Schultz & Company, Certified Public Accountants

Schultz & Company, Certified Public Accountants Schultz & Co CPAs is much more than a balance sheet and a bill. We are a firm dedicated to providing sound technical expertise & elegant financial advice.

05/27/2026

IRS overtime skyrockets amid workforce cuts
In 2025, the IRS experienced a 12% increase in overtime hours, primarily among employees in Taxpayer Services.. A new TIGTA report highlights that overtime costs rose by $27m, reaching $225m, as the agency faced a 25% reduction in its workforce due to resignations and retirements. “We believe that additional overtime costs were needed since the IRS had to balance increasing workforce demands with the impact of Service-wide workforce reductions,” the report stated. The Taxpayer Services division accounted for 87% of all overtime hours, with significant backlogs exacerbated by a 43-day government shutdown. TIGTA flagged 476 questionable overtime claims, indicating a lack of centralized tracking for overtime procedures within the IRS. The report did not include recommendations but noted plans to assess IRS controls over premium pay in the upcoming filing season.

05/13/2026

IRS unveils new dyed fuel tax rules
The Treasury Department and the IRS have introduced temporary regulations regarding the recovery of federal excise tax on dyed fuel under the One Big Beautiful Bill Act. These regulations clarify eligibility and filing procedures for taxpayers seeking refunds under Section 6435 of the tax code. According to Forvis Mazars, “the §4081 tax may be imposed with respect to fuel more than once,” but the refund mechanism prevents double taxation. Taxpayers who paid the original tax on dyed fuel can claim refunds if they meet specific criteria, including the requirement that the fuel was indelibly dyed and removed for nontaxable use after December 31st 2025. The IRS emphasized the importance of providing clarity to taxpayers, saying: “Treasury and IRS recognize the importance of providing clarity to taxpayers through guidance that can be relied on to file claims.” Comments on the proposed regulations are due by June 30th 2026.

05/12/2026

Federal employees with unpaid tax debt surged after pandemic, watchdog says
The number of federal employees behind on their taxes rose sharply during and after the COVID-19 pandemic, with around 215,000 workers owing unpaid tax bills in 2024, according to a new TIGTA audit. The report found the federal employee tax delinquency rate increased from 4.9% in 2021 to 6.9% in 2024. Outstanding tax debt among federal workers climbed 45% over the period to $2.1bn. IRS officials attributed much of the increase to pandemic-era pauses on collection activity. The watchdog said the federal workforce still overwhelmingly pays taxes on time, but urged the IRS and Treasury Department to strengthen enforcement and accountability measures. Auditors warned that public confidence in the tax system could suffer if taxpayers believe federal employees are not meeting their own obligations. The IRS said it resumed phased collection efforts in 2024 and expects delinquency rates to decline in coming years. The agency also increased enforcement activity targeting federal workers behind on taxes and last year sent more than 427,000 notices to delinquent federal employees and retirees, prompting nearly 65,000 people to make payments. The report also found about 572,000 current and retired federal employees owed a combined $6.3bn in unpaid taxes as of 2024. Around 50,000 employees failed to file tax returns for multiple years, while more than 1,000 workers had been delinquent for at least six years. Cases involving 122 employees who were at least eight years behind were referred to the IRS Criminal Investigation division.

05/11/2026

IRS set to shake up Form 990
The Department of the Treasury has announced that the IRS plans to revise Form 990, which is essential for tax-exempt organizations. The aim is to enhance transparency and improve reporting on nonprofit activities. Key anticipated changes include increased disclosure requirements for government contracts, fiscal sponsorship arrangements, and foreign donations. Nonprofits are encouraged to conduct internal reviews of their Form 990 compliance and stay informed about the revision process, which will allow for public comment before any new requirements are implemented. Allie Levene, founder of Levene Legal, emphasizes the importance of maintaining accurate records and being proactive in the upcoming changes.

05/05/2026

Former IRS agent charged over alleged $12m embezzlement scheme
Robert M. McCloughy, a 43-year-old former IRS revenue agent from Carlstadt, NJ, has been charged with wire fraud and two counts of engaging in monetary transactions involving criminally derived property. The U.S. Attorney's Office District of New Jersey reported that McCloughy allegedly embezzled over $12m while serving as CFO and controller of a fuel company from March 2017 to March 2025. He misappropriated funds through unauthorized reimbursements and bank transfers, while falsifying company records to conceal his actions. Federal prosecutors noted that he engaged in money laundering by gambling large sums at online sportsbooks and casinos. No attorney has been listed for McCloughy.

