Tax Implications for Staking in Digital Asset Exchange Traded Funds (ETFs)
Tax Implications for Staking in Digital Asset Exchange Traded Funds (ETFs)
ExecutiveDirector's Corner
Aswemoveintotheheartoftaxseason,Iknowmanyofyouaredeepinclientwork,deadlines,andlongdays.Thisisthetimeof yearwhenyourexpertiseisinhighdemand andIwantyoutoknowthatMSATPisrightbesideyou
At the same time, Maryland’s Legislative Session is underway, and advocacy remains one of our top priorities Last year, we successfully fought back against the proposed 25% sales tax on services protecting practitioners and clients across the state WithMaryland’songoingbudgetchallenges,wearestayingproactiveandvigilant
IencourageyoutovisitourLegislativeTrackingpagetoseeexactlyhowweareadvocatingforyouthissession: �� https://msatp.org/advocating-for-you/
Asofnow,weare:
Monitoring86bills
Supporting7
Opposing8
Supporting1withamendments
Reviewing3additionalbills
We believe in transparency You deserve to see how your association is showing up for you in real time If you’re interested in volunteering to review bills or contribute to our advocacy efforts, please reach out to me at ghawkins@msatporg Practitioner insightstrengthenseveryconversationwehaveinAnnapolis.
You’ll also see that MSATP is entering a new chapter operationally We are transitioning to a fully remote model Outside of our in-person events, our staff will now work from their home offices full-time. This move allows us to operate more efficiently while reinvestingresourcesdirectlyintomembervalue
Youcanstillreachusat(800)922-9672,andournewmailingaddressis:
MarylandSocietyofAccountingandTaxProfessionals 8865StanfordBlvd,Suite#202 Columbia,MD21045
This shift to a virtual structure is helping us accelerate something many of you have asked for a comprehensive, on-demand learningmanagementsystem Weexpecttolaunchouron-demandeducationlibraryinMay2026 Memberswillbeableto: Purchasecoursesandaccessthemanytime Completelearningontheirownschedule
Revisitcontentforupto12monthsafterpurchase
BuildCPEinawaythatfitsbothpracticeandlife
As you navigate deadlines, client questions, and everything that comes with tax season, I hope you feel supported, confident, and connected MSATP is advocating for you, building for the future, and strengthening the professional community that surroundsyou
Together,wecontinuetolearn,grow,andthrive
A POWERFUL ARGUMENT
ERC REFUND RECIPIENTS MUST PRESERVE
BY: PETER HAUKEBO, ESQ & ZACHARY LYDA, ESQ
Businesses that received Employee Retention Credit (“ERC” or the “Credit”) refunds that are now being examined by the IRS must preserve a sophisticated and powerful legal argument that strikes at the heart of the Service’s authority use its standard assessment power to reclaim the cash portion of your ERC refund This potential argument comes with a critical procedural catch: Because of a well-established judicial rule called the Variance Doctrine, taxpayers pursuing disallowed refund claims in court will likely lose the right to make this argument unless it is first raised during the administrative audit and appeal with the agency a step that, especially before the Independent Office of Appeals, may seem counterintuitive but is absolutely necessary
The Argument: Challenging the IRS’s Assessment Authority
ERC is unique because, for most eligible employers, it resulted in a cash refund because the amount of the Credit exceeded the payroll taxes owed And because of the challenging development of the program rules and dissemination of information about the same, many businesses had fully paid those taxes to the Service before claiming the Credit The amount ultimately refunded is considered the non-rebate portion of the Credit and when the IRS audits and disallows an ERC claim, it seeks to recover these funds by making an assessment, as if it were instead underpaid tax
Here is the central legal challenge: Does the Internal Revenue Code or other statute authorize the IRS to make this assessment? A strong legal argument can be made that no law allows for this action The authority the Service is relying on comes from its own regulations, not directly from a statute passed by Congress The argument, therefore, is that the IRS’s regulations are an overreach of its authority And with the Supreme Court’s decision in Loper Bright v Romando, it is more likely than ever that a court will determine that the Service overreached when it gave itself the ability to assess this Credit as unpaid tax
Essentially, the Service lacks authority under 26 U S C § 6201 to make the necessary assessment of tax to recapture the Credits already paid The Government generally, and the Service specifically, point to Section 2301(l) of the CARES Acts as authorizing it to make regulations relative to the Credit However, this Section of the Act only provided that the Treasury had authority to issue procedural guidance and regulations relative to the advance payments of the Credit This was a little used provision of the Act which allowed businesses to get payments of the Credit for wages they paid prior to filing the quarter’s Form 941 via Form 7200 Most claims for the Credit were, however, made after the end of quarter by filing either an original Form 941 of Form 941X Later in the Taxpayer Certainty and Disaster Tax Relief Act, and codified at 26 U S C § 3134(m), Congress gave the Treasury the authority to make regulations to prevent the “ avoidance of the purposes of the limitations under this section ” ; however, again, this was a very narrowly tailored provision that does not give the Treasury the latitude it now claims
