Essential Tax Matters for Preparers in 2025

While tax season 2025 isn’t exactly off to a roaring start, a few IRS filing numbers help illustrate the situation better. As of March 7, 2025, the IRS had received 62.76 million individual tax returns—2.1% fewer than the same period last year. Processing numbers are also lagging, with 51.8 million returns completed, down 2.7% from 2024. E-filing, which remains the preferred method, also saw a 2.1% decline. With April 15 fast approaching, tax pros should brace for a last-minute filing rush. Amid that rush, potential pitfalls are enough to keep any tax pro on their toes. This year, three major concerns demand extra attention: foreign accounts compliance, beneficial ownership reporting, and disaster-related extensions. Let’s break these down so you can keep your clients out of trouble (and away from unnecessary IRS drama).

The Foreign Accounts Trio

If your clients have money parked outside the U.S., it’s not just a matter of reporting their interest income and calling it a day. There’s a trio of forms that tax professionals need to be familiar with:

• Schedule B: The first warning bell. If your client answers "yes" to foreign account questions here, it’s time for a deeper dive.
• Form 8938: This one gets attached to their tax return and discloses specified foreign financial assets.
• FBAR (Foreign Bank Account Report): Filed separately with FinCEN, this covers accounts exceeding $10,000 at any point during the year.

Here’s where it gets tricky: these forms often ask the same thing but in slightly different ways. If your client has, say, a foreign account with $250,000, the IRS expects:

• Interest income is reported on Schedule B.
• The Schedule B box is checked to indicate an FBAR is required.
• Form 8938 is included with their tax return.
• An FBAR filed with FinCEN.

Miss one step? That’s a big red flag for the IRS. It’s like wearing mismatched socks to a job interview—not a good look. Even if there’s no tax due, failing to disclose properly can trigger audits, penalties, and interest. The best move? Ask every client about foreign income, accounts, and assets—no assumptions!

Beneficial Ownership Reporting

Remember the Corporate Transparency Act? It had business owners scrambling to file Beneficial Ownership Information Reports (BOIRs) with FinCEN. The goal? To shine a light on the millions of LLCs and corporations operating in the U.S. and catch those skirting tax obligations.

Then, a Texas court threw a wrench in the works. The Treasury Department backpedaled, announcing no penalties for non-filers (for now). But don’t assume this issue is dead—it’s more like a hibernating bear. The feds still want this data, and they’ll likely revisit enforcement soon. So, what should tax preparers tell their business clients?

• Just because there’s no penalty today doesn’t mean one won’t come later. Filing may still be a good idea to stay ahead of the curve.
• Stay alert for future FinCEN updates. It wouldn’t be surprising if they revived enforcement under new rules.
• If your client has international connections or complex ownership structures, assume scrutiny is coming. The IRS and FinCEN are playing the long game.

If your client’s idea of tax planning is “ignore it and hope it goes away,” this is their wake-up call.

Handle Disaster Extensions with Care

When disaster strikes, the IRS often grants automatic filing extensions for affected taxpayers. Sounds like a great deal, right? Not always. Take San Diego County earlier this year. Residents impacted by flooding got an extended filing deadline: June 17, 2024. But here’s where things went sideways:

• By June 17, the IRS had stopped accepting electronic extensions.
• Paper extensions were rejected—even when mailed by certified mail with a San Diego County address.
• Taxpayers got hit with late filing penalties.

The lesson? IRS disaster extensions are not always smooth sailing. If your clients rely on them, they need a backup plan.

Here’s what to tell clients who may qualify for disaster extensions:

• File early if possible. Don’t assume the system will work as advertised.
• Double-check the IRS’s extension process. If electronic extensions close early, filing by paper (and proving it) is key.
• Expect a battle to remove penalties. The IRS might eventually waive them, but getting someone on the phone to do it? That’s another story.

With IRS staffing already stretched thin, appealing a penalty could be as frustrating as waiting at the DMV on a Monday morning. If your clients depend on these extensions, they need to be prepared for some extra legwork.

The Bottom Line

Tax season might feel like déjà vu, but the details make all the difference. Whether it’s foreign accounts, beneficial ownership reporting, or disaster extensions, tax preparers need to be proactive. The more you educate your clients now, the less time you’ll spend cleaning up messes later. And let’s be honest, dealing with tax headaches is bad enough without having to untangle preventable IRS problems. Have clients dragging their feet on these issues? Time to sit them down and have “the talk.” Because when it comes to taxes, what they don’t know can hurt them.  Be the First to Know! Subscribe for Exclusive MYCPE ONE Insights on Tax Breaks, Market Trends, and Financial Strategies That Impact You.