Kara Sears
Understanding tax law is essential for making informed decisions and ensuring compliance with regulations. Tax laws are dynamic, with new legislation introducing changes that impact both individuals and businesses. These changes can include tax benefits, cuts, and credits, as well as modifications to existing provisions. For instance, the 2017 Tax Cuts and Jobs Act (TCJA) in the US brought about significant alterations to corporate and personal income taxes. In addition to the legislative aspects, tax law also encompasses practical considerations, such as maintaining good records to determine eligible credits and deductions. Furthermore, individuals facing tax challenges can seek assistance from organizations like the Taxpayer Advocate Service (TAS), which helps taxpayers experiencing financial hardship or dealing with IRS system issues. Navigating the evolving landscape of tax law empowers individuals and businesses to optimize their financial decisions and ensure they meet their legal obligations.
| Characteristics | Values |
|---|---|
| Name | Taxpayer Advocate Service (TAS) |
| Who is it for? | Taxpayers facing tax problems that have not been resolved with the IRS |
| Categories of Tax Issues | Financial Hardship, IRS System Issue, Fair & Equitable Treatment |
| Examples of IRS System Issues | Delays beyond 30 days, lack of response or action from the IRS, failure of IRS systems or procedures |
| Tools | Interactive Tax Assistant (ITA) |
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Taxpayer Advocate Service (TAS)
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that ensures taxpayers are treated fairly and helps them understand their rights. TAS offers free assistance to taxpayers with tax problems that they cannot resolve on their own. This includes issues such as financial hardship, IRS system failures, and ensuring fair and equitable treatment. Taxpayers can use the TAS Qualifier Tool to determine if they qualify for assistance, and if eligible, they will be assigned a dedicated advocate. TAS also provides resources such as basic tax information, details about tax credits, and assistance with understanding the Taxpayer Bill of Rights. The service has local offices in every state, the District of Columbia, and Puerto Rico, and taxpayers can call or visit the website for more information.
TAS helps taxpayers facing financial hardship or economic burden, which includes situations where individuals may struggle with basic needs such as housing, food, utilities, or transportation. In such cases, taxpayers need to describe the hardship and provide documentation to verify their circumstances.
TAS also addresses IRS system issues, where IRS processes, systems, or procedures have not operated properly or failed to resolve tax-related problems. This includes situations where the IRS has not responded or taken action to resolve an issue despite multiple requests for more time.
Additionally, TAS ensures fair and equitable treatment for taxpayers, protecting their rights. The TAS website provides information on the Taxpayer Bill of Rights, outlining ten categories of taxpayer rights and protections embedded in the tax code. This helps taxpayers understand their rights and how they apply in specific situations.
To determine eligibility for assistance, taxpayers can use the TAS Qualifier Tool on the TAS website. However, the final determination is made by a TAS Advocate after submitting a Request for Assistance. TAS has made changes to the types of cases it can accept and is taking internal measures to help taxpayers facing significant delays.
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Tax law changes
The One Big Beautiful Bill Act (OBBBA), also known as the 2025 Reconciliation Legislation (H.R. 1), introduces significant changes to the US tax code. Signed into law on 4 July 2025, the legislation makes permanent many of the temporary tax law changes that were first introduced as part of the 2017 Tax Cuts and Jobs Act (TCJA). The OBBBA also introduces new tax rules, both short-term and long-term.
Some of the new tax laws affect 2025 taxes (filed in 2026), but most will start in 2026 or later. The OBBBA includes legislation to stop most of the tax laws from reverting to what they were in 2017, while making some additional changes. The changes include:
- No tax on tips or overtime income for certain workers.
- Taxpayers who claim the Standard Deduction will be able to claim a Charitable Deduction for cash contributions.
- Expanded repayment scenarios for the premium tax credit.
- Elimination of eligibility for the premium tax credit for individuals who enroll in marketplace coverage during a special enrollment period due solely to a change in household income.
- Decreased eligibility for certain lawfully present individuals, including those with income below 100% of the federal poverty level.
- Permanent elimination of miscellaneous itemized deductions.
- A 1% excise tax on money transfers to foreign locations.
- A $6,000 additional deduction for individuals aged 65 and older.
- Individuals may deduct interest paid on a loan used to purchase a qualified vehicle.
- Cuts to energy credits passed under the Inflation Reduction Act.
- Changes to taxes on tips and overtime for certain workers.
- Reforms to Medicaid.
- An increased debt ceiling.
- Reforms to Pell Grants and student loans.
