An IRS levy is serious.

It means the IRS may take money or property to collect unpaid taxes. That can include money in a bank account, part of your wages, or other property you own.

But a levy does not always mean you have no options left.

The right response depends on where you are in the IRS collection process, what notice you received, and whether the IRS has already issued the levy.

This guide explains what an IRS levy means in 2026, what the IRS may take, how bank and wage levies work, and when a levy may be released.

What Is an IRS Levy?

An IRS levy allows the government to seize property to collect an unpaid tax debt legally. A levy is an actual collection action.

A levy may affect:

• Wages or salary;
• Bank accounts;
• Retirement accounts in some situations;
• Rental income;
• Accounts receivable;
• Vehicles;
• Real estate; and
• Other personal property.

The IRS can also seize and sell certain property.

However, some property is protected from seizure under federal law.

What Happens Before the IRS Issues a Levy?

The IRS generally does not begin with a levy.

The collection process usually starts after tax has been assessed and remains unpaid.

The IRS may send billing notices and request payment. If the balance is not resolved, the IRS may issue a final notice stating that it intends to levy.

One common notice is titled:

Final Notice of Intent to Levy and Notice of Your Right to a Hearing

If you receive a final levy notice, the deadline is important.

The current IRS collection guidance states that taxpayers may request a Collection Due Process hearing within 30 days from the date of a qualifying Notice of Intent to Levy and Notice of Your Right to a Hearing. Taxpayers should review the exact notice they received before assuming appeal rights or deadlines. A final levy notice can trigger important procedural rights.

Bank Levy vs. Wage Levy

Bank levies and wage levies work differently.

Understanding that difference is important.

How an IRS Bank Levy Works

When a bank receives an IRS levy, it generally freezes the money that was in the account at the time the levy was received. The 21-day period can provide a limited opportunity to contact the IRS, correct an error, or discuss a resolution before the frozen funds are sent to the IRS. It does not guarantee that the levy will be released. In most cases, money added to the bank account after the levy is received is not part of that specific levy.

How an IRS Wage Levy Works

A wage levy is different.

It is generally continuous.

That means part of your wages may continue to be sent to the IRS each pay period until the levy is released, the tax debt is resolved, or another event ends the levy. The IRS describes wage levies as continuous and notes that a portion of wages is exempt from levy.

Because wage levies can continue over time, they should be addressed quickly.

When must the IRS Release a Levy?

The IRS is required to release a levy in certain situations.

According to the IRS, a levy must be released if it determines that:

• You paid the amount you owe;
• The collection period ended before the levy was issued;
• Releasing the levy will help you pay the tax;
• You enter into an installment agreement and the agreement does not allow the levy to continue;
• The levy creates economic hardship; or
• The value of the property is greater than the amount owed and release will not hurt the IRS’s ability to collect.

Levy release depends on the facts of the case. Simply requesting release does not automatically stop collection. It is also important to understand that a levy release does not erase the tax debt.

The remaining balance still needs to be resolved.

What If the Levy Is Causing Financial Hardship?

A levy may be released when it creates an immediate economic hardship.

The IRS states:

“An economic hardship occurs when we have determined the levy prevents you from meeting basic, reasonable living expenses.”

Hardship generally means the levy is affecting basic living needs. It does not simply mean that the levy is inconvenient or financially uncomfortable. The IRS may ask for financial information before deciding whether hardship exists.

That can include details about:

• Income;
• Housing costs;
• Food;
• Transportation;
• Medical costs;
• Dependents; and
• Other necessary expenses.

If the hardship standard is met, the IRS may release the levy. The taxpayer will still need to address the underlying tax balance.

Can You Appeal an IRS Levy?

In some cases, yes.

A taxpayer may have the right to request a Collection Due Process hearing.

Other cases may qualify for the Collection Appeals Program.

The correct appeal route depends on the notice and the stage of collection.

The IRS’s January 2026 Publication 594 explains that a Collection Due Process hearing can generally be requested within 30 days of a qualifying notice.

Because appeal rights are time-sensitive, taxpayers should not assume that every IRS notice has the same deadline.

What Should You Do If You Receive an IRS Levy Notice?

Start with the notice itself.

Do not ignore it, but do not respond without understanding what it means.

Review these points first:

1. Identify the notice and deadline.
2. Confirm the tax years and amounts involved.
3. Determine whether the levy is proposed or already issued.
4. Check whether the amount is correct.
5. Gather current income and expense information.
6. Review payment and collection alternatives.
7. Get professional help if the situation is complex or urgent.

Possible resolution options may include an installment agreement, Offer in Compromise, Currently Not Collectible status, or another IRS collection solution. The IRS also advises taxpayers to be proactive and not ignore billing notices when they cannot pay in full.

How IRS Audit Group Can Help with an IRS Levy

IRS Audit Group helps individuals and business owners understand where they are in the collection process and what options may still be available.

Our support may include:

• Reviewing the IRS notice;
• Confirming levy status and deadlines;
• Reviewing financial hardship;
• Organizing financial records;
• Communicating with the IRS;
• Requesting levy release when appropriate;
• Reviewing installment agreement options;
• Evaluating Offer in Compromise or Currently Not Collectible status;
• Reviewing collection appeal options; and
• Helping determine the next step after a levy is released.

The goal is to understand the problem, organize the facts, and respond with a clear plan.

Received an IRS Levy Notice?

An IRS levy can affect your bank account, wages, or other property.

The sooner you understand the notice and your available options, the easier it is to make an informed response.

IRS Audit Group can review the notice, explain the collection process, and help you determine the next step.

