use chargers. The number of chargers is even higher when including home chargers, with approximately one million in California.
Gil Tal, a professor at the UC Davis Research Center, mentioned that many merchants are installing chargers to attract customers and boost revenue. Governor Gavin Newsom has banned the sale of new gas-powered cars by 2035, and EV advocates emphasize the importance of the state's renewable energy power grid keeping up with demand.
California lawmakers have allocated over $1 billion to expand the network of electric and hydrogen charging stations and have passed regulations to streamline permits for new EV chargers.
March 18: EPA considers eliminating its science arm
The Environmental Protection Agency (EPA) is contemplating the elimination of its science arm, the Office of Research and Development, and the potential dismissal of 50 to 75 percent of its 1,540 staff members.
This office is crucial as it conducts research that informs the EPA's efforts to protect the public from pollution. The plan, reviewed by the House Science, Space and Technology Committee, was presented to the White House for review.
However, the EPA has stated that no final decisions have been made and that they are gathering input from employees to improve efficiency and fulfill statutory obligations. Jennifer Orme-Zavaleta, a former top official of the office, warned that eliminating this branch would lead to worse environmental outcomes and increased exposure to pollution and toxic chemicals.
The Trump administration has previously made significant changes to the EPA, including eliminating its environmental justice offices and proposing a 65 percent budget cut.
Technology:
March 21: Microsoft is exploring a way to credit contributors to AI training data
Microsoft is launching a research project to estimate the influence of specific training examples on the outputs of generative AI models.
This project aims to demonstrate that models can be trained to efficiently and usefully estimate the impact of particular data, such as photos and books, on their outputs. The initiative, described as "training-time provenance," involves Jaron Lanier, a technologist at Microsoft Research, who advocates for "data dignity" — connecting digital content with its human creators.
This approach could potentially provide incentives, recognition, and even payment for contributors of valuable data. Microsoft is facing legal challenges from copyright holders, including The New York Times and software developers, over the use of protected works in AI training. The project may be a response to these challenges and an effort to address ethical concerns.
Other companies, like Bria, Adobe, and Shutterstock, are also exploring ways to compensate data owners. While Microsoft's project may be a proof of concept, it highlights the ongoing debate over fair use and copyright protections in AI development.
March 21: Trump administration launching an AI tool for government use
The General Services Administration (GSA) is launching a new artificial intelligence tool designed to support staff in their daily work, with plans to extend its use to other federal agencies.
The technology, developed internally over the past 18 months under the Biden administration, focuses on security and privacy. The decision to build the tool internally was driven by concerns about the risks of using commercially available AI tools.
GSA is currently testing how the AI tool fits into the daily workflow of federal workers and is encouraging staff to use it. Acting Administrator Stephen Ehikian highlighted the potential of generative AI in government work, comparing it to giving a personal computer to every worker. The Trump administration supports the tool, noting that feedback from its initial rollout will help improve functionality and expedite delivery to other agencies.
Elon Musk, a top adviser to President Trump, has pledged to enhance government efficiency through AI. Musk's Department of Government Efficiency had been expected to use an AI tool to evaluate responses from federal workers justifying their positions, although Musk denied this, stating it was merely a check to see if employees could respond to an email.
For Fun:
March 19: Is dark energy getting weaker? Fresh data bolster shock finding
Fresh data have strengthened the discovery that dark energy, the mysterious force causing galaxies to accelerate away from each other, has weakened over the past 4.5 billion years.
Initially reported in April last year, the latest results from the Dark Energy Spectroscopic Instrument (DESI) collaboration, presented on March 19 at the American Physical Society meeting, are based on three years of data collection. If confirmed, these findings could force cosmologists to revise their standard model of the Universe, which has assumed dark energy is a constant property of empty space.
The DESI telescope at Kitt Peak National Observatory uses 5,000 robotic arms to point optical fibers at galaxies and quasars, measuring their redshift to create a 3D map of the Universe's expansion history. Researchers track the evolving size of baryon acoustic oscillations (BAOs) to understand changes in the Universe's expansion rate. DESI's latest analysis suggests that cosmic expansion is accelerating less now than in the past, indicating that dark energy's density is around 10% lower than it was 4.5 billion years ago.
The analysis includes redshifts of over 30 million galaxies and quasars, covering 11 billion years of the Universe's history. While the statistical power of DESI's data is not yet sufficient to completely rule out dark energy being a cosmological constant, further data from the European Space Agency's Euclid mission and the Vera Rubin Observatory in Chile are expected to provide more insights.