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Issue Number:  2025-39

Inside This Issue

1. IRS to phase out paper tax refund checks starting with individual taxpayers
2. Treasury, IRS issue guidance listing occupations in which workers customarily and regularly receive tips
3. Tax professionals: Prepare now to assist your clients with reporting proceeds from certain digital asset transactions
4. IRS extends relief to farmers and ranchers affected by drought in 49 states, other regions

1.  IRS to phase out paper tax refund checks starting with individual taxpayers

The IRS, working with the Department of the Treasury, announced paper tax refund checks for individual taxpayers will be phased out beginning on Sept. 30, as required by Executive Order 14247, to the extent permitted by law. This step marks the first move of the broader transition to electronic payments.

The IRS will publish detailed guidance for 2025 tax returns before the 2026 filing season begins, and will share updated guidance on IRS.gov and through outreach efforts nationwide.

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2.  Treasury, IRS issue guidance listing occupations in which workers customarily and regularly receive tips

The Department of the Treasury and the IRS provided guidance on the “no tax on tips” provision in the One Big Beautiful Bill. The One Big Beautiful Bill proposed regulations to identify occupations that customarily and regularly receive tips and define “qualified tips” eligible taxpayers may claim as a deduction. The proposed regulations list nearly 70 separate occupations of tipped workers, from bartenders to water taxi operators.

Treasury and IRS request comments from the public, within 30 days, be made through Regulations.gov. 

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3.  Tax professionals: Prepare now to assist your clients with reporting proceeds from certain digital asset transactions

Tax professionals: The new form brokers use to furnish statements including proceeds from certain digital asset transactions will be sent to taxpayers in early 2026; however, you can take steps now to help your clients get ready.

Brokers will use the new Form 1099-DA to report certain transactions involving digital assets that took place beginning in calendar year 2025. Brokers will need to provide a statement reflecting the information reported to the IRS on Form 1099-DA to taxpayers by Feb. 17. Tax professionals who use software to assist clients should ensure they are using trusted software and pay close attention to taxpayer information as all data used to calculate basis must be complete and accurate.

Tax professionals should:

• Review and reconcile all transactions which may be spread over multiple exchanges, wallets, and accounts
• Apply appropriate cost basis methods and document findings
• Accurately categorize income events

For more information visit Digital Assets, or review Instructions for Form 1099-DA, Digital Asset Proceeds From Broker Transactions.

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4.  IRS extends relief to farmers and ranchers affected by drought in 49 states, other regions

The IRS issued guidance providing tax relief for farmers and ranchers in applicable states and regions who sold or exchanged livestock because of drought. Under the guidance, farmers and ranchers may take more time to replace their livestock and defer tax on any gains from forced sales or exchanges.

Notice 2025-52 PDF lists the applicable areas, by county or other jurisdiction, that qualify for federal assistance. The replacement period extension announced in the notice gives eligible farmers and ranchers until the end of their first tax year after the first drought-free year after the four-year replacement period to replace sold or exchanged livestock. As a result, eligible farmers and ranchers whose drought-sale replacement period was scheduled to expire at the end of 2025 will have until the end of their next tax year to replace sold or exchanged livestock.

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