Don’t Panic… But Don’t Delay!

Call: (310) 498-7508
Email: info@irs-audit-group.com
Offices: Beverly Hills and Newport Beach, California
Serving clients nationwide

The IRS changed an important part of its penalty-relief process in 2026. A new program called Automatic Exemption from Penalty, or AEP, is replacing the long-standing First Time Abate process for eligible tax periods.

The main difference is simple: eligible taxpayers may no longer need to contact the IRS and ask for administrative penalty relief. If the taxpayer meets the requirements, the IRS can apply the relief automatically. That does not mean every penalty will disappear. It also does not mean taxpayers should ignore filing or payment deadlines.

Here is what changed, who may qualify, and what to do if you receive an IRS penalty notice.

What Is Automatic Exemption from Penalty?

Automatic Exemption from Penalty is a new IRS administrative relief process. It is designed for taxpayers who normally file and pay their taxes on time but have an isolated compliance problem. The IRS announced the change on July 8, 2026. Under AEP, eligible taxpayers can receive relief from certain penalties without filing a separate request.

How Is AEP Different from First Time Abate?

For many years, First Time Abate, or FTA, was the IRS’s main administrative penalty-relief program for taxpayers with a good compliance history. Under FTA, the penalty was generally assessed first. The taxpayer then had to contact the IRS and request relief.

AEP changes that process.

First Time Abate	Automatic Exemption from Penalty
Taxpayer generally requests relief	IRS applies relief automatically when eligible
Penalty may be assessed first	Qualifying penalty is not assessed
Requires contact with the IRS	No separate request is normally required
Applies to earlier eligible periods during the transition	Applies to qualifying newer and future periods

Which Tax Periods Are Covered?

AEP begins with eligible:

• 2025 tax-year returns;
• 2026 quarterly returns; and
• Future qualifying tax periods.

The IRS says AEP will fully replace First Time Abate for eligible original returns with due dates on or after January 1, 2027. During the transition, some taxpayers may still receive penalty notices for periods that could qualify for relief. Taxpayers should not assume that every 2025 or 2026 penalty will automatically be handled under AEP. The transition period matters, and some taxpayers may still need to contact the IRS.

Who May Qualify for AEP?

The key requirement is a strong recent compliance history.

For most eligible annual returns, the taxpayer generally needs to have filed and paid on time during the previous three years. For quarterly filers, the IRS looks at the prior 12 consecutive quarters. AEP is intended primarily for taxpayers with a good compliance record who experience an isolated filing, payment, or deposit problem. It is not a general waiver for repeated noncompliance.

Which Penalties Can AEP Cover?

AEP may prevent certain common penalties from being assessed.

These include qualifying:

• Failure-to-file penalties;
• Failure-to-pay penalties; and
• Failure-to-deposit penalties.

Eligible return series include certain Forms 1040, 1065, 1120, 940, 941, 943, 944, 945, and CT-1. Not every return qualifies. For example, some returns connected to one-time or infrequent events are generally excluded. Taxpayers should confirm both the penalty type and the return type before assuming AEP applies.

Does AEP Remove the Tax You Owe?

No.

AEP deals with certain penalties. It does not erase the underlying tax balance.

Interest and other penalties may also remain due. AEP should not be described as tax-debt forgiveness. A taxpayer may receive penalty relief and still need a payment plan or another IRS resolution strategy for the remaining balance.

What If You Receive a Penalty Notice Anyway?

Do not assume the penalty is correct. During the transition to AEP, some taxpayers who appear eligible may still receive a penalty notice.

If that happens, review:

1. The type of penalty;
2. The tax period;
3. Your filing history;
4. Your payment history; and
5. Whether the return appears eligible for AEP.

The IRS advises taxpayers who believe they should have qualified for relief to contact the agency. This is also a good reason to review the notice before paying the penalty or submitting a separate abatement request.

What If You Do Not Qualify for AEP?

AEP is not the only form of IRS penalty relief. You may still have another option.

One important route is reasonable cause.

Taxpayers who do not qualify for AEP should not assume that penalty relief is unavailable. A separate reasonable-cause request may still be appropriate if the facts support it. Circumstances may include serious illness, natural disasters, unavailable records, or other events that prevented timely compliance.

The facts and supporting documents matter.

How IRS Audit Group Can Help

AEP may make administrative relief simpler, but penalty notices can still be confusing.

IRS Audit Group can help by reviewing:

• The penalty notice;
• The tax period involved;
• Your filing and payment history;
• Whether AEP appears to apply;
• Whether another type of penalty relief may be available;
• Whether reasonable cause should be considered; and
• Whether the remaining tax balance needs a separate resolution strategy.

If relief is not automatic, we can help prepare the appropriate request and supporting documentation. If the IRS denies relief, we can also review the decision and available next steps.

Received an IRS Penalty Notice?

Do not ignore the notice. But do not assume you have no options.

The IRS penalty-relief process changed in 2026. For some taxpayers, relief may now be applied automatically. Others may still need to request relief based on their circumstances. The first step is to understand what the IRS assessed and why.

IRS Audit Group can help you review the notice, understand the available options, and determine the next step.

Call: (310) 498-7508
Email: info@irs-audit-group.com
Offices: Beverly Hills and Newport Beach, California
Serving clients nationwide

[Learn More About IRS Penalty Abatement Services]

Don’t Panic… But, Don’t Delay!

