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Beginning in 2026, individuals aged 50 and older who earn more than $150,000 in prior‑year-wages will see a significant change in how they can make catch‑up contributions to their workplace retirement plans.  Under the SECURE 2.0 Act, these contributions will no longer be eligible for traditional pre‑tax treatment.  Instead, they will be required to be made as after‑tax ROTH contributions (if their plan allows).  It should be noted that the new rule applies to just the additional catch-up portion; high earners should still consider maxing out the full $24,500 pre‑tax potion thereby allowing for the greatest income deferral.

Beginning in 2026, individuals aged 50 and older who earn more than $150,000 in prior‑year-wages will see a significant change in how they can make catch‑up contributions to their workplace retirement plans.  Under the SECURE 2.0 Act, these contributions will no longer be eligible for traditional pre‑tax treatment.  Instead, they will be required to be made as after‑tax ROTH contributions (if their plan allows).  It should be noted that the new rule applies to just the additional catch-up portion; high earners should still consider maxing out the full $24,500 pre‑tax potion thereby allowing for the greatest income deferral.

What Employees Need to Know
Catch‑up contributions allow workers over 50 to save beyond the standard 401(k) limit by contributing an additional $8,000, or up to $32,500 in total for 2026.  Historically, these contributions reduced taxable income in the year they were made. Under the new rules, high‑earning participants will pay taxes upfront on just the additional $8,000, but this ROTH contribution piece will grow tax‑free and may be withdrawn tax‑free in retirement, provided the account has been open at least five years and the participant is at least 59½.

Key Takeaways for Taxpayers

We encourage clients to review how these rules may affect their savings strategy, while coordinating with plan administrators to ensure ROTH catch‑up contributions are eligible under their plans effective for 2026.  Understanding these changes earlier in 2026 can help prevent surprises come year-end.  Don’t hesitate reaching out to your EGP & Company contact for additional information.

The One Big Beautiful Bill Act (OBBBA) introduced a major tax change for workers who earn overtime pay.  A new tax provision allows eligible individuals to deduct certain overtime compensation directly on their federal income tax return.  This provision is designed to provide meaningful tax relief to workers who rely on overtime to supplement their income.

The One Big Beautiful Bill Act (OBBBA) introduced a major tax change for workers who earn overtime pay.  A new tax provision allows eligible individuals to deduct certain overtime compensation directly on their federal income tax return.  This provision is designed to provide meaningful tax relief to workers who rely on overtime to supplement their income.

Below is an overview of how the new deduction works, who qualifies, and what employers need to know as they prepare as the rule takes effect.

What Is the Qualified Overtime Compensation Deduction?
New IRC Section 225 allows individuals to deduct qualified overtime compensation they receive during the tax year, provided the income is properly reported on an information return such as Form W‑2 or other statements. Key features include:

·        Maximum deduction: Up to $12,500 per year (or $25,000 for joint filers).

·        Above‑the‑line deduction: Reduces adjusted gross income (AGI) and is available in addition to the standard deduction.

·        Income‑based phaseout: The deduction is reduced by $100 for every $1,000 by which the taxpayer’s modified AGI exceeds the statutory threshold.

·        Reporting requirement: Only overtime compensation reported on required information returns (Forms W‑2 and 1099) qualifies for the deduction.

Who Can Claim the Deduction?

·       Employees: Most employees who receive overtime pay under the Fair Labor Standards Act (FLSA) or similar state laws may qualify.

·       Independent Contractors: Do not qualify for the overtime deduction, as overtime rules apply only to employees.

What Employers Need to Know
Employers should prepare for several practical implications:

·       Payroll systems may require updates. Because the deduction applies beginning January 1, 2025, employers may need to adjust payroll systems.  However, given the retroactive nature of the deduction, employers are not required to separately report overtime compensation on 2025 Forms W‑2 to employees.

·       Accurate overtime tracking is essential. Employers should ensure their payroll systems accurately track overtime hours and pay, as employees may rely on these records to substantiate their deduction.

·       Withholding rules remain unchanged. Overtime compensation remains fully subject to federal income tax withholding, Social Security, and Medicare taxes.

·       Employee communications may be needed. Employers may wish to inform employees about the new deduction and how to access their payroll records for substantiation.

