Hello from Park City, Utah! It’s a brisk 40 degrees as I write this week’s newsletter. I’m here on business, and while I’ve had a lovely time (the Salt Lake City Estate Planning Council was a wonderful host), I am anxious to get back east. Let’s hope that happens. What could slow me down? The Federal Aviation Administration (FAA) is advising airlines to cut flights back due to a shortage of air traffic controllers during the shutdown. The list of affected airports is extensive, including my home airport, Philadelphia. As a result, tax professionals on social media have already suggested they may have to curtail attendance and speaking engagements at tax conferences that require air travel in favor of those accessible by train and car. You can find a list of upcoming conferences near the bottom of the newsletter—I suggest checking with each conference directly if you have questions.
An area where taxpayers may also feel the impact of the shutdown is the closing of the IRS Taxpayer Assistance Centers (TACs). TACs are offices where taxpayers can get help on their taxes. Services offered range from assisting with IRS notices or letters to resolving account issues, making payments to the taxing authority, and answering tax law questions. And it doesn’t just benefit individual taxpayers—recent research suggests that these centers offer significant benefits to businesses, especially entrepreneurs, by lowering taxpayer compliance costs. As the shutdown continues, an unintended consequence might be a decline in these entrepreneurial efforts.
(You can find a summary of what’s open—and what’s not—at the IRS during the shutdown here.)
Despite the shutdown, the IRS continues to roll out guidance related to the One Big Beautiful Bill Act (OBBBA). This week, the IRS released new guidance to help employers and other payers navigate reporting requirements for cash tips and qualified overtime compensation under OBBBA. The guidance provides penalty relief from the new information reporting requirements related to the new deduction—specifically, employers and other payers will not be penalized for failing to file correct information returns or providing correct payee statements to employees and other payees in 2025 for purposes of the deductions. The IRS says that guidance for taxpayers will follow.
That guidance will prove useful as the 2026 tax filing season approaches — it’s already beginning to look different. For one, while we knew it was coming, now we are sure: Direct File, the free tax e-filing option provided by the IRS, has been axed. This week, reports surfaced that the IRS had emailed states to say Direct File would not be available for the next filing season. Some participating states have since confirmed receipt of the email to Forbes. The IRS did not respond to a request for comment and hasn’t officially notified taxpayers, but if you click over to the IRS website that used to be the home of Direct File, a message simply states, “Direct File is closed. More information will be available at a later date.” Information on the site says anyone who needs a transcript should instead log into their IRS online accounts. The IRS also advises, “If you used Direct File to submit your return, you can retrieve a copy by submitting Form 4506, Request for Copy of Tax Return…If you used a different tool to submit your tax return, find out how to access your tax records.” It’s worth noting that the method you used to file your tax return (e-file or paper) and whether you had a balance due affects your current year transcript availability–that’s especially true during the shutdown.
There’s one more story this week related to the shutdown—but this one is a little different. I had the chance to talk to Isaac Stein, an attorney at the IRS Chief Counsel’s Office. Dressed in a suit and tie, his usual work outfit at the office, he now mans a cart, dishing out hot dogs and advice under the shade of an umbrella. It’s been his daily routine ever since the federal government shut down in October, and Stein found himself out of a job—at least temporarily. But far from being a sob story, this is the story of how he fulfilled his childhood dream. Give it a read—it’s sure to make you smile.
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
Questions
This week, a reader asks:
I’m considering buying an apartment in Paris to use as a second home. I might also rent it out through something like Airbnb when I’m not staying there. Can I deduct French property taxes on my U.S. tax return?
Property taxes are generally deductible on Schedule A. However, while you can deduct state and local taxes, you generally cannot deduct foreign real estate taxes on Schedule A.
Under the Tax Cuts and Jobs Act of 2017 (TCJA), the itemized deduction for state and local taxes (SALT) was limited to U.S. state and local income, sales, and property taxes — foreign property (real estate) taxes were specifically excluded. Foreign real estate taxes remain nondeductible under section 164(b)(6)(A) of the tax code—the One Big Beautiful Bill Act (OBBBA) didn’t change that rule.
