00:00Welcome to Tax Breaks. I'm your host, Kelly Phillips-Erb. I'm a senior writer for Forbes,
00:10and you might have seen me around the web as Tax Girl. I'm also a tax attorney, and
00:15I work with tax professionals and taxpayers like you every day. There's a lot to talk
00:21about, so let's get started. The season has begun. No, not tax season. That opened on
00:27January 27, 2025, and it's nearly over. I'm talking about baseball season. If you're a
00:34regular reader or you follow me on social media, you know that I'm a huge baseball fan.
00:40I love baseball, so of course I was front and center on opening day. My Phillies had
00:44a real nail-biter, but they pulled it off. I've mentioned before that I attribute my
00:48love of baseball to my grandfather. Like many Americans, when my grandfather reached what
00:54we would consider retirement age, he was still working. In his mid-70s, he would suit
00:58up as a security guard and work long nights at the local hospital. He was gone a lot.
01:04But on those hot, sticky summers in coastal North Carolina when he had a free moment,
01:09he and I would sit and watch baseball on the old TV in the family room. And for the record,
01:14he was a Cubs fan, not a Phillies fan. Those are some of the most special moments of my
01:19life, and I'm sure it's why I love baseball to this day. I'll bet that you have a similar
01:24story and maybe it's not baseball. It could be another sport like basketball, football,
01:29or in the case of my girls, ice hockey. Sports are a little different today, including college
01:35sports. Players are now both student-athletes and paid-athletes, earning potentially significant
01:41amounts of money from Name, Image, and Likeness, or NIL. The NIL income has significant tax
01:47consequences, and many states are using their tax laws to maximize NIL's efficiency and
01:54effectiveness for their public universities. One that's making news right now? Arch Manning.
02:00Yes, of those Mannings. According to On3 NIL valuations, the presumptive starting quarterback
02:07for the University of Texas next season has an NIL valuation of $6.5 million per season.
02:14During his recruitment, Manning chose to play at Texas over the University of Alabama and the
02:20University of Georgia. While it's likely that Manning considered many factors when choosing
02:24Texas, it's possible that tax played a part in his decision. It's a certainty that Manning will be
02:31a darling on social media, garnering him potentially additional significant income, so long
02:37as he's not in Italy. Italian tax authorities are advancing a landmark value-added tax, or that case,
02:44against big tech. That is sort of like sales tax, although there are some key differences. Here's
02:50what those Italian tax authorities are arguing. When users sign up for a social media platform,
02:56they receive a valuable service in exchange for their personal data. Because that exchange
03:02involves consideration, again, you're paying for services with personal data instead of money,
03:07it should be, they claim, subject to VAT. As a result, Italy has reportedly handed META a
03:14bill for 900 million euro, with smaller claims lodged against the parent companies of X and
03:20LinkedIn. Since VAT is harmonized across the European Union, this isn't necessarily a local
03:27tax issue. It's a potential template for taxing tech giants across the community. Figuring out
03:34reporting and tax obligations may be difficult for some U.S. businesses abroad, but in the U.S.,
03:41U.S. companies are getting a break. U.S. businesses no longer have to comply with the
03:46Beneficial Ownership Information, or BOI, reporting filing requirements of the Corporate Transparency
03:52Act, or CTA. That's the result of an interim final rule issued this month by the Trump administration
03:59that removes the requirement for U.S. companies and U.S. persons to report Beneficial Ownership
04:05Information to the Financial Crimes Enforcement Network, or FINCEN. If finalized, the rule,
04:11which was an effort to crack down on money laundering and other potential crimes,
04:16would exempt more than 99% of entities from the reporting requirement that Congress passed in
04:212021. While the Trump administration has been busy cutting reporting requirements for corporations,
04:28it has been making a slew of proposed rule changes and personnel cuts at the Social Security
04:33Administration, or SSA, which could create more administrative burdens for individuals.
