Issue Number: 2025-08Inside This Issue
IRS issues final regulations for workers who receive tips
Treasury and IRS recently issued final regulations on the “No Tax on Tips” deduction. These regulations list more than 70 occupations from tipped workers, to bartenders and water taxi operators. Qualified tips must meet these requirements:
- Must be received from customers through a mandatory or voluntary tip-sharing arrangement
- Must be paid voluntarily by the customer and not subject to negotiation
- Doesn’t include service charges unless the customer has an option to disregard or modify the service charge
Taxpayers can only take the deduction for qualified tips included on Form W-2, Form 1099-NEC, Form 1099-MISC, Form 1099-K, or reported on Form 4137.
Gig workers and other self-employed individuals may qualify for this deduction if their job is on the approved list of tip-earning occupations and they meet the other requirements. Additionally, the new law limits the deduction for self-employed individuals to their net income.
For more information about the One, Big, Beautiful Bill, visit the provisions page on IRS.gov. Back to Top
IRS seeks public input on remittance transfer tax under One, Big, Beautiful Bill
Treasury and the IRS recently issued guidance related to the new excise tax imposed on certain remittance transferers subject to 1% remittance transfer tax beginning Jan. 1, 2026. This tax applies when sender uses cash, money order, cashier’s check, or similar methods to send money to recipients in foreign countries.
The proposed guidance:
- Specifies which part of transaction is subject to tax
- Defines which physical payment instruments trigger the tax
- Provides examples to show how the rules apply
To report the new remittance transfer tax, use Form 720, Quarterly Federal Excise Tax Return.
Businesses and individuals should review Notice 2025-55 for guidance on limited penalty relief for remittance transfer providers who fail to deposit the correct amount during the first three quarters of 2026.
Public comments on these proposed regulations should be submitted by June 12, 2026, through Regulations.gov. Back to Top
Guidance available for nominating census tracts as Qualified Opportunity Zones
Treasury and the IRS are providing guidance in Revenue Procedure 2026-14 for all states, the District of Columbia and U.S. Territories to nominate census tracts as Qualified Opportunity Zones. The OBBB made the QOZ tax incentive permanent. The first round of designations will be effective Jan. 1, 2027.
States can nominate eligible census tracts from July 1 - Sept. 27, 2026, and are subject to a 30-day extension.
After the nomination and selection processes are complete, the IRS will provide more guidance on which areas are designated as QOZ.
For additional information, see QOZ investments in rural areas under OBBB. Back to Top
Beware of fake tax deduction calculators related to the One, Big, Beautiful Bill
IRS warns taxpayers of latest scam making false promises on eligibility for new tax credits and deductions due to recent provisions under OBBB. Business and individual taxpayers should be cautious when using tax deduction calculators and software online.
Guidelines when using online digital tools:
- Trust the URL: Only use sites ending in .gov for official government resources. Be wary of misspellings like irsgov.com or irs-gov.org instead of IRS.gov.
- Expect estimates, not guaranteed calculations: Legitimate calculators that provide estimates and tools that promise a big payday is likely a phishing attempt to obtain personal information.
- Stick to trusted sources: Use only official IRS website or sites of well-known, established tax software companies. Refer to One, Big, Beautiful Bill Provisions for information about new or expanded tax credits and deductions.
- Too good to be true: Be wary of calculators or websites that guarantee a big payday or an unusually large, unexpected refund.
- Don’t engage: Avoid replying, clicking on links or opening suspicious messages.
Report suspected scams using the new tool at IRS.gov/SubmitATip. This tool consolidates IRS fraud-reporting options into a centralized location. It uses clear prompts and a simplified reporting process to help ensure information is routed to the appropriate IRS office.
For more information, visit the recognize tax scams and fraud page on IRS.gov. Back to Top
IRS issues tax relief for Tennessee
Individuals and businesses in Tennessee affected by Winter Storm Fern that began on Jan. 22, 2026, have until May 22, 2026, to file various federal individual and business tax returns and make tax payments.
The IRS automatically identifies taxpayers located in covered disaster areas and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS Special Services toll-free number at 866-562-5227 to request this tax relief.
The Tax relief in disaster situations page on IRS.gov has the most recent tax relief info for taxpayers affected by a disaster. Back to Top
Other tax news
The following information may be of interest to individuals and groups in or related to small businesses:
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