Therefore, the regulations ultimately promulgated at 26 C F R § 31 3111-6 granting the Service authority to assess Credits paid as a tax, which base their authority in Section 2301(I), are an extreme overreach of the Treasury’s authority Furthermore, the general authority of the Treasury to make regulations under 26 U S C § 7805(a), cannot support these regulations either If it did, that provision of the Code would essentially allow the Treasury to, by regulation, create its own system of taxation That reading is neither supported by the law nor court precedents In essence, the government decided it would be too hard to use the tools Congress gave it, for example through erroneous refund suits, and instead puts the burden back on the taxpayer to prove that they really do deserve the refund they already received
The Procedural Dilemma and the Trail King Warning
If taxpayers under audit want to be able to make this argument, they must first present it to the agency, including Appeals This may seem counterintuitive because Appeals Officers are not permitted by treasury regulations from considering the argument that regulations are not valid and so taxpayers are almost certainly going to be ignored See 26 C F R § 301 7803-2(c)(19)
So why make the argument? Because the courts demand it A recent case, Trail King Industries, Inc v United States, No 4:24-cv-04164-RAL, 2025 WL 2084112, (D S D Jul 24, 2025), serves as a stark warning In that case, the court refused to even consider the taxpayer's challenge to the validity of a regulation because the taxpayer had not included that specific challenge in its initial administrative claim
The court ruled that the Variance Doctrine barred the argument, effectively foreclosing on the taxpayer's most creative line of attack The court indicated that the variance doctrine is a judicially created bar and whether treasury regulations allow for the IRS to consider an argument does not affect judicially created doctrines
How to Protect This High-Stakes Argument
The lesson from Trail King is clear: To preserve the right to challenge the IRS's assessment authority in front of a judge who can adjudicate the issue, taxpayer’s must first present the argument to the Independent Office of Appeals, or in a subsequent claim for refund, even if it is a literal exercise in futility
This is a complex, in-the-weeds legal argument that requires careful execution If you are facing an ERC audit after having received a refund, it is imperative to consult tax counsel who understands both the nuances of the Credit and the sometimes unforgiving rules of tax litigation Including this argument in your protest, or claim for refund, is a critical defensive step to ensure all your legal options remain available down the road
Tax Implications
On November 10, 2025, the Internal Revenue Commissioner (the Commissioner”) issued Revenue Procedure 2025-31, outlining a new safe harbor for Exchange Traded Funds (ETFs) or investment trusts, engaged in digital asset staking This guidance addresses a critical uncertainty for the growing crypto-ETF market: whether crypto staking activities constitute a business activity that would disqualify an ETF from being treated as an “ investment trust under § 3017701-4(c) and as [a] grantor trust ” for tax purposes
Regulatory Background: Digital Assets and the IRS
Since the Tax Cuts and Jobs Act (TCJA) of 2017, the tax code provides a statutory definition for “digital assets, ” set forth in IRC 6045(g)(3)(D):
Except as otherwise provided by the Secretary, the term “digital asset ” means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary
The Internal Revenue has dealt with digital assets since an IRS Notice in 2014 that outlined how digital assets are taxed The Notice referred to digital assets as “convertible virtual currencies, ” and treated them like capital assets (property), subject to capital gains tax Since then, there have been over a dozen pieces of IRS guidance published on digital assets, including guidance on the taxability of staking rewards and airdrops, and whether a hard fork is a taxable event However, due to the recently developing space for crypto ETFs and crypto staking, there became a need for additional tax guidance for crypto ETFs engaged in staking
Crypto ETFs
ETFs are like mutual funds which compose a basket of underlying investments, stocks, bonds, or commodities listed on national exchanges (such as the NYSE or Nasdaq) for investors to buy and sell as a single investment product An example is the “$SPY” ETF which is composed of the same underlying stocks that make up the entire S&P 500 index This ETF tracks the S&P 500 index and allows investors to gain exposure to all 500 stocks via the index in one seemingly diversified product, the $SPY ETF
In 2024, wall street and financial regulators began increasingly adopting digital asset products into traditional finance markets, primarily by listing ETFs on national exchanges that hold digital assets
Historically, entities such as Grayscale, a subsidiary of the Digital Currency Group, created ETF-like products called “Trusts” These traded like spot crypto ETFs but were not structured the same way Primarily, because they lacked the ETF creation and redemption mechanism They also did not have to register as investment companies under the Investment Company Act of 1940, since they were not dealing in securities