05/01/2026

Court ruling could unlock Covid-era tax refunds for millions of Americans
A recent federal court decision has opened the door for tens of millions of U.S. taxpayers to potentially reclaim penalties, interest payments and other charges imposed during the Covid-19 pandemic, after ruling that many IRS filing deadlines were effectively suspended. The judgment found that a 2019 law granting automatic deadline extensions for disaster victims, combined with the nationwide emergency declared in January 2020, meant that tax deadlines should have been paused until July 10th 2023. This contradicts the IRS’s earlier interpretation, under which deadlines remained in force, leading to widespread penalties for late filings and payments. The scope of the issue is significant, affecting individuals, small businesses and large corporations alike, with more than 28m penalties issued in fiscal 2022 alone, totalling over $12bn. Some companies, including large corporates, have already begun pursuing claims based on the ruling. The IRS’s national taxpayer advocate has urged taxpayers to review their eligibility and submit claims, typically via Form 843, before the key deadline of July 10th 2026, which reflects the standard three-year window for refund claims. However, the process may prove complex and slow, as claims must currently be filed on paper and could overwhelm IRS systems.

04/30/2026

Well wouldn't this be a welcome change.

Bipartisan bills aim to modernize IRS
The House has passed a series of bipartisan tax-related bills aimed at improving IRS operations, including customer service and taxpayer privacy. The Taxpayer Experience Improvement Act, introduced by Rep. David Schweikert (R-AZ) and Rep. Don Beyer (D-VA), seeks to modernize IRS services by providing real-time information on call volumes and wait times. "Taxpayers should not have to spend an afternoon on hold just to find out whether the IRS received a document or when their refund is coming," Schweikert stated. The bill also proposes expanding online taxpayer accounts for easier access to tax documents and responses. If approved by the Senate, these changes could significantly enhance taxpayer experience and efficiency by 2028.

04/20/2026

U.S. to refund $166bn in tariffs after Supreme Court ruling
The Trump administration will today begin refunding more than $166bn in tariffs to importers after the Supreme Court invalidated a central pillar of its trade policy, with businesses able to submit claims through a newly created system and receive repayments with interest. The move is expected to provide significant financial relief to companies that absorbed the costs of the tariffs, although only those that directly paid the duties are eligible, leaving consumers who faced higher prices without direct compensation. However, the process is expected to be complex and potentially slow, with officials warning of technical challenges and businesses expressing uncertainty over how quickly refunds will be issued. While some large companies have indicated they may pass refunds on to customers, most have made no such commitments, and ongoing uncertainty around potential replacement tariffs means firms may remain cautious in how they use any recovered funds.

03/29/2026

High-tax states lose billions as migration reshapes U.S. economy
New Internal Revenue Service data shows significant income migration from high-tax states to lower-tax regions. California lost $11.9bn in net income between 2022–23, while New York lost $9.9bn. In contrast, Florida gained $20.6bn, with further gains in Texas and the Southeast. Migration is driven by affordability, housing supply and lower taxes, with many movers leaving high-cost, high-tax states. Analysts note that states without income tax are benefiting most. The trend highlights ongoing fiscal pressures for some states, alongside population and economic growth in lower-tax regions.

03/19/2026

IRS has no plan to reduce backlog of taxpayer correspondence, watchdog finds.

A government watchdog said the IRS doesn’t yet have a plan to reduce its backlog of taxpayer correspondence. The Government Accountability Office said the agency’s backlog at the end of last year’s filing season remained higher than pre-pandemic levels. GAO said that without a plan, the IRS risks not doing all it can to bring down the backlog and may provide less timely service to taxpayers. The IRS said it will take GAO’s recommendations into consideration.
(Management of agency reforms and workforce planning needed to address severe risks to future IRS operations - Government Accountability Office)

02/23/2026

Did you know partnership income is generally subject to self-employment taxes?💼 Partnership Income & Self-Employment Tax?

There’s a common misconception that partners only pay self-employment (SE) tax on distributions.

That is incorrect.

📚 What the Internal Revenue Code Says:

🔹 IRC §1402(a)
Self-employment income includes a partner’s distributive share of income from a trade or business carried on by the partnership.

🔹 IRC §1402(a)(13)
The limited partner exception — generally excludes a limited partner’s distributive share from SE tax (but not guaranteed payments for services).

🔹 IRC §707(c)
Guaranteed payments for services are treated as compensation and are included in SE income.

🚨 What This Means Practically

Self-employment tax applies to:

✔ Your share of ordinary trade or business income (Schedule K-1, Box 1)
✔ Guaranteed payments for services

It does NOT depend on:

✘ Whether the money was distributed
✘ How much cash you withdrew
✘ Whether profits were retained in the partnership

SE tax is based on economic income — not cash flow.

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