04:39Frank Bencinano, President Trump's nominee to lead the Social Security Administration,
04:44faced questions about these issues during his confirmation hearing to lead the agency
04:49responsible for paying $1.6 trillion per year to 72.5 million beneficiaries, including retirees,
04:58the disabled, and children who are the survivors of covered workers. One controversial proposal
05:05being pushed by the Elon Musk-led Department of Government Efficiency, or DOGE, would limit
05:11Social Security phone services, forcing Americans to sign up for benefits or switch the bank
05:16accounts where they receive them to do it online or in person at a Social Security office. But
05:22under questioning, Bencinano described phone service as, quote, a part of meeting beneficiaries
05:28where they want to get met, end quote. Apparently, folks at the SSA took their potential future boss
05:35at his word. A day after the hearing, the agency changed course, announcing that it would now allow
05:41phone service for certain beneficiaries. The agency announced that as of April 14, 2025,
05:48those who are applying for Social Security Disability Insurance, or SSDI, Medicare, or
05:55Supplemental Security Income, or SSI, and who cannot use a personal online Social Security
06:02account can complete their claim entirely by telephone. Those applying for regular retirement
06:08or survivor benefits, however, will have to do it online or go to a Social Security Administration
06:14office. The Social Security news didn't stop there. This past week, President Trump signed an
06:20executive order declaring that the federal government must stop issuing paper checks by
06:26September 30, 2025, in favor of direct deposit, prepaid cards, or some other digital account option.
06:34That includes Social Security benefits as well as payments from other agencies, including tax
06:40refunds. According to the order, using paper checks is expensive and wasteful, and Department
06:46of the Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable,
06:54or altered compared to electronic funds transfers, or EFT. The new rule also applies to federal
07:01government receipts, like paying taxes. Of course, federal agencies have been fighting the battle
07:06against paper for years. My favorite paper check rule? In 2015, the Federal Reserve announced that
07:13it would no longer accept checks larger than $99,999,999. Luckily, this hasn't been a problem
07:23for me. Speaking of taxes, there are just a couple weeks left in tax season. Enjoy the rest of the
07:30tax, baseball, college, basketball, your favorite season here season. Now let's answer a taxpayer
07:37question. This week, a reader asked, I just received a retroactive bonus for the 2024 year,
07:44but I've already filed my taxes. Do I need to amend my return? So first of all, congrats on the bonus.
07:51But here's my answer. Luckily, you don't need to do anything for 2024. Your employer must report
07:57payments and the year in which they are paid. For you, that's 2025, even if the payments are
08:03attributable to work that was performed in a previous year. So you'll report your bonus on
08:08your 2025 tax return, even though it was for work that happened in 2024. That's true for bonuses,
08:15as well as your regular wages. Those hours that you worked on December 30 or December 31, 2024,
08:21but you were paid in 2025, those get reported in 2025 on your 2025 tax return. This also applies
08:29to corrected wages. That's when your boss pays you later for wages that were underpaid in a previous
08:35year. The same rule generally applies to other payments as well, including social security
08:40benefits that are received as a lump sum payment. You typically receive the taxable portion of the
08:46lump sum payment that you receive in the current year in your income for that year, even if the
08:52payment covers benefits paid for other years. If you have a tax question or matter that you think
08:58we should consider in the next episode, please let us know. You can find more information in the show
09:03notes. Of course, if you follow me on Forbes, you know that I love looking at statistics and a good
09:10map or chart. This week, I'm focusing on tax filing season statistics. Stop me if you've heard this
09:16before, but taxpayers do not appear to be excited to file this filing season. IRS data from the
09:23seventh week of the tax filing season, the week ending March 14, 2025, shows that numbers for tax
09:30filing and processing of tax returns for individuals have dipped again, a trend that hasn't
09:35changed since the season opened on January 27, 2025. The data shows that the IRS received
09:43$70,370,000 individual income tax returns as of March 14, 2025, compared to $71,587,000
09:53as of March 15, 2024. That's more than $1,000,000 fewer individual income tax returns to date in
10:002025 as compared to 2024. Two more sets of data points stand out to me. First, the number of
10:08e-filed returns prepared by professionals is nearly neck and neck with the number of e-filed returns
10:13that are self-prepared. The IRS received $34,467,000 individual income tax returns
10:21e-filed by tax professionals and $34,880,000 self-prepared e-filed returns. That's consistent
10:28with predictions. In January, the IRS noted that it expected about half of all tax returns to be
10:35filed this year with the help of a tax professional. Second, tax refund numbers are up. That's true
10:42not only for the number of tax refunds issued to date, despite the dip in filing, but also for the
10:48dollar values involved. The average tax refund so far this year is $3,271. The direct deposit
10:55numbers are even a little higher at $3,330. Now it's time for a little tax trivia. All this talk
11:03about Social Security has made me wonder, who was the first Social Security beneficiary? Your choices
11:10are A. Ernest Ackerman B. Fred Happel C. Grace Dorothy Owen D. John David Sweeney. I'll give you a minute.