But if you do opt to rent out the place? Foreign real estate taxes might be deductible as part of rental property expenses on Schedule E, if the property produces income.
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Do you have a tax question that you think we should cover in the next newsletter? We’d love to help if we can. Check out our guidelines and submit a question here.
Statistics, Charts, and Graphs
The 2025-2026 college basketball season kicked off on November 3—and the season will look a little different this year as colleges and their teams continue to acclimate to a sweeping change that allows college athletes to receive name, image, and likeness (NIL) payments.
Following landmark U.S. Federal Court decisions in O’Bannon vs. NCAA and NCAA vs. Alston, the NCAA was left unable to prevent athletes from being paid for NIL. Starting on July 1, 2025, the NCAA officially allowed athletes to be paid for their NIL without sacrificing their amateur status.
While many athletes welcomed this change, it also meant they would now be subject to income tax on these payments. According to Section 61 of the Internal Revenue Code, gross income is defined as all income from whatever source derived. While NIL is not explicitly listed as an example, the nature, extent, and timing of this compensation squarely fall within the definition.
NIL compensation can now vary anywhere from payments for explicit services being provided – autograph sessions, commercials, endorsements – all the way to compensation in-kind. For instance, if an athlete receives use of a car as part of their NIL, the cost of using that car is considered income. The athlete will then have to pay taxes on that income, even though they are not being explicitly paid.
What do those payments look like? The numbers can be in the millions—as noted here. According to SI.com, aggregate NIL payments are skyrocketing, as high as $2 billion. Those numbers deserve some attention–including from tax authorities.
A Deeper Dive
Does President Trump have the power to unilaterally impose tariffs, and perhaps other taxes, without the consent of Congress? That was the question before the Supreme Court this week.
Under the Constitution, Article I, the responsibilities of Congress include “Power To lay and collect Taxes, Duties, Imposts and Excises.” By contrast, the words “tax” or “tariff” never appear in Article II, which describes the duties and responsibilities of the president.
President Trump is relying on the power he claims is granted under the International Emergency Economic Powers Act (IEEPA). The 1977 law allows the president “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States,” if he declares a national emergency “with respect to such threat.” This includes regulating imports and exports. Trump suggests that there are two threats: the flow of fentanyl into the U.S. and large trade deficits.
Small businesses and states challenged the use of IEEPA in court, and those challenges eventually landed at the Supreme Court.
The theory asserted in those lawsuits is that the executive’s power to regulate imports does not include the power to impose tariffs. They go on to say that tariffs are effectively like the internal taxes collected by the IRS, and taxes — apparently uniquely — can be delegated by Congress to the president only with a highly specific delegation.
Importantly, those challenging the power of the president to impose tariffs aren’t arguing that Congress cannot delegate the power to tax or tariff, only that there is no delegation here. When Congress delegates the “uniquely dangerous” tax power to the president, they assert, it must speak clearly, preferably using specific words like “tariff.”
While the justices have been asked to resolve the matter quickly, it’s unclear when we’ll have the court’s ruling. However, if the oral arguments offer any sort of window into the Supreme Court’s leaning (they generally do), the Court appeared skeptical of President Donald Trump’s authority to impose sweeping tariffs. The justices appeared to agree with those who argued that the imposition of the tariffs exceeded the president’s powers.
Tax Filings And Deadlines
📅 November 15, 2025. Due date for tax-exempt organizations on extension to file Forms 990, 990-EZ, 990-PF, 990-N, 990-BL, or 990-T.
📅 December 31, 2025. Deadline for required minimum distributions (RMD) for most individuals subject to RMDs. (If you turned 73 in 2024, you should have taken your first RMD (for 2024) by April 1, 2025, and you also need to take your 2025 RMD by the end of the year.)
📅 January 15, 2026. Fourth quarter 2025 estimated tax payment due for individuals.