Key Takeaways for Taxpayers
This new Qualified Tips Deduction represents a meaningful shift in how tip income is treated for tax purposes.  While the deduction primarily benefits workers, employers will need to ensure compliance with the increased reporting rules.  For 2025, the IRS has provided a transition period, allowing for a reasonable method to bifurcate between ‘wage’ and ‘tip’ income.  In 2026, new tip coding will be afforded to employees within Box-12 of their W-2 forms.

The Overtime Income Deduction provides a new tax benefit for employees who work overtime, but it also introduces new compliance considerations for employers. While reporting obligations remain largely unchanged for 2025, employers should ensure that overtime is calculated correctly, payroll systems maintain accurate records, and employees can access documentation needed to claim the deduction.

We recommend reviewing your current systems, proactive preparation will help minimize administrative burdens and support employees in taking advantage of this new tax benefit.  Don’t hesitate reaching out to your EGP & Company contact for additional information.

As we approach the close of the 2025 tax year, proactive planning remains essential. Recent legislative changes enacted under the One Big Beautiful Bill Act (OBBBA) introduces a significant new tax benefit for workers in traditionally tipped occupations. This provision allows eligible individuals to deduct certain tip income directly on their federal tax return.  However, there are numerous limitations, restrictions, and constraints.

As we approach the close of the 2025 tax year, proactive planning remains essential. Recent legislative changes enacted under the One Big Beautiful Bill Act (OBBBA) introduces a significant new tax benefit for workers in traditionally tipped occupations. This provision allows eligible individuals to deduct certain tip income directly on their federal tax return.  However, there are numerous limitations, restrictions, and constraints.

Below is an overview of how the new deduction works, who qualifies, and what employers need to know as they prepare for implementation.

What Is the Qualified Tips Deduction?
New IRC Section 224 allows individuals to deduct up to $25,000 of qualified tips received during the tax year.  This deduction is taken “above the line,” meaning it is available in addition to the standard deduction. To qualify, tips must be:

·       Cash tips received in an occupation that traditionally and customarily received tips on or before December 31, 2024.

·       Applies to certain occupations as determined by the Secretary of the Treasury.

·       Voluntary payments made by customers, not negotiated or mandatory charges.

·       Reported to the IRS on an information return such as Form W‑2, Form 1099, etc.

·       Not received in a “specified service trade or business” which includes fields such as health, law, consulting, and investment management.

Further, the deduction is subject to an income‑based phaseout.  It begins to phase out at $150,000 modified AGI for single filers ($300,000 for joint filers).  The deduction is reduced by $100 for every $1,000 of income above these thresholds.

Who Can Claim the Deduction?

·       Employees: Most employees in tipped industries—such as restaurants, hospitality, and personal services—may qualify, provided their tips meet the statutory criteria and are properly reported.

·       Independent Contractors: Non‑employee workers (e.g., hair stylists renting a booth, self‑employed massage therapists) may also claim the deduction, but only to the extent their tips exceed their deductible business expenses. This ensures the deduction applies only to net tip income.

What Employers Need to Know
Employers should prepare for several practical implications:

·       Tips must still be reported. Employees must continue reporting tips to employers, and employers must continue reporting them on Form W‑2.

·       Withholding rules remain unchanged. Tips remain subject to federal income tax withholding, as well as Social Security and Medicare taxes.

·       Payroll systems may require updates. Because the deduction applies beginning January 1, 2025, employers may need to adjust payroll systems.

·       Service charges are not tips. Automatic gratuities -- such as an 18% charge for large parties -- do not qualify as tips (for purposes of this deduction).

·       Unreported tips may still be deductible. Employees who fail to report tips to their employer may still claim the deduction by reporting them on Form 4137.

·       Non‑employee tip reporting is evolving. Form 1099‑NEC currently has no dedicated line for tips, but the law requires reporting of tipped amounts and whether the occupation is customarily tipped.

Key Takeaways for Taxpayers
This new Qualified Tips Deduction represents a meaningful shift in how tip income is treated for tax purposes.  While the deduction primarily benefits workers, employers will need to ensure compliance with the increased reporting rules.  For 2025, the IRS has provided a transition period, allowing for a reasonable method to bifurcate between ‘wage’ and ‘tip’ income.  In 2026, new tip coding will be afforded to employees within Box-12 of their W-2 forms.

We recommend reviewing your current tip‑reporting procedures, updating payroll systems as needed, and preparing to communicate these changes to employees.  Don’t hesitate reaching out to your EGP & Company contact for additional information.