11:25The answer is A, Ernest Ackerman. In 1937, retired Cleveland motorman named Ernest Ackerman
11:46became Social Security's first beneficiary. A nickel was withheld from his wages for the one
11:51day he worked under the new program. In return, he received a one-time lump sum retirement payment
11:58of 17 cents. Not a bad return. The other choices happen to be real people with a connection to
12:05Social Security. Fred Happel of Albany, New York designed the original Social Security card in 1936
12:12and he was paid $60 for his work. Grace Dorothy Owen of Concord, New Hampshire applied for her
12:18Social Security number on November 24, 1936. She received the lowest Social Security number,
12:250010010001. The lowest area numbers were assigned to New Hampshire. This was apparently done so that
12:34the number could be given to the Social Security Board Chairman and three-time Governor of New
12:39Hampshire, John G. Winnett. However, Winnett declined. That meant that the first applicant
12:45from New Hampshire, that's Grace Dorothy Owen, was issued the card with the lowest possible number.
12:52Owen wasn't, however, the first person to receive a Social Security number. That was John David
12:57Sweeney of New Rochelle, New York, who received the first Social Security number 055090001
13:06on December 1, 1936. Sweeney died of a heart attack in 1974 at the age of 61 without ever
13:14receiving any benefits. His widow, however, was able to receive his benefits based on his work
13:20until she died in 1982. Now it's time for a deeper dive and it's a look at the changes at the IRS.
13:29Acting IRS Commissioner Melanie Krauss has told employees that the Treasury hasn't yet provided
13:35the agency with its reduction in force or RIF plan yet. There are still discussions regarding
13:41the scope and how many employees are going to be cut. It's also unclear whether those RIF numbers
13:47will include the 7,000 probationary employees who were terminated and subsequently reinstated.
13:54They're currently on paid administrative leave. Tax professionals, including me,
13:59are concerned about the effect that these cuts may have on service and collections,
14:04especially given that the terminations so far have disproportionately affected enforcement personnel
14:10like revenue agents and revenue officers. There are also concerns about leadership.
14:15Former Missouri Representative Billy Long has been picked by President Trump to serve
14:19as the next IRS Commissioner following the departures of former IRS Commissioner Danny
14:25Werfel and former Acting Commissioner Doug O'Donnell. Lawmakers on the Hill are still
14:30waiting for all of the paperwork for Long and they haven't scheduled a hearing date yet.
14:35Yet another concern is the security of taxpayer data. The DOJ team reportedly wants to use
14:44IRS data to investigate potential fraud at the Supplemental Nutrition Assistance Program,
14:50or SNAP, currently known as food stamps. Prior analysis at the Urban Institute,
14:56focused on improving tax administration, shows that even if IRS did share that data,
15:01differences between how tax data and SNAP programs are administered likely make the data
15:07of limited value. Why? They don't use the same data points. Now for something a little more brief,
15:13some quick tax and accounting newsmakers. In an op-ed for Bloomberg Tax, former IRS Commissioner
15:20Danny Werfel explains that the IRS has, over the years, given some of its employees access to
15:26taxpayer data. But he notes that it was rare for anyone of the IRS to have access to all of the
15:31data. Werfel says that even if he, as the former IRS Commissioner, had requested access to all of
15:38the data in all of the IRS systems, quote, the agency's data security team would rightfully say
15:44no. I would have no compelling need and there was no legal basis for me to demand it, end quote.
15:50That's why he says DOE's requests to access all data should be met with questions.
15:57The 50th anniversary of the Earned Income Tax Credit, or EITC, was Saturday, March 29, 2025.
16:05The EITC was originally signed into law by President Gerald Ford on March 29, 1975. What
16:12began as a modest means of providing financial support for working families has evolved into
16:17one of the federal government's largest anti-poverty programs. As of December 2024,
16:23approximately 23 million workers and families received about $64 billion from the EITC.
16:31And finally, Oregon recently celebrated registering more than 100,000 electric cars.
16:37The move towards fuel-efficient cars has resulted, however, in a dip in tax revenues
16:43since electric vehicles, about 5% of the cars registered in Oregon over the past decade,
16:49aren't subject to the gas tax. That's causing state tax officials to consider what to do next.
16:55And that's a wrap. Thanks to all of you who continue to watch, comment, and share the show.
17:01I'd love to know what you thought of this episode. You can send an email with your feedback
17:06to kerb at forbes.com. And if you liked it, please share. You can find the link to the audio
17:12of each episode on forbes.com. And thanks for listening, because paying taxes is painful,
17:19but hearing about them shouldn't have to be.
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