While Congress nears the end of its August recess with a government funding deadline looming, Treasury and IRS tax policy developments have continued to roll in during a typically – if not often hopefully – quiet month in Washington. The IRS, amidst ongoing leadership shake-ups, has issued several noteworthy updates in August, namely urgent guidance released on Aug. 28, 2025, Rev. Proc. 2025-28, which sheds much-needed light for taxpayers on various elections, amended returns, and accounting method changes for research or experimental expenditures as provided under section 70302 of the sweeping tax and spending legislation enacted on July 4, 2025, known as the One Big Beautiful Bill Act (OBBBA) (P.L. 119-21).
Congress returns
Both chambers of Congress are slated to return to Washington next week on Sept. 2, 2025, as lawmakers prepare to race against the clock to avert a government shutdown at midnight on Sept. 30, 2025. With fiscal year 2026 beginning Oct. 1, 2025, Congress has less than 20 legislative days to reach bipartisan, bicameral agreement on 12 annual appropriations bills known as an “omnibus” or otherwise pass a “stopgap” continuing resolution (CR) to keep the lights on. It is also possible a CR could accompany some of the appropriations bills, if passed, known as a “minibus” to avoid a partial government shutdown. At this time, the Senate has passed three appropriations bills, and the House has passed two, all of which must be unified by amendment or reconciled in conference committee before reaching the president’s desk for signature or veto.
Looking ahead, some Republican lawmakers are already vocal about wanting a second bite of the apple with OBBBA follow-up reconciliation legislation in fiscal 2026, which could contain certain policy proposals that didn’t make it over the finish line last round as well as technical corrections. Additionally, it remains to be seen whether there will be an appetite for a bipartisan tax extenders bill. For more on lawmakers’ tax-related priorities that may gain traction in the fall, see our July 2025 Policy Pulse.
Treasury and IRS
So long. Former IRS Commissioner Billy Long announced on Aug. 8, 2025, that he would be stepping down to become ambassador to Iceland. President Trump removed Long as chief of the agency less than two months after his controversial confirmation. Treasury Secretary Scott Bessent is serving as acting IRS Commissioner. He is the agency’s seventh commissioner this year.
Paper checks. Treasury announced on Aug. 14, 2025, that the federal government will stop issuing paper checks for most federal payments on Sept. 30, 2025. The move follows President Trump’s March Executive Order (EO) mandating Treasury cease issuing paper checks for all federal disbursements, including tax refunds. The EO also states, “as soon as practicable, and to the extent permitted by law, all payments made to the Federal Government shall be processed electronically.” At this time, however, Treasury has not made any such announcement prohibiting the receipt of paper checks from taxpayers.
Guidance on research or experimental expenditures. As noted above, on Aug. 28, 2025, the IRS issued Rev. Proc. 2025-28, which generally provides instructions for taxpayers on how to make various elections, file amended or superseding returns, and make changes in accounting method for research or experimental expenditures in compliance with IRC sections 174, 174A, and 280C, as amended and added by section 70302 under the OBBBA. Baker Tilly will release substantive analysis on this guidance in the coming days. For more information on the OBBBA’s changes to how domestic research expenses are treated for tax purposes, see Baker Tilly’s recent article.
Clean vehicle and energy credits. On Aug. 21, 2025, the IRS issued Fact Sheet 2025-25, a list of seven FAQs providing guidance on several energy credits and deductions that are expiring under OBBBA. Additionally, the FAQs provide clarification on the availability of the new clean vehicle credit, the energy efficient home improvement credit and the residential clean energy credit, among others.
Wind and solar. On Aug. 15, 2025, the IRS issued Notice 2025-42, which provides guidance on “beginning of construction” requirements for clean electricity production and investment credits terminated under the OBBBA.
Partnerships. On Aug. 18, 2025, Treasury and the IRS issued proposed rules modifying information reporting obligations with respect to sales or exchanges of certain interests in partnerships owning inventory or unrealized receivables.
Baker Tilly continues to help clients navigate the OBBBA while monitoring for additional regulatory guidance. Be sure to visit our OBBBA central-source webpage for more information. If you have questions about how this may impact your tax situation, please contact your Baker Tilly tax advisor.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