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

Telephone Number: (310) 498-7508

info@irs-audit-group.com

The 2025 tax law (the “One, Big, Beautiful Bill” or OBBBA) introduced sweeping changes to deductions, credits, and business expensing. While many taxpayers legitimately benefit from larger deductions and updated thresholds, the new rules also create fresh IRS audit risks. Aggressive claims, mismatches between federal and state treatment, and reporting changes (especially for marketplace and gig income) are among the top red flags the IRS will be watching in the coming tax filing season 2026.

This guide explains the most important IRS audit red flags after the 2025 tax law and practical, step‑by‑step safeguards for taxpayers to avoid problems.

WHY 2025 CHANGES INCREASE AUDIT RISKS?

The IRS uses document matching, algorithms, and targeted industry programs to select returns for examination. Two broad reasons the 2025 law increases audit touchpoints:

1. More complexity and new elections. Permanent 100% bonus depreciation, restored R&D expensing, and new reporting thresholds create additional tax elections that must be properly documented. Errors or overly aggressive positions increase IRS audit risk.
2. Data matching and reporting shifts. Restored 1099-K thresholds and updated IRS reporting increase the risk of mismatches between third-party data and tax returns, a common trigger for IRS audits.

TOP IRS AUDIT RED FLAGS (AND HOW TO AVOID THEM) IN TAX SEASON 2026

1. Poorly documented Section 179/Bonus Depreciation claims: Full bonus depreciation (and higher Section 179 limits) can sharply reduce taxable income in year one. States that decouple may require add‑backs, and the IRS will want proof that the property qualifies and the basis is correct. Aggressive classification (personal vs. business use, listed property) draws attention.

How to avoid:

• Keep asset-level purchase invoices, delivery/installation records, and capitalization policies. 
• Document business purpose and placed‑in‑service dates. 
• If you operate in a state that decouples from bonus depreciation, model the required state addbacks and clearly document them in the tax workpapers.

2. Schedule C (sole proprietor) returns with repeated losses or excessive expenses: Schedule C filings historically attract IRS audits. Repeated losses year after year or unusually large deductions (meals, travel, contractor labor, home office) can trigger a closer look for hobby‑loss rules or misstated business activity.

How to avoid: 

• Maintain a profit plan, time logs, sales records, and marketing documentation showing a profit motive. 
• Keep receipts and contemporaneous logs for meals, mileage, and home office expenses. The IRS expects reliable records. See “Audits & Records Requests” for exactly what auditors ask for.

3. Mismatches on third‑party reporting (1099‑K, 1099‑NEC, W‑2s): The IRS cross‑checks Forms W‑2/1099 against filed returns. If the gross receipts you report differ materially from what payers sent, the return becomes a prime candidate for examination. The 2025 Fact Sheet on Form 1099‑K clarifies reporting rules — but taxpayers still commonly underreport gross receipts or omit deductible offsets.

How to avoid: Reconcile all 1099s to bank statements and accounting records before filing. Do not assume missing 1099s mean income is non-taxable; the IRS treats all income as taxable unless excluded by law. File an amended return promptly if errors are identified.

4. Aggressive or unsupported R&D credit claims / large credits with weak substantiation: R&D credits remain attractive but complex. Large or recurring claims without solid project documentation, time studies, and cost support can trigger audits, especially after the 2025 changes to R&D expensing rules.

How to avoid: 

• Use project files, payroll records, invoices, lab notebooks, and technical summaries. If you claim credit, prepare a concise technical memo showing qualified activities and the costs allocated. Consider a pre‑filing R&D documentation review.

5. High charitable deductions, noncash gifts, or appraisal issues: Large charitable deductions, especially for noncash property requiring Form 8283 or appraisals, draw automated screening. The IRS looks for valuation inconsistencies.

How to avoid: Keep donation receipts, contemporaneous records, and qualified appraisals when required. If you claim a deduction for a vehicle or large property donation, follow Form 8283 and appraisal rules meticulously.

6. Misuse of credits aimed at individuals (EITC, Child Tax Credit, adoption credit): Refundable credits attract scrutiny because they increase refund exposure. Incomplete eligibility (residency, support tests, AGI thresholds) can prompt automated checks and audits. The IRS recently adjusted many thresholds and credit amounts — know the updated rules.

How to avoid: Keep documents proving eligibility (birth certificates, custody agreements, school records, proof of residency). When in doubt, consult guidance on the specific credit and error on the side of conservative claims.

7. Large or unusual business interest expense or international tax positions: Changes to interest expense limits, GILTI/NCTI rules, and international tax provisions require careful calculation. Complex positions without proper transfer pricing support or documentation increase IRS audit risk.

How to avoid: Maintain transfer pricing studies, contemplate documentation, and a qualified international tax memo. Run sensitivity analyses for different audit outcomes.

WHY WORKING WITH A TAX PROFESSIONAL MATTERS NOW?

The 2025 tax law made many valuable benefits available — but with added complexity that raises IRS audit risk if records are weak or taxpayers are careless.

Tax professionals provide:

• proactive tax planning around bonus depreciation and Section 179 elections.
• R&D documentation and credit substantiation. 
• federal vs. state conformity modeling to avoid surprise state tax bills.
• audit defense and representation if needed.

IRS Audit Group can help you review returns before filing, prepare organized work papers, and represent you during any IRS contact. For operational clients, we also provide staff training on audit‑ready recordkeeping.

