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The end of tax season marks the beginning of the road to the next most significant date in this year's tax calendar — the presidential election in November.
President Joe Biden set out his tax stall in his State of the Union address on March 7, which included protecting and expanding the Affordable Care Act, providing an annual mortgage tax credit for new homebuyers, restoring the Child Tax Credit and introducing a minimum tax on billionaires.
The administration followed this up with its detailed revenue proposals for fiscal year 2025. These "would contribute to lowering child poverty and giving working families more breathing room in their household budgets," Treasury Secretary Janet Yellen said in her opening statement to the Senate Finance Committee about the budget plans. "We can make these investments while reducing the deficit by $3 trillion over a decade through a combination of smart savings and tax proposals."
Read more: The definition of 'rich' — and its impact on taxes
Meanwhile, the IRS has been moving ahead with technology improvements in its strategic operating plan, using multiyear funding from the Inflation Reduction Act, while stressing the need for its Business Systems Modernization funding to be restored. According to a Government Accountability Office report, the plan involves, among other things, involves retiring and replacing legacy systems and updating programming languages, giving taxpayers tools to access their data and use online services, and ensuring continued security and privacy of taxpayer data.
"We're catalyzing this transformation because a digital-first IRS is a generational imperative," said IRS Commissioner Danny Werfel, outlining his vision of the future for the agency during a speech in March at the Kogod School of Business at American University in Washington, D.C. "It's how most taxpayers want to interact with us in the 21st century."
One of the first steps on that road was the March launch of the Direct File pilot program for free tax filing, after weeks of testing in a dozen states. Werfel noted that once taxpayers start their return on the Direct File site, it won't take long to complete the return, but they can save their progress and come back if they need to take a break. They can also get special support from IRS representatives through the system's live chat feature. Like other electronic filing options, it allows taxpayers to get tax refunds within 21 days or fewer when using direct deposit.
Read more: 5 IRS developments to watch this tax season
With IRA funding for the IRS having already been cut back last year by Congress, the result of the fall's election could pose a significant threat to Werfel's plans. Similarly, several commentators have pointed out that the current administration's tax proposals are something of a wish list that may not even see the light of day, depending on the outcome later this year.
"If the past is any indication of the future, it won't be an easy road ahead," said John Gimigliano, principal-in-charge of federal legislative and regulatory services in the Washington national tax office of KPMG. "As with any election year, a lot still remains uncertain — and all eyes are on November."
Catch up on all our recent coverage of the key issues that will be shaping the profession this year after the dust has settled on tax season.
