The Internal Revenue Service (IRS) and the US Treasury Department have released some new guidelines for businesses. They’ve been in the works for some time, so don’t mistake them for changes made by the new administration. Tax reporting, accounting, and currency regulation modifications are carefully evaluated before they become official. This article covers IRS regulations for 2025 and Treasury Department regulations, as follows:
- The new cryptocurrency 1099-DA form
- 2025 waivers for accounting method changes
- Technology competence for tax professionals
- 2025’s increased standard mileage rate
Companies with annual revenues between $500K and $20M should pay close attention to these rule changes because they could significantly impact small businesses. There’s also a good chance these rules will be updated again in 2026, so familiarizing yourself with them now could benefit your financial planning for the next few reporting periods.
New cryptocurrency regulations and the 1099-DA form may make digital payments more complex.
Cryptocurrency regulations are part of a framework for future changes. Under Sections 6045 and 6050 of the tax code, cryptocurrency transactions initiated by brokers, exchanges, or other facilitators must be reported to the IRS using Form 1099-DA. This change was deemed necessary because of the increased use of digital assets in the United States.
Here are the key takeaways from cryptocurrency regulations.
What is the effective date?
Businesses must comply with new IRS regulations for 2025 by Jan. 1, and all transactions must be reported using Form 1099-DA.
Will your business be affected?
Small business owners, brokers, digital wallet providers, and trading platforms must report cryptocurrency income. Taxpayers receiving crypto as payment must add the 1099-DA to their reported income and pay taxes on it.
Are compliance challenges onerous?
The new law requires a 1099-DA for every crypto transaction. That could be challenging for smaller providers and create a volume backlog at the IRS.
What is the overall business impact of cryptocurrency regulations?
The new regulations add the burden of additional paperwork for small businesses with limited resources operating in the digital asset space. Aside from that, cryptocurrency reporting, combined with new reporting thresholds for third-party settlement organizations (TPSOs) like PayPal and Venmo, could significantly increase tax liabilities.
New rules introduce expanded waivers for accounting method changes.
This change affects companies with heavy research and experimental budgets. It states that Research and Experimental (R&E) expenses incurred after 2021 are not deductible. Businesses must now capitalize and amortize those amounts over five years for domestic research and fifteen years for foreign research. Use Form 3115 to report this change.
Here are the key takeaways for waivers on accounting method changes.
What is the effective date?
The rules are effective for the current tax season and will take official effect on Jan. 21.
Will your business be affected?
Your tax bill may be affected if your business depends on significant investment in research and experimental expenses, such as research labs, R&D facilities, technology companies, and engineering firms.
Let’s review the core provisions.
Here’s what you need to know about compliance and timelines for accounting method changes:
- Expands eligibility for waivers on accounting method changes.
- Applies to Form 3115 (Application for Change in Accounting Method).
- Covers research and experimental expenses incurred after Dec. 31, 2021.
What is the overall business impact of expanded waivers?
Consult with a tax professional about whether the new IRS regulations for 2025 affect your business. R&E expenses covered under this rule include employee wages, basic research payments, intellectual property, cloud infrastructure, facility general overhead, and patent costs. Materials and supplies used in research and experiments also qualify. Your accountant can tell you what the limits are.
IRS introduces new technological competency requirements for tax professionals.
Private companies typically run tax preparation training as part of the onboarding process, but many students open independent businesses when the classes are done. This new rule mandates that all tax professionals demonstrate technological proficiency at a professional level in industry-standard software like QuickBooks and stay up to date with evolving tax laws and digital filing systems.
Here are the key takeaways for technological competency requirements.
New requirements include the following stipulations:
- Tax preparers must demonstrate technological proficiency in current software.
- Provisions related to registered tax preparers will be eliminated.
- Certain contingent fee arrangements will be classified as disreputable conduct.
- New standards for appraisals and appraiser disqualification will be established.
Will technological competency requirements affect your business?
Businesses that rely on external tax preparers should confirm that their providers meet the new competency standards. Companies with in-house accounting teams might consider training programs to maintain compliance with evolving tax practices. Failure to meet these standards could subject the tax preparer to penalties and fines from the IRS.
Take advantage of increased standard mileage rates for 2025.
The IRS standard mileage rate increased from 67¢ per mile to 70¢ per mile effective Jan 1, 2025. This rate sets a standard for businesses reimbursing employees and independent contractors who use personal vehicles for work. It also affects depreciation calculations under the Fixed and Variable Rate (FAVR) plan, which is used to calculate car allowances.
Here are the key takeaways for standard-mileage-rate deduction increases.
What is the effective date?
The effective date, Jan. 1, 2025, means that the standard mileage rates apply to the current tax season.
Will your business be affected?
Nearly all small businesses benefit from this increase because travel-related expenses are essential to maintaining strong relationships with clients, partners, and vendors.
What is the overall business impact of increased standard mileage rates?
The new rates impact expense calculations for businesses that rely on company vehicles or reimburse employees for mileage.
Companies will need to adjust their policies to align with the updated IRS mileage rates. Independent contractors can do the same, but tax software like TurboTax and H&R Block will have the new rates already installed.
Get solutions to challenges and capitalize on opportunities.
These new regulations could present some challenges for small businesses, but they also offer competitive advantages for firms that comply. If any of these changes affect your business, we need to develop a strategic tax plan right now. Schedule a discovery call to get started.
Talk soon,
Jeremy A. Johnson, CPA