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

Telephone Number: (310) 498-7508

info@irs-audit-group.com

Contact

KEY OFFICIAL RESOURCES

• IRS — One, Big, Beautiful Bill provisions. https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions.  (See IRS fact sheets and summaries for details.)
• IRS — Form 1099‑K FAQs (Fact Sheet 2025‑08) and Form 1099‑K guidance. https://www.irs.gov/newsroom/irs-issues-faqs-on-form-1099-k-threshold-under-the-one-big-beautiful-bill-dollar-limit-reverts-to-20000.
• Treasury/IRS guidance — additional first‑year depreciation (bonus depreciation) under the 2025 law. https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-the-additional-first-year-depreciation-deduction-amended-as-part-of-the-one-big-beautiful-bill.
• IRS — Audits & Records Requests (what auditors will ask for). https://www.irs.gov/businesses/small-businesses-self-employed/audits-records-request.
• Tax Foundation — state decoupling and conformity issues after OBBBA. https://taxfoundation.org/research/all/state/big-beautiful-bill-state-tax-impact/. 

As the 2025 tax season begins, tax scams are occurring more frequently, posing risks to taxpayers and making it crucial to stay informed about potential fraud schemes. Fraudsters continuously exploit taxpayers’ lack of tax knowledge, stress, and urgency to steal money or sensitive information. The IRS Dirty Dozen list for 2025 highlights the most prevalent and dangerous tax scams that taxpayers should be aware of to avoid falling victim to fraud.

 

As a trusted tax audit representation firm, IRS Audit Group encourages taxpayers to stay vigilant and informed about these scams to safeguard their finances and personal data. Below, we discuss three of the most significant tax scams from the 2025 IRS Dirty Dozen list and provide essential tips on how to avoid them.

 

1. Phishing and Smishing Scams

Phishing (email scams) and smishing (text message scams) are among the most common tactics used by scammers to steal personal and financial information, such as Social Security numbers, banking details, and credit card information.

 

How It Works

• Scammers send fraudulent emails or text messages that appear to come from legitimate organizations like the IRS or a bank.
• These messages often contain malicious links or attachments that install malware or redirect the taxpayer to fake websites.
• Unsuspecting taxpayers who click on these links may unknowingly provide scammers with their sensitive information.

 

How to Avoid Phishing and Smishing Scams

• Be Skeptical – If you receive an unsolicited email or text asking for personal or financial information, it’s likely a scam. IRS does not ask for such details.
• Use Multi-Factor Authentication (MFA) – Adding an extra layer of security to your accounts can help prevent unauthorized access.
• Keep Your Devices Updated – Ensure your smartphone, computer, and other devices have the latest security updates to protect against malware.
• Verify the Source – Always check the sender’s email address or phone number and contact the organization directly using official channels.

 

2. Inflated Refund Claims

Some fraudsters manipulate tax returns to artificially increase refunds, luring taxpayers into schemes that can lead to serious legal consequences.

 

How It Works

• False Promises – Scammers guarantee unusually high refunds without reviewing the taxpayer’s actual financial details.
• Fraudulent Tax Preparers – Some unethical preparers ask taxpayers to sign blank forms or submit false information.
• Unrealistic Deductions or Credits – Fraudsters claim deductions or credits that the taxpayer does not qualify for.
• Fees Based on Refund Amount – Scammers charge fees based on the size of the refund, which is illegal and unethical.

 

How to Avoid Inflated Refund Scams

• Choose a Trusted Tax Preparer – Ensure your tax preparer is licensed and reputable. Avoid “ghost” preparers who refuse to sign returns.
• Review Your Return – Before signing, check that all deductions and credits are accurate and legitimate.
• Ignore Promises of Large Refunds – If an offer sounds too good to be true, it probably is.
• Report Suspicious Activity – File a report with the IRS using Form 3949-A or through the IRS Whistleblower Program.

 

3. Fake Tax Payments via Prepaid Cards

Scammers may impersonate IRS agents and demand tax payments via prepaid debit or gift cards, leading unsuspecting taxpayers to lose money with no way to recover it.

 

How It Works

• Posing as IRS Officials – Scammers call or email claiming that the taxpayer owes back taxes and must pay immediately.
• Demanding Unusual Payment Methods – Instead of traditional IRS payment methods, scammers insist on prepaid debit cards or gift cards (such as iTunes or Google Play cards).
• Threats and Urgency – Scammers create a sense of fear by threatening arrest, fines, or asset seizures if immediate payment is not made.
• Stealing the Funds – Once the taxpayer provides the prepaid card information, the scammer drains the funds, making recovery almost impossible.

 

How to Avoid Fake Tax Payment Scams

• Never Pay Taxes with Prepaid Cards – The IRS does not accept tax payments via prepaid or gift cards.
• Verify the Caller’s Identity – If someone claims to be from the IRS, hang up and call the IRS directly at their official number.
• Do Not Share Personal Information Over the Phone – The IRS will never demand sensitive information over an unsolicited phone call.
• Monitor Financial Accounts – Regularly check your bank accounts for suspicious activity.

 

Stay Protected Against Tax Scams in this Tax Season 2025

By staying informed about the IRS Dirty Dozen scams and following best practices, taxpayers can significantly reduce their risk of falling victim to fraud in the 2025 tax season and beyond.

 

If you have concerns about tax scams or need professional representation for an IRS audit, IRS Audit Group is here to help. Our team of tax professionals, CPAs, enrolled agents, and tax attorneys specializes in IRS Tax Audit Representation and works with all IRS offices nationwide.

 

📞 Contact Us Today 🔗 IRS Audit Group
📧 info@irs-audit-group.com
📞 (310) 498-7508

California is known for its frequent and severe wildfires, particularly in the summer and fall. These fires can have a devasting impact on communities, ecosystems, and the economy. In January 2025, Southern California was hit by a series of devasting wildfires, most notably the Palisades Fire and the Eaton Fire, which caused substantial damage in the Los Angeles area. These fires have become the focus of recovery efforts and financial relief programs, particularly in the 2025 tax filing season.

