Will Your Tax Filing Be More Expensive Next Year? Trump Ends A Free IRS Tax-Filing Service

Key Concepts:

• Tax Day, IRS Direct File program, Record Retention, VAT (Value Added Tax), IRS Levy vs. Lien, Installment Agreement, Tax Filing Statistics, IRS Website Analytics, FBAR Penalties, Accounting STEM Pursuit Act, Venice Arrival Tax, Political Protest via Crosswalk Signals.

1. Tax Day and IRS Direct File Program

• Tax Day was April 15th for most of the US, but this hasn't always been the case.
• The Trump administration plans to eliminate the IRS Direct File program, despite initial commitments to keep it operative for the 2025 season.
• Treasury Secretary Scott Bessant had previously committed to the program during his confirmation hearing, stating, "I will commit that for this tax season direct file will be operative."
• Amanda Rentia, CEO of Code for America, criticized the decision, calling it "a dark day for Americans who want a simple free option to file their taxes electronically directly with the government" and "a betrayal of public trust."

2. Record Retention Guidelines

• Taxpayers should keep tax records and supporting documentation until the three-year statute of limitations has run.
• Supporting documentation includes forms W2 and 1099, credit card receipts, invoices, mileage logs, copies of checks, proofs of payment, and any records supporting income, deductions, credits, or tax breaks.
• Exceptions apply for fraud, failure to file, and non-tax-related reasons like mortgages or student loans.

3. VAT and the Great British Marshmallow Decision

• The UK VAT (Value Added Tax) is similar to a sales tax.
• The case of His Majesty Revenue and Customs versus Innovated Bites Limited (aka The Great British Marshmallow Decision of 2025) debated whether mega marshmallows should be classified as edible confectionaries (subject to 20% VAT) or culinary ingredients (VAT exempt).
• The court ruled that mega marshmallows were confectionaries and not eligible for a VAT exemption.
• Marshmallows eaten out of the bag are considered confectionaries, while those toasted for s'mores might receive a VAT exemption.

4. IRS Levy vs. Lien and Installment Agreements

• A levy is a legal seizure of property to satisfy tax obligations, while a lien is filed against you to act as security.
• The IRS typically won't levy assets or garnish wages if a taxpayer is making regular payments on an installment agreement, filing tax returns on time, and complying with the agreement's terms.
• However, the IRS may still seize a tax return and apply it to the outstanding balance, even with a payment plan.
• The IRS will release a lien once the debt is paid off. For certain taxes, the IRS will withdraw the lien if you enter into a direct debit installment agreement and meet certain other conditions.

5. Tax Filing Statistics and IRS Website Analytics

• Tax filings are lagging behind the numbers from last year.
• As of April 11, 2025, the IRS had received 117,58,000 individual income tax returns, compared to 119,592,000 as of April 12, 2024, a dip of 1.7%.
• Web visits to IRS.gov have dropped significantly, about 45%.
• The IRS changed its analytics methodology from a session-based approach to an event-based model, making year-to-year comparisons difficult.
  • A session-based approach tracks users within a defined timeline and includes metrics like page views, bounce rates, and traffic source.
  • An event-based approach tracks actions like clicks and form submissions.
• The IRS's Chief Information Officer, Rajie Uppel, is leaving his position, following other high-profile departures from the agency.

6. Tax Trivia: Time Spent Preparing Returns

• The average individual taxpayer spends 13 hours preparing their individual returns, with an average out-of-pocket cost of $290 per return.
• Non-business taxpayers have an average burden of about eight hours and an average cost of about $160 per return.
• Business taxpayers have an average burden of about 24 hours and $620 per return.
• A business filer is someone who files a Schedule C, E, F, or Form 2106 with their 1040.

7. FBAR Penalties and Estate Obligations: Estate of Beneshai v. United States

• A recent court decision clarified that FBAR penalties accrue on the date the form is due but fails to be filed, not when the IRS assesses the penalties.
• The case involved David Beneshai, who failed to file timely FBARs for foreign bank accounts.
• The court found that FBAR penalties are primarily remedial, designed to compensate the government for investigating non-compliance and enforcing tax collection, not purely punitive.
• Therefore, the penalties can survive the taxpayer's death.
• Under FBAR rules, each US person with an interest in, signature, or other authority over one or more bank, securities, or other financial accounts in any foreign country must file an FBAR if the aggregate value of such accounts at any point in the calendar year exceeds $10,000.

8. Quick Tax and Accounting News

• The AICPA supports the Accounting STEM Pursuit Act (HR 2911), which would allow K12 grant funding to be used for accounting education.
• Venice, Italy, will charge day trippers an arrival tax for the second year, costing €5-€10.
• Pedestrians in Seattle heard crosswalk signals broadcasting recordings purporting to be Jeff Bezos criticizing local tax policies.

9. Conclusion

The episode covered a range of tax-related topics, from the end of tax season and the potential elimination of the IRS Direct File program to record retention guidelines, VAT implications, and the enforceability of FBAR penalties after death. It also highlighted key tax filing statistics, changes in IRS website analytics, and relevant news from the accounting world. The discussion of the Estate of Beneshai case provides a crucial understanding of how FBAR penalties are treated in estate matters, while the overview of IRS levies and liens offers practical guidance for taxpayers facing tax debt.