A good comparison is the gold ETF: $GLD, which is a commodity ETF that holds primarily all of its underlying assets in physical gold Typical ETFs are structured in a way that the investors may redeem shares in the ETF for the underlying investments on demand At the same time, the ETF issuer may create or redeem shares to track the index appropriately
However, since crypto was in a murky regulatory category, most ETF issuers were not comfortable with or outright banned from allowing in-kind redemptions of crypto ETFs For instance, you could not redeem your Bitcoin ETF shares for actual Bitcoin (unlike other ETFs)
Even after Grayscale won a lawsuit against the SEC in 2023, in-kind redemptions were still not allowed, instead they could only redeem shares for cash However, this changed in July 2025, when the Securities Exchange Commission (“SEC”) issued a rule allowing in-kind redemptions for crypto ETFs that directly held Bitcoin and Ether The SEC is the primary capital market regulator in the United States
In late 2024, the first crypto ETFs outside bitcoin and ethereum started receiving approval by the SEC after Federal courts settled disputes over whether certain cryptocurrencies were considered securities and how to regulate crypto ETFs This was largely thanks to Grayscales win in 2023 Prior to that, the courts had determined only with respect to Bitcoin (and later ether) that it was not a security These cases ushered in the first true crypto ETFs that owned the underlying digital assets outright and which investors could redeem for shares
By 2025, with a massive shift in regulatory views from the Trump Administration, you started to see a flood of new spot crypto and crypto ETFs, beyond just bitcoin and ether All of these spot crypto ETFs were structured as grantor trusts, like spot precious metals ETFs, such as $GLD
The Investment Trust Problem ETFs are unique entities that operate similar to mutual funds For tax purposes they are generally treated as investment trusts, under Treasury Regulation § 3017701-4(c) One requirement to be
an investment trust is that the trust must not operate a business or engage in investment activity beyond the holding of investments for investors
The regulation states, “An investment trust with a single class of ownership interests, representing undivided beneficial interests in the assets of the trust, will be classified as a trust if there is no power under the trust agreement to vary the investment of the certificate holders”
Virtually all crypto ETFs registered with the SEC since 2022 were formed under the auspices of a commodity-based trust (investment trust), or a grantor trust This allowed them to register with the SEC under the Securities Act of 1933, NOT the Investment Company Act of 1940, which nearly all other equity and bond ETFs must register under
However, with the influx of crypto based ETFs a new problem began to emerge Unlike gold, which is a non-income producing asset, many cryptos are native to proof-of-stake protocols which allow income generation by the stakers, or holders of the crypto asset This raises the question whether a crypto ETF may engage in staking activities with its underlying crypto
Staking
Rev Proc 2025-31 addresses this issue that spot crypto ETF issuers run into holding certain digital assets in a grantor trust: staking
Staking is the process by which an asset holder locks up a certain amount of the underlying crypto product to participate in the network’s consensus mechanism, earning passive yield in return
For instance, if you wanted to earn passive yield on your Ethereum holdings, you could “stake” your Ether (30 ETH is required, unless you pool or use a custodian), meaning your Ether is not available for sale or transfer, but it is locked up on the Ethereum blockchain and provides the necessary validation functions that every blockchain requires to verify, process and store transactions You are paid a variable yield (based on transaction volume and number of validators) for staking, that represents the fees paid by people using the blockchain
When a Trust “stakes” their crypto (eg, Ether), the assets are locked on the blockchain (eg, Ethereum) and the Trust or ETF earns a passive yield separate from the change in price of the underlying crypto asset However, this activity is different than merely holding the asset and earning dividends, since you are actively doing something with (locking up) the underlying asset to earn a passive yield
The tax problem addressed by the IRS’s recent revenue procedure is whether this activity violates the investment trust ” status of these crypto ETF grantor trusts by varying the investment
An investment trust enjoys the tax advantage of being a pass-through entity Thus, the gains and losses from the ETFs transactions of buying and selling the underlying investment and trust administrative expenses are passed through to the ETF investors, not the ETF itself or the issuer
If the investment trust status were lost because staking was viewed as a “ power to vary the investment ” or a business activity, the ETF issuer could be liable for paying income tax on the gains of the funds and the investors on the distributions treated as dividends More importantly, it could lose its gray area legal structure as a grantor trust, which essentially exempts the ETF from registering with the SEC under the Investment Company Act or the Commodity Exchange Act