 

Impact of Wildfires on Tax Season 2025

As tax season 2025 begins, victims of California wildfires may have special obstacles in completing their taxes and may need additional relief or extensions. Fortunately, both the Federal Government and California state authorities provide tax help for those affected by disasters like wildfires.

 

Tax Relief Measures for Wildfire Victims

Tax filing extension:

The IRS provides automatic filing extensions to individuals and businesses affected by wildfires. This gives taxpayers in declared disaster zones extra time to file their returns without incurring penalties. Generally, the filing date is extended to October 15, 2025.

The California Franchise Tax Board (FTB) also offers similar extensions for state taxes.

 

Casualty Loss Deductions:

FEMA (Federal Emergency Management Agency) assisted payments to wildfire victims are not taxable. As a result, taxpayers do not need to include disaster relief assistance as income on their tax returns. If your home or business is in a declared disaster zone, you may be eligible for special tax benefits or deductions due to wildfire damage.

 

State-Specific Relief:

California provides programs that allow taxpayers to postpone property tax payments or reduce assessed property values in response to wildfire damage, offering further relief to individuals affected.

 

Automatic Filing Extensions:

If you live in an affected location, the IRS will automatically provide you an extension to file your taxes. You do not need to take any more steps to obtain this extension.

 

Local relief measures:

In addition to Federal and State relief, various local government initiatives also provide tax relief or financial help, which include property tax deferrals or extensions, and support programs to assist businesses recover and maintaining operations.

 

Steps to Take During Tax Season 2025 If You Are a Wildfire Victim

1. Claim casualty losses: Keep track of and document all wildfire-related damages (ex: home damage car damage, lost possession, etc.).
2. Consult a Tax professional: It is recommended that you speak with a tax professional who can walk you through the procedure, especially when it comes to seeking disaster-related tax relief.
3. Check for Relief Programs: Check for updates from the IRS and the California Franchise Tax Board (FTB) on new or expanded relief programs for wildfire victims. You may also be qualified for disaster assistance programs, which provide financial assistance in addition to tax benefits.
4. Document Your Payments: Keep detailed records of any fire-related losses and expenses, including receipts, photographs, and evidence of any relief payments received.

 

The recent wildfires have already caused significant challenges for individuals and businesses in California, but with available tax relief measures and recovery programs, those affected have a better chance of rebuilding and recovering their financial stability during the 2025 tax season. The wildfire victims can reduce the strain of recovery and receive much-needed financial assistance by taking advantage of the available tax relief measures by Ithe RS.

 

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

info@irs-audit-group.com

As the Tax Season 2025 begins, tax refund also becomes a commonly used term while filing the taxes with the IRS. A tax refund is the money that the IRS returns to the taxpayers if they’ve overpaid the taxes. Filing your tax return is an important step in meeting tax obligations and potentially earning a tax refund if overpaid. Tracking your tax refund status is simple, and the IRS provides a few useful tools to keep you updated. Below is the step-by-step guide on how the tax refund process works, and what support system does the IRS provide in tax refund?

 

1. File your Tax Return

Filing your tax return with the IRS is the initial step to getting your tax refund. To file tax returns, collect all necessary documents including W-2s, 1099s, receipts for deductions, etc. Complete the tax return using Form 1040 or other applicable forms.

E-file: This is the fastest way of tax filing using electronic tax preparation software (ex: Turbo Tax, H&R Block, etc.) or directly through the IRS e-file system.

Paper file: If you choose, you can send a paper return to the IRS.

 

Mistakes in tax filing can result in delays or even tax audits. If you encounter discrepancies, our tax professionals can review your return to ensure compliance and accuracy.

 

2. IRS Processes Your Tax Return

Once you have filed your tax return, the IRS will process your tax return by checking the following.

Review for accuracy: In this step, the IRS will check your information such as social security numbers, income, deductions, and credits are correct.

Calculation of Refund: the amount of tax refund you’re entitled to will be calculated, based on total tax payments (via withholding or estimated payments) and the taxes owed.

 

3. IRS Issues Your Refund

Here is how your refund will be issued by the IRS:

Direct Deposit: This is the fastest option for tax refund, if you choose direct deposit on your tax return, the IRS will send your refund directly to your bank account. If you e-filed your return and there are no issues, by direct deposit you will get your refund in 21 days or less.

Paper Check: if you’ve opted for the paper check, the IRS will mail your refund to your address. Paper check refunds will typically take about 6 to 8 weeks to process and mail.

 

4. Track Your Refund

The IRS offers simple and reliable tools, that enable you to check the status of your refund after filing. The “Where’s My Refund?” tool is the simplest and most reliable way to check your return status online. You can get it through the IRS website or their mobile app. On mobile, you can use the IRS official app “IRS2Go” to track your refund status.

 

Steps to Use the “Where’s My Refund?” Tool:

Step 1: Open your web browser and visit the IRS official website.

Step 2: On the “Where’s My Refund” page, enter the required information.

• Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN)
• Choose your filing status from the list (single, married filing jointly, head of household, etc.)
• Enter the exact refund amount including any cents, as shown on your tax return

Step 3: Click on the “Submit” button after entering your information to access the refund status

Step 4: View your refund status.

The tool will display one of the following statuses:

• Return received – the IRS has received and it is processing your tax return
• Refund approved – your tax return is approved by the IRS, and it will be sent soon
• Refund sent – your refund has been issued either by direct deposit or paper check

Step 5: Check for daily updates.

Once a day the IRS will update the “Where is My Refund’ tool, usually overnight. So, for the most up-to-date information, check the IRS website once a day.

