Introduction
With sweeping legislative changes under the One, Big, Beautiful Bill (OBBB) and IRS modernization efforts, 2026 brings both opportunities and compliance challenges for U.S. tax professionals. The right practices will help avoid errors, penalties, and client dissatisfaction.
What’s New & What You Need to Know
- Enhanced Tax Pro Account features: The IRS has expanded digital tools for tax professional businesses, including linking Employer Identification Numbers (EIN) to business Central Authorization File (CAF) numbers and managing authorization relationships more efficiently. (irs.gov)
- Employee Retention Credit (ERC) claims limited: Under section 70605 of OBBB, ERC claims for Q3 & Q4 2021 filed after January 31, 2024 are not allowed or refundable—even if eligibility criteria are otherwise met. (irs.gov)
Avoiding Pitfalls & Penalties
Tip & Overtime Reporting
Some deductions for tips and overtime under OBBB require accurate reporting and information returns from employers. Misclassification or missing statements could lead to disputes or audits. Work with clients and payroll providers to ensure definitions match IRS occupation lists and reporting rules. (eitc.irs.gov)
Maintain & Monitor Withholding & Reporting Tables
While TY 2025 forms and withholding schedules remain unchanged for many provisions, significant changes take effect across tax forms and withholding in 2026. Be prepared for updated forms, especially regarding overtime, tips, and employer interest reporting. (irs.gov)
Use Digital Tools & Secure Authorizations
- Adopt the enhanced Tax Pro Account to manage client authorizations, monitor active CAFs, and withdraw outdated permissions.
- Ensure that employees who have access to sensitive client information are properly authorized and that authorization files are kept up-to-date. (irs.gov)
Best Practice Checklist
| Task | When to Do It | Reason |
|---|---|---|
| Audit client classification (employee vs self-employed) for tips/overtime | Early in 2026 or during year-end planning | To align with OBBB provisions on new deductions and reporting requirements |
| Review payroll provider processes | Before first payroll cycle of 2026 | So reports and forms reflect any legislative changes without delay |
| Track deadlines for ERC & any other former credit claims | Confirm filing dates (especially Jan 31, 2024 cut-off for ERC) | To avoid disallowed claims |
| Train staff on new IRS rules & forms | Q1 2026 | Many reporting changes and disclosures, including Trust/Estate or nonprofit work |
Example Case: Mid-Sized CPA Firm
Greenleaf Accounting has 30 employees and serves 200 self-employed clients. They adopt the enhanced Tax Pro Account, link their CAF with their EIN, and designate staff with specific access rights. For a client who performs tip-based hospitality work, Greenleaf ensures that the occupation qualifies, helps gather tip statements, and aligns Form W-2 filings. For another client who missed the ERC claim deadline, they document eligibility for other credits or adjustments (but don't pursue the 2021 ERC claim as it’s blocked by OBBB). The result: smoother audits, fewer rejected forms, and better client trust.
Final Word
This is a transformative period. Tax professionals are encouraged to stay updated on IRS guidance, use digital authorizations via Tax Pro Accounts, and carefully monitor deadlines imposed by OBBB. Doing so will strengthen compliance and client service in 2026 and beyond.