December Newsletter
It’s not too early to get ready for the 2026 tax season
The IRS advises taxpayers to begin preparing early for the upcoming tax season. By organizing documents and gathering necessary information ahead of time, individuals can make the filing process faster, smoother, and more accurate.
Information that should be gathered:
Bank account information.
Forms 1099 from banks and other payers.
Records of digital asset transactions.
Forms W-2 from your employer (s).
Taxpayers are advised to hold off on filing until they’ve gathered all necessary tax documents. Staying organized with records can simplify the process of finding details required to claim deductions and credits.
IRS Online Account
Taxpayers can securely access their personal tax information through an IRS online account. This service allows them to:
Review tax records, including transcripts and adjusted gross income
Make, schedule, and track payments
Obtain or view their Identity Protection PIN (IP PIN)
Grant digital access to a tax professional
Retrieve available Forms W‑2 and certain 1099s
Speed up refunds by using direct deposit
Direct Deposit
Direct deposit remains the quickest way to receive a tax refund. Under Executive Order 14247, the IRS began phasing out paper refund checks on September 30, 2025. As a result, most taxpayers must provide their bank routing and account numbers to have refunds deposited directly into their accounts.
Banking Options
Those without a bank account can explore opening one at an FDIC‑insured bank or through the National Credit Union Locator Tool. Veterans may also use the Veterans Benefits Banking Program, which offers services through participating banks.
Alternative Deposit Methods
Refunds can also be sent to prepaid debit cards, digital wallets, or mobile apps, provided the taxpayer has valid routing and account numbers linked to their personal account. It’s important to confirm with the financial institution or app provider which numbers should be used.
New Regs. Reshape 1% Stock Buyback tax, Drop Funding Rule
The IRS has issued final regulations for the 1% excise tax on corporate stock repurchases under Sec. 4501, removing one of the most controversial provisions.
Released on November 21 (T.D. 10037), the rules eliminate the “funding rule,” which would have imposed the tax when a U.S. subsidiary helped its foreign parent finance a buyback. Critics argued the rule was overly broad, unclear, and could have applied to routine transactions, creating unnecessary compliance burdens.
Key Changes
No Double Benefit Rule Removed: The IRS dropped a proposed measure that would have disregarded certain reorganizations and distributions under the netting rule in Sec. 4501(c)(3).
Preferred Stock Clarification: The regulations exclude “plain vanilla” preferred stock described in Sec. 1504(a)(4) from the definition of taxable stock, treating it more like debt.
Background
The Inflation Reduction Act of 2022 introduced a 1% excise tax on repurchases of stock by publicly traded corporations. The tax is based on the fair market value (FMV) of stock repurchased during the tax year. Proposed rules were issued in April 2024, followed by administrative guidance in July 2024.
Relief for M&A Deals
The IRS narrowed the tax’s reach in merger and acquisition contexts, exempting take-private transactions, leveraged buyouts, and liquidations under Secs. 331 and 332.
Effective Date
The excise tax applies to repurchases made after December 31, 2022. The final regulations took effect on November 24, 2025.
IRS & Security Summit Partner Announce 10th Annual National Tax Security Awareness Week
The IRS, working with its Security Summit partners, has kicked off the 10th annual National Tax Security Awareness Week to highlight the growing risks of tax‑related identity theft and scams during the holiday season and ahead of tax filing.
Security Summit Partnership
The Security Summit brings together the IRS, state tax agencies, tax software providers, tax professionals, and other members of the tax community. This public‑private coalition was created to strengthen protections against identity theft and raise awareness of evolving threats. Since its start, the Summit’s efforts have safeguarded millions of taxpayers and prevented billions in fraudulent refunds.
Rising Threats
As defenses inside the tax system have improved, criminals now focus on stealing personal and financial data directly from taxpayers, businesses, and tax professionals. Scammers often impersonate the IRS or trusted organizations through fake emails, texts, and online schemes. Social media has also become a growing source of false tax advice and scams.
To counter these risks, Summit partners formed the Coalition Against Scam and Scheme Threats, which will be more active this tax season. Another key tool is the Identity Theft Information Sharing and Analysis Center, which helps identify and coordinate responses to fraud.
Areas of Concern
Social media scams: False tax tips or “secret credits” spread online can mislead taxpayers.
Phishing and smishing: Fraudulent emails and texts attempt to steal sensitive data or money.
Senior protections: Older taxpayers are often targeted for retirement account withdrawals.
Business and professional safeguards: Tax professionals must maintain security plans and use multi‑factor authentication; businesses should update cybersecurity defenses.
Identity Protection PIN (IP PIN): A six‑digit PIN helps prevent fraudulent returns filed with stolen SSNs or ITINs.
Resources
Learn more at Security Summit
Victims of identity theft: visit Identity Theft Central
Additional guidance: see Tax Scams
Trusted sources: follow the IRS on social media, visit an IRS walk‑in center, or consult a tax professional