Tax codes and regulations do not define the implications of staking digital assets in an investment trust
As part of this shift, during 2025, the SEC’s Division of Corporation Finance issued over a half-dozen Staff Statements outlining the Commissions view on crypto and related activities One of these activities was protocol staking Simultaneously, there was an increasing push towards “traditionalizing” crypto investing This primarily took shape after crypto products beyond bitcoin and Ethereum were allowed to trade as ETFs
This brings us to the current environment This year crypto-related ETFs accounted for the largest class of new ETF listings, with over 155 new crypto ETF filings with the SEC as of November 2025
Now, the question of staking became central as over 90% of cryptos today operate on a proof-ofstake protocol that requires staking and pays staking rewards
So, the IRS issued Rev Proc 2025-31
Revenue Procedure 2025-31
The tax problem addressed by the IRS’s recent revenue procedure arises when these ETFs want to engage in staking which is arguably an activity separate from holding an investment
As a result, the Commissioner issued Rev Proc 2025-31 to provide a safe harbor for these types of crypto ETFs, allowing them to engage in staking activity without losing their investment trust status Being an investment trust is critical for these crypto ETF issuers and losing status could jeopardize their tax structure and registration under applicable securities laws
The new revenue procedure sets forth a conjunctive 1`4-part test that must be satisfied for the safe harbor to apply, as well as a 9-month grace period for crypto ETFs to change their ETF registrations to comply with the new safe harbor
While the full revenue procedure details every requirement, the core requirements include the following:
Regulatory Compliance: The trust must comply with the SEC’s rules and regulations
Single Asset Type: The trust must hold only one type of digital asset
Delegation to Third Parties: The trust must not act as a validator node itself Instead, it must direct its staking activities through a custodian to a staking provider (a third-party validator node operator)
Arm’s Length Terms: The arrangement with the staking provider must be an arm ’ s length transaction
No Active Management: The trust is prohibited from using staking to take advantage of market variations (ie, it cannot switch staking strategies to “ time ” the market or maximize yield based on daily fluctuations)
No Control: The trust must have no legal right or arrangement to direct, participate in, or control the specific activities of the staking provider
Staking Requirement: The trust is generally required to stake all of its tokens, with exceptions allowed for maintaining a liquidity reserve to facilitate redemptions by trust interest holders
The guidance ensures that if compliant, the activity of staking crypto held in a grantor trust does not constitute an activity outside the investment of the underlying crypto This makes logical sense for the same reason a stock ETF does not lose its status because it pays a dividend However, market regulators treat stock ETFs differently than commodity ETFs, which typically do not generate income
The category of crypto ETFs is unique in that it does not require outside activity other than holding the investment to generate income, as if gold paid you a dividend just for owning it
As a result of Rev Proc 2025-31, many crypto ETFs will amend their registrations to comply with the safe harbor and begin engaging in staking activities However, it is not a get out of jail free card for everyone In fact, Grayscale filed its LINK ETF registration statement shortly after the IRS’ guidance raising this concern Although the guidance was not directly referenced, it did reference the SEC’s statements and concluded that LINK may not be eligible for staking based on the guidelines for certain protocols outlined by the SEC as covered crypto activities LINK is not a native blockchain token but rather the token for an Ethereum-based protocol that utilizes ERC-677 Thus, the SEC’s statement on staking activities may not cover LINK’s staking
activities And, since Rev Proc 2025-31 relies heavily on the SEC’s definition of staking activities, it may not apply to a LINK ETF, or other similar types of cryptocurrency ETFs
Whether parsing the IRS’ guidance will be so nuanced is still in question The staking rewards associated with different protocols varies Additionally, there is still no legislation or regulation from the CFTC or SEC related to crypto or crypto activities and allowing IRS guidance to act as a substitute is dangerous Some clarity is still required
A digital asset market structure bill called “The Clarity Act,” passed the House in 2025, and is currently under review in the Senate
5 Rev Rul 2023-14, https://wwwirsgov/pub/irs-drop/rr-2314pdf
6 Grayscale Investments, LLC v SEC, No 22-1142 (DC Cir 2023) https://casesjustiacom/federal/appellatecourts/cadc/22-1142/22-1142-2023-08-29pdf
7 Commodity Futures Trading Commn v My Big Coin Pay, Inc, 334 F Supp 3d 492 (D Mass 2018) https://wwwcftcgov/sites/default/files/201810/enfmybigcoinpayincmemorandum092618 0pdf