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Tax cuts
On July 4, 2025, President Donald Trump signed into law a series of tax cuts as part of a larger legislative package. These tax cuts were promoted as being significant and beneficial to taxpayers. The legislation, often referred to as the One Big Beautiful Act, included a mix of permanent and temporary tax provisions.
The tax cuts introduced by President Trump and the Republicans aimed to reduce the tax burden on working Americans and enhance the country's economic competitiveness. Some specific measures included reducing levies on tips, overtime, auto loans, and seniors, as well as increasing the Child Tax Credit and making deductions for state and local taxes more generous. These changes were expected to result in larger refunds for many taxpayers when filing their returns the following spring.
However, there is some controversy surrounding the cost of these tax cuts. While Republicans initially downplayed the cost of their tax plan, it has been re-evaluated using a conventional yardstick, resulting in a much higher estimated cost of $4.5 trillion over a decade. This has sparked debates about the true impact of the tax cuts and the use of accounting tactics to minimise their apparent cost.
Despite the controversy, tax cuts can provide immediate financial relief to individuals and stimulate economic activity. They can increase disposable income, encourage spending, and promote investment, which can have positive effects on the overall economy. However, it is important to consider the potential long-term implications, including the impact on government revenue and the ability to fund public services and programmes.
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Tax credits
There are three types of tax credits: refundable, partially refundable, and nonrefundable. Refundable tax credits are those that can be claimed as a refund even if you don't owe any tax. Most tax credits can reduce your tax until it reaches $0, but refundable credits will give you any remaining credit as a refund. Taxpayers must have under $11,600 in investment income and earn less than a specific income level from working to qualify for a refundable tax credit. The income level ranges from $18,591 if you're single with no children, to $66,819 if you're married filing jointly with three or more children.
One of the most popular refundable tax credits is the Earned Income Tax Credit (EITC). The EITC is for low- to moderate-income taxpayers who earn an income through an employer or by working as a self-employed individual and meet certain criteria based on income and number of family members. The Child Tax Credit was previously a nonrefundable credit but became partially refundable as a result of the Tax Cuts and Jobs Act (TCJA). For 2024, the Child and Dependent Care Credit is nonrefundable. This credit helps individuals and couples reduce the costs of care for children under 13. It is available to those who have to arrange for this care so that they can work or look for employment. You may also receive the credit if you care for a spouse or a dependent of any age who cannot care for themselves. For 2024, you may claim up to $3,000 for the care of one dependent or up to $6,000 for two or more. The credit ranges from 20% to 35% based on your income.
The American Opportunity Tax Credit is for qualified education expenses paid by or on behalf of an eligible student for the first four years of higher education. It is partially refundable. If the credit reduces the amount of tax a taxpayer owes to zero, they can get a refund of 40% of any remaining amount of the credit, up to $1,000. Taxpayers can get a maximum annual credit of $2,500 per eligible student.
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Tax expenditures
In essence, tax expenditures are similar to government spending, as they are policy choices intended to encourage certain behaviours. For example, the mortgage interest deduction was introduced to encourage homeownership, and the exclusion of employer-sponsored health insurance was meant to incentivise companies to provide healthcare coverage for their employees.
The Congressional Budget and Impoundment Control Act of 1974 defines tax expenditures, highlighting their role in providing alternatives to direct spending programs or regulations. The Office of Management and Budget (OMB) and the Congressional Joint Committee on Taxation (JCT) publish annual lists of tax expenditures and estimates of their associated revenue losses. However, it is challenging to precisely track and evaluate the effectiveness of tax expenditures, as many beneficiaries may have engaged in the desired behaviour without the tax incentive.
Understanding the distinction between permanent and temporary tax provisions is crucial for making informed decisions. The One Big Beautiful Bill Act, signed into law by President Donald Trump in 2025, introduced a mix of both types of provisions, signalling an evolution in the tax landscape.
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Frequently asked questions
The IRS will not pursue a taxpayer who failed to file a return if six years have passed since the return was due.
It is possible but not necessary. The IRS will refrain from criminal charges if you willingly file before they contact you.
This is possible but currently unlikely.
Yes, the Taxpayer Advocate Service (TAS) helps taxpayers who are experiencing financial difficulty or IRS system issues.
Other common questions include:
- If I cannot pay taxes, should I file a return?
- Can I get an extension to pay my taxes without incurring interest and penalties?
- Do I need to pay taxes on profits received from Bitcoins?
- Should I itemize my deductions or take the standard deduction?
- Am I eligible for tax credits or benefits?
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