Part I of this two-part blog discussed how to identify penalty relief associated with the IRS’s recently announced broad penalty relief initiative on IRS tax account transcripts and explained the many uses of the transcript transaction code (TC) 290.  Part Two continues with more helpful tips I hope you will find useful when trying to understand IRS transcripts.

Recently, I’ve received many questions about how Executive Order (EO) 14247, Modernizing Payments To and From America’s Bank Account, will affect taxpayers. The good news is that most taxpayers already receive their refunds using direct deposit and may not even be aware of the change.  During the 2025 filing season, about 94% of individual taxpayers provided their direct deposit information on their Form 1040.  But some taxpayers are unable to provide direct deposit information or may not wish to do so, and they may be wondering what the impact of the EO will be going forward.

As March Madness basketball brackets dominate our screens, it’s hard not to think about the 68 teams involved in the tournament. This number also mirrors the 68 provisions in the Taxpayer Assistance and Service (or “TAS”) Act, a significant discussion draft aimed at improving tax administration. Among these provisions, one in particular stands out as familiar for its potential to help vulnerable taxpayers. Section 110 of the draft TAS Act would unlock the funding restrictions for the Low Income Taxpayer Clinic (LITC) Program. This reform would be a slam dunk for taxpayer rights and ensure that low-income taxpayers get the professional representation and assistance they deserve in tax disputes.

Many taxpayers experience difficulties with correspondence audits. Once a return is selected for examination, the IRS notifies the taxpayer by letter and, as the name implies, conducts the audit via correspondence. Correspondence audit letters fail to provide a point of contact – the taxpayer is not given a direct phone number or the name of an IRS employee to contact. Instead, the letter provides a phone number for all correspondence audits. If no response to the initial contact letter is received, the IRS generally makes no effort to contact the taxpayer before proposing adjustments, issuing a Statutory Notice of Deficiency, and closing the case. Taxpayers wishing to speak with someone regarding an audit are limited to calling a representative on a toll-free line. The correspondence audit process is meant to create efficiency; however, these audits can present a host of challenges for our nation’s most vulnerable taxpayers and have downstream consequences for taxpayers and the IRS, as discussed in my 2021 Annual Report to Congress, Low-Income Taxpayers Encounter Communication Barriers That Hinder Audit Resolution, Leading to Increased Burdens and Downstream Consequences for Taxpayers, the IRS, TAS, and the Tax Court.

National Taxpayer Advocate delivers 2025 Annual Report to Congress. his year’s report focuses on the taxpayer impact of processing delays.  

The IRS is in the midst of reinventing itself by offering taxpayers several new customer service options, including: expanding document digitalization, implementing chatbots to assist taxpayers, adding more customer service representatives, expanding the use of online taxpayer accounts and conducting a direct file pilot program.

These enhancements will undoubtedly provide better customer service to taxpayers, but the IRS must design them so they will be accessible to all, including the 42 million Americans with a reported disability as of the 2021 census. It is critical that the IRS ensure that these millions of taxpayers with disabilities can easily comply with their tax obligations and receive the refunds to which they are entitled, especially since this group struggles with financial stability at a higher rate than their non-disabled counterparts.

The IRS is redesigning Form W-4, Employee’s Withholding Allowance Certificate. The changes to this form will affect nearly every employee and employer, potentially more than once a year.

Every year the Taxpayer Advocate Service (TAS) helps thousands of people with tax problems. This success story is only one of many examples of how TAS helps resolve taxpayer issues.

A taxpayer contacted the IRS to resolve a balance due that exceeded $150,000, which required the taxpayer establish a short-term payment plan. However, the IRS assistor didn’t finalize the agreement on the taxpayer’s account, resulting in the taxpayer’s bank account being levied with over $20,000 being attached.