Tax Conferences And Events
📅 November 17-18, 2025. AICPA & CIMA National Tax Conference, Washington Hilton, Washington, DC. Registration required.
📅 December 11-13, 2025. American Bar Association Section of Taxation. 2025 Criminal Tax Fraud and Tax Controversy Conference, Wynn, Las Vegas. Registration required.
Trivia
Since hot dogs are in the newsletter this week, which city imposes a 10.25% sales tax on ready-to-eat hot dogs from a cart or ballpark vendor and has held the spot as the number 1 hot dog-consuming city in the country for nearly a decade?
(A) Chicago
(B) Los Angeles
(C) New York
(D) Philadelphia
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS continues to update its information targeted to employees regarding the government shutdown and those who have been recently separated (i.e. let go)—it was most recently updated on November 7, 2025. Notably, because the current furlough will have exceeded 30 days, the IRS is legally required to furlough employees again, effective midnight on November 8, 2025, for up to an additional 30 days.
The American Bar Association (ABA) Section of Taxation submitted comments to the Treasury on the Notice of Proposed Rulemaking regarding the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. According to the section, the most effective tax-related guidance that Treasury and the IRS could issue would be simply to treat payment stablecoins as cash—by treating payment stablecoins as cash, they would be exempt from onerous recordkeeping, reporting, and tracing rules.
On behalf of the tax professional community, the National Association of Tax Professionals (NATP), National Association of Enrolled Agents (NAEA), National Society of Tax Professionals (NSTP), and National Society of Accountants (NSA) sent a letter to the IRS to share urgent concerns about the upcoming tax filing season.
Noteworthy
The American Institute of Certified Public Accountants (AICPA) Professional Ethics Division posts the outcomes of recent case investigations that resulted in disciplinary actions against AICPA members. You can find those lists, including for 2025, here.
Frank Agostino has joined forces with Kostelanetz LLP, a tax controversy and white collar defense boutique. Joining Frank under the Kostelanetz umbrella are three additional attorneys from Agostino & Associates, Brian Derdowski, Shan Kadkoy, and Byung Hyuk (Billy) Min, as well as Enrolled Agent Michael Wallace. Frank and Brian join as Counsel, while Shan and Billy join as Associates. Frank, Brian, Shan, Billy, and Michael will continue to work out of Hackensack, New Jersey, where Kostelanetz will now have an office.
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If you have tax and accounting career or industry news, submit it for consideration here or email me directly.
In Case You Missed It
Here’s what readers clicked through most often in the last newsletter:
- What’s Open—And What’s Not—At The IRS During The Government Shutdown
- From Taylor Swift Tickets To Etsy Sales, IRS Clarifies When You Might See Form 1099-K
You can find the entire newsletter here.
Trivia Answer
The answer is (B) Los Angeles.
According to the National Hot Dog and Sausage Council, LA has held the No. 1 spot as the country’s top hot dog-consuming city for more than a decade, purchasing more than 27 million pounds of hot dogs in 2024. Dodger Stadium also consistently sells the most hot dogs in baseball, averaging around 2.5 million hot dogs per season.
Chicago ranked #4, while Philadelphia came in #7. New York placed #2 and has the distinction of roiling the industry by defining a hot dog as a sandwich. For tax purposes, the applicable regulation states, “a sandwich can be defined as a prepared food item consisting of a filling, such as meat, poultry, or fish, salad, or cheese, between two slices of bread or on a roll”.
This classification means that whether the hot dog is taxable depends on where it is sold (as in much of the country). If a deli sells a prepared hot dog on a roll, it is subject to sales tax, but a supermarket selling a package of hot dogs and a pack of rolls for home cooking is not.
Despite this tax rule, the National Hot Dog & Sausage Council disagrees, opining, “Limiting the hot dog’s significance by saying it’s ‘just a sandwich’ is like calling the Dalai Lama ‘just a guy’.”
(You can read more about hot dogs and tax in this prior post.)
Feedback
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