The One Big Beautiful Bill Act (OBBBA) created a new tax‑advantaged savings vehicle known as the Trump Account.  These accounts are designed to encourage long‑term savings and investment for American children and operate similarly to traditional IRAs, with several important distinctions.  Further additional IRS and Treasury guidance is forthcoming.

The One Big Beautiful Bill Act (OBBBA) created a new tax‑advantaged savings vehicle known as the Trump Account.  These accounts are designed to encourage long‑term savings and investment for American children and operate similarly to traditional IRAs, with several important distinctions.  IRS and Treasury guidance is forthcoming.

Below is a practical overview for evaluating how Trump Accounts may fit into your individual tax planning.

What Is a Trump Account?
A savings vehicle treated similarly to a traditional IRA.  An account is created for the exclusive benefit of an eligible individual, generally a minor child.  Once created, it is subject to specific contribution, reporting, and administrative rules.  Distributions from the account could likely be taxable, however, exceptions apply.  Current guidance makes it clear these accounts are not Roth IRA’s.

Taxpayer may eventually open a Trump Account in various ways: via an online portal at trumpaccounts.gov, with Form 4547 with the 2025 tax return, or potentially additionally prescribed by future IRS Notice(s).

Who Is Eligible? 
An “eligible individual” is generally a child who has not reached age 18 by the end of the calendar year, and meets additional criteria to be clarified in forthcoming regulations.

IRS guidance indicates that no contributions may be made until July 4, 2026.  Annual contributions are capped at $5,000, indexed for inflation beginning in 2027.  Contributions may be made by parents, guardians, or other permitted contributors.

Families with children born between December 31, 2024, and January 1, 2029, and who are a U.S. citizens, and hold a valid social security number can likely receive additional benefits.  These individual may participate in the ‘pilot program’ where an one-time governmental $1,000 contribution is seeded for each qualifying Trump account beneficiary.

Tax Treatment
Trump Accounts are modeled on traditional IRAs where contributions may be deductible, subject to income limits (to be clarified in regulations).  Earnings grow tax‑deferred.  While withdrawals will be subject to rules similar to IRA distributions unless modified by future guidance.  Any future ‘nonqualified distributions’ from the account are taxable and may face further penalties (similar to traditional IRA rules).

Trump Accounts represent a new opportunity for families to build long‑term savings for children, with tax advantages similar to retirement accounts.  Financial institutions will begin offering Trump Accounts once regulations are finalized.  As noted above, future legislation is anticipated further clarifying the accounts.  Don’t hesitate reaching out to your EGP & Company contact for additional information. 

The IRS has provided interim guidance on the deductions for qualified tips and qualified overtime compensation under the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21). For tax year 2025, employers and other payors are not required to separately account for cash tips or qualified overtime compensation on Forms W-2, 1099-NEC, or 1099-MISC furnished to individual taxpayers.

The IRS provided guidance on changes relating to health savings accounts (HSAs) under the One, Big, Beautiful Bill Act (OBBBA) (P.L. 119-21). These changes generally expand the availability of HSAs under Code Sec. 223.

The IRS provided guidance on changes relating to health savings accounts (HSAs) under the One, Big, Beautiful Bill Act (OBBBA) (P.L. 119-21). These changes generally expand the availability of HSAs under Code Sec. 223.

Background

To access HSAs, individual taxpayers (1) need to be covered under a high-deductible health plan (HDHP) and (2) should not have other disqualifying health coverage. The minimum annual deductible for an HDHP in 2025 is $1,650 for self-only coverage and $3,300 for family coverage. The out-of-pocket maximum for TY 2025 is $8,300 for self-only coverage and $16,600 for family coverage.

OBBBA Changes

The OBBA made a few key changes to HDHPs and, by extension, HSAs. First, it made permanent a safe harbor for HDHPs that have no deductible for telehealth and other remote care services. The OBBBA permanent extension applies retroactively after December 31, 2024.

Second, the term HDHP now includes any plan under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) that is available as individual coverage through an exchange, including bronze and catastrophic plans. Before the OBBBA was enacted, many bronze plans did not qualify as HDHPs because the plans’ out-of-pocket maximum exceeded the statutory limits for HDHPs or because they provided benefits that were not preventive care without a deductible. Similarly, catastrophic plans could not be HDHPs because they were required to provide three primary care visits before the minimum deductible was satisfied and to have an out-of-pocket maximum that exceeded the statutory limits for HDHPs. This provision amending the definition of an HDHP applies for months after December 31, 2025.

