MATH ACT TO PROVIDE TAXPAYERS WITH NEEDED INFORMATION
On December 1, 2025, the President has signed the “Internal Revenue Service Math and Taxpayer Help Act” (“MATH Act”). The MATH Act requires that the IRS provide specific information when it makes a tax return change due to a math or clerical error.
Previously, the IRS could just make the change without providing much, if any information to the taxpayer.
The IRS will now have to provide:
- A clear description of the error, including the type of error and the tax return line where the error was made.
- An itemized computation of adjustments that are needed to correct the error.
- The phone number for the IRS’s automated transcript services.
- The deadline for requesting an abatement of any penalties because of the error.
Additionally, the communication to the taxpayer will identify direct and incidental adjustments on the return impacting:
- Adjusted gross income
- Taxable income
- Itemized or standard deductions
- Nonrefundable credits
- Other credits
- Income tax
- Other taxes
- Total tax
- Federal income tax withholdings
- Estimated tax payments, included amounts applied from the prior year
- Refund or amount owed
- Net operating loss carryforwards
The entire MATH Act, which is quite short is available here.
PREPARING FOR YOUR 2025 BUSINESS RETURN
Businesses should be preparing for their year-end returns now. This preparation includes the following at a minimum:
- Estimation of current year income based on interim operating results.
- Reviewing last year’s return for those items which need to be considered in the current year planning.
- Identification of any expenditures which may be beneficial if made in the current year, including capital expenditures, owner compensation or distributions.
- Employee incentive or bonus compensation.
- Any need to correct current year information both prior to and at year-end.
- Timing for completion of the current year tax return, including any expected need for tax return extensions.
- Consideration of any expected 2026 changes in operation or income, especially those which may affect decisions related to 2025 matters.
Most business taxpayers will find it helpful to meet with their tax return preparer now. After the end of the year may be too late to take advantage of any opportunities available.