8 Sec & Exch Comm'n v Ripple Labs et al Case No 1:20cv-10832 (SDNY 2023) https://wwwnysduscourtsgov/sites/default/files/202307/SEC%20vs%20Ripple%207-13-23pdf
9 Internal Rev Serv, Digital assets, IRSgov, https://wwwirsgov/filing/digital-assets
10 SPDR ETFS: BASICS OF PRODUCT STRUCTURE, SEC Filing (July 30, 2014) https://wwwsecgov/Archives/edgar/data/1222333/0001193 12514287007/d766507dfwphtm
11 Jesse Benjamin, Virtual currency grantor trusts and ETFs: Tax compliance, The Tax Advisor (September 2022), https://wwwthetaxadvisercom/issues/2022/sep/virtualcurrency-grantor-trusts-etfs-tax-compliance/
DELAWARE EXPANDS LIABILITY FOR GENERAL CONTRACTORS
in Worker Misclassification Cases
Recent amendments to Delaware’s Workplace Fraud Act (WFA) significantly increase the exposure of general contractors operating in the construction industry
The updated statute now extends liability beyond a contractors own actions, reaching the classification decisions of their subcontractors
For construction businesses in Delaware, this development represents a meaningful shift in compliance risk
Background: The Workplace Fraud Act
The WFA prohibits employers in the construction services industry from misclassifying workers as independent contractors when, in reality, an employer-employee relationship exists
The purpose of the law is straightforward: prevent businesses from avoiding obligations tied to employment, including:
Income tax withholding
Unemployment insurance contributions
Compliance with wage and hour laws
Workers compensation coverage
Violations can carry steep penalties Under the WFA, consequences may include:
Civil penalties up to $20,000 per violation
Wage restitution
Debarment from public contracts for three years (for repeat violators)
Each instance of misclassification is treated as a separate violation, which means exposure can multiply quickly
What Changed Under the Amendments?
The most significant change is this:
General contractors are now responsible not only for their own worker classification decisions, but also for misclassification committed by their subcontractors
The amendments impose joint and several liability for penalties resulting from a subcontractor’s violation While general contractors are not subject to debarment for a subcontractor’s misconduct, they can still face substantial financial penalties
This expansion creates a new compliance dynamic in the industry General contractors who historically took a hands-off approach to subcontractor workforce decisions may now face direct financial consequences if those subcontractors misclassify workers
Why This Matters
Misclassification risk is rarely isolated to one worker If a subcontractor misclassifies multiple individuals, penalties can escalate rapidly
For example:
Multiple workers × multiple pay periods × perviolation penalties
Potential wage restitution
Reputational and operational impact
The amended WFA effectively places general contractors in a risk-monitoring role, even if they do not directly control the subcontractor’s workforce
Practical Steps for General Contractors
In light of the amendments, Delaware general contractors should reassess their compliance strategies Consider the following proactive measures:
1. Strengthen Due Diligence
Evaluate subcontractors’ classification practices before engagement Request documentation supporting independent contractor determinations
2. Update Contract Language
Agreements with subcontractors should address: Representations regarding proper worker classification
Indemnification provisions
Audit rights
Insurance requirements
3. Implement Monitoring Protocols
Periodic compliance reviews may help mitigate exposure
A purely hands-off approach now carries greater risk
4 Educate Internal Teams
Project managers and contract administrators should understand the expanded liability landscape and escalate concerns when red flags arise
Broader Implications
The amendments reflect a growing regulatory trend: holding upstream parties accountable for downstream labor practices Delaware’s approach aligns with broader enforcement efforts nationwide targeting worker misclassification in construction and other industries
For general contractors, this shift underscores an important reality:
Risk management now extends beyond your payroll it includes your subcontractors’ payroll practices as well
Bottom Line
Delaware’s amended Workplace Fraud Act significantly increases liability exposure for general contractors in the construction industry The expanded joint liability framework means classification compliance can no longer be treated as solely the subcontractor’s responsibility
HERE FOR YOU WHEN LIFE HAPPENS
TheMSATPAssistanceCommittee
In our profession we pride ourselves on stability, reliability, and the trust we build with every client we serve But even the most dedicated tax and accounting professionals face moments when life takes an unexpected turn Illness, medical emergencies, family crises, and other life events can happen without warning and when they do, the last thing you should worry about is who will step in to support your clients
That s where the MSATP Assistance Committee comes in
This committee exists for one purpose: to support our members and the families of our members when they need it most
A Safety Net You Can Count On
The Assistance Committee is made up of MSATP volunteers who graciously offer their time and expertise to help manage client work when a member cannot These volunteers step in temporarily to ensure:
Client deadlines are met or extended
Returns and filings stay on track
Communication continues seamlessly
Your practice maintains stability during your absence
Whether the situation is a surgery, a hospitalization, a family emergency, or any unexpected hardship, the committee is here to prevent clients from being left without guidance
This service isn’t just practical it reflects the true spirit of MSATP We re more than a professional association; we are a community that shows up for one another
For Members’ Families: You Are Not Alone
If you are a family member of an MSATP member navigating a difficult situation, please know you dont have to carry the burden alone During moments when a practitioner cannot work or respond to clients, simply reach out to us confidentially and without hesitation
MSATP will coordinate with our volunteer network to ensure your loved one s clients are supported
This allows families to focus on what truly matters: care recovery, and well-being
For Members: Keep This Note Handy
Life is unpredictable If an emergency ever prevents you from working, please remember:
�� You can contact MSATP directly and we will match you with a volunteer who can step in to help with your client work
Whether for a week, a month, or a season, our volunteers will keep things moving until you are able to return
Many members choose to share this note with their spouse, partner, or trusted family member so they know exactly who to call in a time of need
A Community That Thrives Together
The Assistance Committee is a shining example of what makes MSATP special We dont just talk about community we live it When one of us faces a hardship others step forward When a member needs help, we rally
It s the kind of support system you cant find everywhere, but you ll always find it here
If you ever need assistance or if someone in your family needs support on your behalf please reach out We are here ready to help whenever life happens
Please call (800) 922-9672 or email info@msatp.org if you or a loved one needs assistance
FUEL YOUR FOCUS:
HONEY GARLIC SHRIMP FOR BUSY SEASON
Step-by-Step Instructions
1.Prep the Shrimp: Rinse under cold water and gently pat dry.
Busy season isn’t just about long hours and tight deadlines it’s also about keeping your energy up so you can stay sharp from first client call to final return filed A meal that’s fast to make, high in protein, and big on flavor can be a game-changer during back-to-back days in the office or while working from home.
This High-Protein Honey Garlic Shrimp hits the mark with tender shrimp glazed in a savory-sweet sauce you can have on the table in about 25 minutes perfect for lunch between engagements or a satisfying dinner once you close the laptop.
�� Why This Recipe Works for Tax Professionals
Quick Prep & Cook: Ready in under 30 minutes excellent for those pockets of time between calls or late-night work sessions.
Protein-Rich: Shrimp is naturally high in protein, keeping you full and fueling focus without feeling heavy
Simple Ingredients: Most pantry staples and a quick grocery run can get you everything you need.
Versatile & Balanced: Serve it over rice, quinoa, or greens or pair with a salad for extra nutrients.
Ingredients (Serves ~4)
1 pound large shrimp, peeled and deveined ¼ cup honey
4 cloves garlic, minced
2 tablespoons soy sauce
1 tablespoon olive oil
1 teaspoon cornstarch (optional, for a thicker sauce)
Salt and pepper, to taste
Optional garnishes: sliced green onions, sesame seeds
2.Mix the Sauce: In a small bowl, whisk together honey, garlic, soy sauce, and olive oil (add cornstarch if you want a thicker glaze)
3.Cook: Heat a skillet over medium-high, add a little olive oil, then the shrimp in a single layer. Season with salt and pepper Cook until they just start to turn pink (about 2–3 minutes)
4.Add Sauce: Pour the honey-garlic mix over the shrimp and toss to coat evenly. Let it simmer another 3–5 minutes until fully cooked and the sauce thickens
5 Serve Warm: Garnish with green onions or sesame seeds if you like.
Payroll,
and the Hidden Stress Load on Small Firms
AboutJonathan
Jonathan Pocius is a small business champion and HR/payroll strategist with over 15 years of experience helping employers build compliant, people-first operations He is the CEO and founder of PeopleWorX, a workforce solutions firm grounded in onesimpleprinciple:PeopleMatter
Jonathan’s perspective blends compliance know-how with a deepunderstandingofwhatmakesbusinessestick,theirpeople. Hiscompanyhelpssmallandmidsizebusinessescreatestronger onboarding processes, avoid costly payroll mistakes, and turn workforcemanagementintoastrategicadvantage
The 90-Day Clock:
For tax professionals, the statutory notice of deficiency is a familiar but unforgiving document Once the IRS mails a valid notice of deficiency, the taxpayer generally has 90 days (150 days if the notice is addressed to a person outside the United States) to petition the U S Tax Court If the petition arrives even one day late and no exception applies, the court will dismiss the case, and the taxpayer loses the chance to be heard
During my work in the University of Baltimore Low-Income Taxpayer Clinic, I learned just how easy it is for that deadline to go wrong One client received a notice of deficiency that clearly listed a response deadline of October 9th When I counted 90 days from the notice date myself, I landed on October 6th.