Finally, direct primary care service arrangements (DPCSA) under Code Sec. 223(c)(1)(E)(ii) are no longer treated as a health plan for purposes of determining HSA eligibility and enrollment, and enrolling in a DPCSA will not cause a taxpayer to fail eligibility to contribute to an HSA. These DPCSAs changes would apply after December 31, 2025.

Q&As

The IRS answered several common questions from the public regarding these three provisions with regards to administration and eligibility.

Notice 2026-5

IR 2025-119

The IRS has answered initial questions regarding Trump accounts, which it intends to address in forthcoming proposed regulations. The guidance addresses general questions relating to the establishment of the accounts, contributions to the accounts, and distributions from the accounts under Code Secs. 128, 530A, and 6434. Comments, specifically on issues identified in the notice, should be submitted in writing on or before February 20, 2026, by mail or electronically.

The IRS has answered initial questions regarding Trump accounts, which it intends to address in forthcoming proposed regulations. The guidance addresses general questions relating to the establishment of the accounts, contributions to the accounts, and distributions from the accounts under Code Secs. 128, 530A, and 6434. Comments, specifically on issues identified in the notice, should be submitted in writing on or before February 20, 2026, by mail or electronically.

Establishment of the Accounts

An account may be established for the benefit of an eligible individual by making an election on Form 4547, Trump Account Election(s), or through an online tool or application on trumpaccounts.gov. A Trump account may be created at the same time that an election is made to receive a pilot program contribution. A Trump account is a traditional IRA under Code Sec. 408(a).

A rollover Trump account can only be established after the initial Trump account is created and during the growth period of the account, which is the period that ends before January 1 of the calendar year in which the account beneficiary attains age 18. A rollover account must first be funded by a qualified rollover contribution before receiving any other contribution. Additional rules regarding the choice of trustee, rollover accounts, and the written government instrument requirements are discussed in section III.A of the notice.

Pilot Program and Contributions

The election to receive a pilot program contribution is made on Form 4547 or through the online tool, once available. Pilot program contributions will be deposited into the Trump account of an eligible child no earlier than July 4, 2026.

Trustees of Trump accounts must maintain procedures to prevent contributions from exceeding the annual limit of Code Sec. 530A(c)(2)(A). Trustees are required to collect and report the amount and sources of contributions. Contributions may be made to a Trump account and to an individual retirement arrangement for the same individual during the growth period in accordance with the rules of Code Secs. 408 and 530A(c)(2).

Qualified general contributions will be transferred by the Treasury Department or its agent to the trustee of a Trump account pursuant to a general funding contribution. More information on how and where permitted entities will make an application to make a general funding contribution will be provided before the application process opens.

An employer can exclude up to $2,500 from the gross income of an employee for a contribution made by the employer to a Trump account contribution program. The annual limit is per employee, not per dependent. A Trump account contribution may be made by salary reduction under a Code Sec. 125 cafeteria plan if the contribution is made to the Trump account of the employee's dependent and not if the contribution is made to the Trump account of the employee.

Eligible Investments

The terms "mutual fund" and "exchange traded fund" are explained, with additional comments requested on their definitions. The tracking of returns of an index and leverage for purposes of Trump accounts are also described. A mutual fund or exchange traded fund will meet the requirements of having annual fees and expenses of no more than 0.1% of the balance of the investment fund if the sum of its annual fees and expenses is less than 0.1% of the value of the fund's net assets. Additional questions regarding eligible investments are discussed in section III.D of the notice.

Distributions

Only permitted distributions, which are qualified rollover contributions or qualified ABLE rollover contributions, excess contributions, or distributions upon the death of an account beneficiary, are allowed during the growth period. Hardship distributions during the growth period are not allowed. If an account beneficiary dies after the growth period, the rules that apply to other individual retirement accounts after the death of the account owner apply. If the Trump account beneficiary dies during the growth period, the account ceases to be a Trump account and an IRA as of the date of death.

Reporting and Coordination with IRA Rules

Annual reporting by the Trump account trustee is required. Forms and instructions will be issued in the future. After the growth period, distributions from Trump accounts are governed by the IRA distribution rules of Code Sec. 408(d).

Notice 2025-68

IR 2025-117

The IRS intends to issue proposed regulations to implement Code Sec. 25F, as added by the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21). Code Sec. 25F allows a credit for an individual taxpayer's qualified contribution to a scholarship granting organization (SGO) providing qualified elementary and secondary scholarships.

