SubscribeCheck out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for June 18, 2025 – July 11, 2025.
“One Big Beautiful Bill Act” tax provisions
On July 4, 2025, US President Donald Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law, which enacted several changes to federal tax law. Some of the key changes that affect IRS administration and/or federal tax procedure include:
- Form 1099-NEC reporting threshold. The reporting threshold for payments to non-employees for personal services will be raised from $600 to $2,000 beginning in 2026. While amounts below the threshold will still constitute income subject to taxation, an employer will not be subject to backup withholding requirements or be required to issue a Form 1099 if the total value of the services provided cost less than $2,000.
- Controlled foreign corporations (CFCs). The look-through rule for CFCs under Internal Revenue Code Section 954 is permanently extended. New Section 951B extends the CFC inclusion rules to “foreign controlled US shareholders” of foreign-controlled CFCs (the US shareholder must own more than 50% by value or vote of the foreign corporation to be designated as such). The tax law also creates a one-month deferral election for determining a CFC’s tax year.
- Opportunity zone designation. The OBBBA establishes a permanent opportunity zone policy, maintaining current designation guidelines. For investors with investments made after December 31, 2026, gains deferred via investment in the Qualified Opportunity Zone program will now be recognized on the fifth anniversary of the investment date.
Additionally, the OBBBA introduces a detailed reporting regime as included in new Code Sections 6039K and 6039L. A penalty provision in Code Section 6726 is also included to improve oversight and transparency regarding the economic impact of qualified opportunity investments. The reporting penalties can be as high as $10,000 per return or up to $50,000 for qualified opportunity funds with assets worth more than $10 million. The US Department of the Treasury must publish annual reports on opportunity zone investments and economic performance of the designated tracts.
- Employee Retention Credit (ERC) update. Pending ERC claims filed after January 31, 2024, for the third or fourth quarters of 2021 are disallowed under the tax law. The statute of limitations on assessment for ERC (i.e., the period during which the IRS may recapture ERC through assessment) was also extended to six years. The OBBBA also imposes penalties on ERC promoters who fail to comply with due diligence requirements and demonstrate that they did not facilitate the making of fraudulent claims.
IRS guidance
June 23, 2025: The IRS issued Notice 2025-30, publishing the inflation adjustment factor and reference price for calendar year 2025 for the renewable electricity production credit under Code Section 45. The inflation adjustment factor for calendar year 2025 for qualified energy resources is 1.9971, and the reference price for calendar year 2025 for facilities producing electricity from wind is 3.1 cents per [...]
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