On paper, the IRS had given the taxpayer three extra days That extra time would save them if they filed by October 9th, but the mismatch shows how fragile these timelines are, especially for people who do not have representation and may not file until it is already too late
The “last day to petition” and what it really means
Congress knows that most people are not counting days on a calendar In 1998, it amended I R C § 6213(a) in the Internal Revenue Service Restructuring and Reform Act to require the IRS to print the “last day” to petition on each notice of deficiency and to treat any petition filed by that printed date as timely The idea was simple: taxpayers should be able to rely on the date on the notice instead of doing their own deadline math
The IRS followed suit in its own guidance The Internal Revenue Manual (I R M ) explains that an incorrect “last day to file petition with the U S Tax Court” does not invalidate the notice Instead, Tax Court jurisdiction turns on the 90th (or 150th) day after the notice is mailed or, if later, the last day printed on the notice
In practice, that rule protects taxpayers when the IRS gives too much time If the Code says the 90day deadline falls on October 6th, but the notice says October 9th, a petition filed on October 9th is still timely At the Clinic, we don’t assume the printed date is right We always count forward 90 days from the mailing date and compare it to the “last day to petition” on the notice When those dates do not match, we treat it as a red flag and talk with the client about filing as early as possible
Isthe90-daydeadline“jurisdictional”?
“Taxpayers should be able to rely on the date on the notice instead of doing their own deadline math.”
For years, the Tax Court and most courts of appeals treated the 90day deadline as a strict jurisdictional rule If the petition was late, the court said it had no power to hear the case, no matter how compelling the reason
In Hallmark Research Collective v Commissioner, decided shortly after the Supreme Court’s decision in Boechler, the Tax Court held that § 6213(a)’s deadline is jurisdictional and not subject to equitable tolling
Things started to shift with Culp v Commissioner There, the Third Circuit held that the 90-day period in § 6213(a) is a claims-processing rule, not a jurisdictional bar, and that equitable tolling can apply Commentators and the National Taxpayer Advocate have noted that many Tax Court cases are dismissed each year as untimely, so Culp has the potential to open the courthouse doors for taxpayers who missed the deadline for reasons outside their control
Legislative Developments
The Tax Court Improvement Act (H R 5349) aims to make the rules consistent and fair According to the Joint Committee on Taxation, the bill would explicitly allow the Tax Court to apply equitable tolling to the 90- day deadline in § 6213(a), no matter where the taxpayer lives or which circuit would hear the appeal It would also amend § 7459(d) so that if the court dismisses a case solely because equitable tolling does not apply, that dismissal would not count as a decision on the deficiency. The taxpayer could still choose to pay and pursue a refund in another court
A recent tax-policy update notes that on October 3rd, 2025, the House Ways and Means Committee unanimously reported H R 5349 out of committee The same update explains that the bill would “amend Tax Code section 6213(a) to permit the Tax Court to apply equitable tolling in deficiency cases ” and adjust § 7459(d) so taxpayers denied equitable tolling can still seek a refund in district court or the Court of Federal Claims
Updated Litigation and Legislative Developments (January 2026): Since this article was first written, the House of Representatives passed H.R. 5349, the Tax Court Improvement Act, by voice vote on December 1, 2025, sending the bill to the Senate for consideration The bill would expressly authorize the Tax Court to toll or extend deadlines for filing deficiency petitions under I R C § 6213(a) on equitable grounds and prevent dismissals based solely on equitable tolling denial from constituting a decision on the deficiency
In addition, two appellate courts of appeals have adopted the position that the § 6213(a) 90-day deadline is nonjurisdictional and subject to equitable tolling In Buller v Commissioner, the U S Court of Appeals for the Second Circuit held that § 6213(a)’s filing deadline is a nonjurisdictional claimprocessing rule subject to equitable tolling and remanded to the Tax Court to consider tolling In Oquendo v Commissioner, the Sixth Circuit likewise concluded that the 90-day deadline is a claims-processing rule that can be equitably tolled, reversing the Tax Court’s jurisdictional dismissal and remanding for further proceedings
As a result of these holdings and the Third Circuit’s earlier decision in Culp v Commissioner, the Tax Court, in many circuits, continues to dismiss late-filed petitions as jurisdictional Until Congress enacts reform clarifying equitable tolling and the jurisdictional question, this circuit split remains unresolved
What taxpayers and practitioners should do right now
Until Congress enacts reform, taxpayers and practitioners should continue treating the 90-day rule as a hard deadline
1 Recheck the date Do not rely solely on the date printed on the notice. Independently count 90 (or 150) days from the notice date under § 6213(a) Calendar both dates If they differ, treat the earlier one as the real danger point, even though the statute lets you rely on the later printed date
2 Educate clients and community members Lowincome and unrepresented taxpayers often assume that the government-printed date is both correct and flexible The National Taxpayer Advocate has stressed that a timely petition is what gives the Tax Court jurisdiction in the first place and has urged Congress to clarify that equitable tolling applies in deficiency cases
In the end without any action from Congress, the lesson is simple: Always check the deadline yourself Don’t rely solely on what’s printed on the notice Because if that date is wrong the IRS doesn’t bear the cost – you do.