The IRS intends to issue proposed regulations to implement Code Sec. 25F, as added by the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21). Code Sec. 25F allows a credit for an individual taxpayer's qualified contribution to a scholarship granting organization (SGO) providing qualified elementary and secondary scholarships.

Tax Credit

Beginning January 1, 2027, individual taxpayers may claim a nonrefundable federal tax credit for cash contributions to SGOs. Taxpayers must be citizens or residents of the United States. The credit allowed to any taxpayer is limited to $1,700. The credit is reduced by the amount allowed as a credit on any state tax return. Additionally, to prevent a double benefit, no deduction is allowed under Code Sec. 170 for any amount taken into account as a qualified contribution for purposes of the Code Sec. 25F credit.

SGO Requirements

An organization can qualify as an SGO after satisfying conditions that include (1) being a Code Sec. 501(c)(3) organization that is exempt from tax under Code Sec. 501(a) and not a private foundation; (2) maintaining one or more separate accounts exclusively for qualified contributions; (3) appearing on the list submitted for the applicable covered state under Code Sec. 25F(g); and (4) providing scholarships to 10 or more students who do not all attend the same school, as well as meeting certain other requirements.

Request for Comments

The forthcoming proposed regulations describe the certification process currently envisioned by the Treasury Department and the IRS for covered states to elect to participate under Code Sec. 25F . The IRS requests comments on these matters before December 26, 2025, through the Federal e-Rulemaking portal (indicate “IRS-2025-0466”). Paper submissions should be sent to: Internal Revenue Service, CC:PA:01:PR (Notice 2025-70), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

Notice 2025-70

IR-2025-115

The IRS has disclosed the first set of certifications for the qualifying advanced energy project credit under Code Sec. 48C(e).

The IRS has disclosed the first set of certifications for the qualifying advanced energy project credit under Code Sec. 48C(e) for the period beginning:

• March 29, 2024, through September 30, 2025, resulting from the Round 1 allocation; and
• January 10, 2025, through September 30, 2025, resulting from the Round 2 allocation.

The Service also disclosed the identities of taxpayers and amounts of the Code Sec. 48C credits allocated to said taxpayers.

Background

Notice 2023-18, I.R.B. 2023-10, established a program to allocate $10 billion of credits for qualified investments in eligible qualifying advanced energy projects under Code Sec. 48C(e)(1). Code Sec. 48C(e)(4)(A) provides a base credit rate of 6 percent of the qualified investment. In cases where projects satisfy Code Secs. 48C(e)(5)(A) and (6), the Service would provide an alternative rate of 30 percent of the qualified investment.

Certification

Each applicant for certification has two years from the date of acceptance of the Code Sec. 48C(e) application. During this time, the applicant needs to submit evidence that the requirements of the certification have been met. The IRS will publish additional notices annually for certifications issued during each successive 12-month period beginning on October 1, 2025 for both Round 1 and 2.

Announcement 2025-22

Announcement 2025-23

The IRS and Treasury Department have provided procedures for a state to elect to be a “covered state” to participate with the Code Sec. 25F credit program for calendar year 2027 prior to identifying any scholarship granting organizations (SGOs) in the state. Form 15714 is used by a state to make the advanced election.

The IRS and Treasury Department have provided procedures for a state to elect to be a “covered state” to participate with the Code Sec. 25F credit program for calendar year 2027 prior to identifying any scholarship granting organizations (SGOs) in the state. Form 15714 is used by a state to make the advanced election.

Background

For tax years beginning after 2026, a U.S. citizen or resident alien may claim a nonrefundable personal tax credit of up to $1,700 for qualified contributions made to a scholarship granting organization (SGO). A qualified contribution is a charitable contribution of cash to an SGO that uses the contribution to fund scholarship for eligible K-12 students.

In order for a contribution made by a taxpayer to an SGO in a state (or the District of Columbia) to be a qualified contribution eligible for the credit, the state must elect participate in the credit program and must identify by January 1 of each calendar year a list of qualified SGOs in the state.

Advanced Election for 2027

A state may make an advanced election using Form 15714 to be a covered state for the Code Sec. 25F credit for the 2027. The form may be submitted any time after December 31, 2026, and before the day before the final date on which the State is permitted to submit the State SGO list (as will be specified in future guidance).