 

How to use IRS2Go?

Step 1: Download the App from the Google Play Store (Android) or the Apple App Store (iOS).

Step 2: After downloading, open the app, and select the “Where is My Refund’ option.

Step 3: Enter the Required Information (SSN, ITIN, etc.)

Step 4: Check Your Refund Status

 

5. Call the IRS (if needed)

If you can’t access the IRS website or mobile app, or if you have specific questions regarding your refund status, you can call the IRS refund hotline: 1-800-829-1040.

 

While the IRS provides tools to track your tax refund, discrepancies can sometimes arise. If you face issues with your tax refund—such as refund delays, tax audits, or incorrect refund amounts—our expert tax audit representation team is here to help.

 

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

info@irs-audit-group.com

What is the Energy Efficient Home Improvement Credit?

The Energy Efficient Home Improvement Credit is a tax incentive for homeowners who make qualified energy-efficient improvements to their homes. This credit allows taxpayers to claim up to 30% of certain qualified expenses, including energy efficiency improvements, residential clean energy property, and home energy audits. The maximum credit one can claim in this tax season 2025 is $3,200 if taxpayers make qualified energy-efficient improvements to your home after Jan. 1, 2023.

 

What is the Residential Clean Energy Property Credit?

The Residential Clean Energy Property Credit is a tax credit for homeowners investing in renewable energy systems like solar, wind, geothermal, fuel cells, or battery storage technology.

 

Who is Eligible?

To qualify for the Energy Efficient Home Improvement Credit, the home must be your primary residence, located in the United States, and an existing home that you improve or add onto. For the Residential Clean Energy Property Credit, you may claim the credit for improvements to your main home, whether you own or rent it. The credit applies to new or existing homes located in the United States.

 

How to Apply?

To apply for these credits, taxpayers need to file IRS Form 5695 with their tax return. Make sure to keep records of your qualified expenses, including receipts and manufacturer certifications, to support your claim.

 

What are the New Changes for the Tax Year 2024-2025?

For the Energy Efficient Home Improvement Credit, starting from tax season 2025.

 

• Qualified Manufacturer Requirement: No credit will be allowed for an item unless it is produced by a qualified manufacturer recognized by the IRS.
• PIN Reporting: Taxpayers must report the Product Identification Number (PIN) for each qualifying item on their tax return to claim the credit.

 

For the Residential Clean Energy Property Credit, the credit percentage rate remains at 30% for property installed through 2032, but it will phase down to 26% for property placed in service in 2033 and 22% for property placed in service in 2034.

 

These credits provide a significant opportunity for homeowners to invest in energy-efficient and renewable energy improvements, reducing their tax burden while contributing to a more sustainable future.

 

Eligibility Requirements for Energy Efficient Home Improvement Credit

1. Primary Residence: The home must be your primary residence and located in the United States.
2. Existing Home: The credit applies to improvements made to an existing home, not a new home.
3. Qualified Improvements: The improvements must meet specific energy efficiency standards, such as:
   • Exterior windows and skylights must meet Energy Star’s most efficient certification requirements.
   • Exterior doors must meet applicable Energy Star requirements
   • Insulation materials or systems must meet the prescriptive criteria established by the International Energy Conservation Code (IECC) standard.
4. Business Use: If you use your home partly for business, the credit is based on the share of expenses allocable to non-business use.

 

Eligibility Requirements for Residential Clean Energy Property Credit

1. Main Home: The credit applies to improvements made to your main home, whether you own or rent it. The home must be located in the United States.
2. Qualified Clean Energy Property: The property must be new and meet specific requirements, such as:
   • Solar electric panels and solar water heaters must be certified for performance by the Solar Rating & Certification Corporation or a comparable entity. To get certified by the Solar Rating & Certification Corporation (SRCC), manufacturers must apply for OG-100 (solar collectors) or OG-300 (solar water heating systems) certification. They need to submit an application with product specifications, undergo testing at an SRCC-recognized lab, and pass a performance review. Upon approval, SRCC issues certification, which may require periodic renewal. For details, visit the SRCC Application Resources.
   • Wind turbines, geothermal heat pumps, and fuel cells must meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE). To qualify for the Energy Efficient Home Improvement Credit, wind turbines, geothermal heat pumps, and fuel cells must meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE). For detailed information on these efficiency tiers, please refer to the CEE Tiers and ENERGY STAR page.
   • Battery storage technology must have a capacity of 3 kilowatt-hours or greater.
3. Business Use: If you use your home partly for business, the credit is based on the share of expenses allocable to non-business use.

 

The Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit provide valuable incentives for homeowners to invest in energy-efficient and renewable energy improvements. These credits not only reduce your tax burden but also contribute to a more sustainable and eco-friendly future. By understanding the eligibility requirements, maintaining proper documentation, and staying informed about the latest changes, taxpayers can take full advantage of these credits and make impactful improvements to their homes. Keep in mind the importance of keeping accurate records and verifying that the products you install meet the required standards to ensure a smooth application process.

 

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

 

Contact

Telephone Number: (310) 498-7508

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Tax disputes between the IRS and taxpayers often arise due to discrepancies in tax filings, misinterpretation of tax laws, or IRS audits. When a taxpayer undergoes a tax audit, they might contest the IRS’s evaluation, which can necessitate the use of Alternative Dispute Resolution (ADR).  ADR is a series of processes that allow taxpayers and the IRS to resolve tax problems outside of the typical litigation or formal appeals processes. The purpose of ADR is to provide taxpayers with a speedier, less expensive, and more flexible way to resolve issues with the IRS while reducing the adversarial nature of tax disputes.