DemocracyinMaryland
Short of running for office, we can reach out to our elected officials and offer insights on the matters that affect us.
limited budget with imperfect information and not enough time Their successes are little acknowledged and their failures are broadcast far and wide It is thankless work
In this context then, they would appreciate our participation in our government.
As an example, Senator Clarence Lam once considered legislation to decouple Maryland from the federal government’s extension of 529 distributions being used for primary and secondary education I provided background information as to how such a law would need to be complied with It would essentially require any school in our state to issue some version of a 1098-T so that the state could match that with the corresponding 1099-Q I don’t believe that legislation went anywhere – or more accurately, this initiative was deprioritized Regardless, it was important that a member of our government took the time to listen to the insight of someone that would have to comply with that proposed bill
WELCOMING OUR NEW MEMBERS
SINCE JULY 2025
Please join us in warmly welcoming the newest members of our community who have joined since July 2025. Each of you brings unique experience, perspective, and talent to our profession, and we are excited to have you as part of our growing network
WELCOMING OUR NEW MEMBERS
SINCE JULY 2025
We’re excited to invite you to be part of our Circle discussion community a space created for Maryland accounting and tax professionals to connect, share insights, ask questions, and support one another year-round
Whether you’re looking for practical tips, want to discuss industry changes, or just want to connect with peers who “get it,” this is your place We believe in building an inclusive, collaborative community where every voice adds value
➡ Join here: https://mds-community-for-accounting-and-tax-pros circle so/join?
invitation token=270c913ae72db1b7c627646cf1a56c694a13b3e1-58fec786-8414-4fe3-b7fc-1ac0a9814b28
We can’t wait to see you there and hear what’s on your mind!
Member Benefits Spotlight
Verifyle
FREE access to Verifyle Platinum If you haven't done so already, it’s time to safeguard your client’s information and enhance your practice’s efficiency Verifyle Platinum is an ultra-secure document storage and communication platform designed with professionals like you in mind It offers a space to share, store, and communicate securely.
Earmark CPE
With Earmark's Unlimited Subscription, members can enjoy unlimited free CPE courses every week, an ad-free experience within the app, and the option to skip sponsor messages during registration for sponsored courses It's a game-changer for professionals in small firms, providing a convenient and affordable education
As a NASBA-approved CPE sponsor and IRS-approved CE provider, Earmark offers a vast range of courses covering accounting, tax, technology, fraud detection, personal development, practice management, and more Our CPAs, CMAs, and EAs can now meet their continuing education requirements simply by tuning in to insightful podcasts We're particularly excited about the exclusive Federal Tax Updates podcast, which provides biweekly federal tax news and analysis.
CCH TaxAware
Quickly and easily get answers to all your federal and state tax questions in one place! Don’t waste time searching various resources for crucial news and information that you need quickly
Housed on the powerhouse platform, CCH® IntelliConnect®, the Wolters Kluwer TaxAware Center has all the state and federal tax news, information, and tools necessary for today’s tax professionals
Blue J
Blue J is a cutting-edge software platform that specializes in tax research and predictive analytics, using artificial intelligence (AI) to streamline complex tax decision-making It helps tax professionals, including solo practitioners and small firms, save time by automating research tasks and offering predictive insights based on the latest tax laws and case rulings