The advance election will allow a state to inform potential SGOs of the state’s participation in the credit before submitting a full SGO limit to the IRS. Any SGO list submitted with Form 15714 will not be processed by the IRS and the state will need to resubmit the list as specified in future guidance. Once a state’s advance election has been made on Form 15714 for calendar year 2027, the only subsequent submission the IRS will accept is the official submission of the state’s SGO list for the calendar year.

Rev. Proc. 2026-6

IR 2025-121

The IRS has formally withdrawn two proposed regulations that would have clarified how married individuals may obtain relief from joint and several tax liability. The withdrawal affects taxpayers seeking protection under Code Sec. 6015 and relief from federal income tax obligations tied to State community property laws under Code Sec. 66.

The IRS has formally withdrawn two proposed regulations that would have clarified how married individuals may obtain relief from joint and several tax liability. The withdrawal affects taxpayers seeking protection under Code Sec. 6015 and relief from federal income tax obligations tied to State community property laws under Code Sec. 66.

The two notices of proposed rulemaking—originally issued on August 13, 2013 (78 FR 49242), and November 20, 2015 (80 FR 72649)—offered procedural guidance for requesting equitable, innocent spouse, or separation of liability relief. These proposals also reflected statutory amendments introduced by the Tax Relief and Health Care Act of 2006 and evolving jurisprudence. The Treasury Department and the IRS decided to halt progress on these rules due to the passage of time, the scope of public comments, and resource prioritization.

While the agency acknowledged the regulatory need in this area, it cited the volume and breadth of feedback as grounds for reassessment. The IRS clarified that any future rules addressing these issues would require new proposals and another round of public comment, in line with current statutory frameworks and legal developments.

Importantly, this withdrawal does not prevent the issuance of new regulations on joint and several liability relief. Nor does it alter existing statutory or regulatory obligations in place under current law. The IRS retains authority under 26 U.S.C. 7805 to revisit and re-propose rules as necessary.

The withdrawal was announced by the IRS and Treasury on December 15, 2025, and was signed by Frank J. Bisignano, Chief Executive Officer. Tax professionals and affected individuals should continue to rely on existing law and procedures when seeking relief under Code Secs. 6015 and 66.

Proposed Regulations, NPRM REG-132251-11; REG-134219-08

The American Institute of CPAs has voiced its opposition to the Internal Revenue Service’s proposal to combine the Office of Personal Responsibility and the Return Preparer Office

The American Institute of CPAs has voiced its opposition to the Internal Revenue Service’s proposal to combine the Office of Personal Responsibility and the Return Preparer Office.

“The AICPA has an extensive and resolute history of steadfastly supporting initiatives that would enhance compliance, elevate ethical conduct, and protect taxpayer confidence in our tax system,” the organization said in a November 14, 2025, letter to the directors of the two offices. “The proposed combination of OPR and RPO contravenes those principles.” A copy of this and other AICPA 2025 tax policy and advocacy comment letters can be found here.

AICPA said it “strongly opposes any efforts to combine OPR and RPO because it would inappropriately consolidate credentialed and uncredentialed return preparers under OPR, create potential conflicts of interest, and divert resources from the primary role of OPR.”

It added that the merger “would sow confusion among taxpayers trying to understand the differing qualifications and practice rights of preparers, which would harm taxpayers and erode taxpayer confidence in our tax system.”

AICPA noted that OPR “has the exclusive delegated authority to interpret and enforce the regulations in Treasury Department Circular 230 (Circular 230), which governs tax practitioners interacting with the tax administration system,” while RPO “administers the Preparer Tax Identification Number (PTIN) program, manages the enrolled agent practitioner program, encourages enrollment in the Annual Filing Season Program (AFSP), and processes some complaints against return preparers.”

“These two offices perform dissimilar government functions, oversee different types of preparers, and, therefore, should remain separate to avoid potential conflicts of interest,” AICPA said in the letter.

AICPA argued that the combination would divert resources away from the primary role of OPR and could undermine the credibility of OPR’s enforcement objective.

“Under a combined OPR unit, unscrupulous and incompetent preparers could readily misrepresent that they are subject to ethical obligations overseen by the ‘Office of Professional Responsibility,’ which would give such preparers a foothold to abuse taxpayers and undermine public trust and accountability in the tax profession,” AICPA stated in the letter.

By Gregory Twachtman, Washington News Editor