 

This tax season 2025, the IRS has made significant modifications to its ADR programs to improve their efficiency, accessibility, and fairness. To enhance efficiency and accessibility, the IRS has introduced three pilot programs focusing on the Fast Track Settlement (FTS) and Post-Appeals Mediation (PAM) processes. These initiatives, effective from January 15, 2025, to January 15, 2027, aim to expedite dispute resolutions between taxpayers and the IRS.

 

Overview of the Pilot Programs

1. Expansion of FTS Eligibility: Traditionally, FTS was available to specific taxpayer segments. In the tax season 2025, the new pilot program broadens eligibility, allowing a wider range of taxpayers under examination in the Large Business and International (LB&I), Small Business/Self-Employed (SB/SE), and Tax Exempt/Government Entities (TE/GE) divisions to participate. This expansion aims to facilitate quicker resolutions by involving Appeals earlier in the examination process.
2. “Last Chance” FTS: This pilot introduces an opportunity for cases that have already been through the traditional Appeals process without resolution to re-enter FTS. By doing so, it provides a final chance for settlement before potential litigation, promoting efficiency and reducing the burden on both taxpayers and the IRS.
3. Concurrent Use of FTS and PAM: Previously, participation in FTS precluded taxpayers from utilizing PAM. The new pilot removes this restriction, allowing taxpayers to engage in both ADR processes. This change encourages the use of multiple resolution avenues, enhancing the likelihood of timely settlements.

 

Implications for Taxpayers

These pilot programs reflect the IRS’s commitment to making ADR processes more efficient and accessible. By expanding eligibility and providing additional opportunities for resolution, taxpayers can expect a more streamlined experience when addressing disputes. The concurrent use of FTS and PAM, in particular, offers flexibility, enabling taxpayers to explore multiple pathways to resolve their issues without the constraints of previous limitations.

 

Why ADR Matters in IRS Audits

IRS audits are conducted to verify the accuracy of tax returns, ensuring that taxpayers comply with federal tax laws. If an audit results in additional tax liabilities, penalties, or other disputes, taxpayers can challenge the IRS’s findings through appeals or ADR. The new FTS programs offer a faster, less adversarial way to resolve tax disputes compared to lengthy appeals or litigation.

 

How an IRS Audit Representation Firm Can Help

If you or your business is undergoing an IRS audit, working with a professional IRS audit representation firm can significantly improve your chances of a favorable outcome. These experts can:

• Guide you through the audit process
• Represent you in ADR proceedings, including FTS and PAM
• Negotiate settlements with the IRS to minimize liabilities.
• Ensure compliance with tax laws to prevent future audits.

 

The IRS’s introduction of new ADR pilot programs in the 2025 tax season reflects its commitment to making tax dispute resolutions faster and more accessible. Taxpayers undergoing an IRS audit now have improved options to resolve disputes efficiently through expanded FTS eligibility and mediation opportunities. If you are facing an IRS audit and need professional representation, seeking help from an IRS audit representative firm can be the key to a smoother resolution.

 

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

 

Contact

Telephone Number: (310) 498-7508

info@irs-audit-group.com

Introduced in 1975, the Earned Income Tax Credit (EITC) is celebrating its 50th anniversary in this 2025 tax season. EITC provides financial relief to millions of working families and individuals with low to moderate incomes. In the previous Tax Season, 2024, approximately 23 million workers and families received about $64 billion from EITC, with the average recipient receiving $2,743.

 

The EITC has made significant updates to its program to benefit taxpayers in this filing season of 2025. Below are the several changes that taxpayers must be aware of.

 

1. Increased Maximum Credit

The maximum credit has increased to $7,830 (up from $7,430 in 2023) for taxpayers with three or more qualifying children. For taxpayers with two qualifying children, the credit is up to $6,804. For taxpayers with one qualifying child, it is up to $3,995. The maximum credit for taxpayers with no qualifying children is $600 (up from $560). Individuals without children are eligible for the EITC, which provides credit even if they do not have dependents.

 

2. Broader Eligibility

Income limits have been increased a little for the 2025 tax season, making EITC available to a greater pool of eligible workers, particularly those with modest incomes. Investment income must be $11,600 or less to qualify for EITC, ensuring that the people who earn money from investments will also qualify for the credit.

 

3. Tax Refunds for Eligible Workers

For qualifying workers, EITC can provide a significant refund, reducing tax payments or even resulting in a refund if no taxes are payable. Even those workers without children owe no federal income tax, they may be eligible for a return through the EITC.

 

4. Enhanced Filing Procedures with IP PIN

To combat identity theft and streamline processing, the IRS now allows taxpayers to electronically file returns even if a dependent has been claimed on a separate, previously filed return. This is possible if the primary taxpayer on the subsequent return includes a valid Identity Protection Personal Identification Number (IP PIN). This change aims to reduce processing times and expedite refunds for those affected by duplicate dependent claims. Taxpayers without an IP PIN will have their e-filed returns rejected if a dependent has already been claimed by another filer. To obtain an IP PIN, taxpayers can use the IRS’s online tool, ensuring they have this six-digit number to protect their tax filings.

 

Who is Eligible for the EITC in Tax Season 2025?

The EITC is designed to benefit low-to-moderate-income workers, particularly those with children. Eligibility for the 2024 tax year (filed in Tax Season 2025) depends on income level, filing status, and the number of qualifying children.

 

Basic Eligibility Requirements:

• Must have earned income from employment, self-employment, or certain disability payments.
• Investment income must be $11,600 or less for the tax year 2024.
• Must have a valid Social Security number for themselves, their spouse (if filing jointly), and any qualifying children.
• Cannot file as “Married Filing Separately.”
• Must be a U.S. citizen or resident alien all year.
• Cannot claim foreign earned income exclusion.

 

How to Claim the EITC

 

Step 1: Determine Eligibility: Use the IRS EITC Assistant Tool to confirm eligibility. Workers also may visit the Child-related tax benefits comparison page to learn more about basic eligibility rules for the EITC and several other tax credits

Step 2: File a Federal Tax Return: Even if not required to file due to low income, taxpayers must file a tax return (Form 1040) and include Schedule EIC if they have qualifying children.

Step 3: Provide Required Information: Include earned income details (W-2s, 1099s, self-employment records). If claiming children, provide Social Security numbers and details proving residency.

Step 4: Choose E-File for Faster Processing: E-file with Direct Deposit for the fastest refund.

Step 5: Expect Delayed Refunds If Claiming EITC: Due to anti-fraud measures, the IRS cannot issue refunds before mid-February if the return includes EITC or Additional Child Tax Credit (ACTC).

 

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California, and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

 

Contact

Telephone Number: (310) 498-7508

info@irs-audit-group.com

Officially, the 2025 tax season started on Monday, January 27.  The IRS anticipates over 140 million individual tax returns in this tax season 2025 to be filed before the federal deadline on Tuesday, April 15. This year more than half of these returns are expected to be filed with the assistance of a tax professional. To ensure accuracy and safeguard against potential scams, the IRS strongly encourages taxpayers to seek help from a trusted tax professional.

 

Here are some important updates and tips to be aware of while you begin your tax filing.

 

IRS Online Account

For the average taxpayer, filing the annual tax can be confusing. There are numerous tools and services available to help individual taxpayers, one of which is an IRS Online Account. This digital platform allows taxpayers to quickly access tax information, making the tax season 2025 easier and helping to safeguard your tax information.

Benefits of IRS Online Account

• The IRS Online Account allows taxpayers to access information on their payoff amount, which is updated on the current day
• Taxpayers can view the balance for each tax year in which they owe taxes
• It displays their payment history
• Key details from their most recent tax return, as originally submitted
• Payment history and the details of any payment schedule they have set up with the IRS
• Digital copies of any IRS notices that they have received

 

Gather and organize all year-end income documents

It is significant for taxpayers to have all of the relevant paperwork before starting to prepare their returns. This allows them to file a complete and accurate tax return. Here is some information that taxpayers need before filing their taxes:

• Social Security Numbers
• Bank account and routing numbers
• Sources of income
• Types of deductions

 

 Understand refund timing and how to avoid delays

Several factors can influence the timing of a refund once the IRS receives the tax return. While most of the refunds from the IRS are issued in less than 21 days, some returns may require further review and processing time if there are any problems, missing information, or indications of identity theft or fraud.

 

Use direct deposit for a faster refund

The quickest method for taxpayers to receive their refund is to file electronically and select direct deposit. Since refunds are electronically deposited, there is no chance of a paper check being stolen or lost in the mail. It’s also the easiest way to get a refund.

 

Free filing options

75% of all taxpayers can use free brand name tax software to prepare and file their federal income tax returns online through IRS Free File. All taxpayers, regardless of income level, can use the IRS Free File Fillable Forms.

 

Identity Protection Personal Identification Number (IP PIN)

Tax season comes not only the responsibility of filing returns but also the increased risk of identity theft. In response, from this tax season 2025, the IRS has created a key tool for taxpayers: The Identity Protection Personal Identification Number (IP PIN).

The IRS IP PIN is a six-digit number provided to eligible taxpayers to help prevent fraudulent use of their Social Security Number (SSN) on federal income tax returns. Each year a new IP PIN will be generated. The IRS adds an extra layer of security by providing a unique PIN to each taxpayer who opts in, making illicit access much more challenging.

Applying for an IP PIN is simple and can be done online through the IRS website. The process includes validating your identity via the IRS secure portal, which may require information from previous tax returns, personal accounts, or personal identity documents. The IRS offers alternative ways to apply for an IP PIN. These include applying via mail or in person at an IRS office.

 

1099-K Threshold Changes

Form 1099-K is used to record the yearly gross amount of transactions (e.g., digital payments, credit card/debit cards, store value of gift cards, payment applications, and online marketplaces) processed by third-party settlement organizations (TPSO). The form is used for reporting taxable income. A much-anticipated 1099-K reporting threshold change for online marketplaces and payment apps will come into effect for the following two years. Form 1099-K should be sent to:

• Taxpayers who recorded more than $2,500 in business transactions during calendar year 2025
• Taxpayers who recorded more than $600 in business transactions in calendar year 2026

 

Digital Assets on Taxes in Tax Season 2025

The IRS definition of a digital asset is any digital representation of value maintained on a cryptographically protected distributed ledger (blockchain) or similar technology. Cryptocurrencies, NFTs, stablecoins, and tokenized securities are increasingly popular among digital assets. Anyone who sold cryptocurrency got it as payment, or had other digital asset transactions must appropriately report it on their tax returns.

 

IRS AUDIT GROUP

IRS Audit Group consists of tax professionals, CPAs, enrolled agents, and tax attorneys.  We are located in Los Angeles, California and our primary area of expertise is IRS Tax Audit Representation.  However, our certified professionals cooperate and work with all IRS offices nationwide.  Please get in touch with us for more information.

https://irsauditgroup.com/contact/

Telephone Number: (310) 498-7508

info@irs-audit-group.com