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Tag: taxes

  • Consumer confidence slides in December to lowest level since US tariffs rolled out

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    WASHINGTON — Consumers confidence in the economy was shaken in December as Americans grow anxious about high prices and the impact of President Donald Trump’s sweeping tariffs.

    The Conference Board said Tuesday that its consumer confidence index fell 3.8 points to 89.1 in December from November’s upwardly revised reading of 92.9. That is close to the 85.7 reading from April, when Trump rolled out his import taxes on U.S. trading partners.

    A measure of Americans’ short-term expectations for their income, business conditions and the job market remained stable at 70.7, but still well below 80, the marker that can signal a recession ahead. It was the 11th consecutive month that reading has come in under 80.

    Consumers’ assessments of their current economic situation tumbled 9.5 points to 116.8.

    Write-in responses to the survey showed that prices and inflation remained consumers’ biggest concern, along with tariffs, despite repeated claims by President Trump that inflation is a hoax.

    Perceptions of the job market also declined this month.

    The conference board’s survey reported that 26.7% of consumers said jobs were “plentiful,” down from 28.2% in November. Also, 20.8% of consumers said jobs were “hard to get,” up from 20.1% last month.

    Last week, the government reported that the U.S. economy gained a healthy 64,000 jobs in November but lost 105,000 in October. Notably, the unemployment rate rose to 4.6% last month, the highest since 2021.

    The country’s labor market has been stuck in a “low hire, low fire” state, economists say, as businesses stand pat due to uncertainty over Trump’s tariffs and the lingering effects of elevated interest rates. Since March, job creation has fallen to an average 35,000 a month, compared to 71,000 in the year ended in March. Fed Chair Jerome Powell said recently that he suspects those numbers will be revised even lower.

    Despite the broad pessimism, the proportion of those surveyed who think a recession in the next year is is unlikely grew.

    The December survey showed that respondents’ views of their family’s current financial situation sank into negative territory for the first time in close to four years. On the flip side, expectations about their future financial situation were the most positive since January.

    Also Tuesday, the government reported that the economy expanded at a 4.3% annual rate in the third quarter, though economists expect a much more sluggish fourth quarter.

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  • Regulators Approve DTE Contracts for Michigan’s First Hyperscale Data Center

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    Despite criticism that they were acting too fast, state utility regulators on Thursday approved DTE Energy’s proposal to supply power for Michigan’s first hyperscale data center — while tacking on a host of conditions that aim to protect ratepayers from subsidizing the facility.

    The approval, made over shouts of disapproval from onlookers gathered in a Lansing conference room, drew cheers from business interests and ire from skeptics who had called for a deeper public review of the 19-year deal.

    Defending the decision, Michigan Public Service Commission Chair Dan Scripps told the gathered crowd that after reviewing them in detail, “I would put the contracts that are in front of us today on par or better with any that have been approved in the country.”

    He and other commissioners said they had concluded the deal would save ratepayers money and would not sacrifice energy reliability.

    But a wave of public speakers lined up to condemn the vote, raising concerns about lost farmland and habitat, rising power rates, climate pollution from fossil fuels used to power the facilities and additional pollution from the water used to cool servers.

    “We won’t be happy, I suppose, until the Great Lakes run dry, until the farmlands all are gone, until all the air is polluted, said Tim Bruneau, a Saline Township resident who has vocally opposed the 1.4-gigawatt facility planned by tech firms Oracle, OpenAI and Related Digital.

    “And guess what happens when that happens? We’re extinct.”

    The decision paves the way for tech firms OpenAI, Oracle and Related Digital to team up on Michigan’s first hyperscale data center, a $7 billion Stargate facility where massive buildings full of computer servers will train artificial intelligence models on a 575-acre site south of Ann Arbor in Saline Township.

    In a statement, DTE spokesperson Ryan Lowry lauded the commission’s order, saying the contracts “protect our customers — including ensuring that there will be no stranded assets — while enabling Michigan’s growth.”

    Supporters of the project have hailed it as an economic development win for the state that will produce millions annually in taxes and 450 permanent jobs. Opponents contend that’s not a sufficient return, citing the risks that energy-hungry data centers could pose to Michigan’s environment and energy grid.

    The facilities are massive energy users — the Stargate project’s expected 1.4 gigawatts of demand is equivalent to that of a large American city.

    The commission’s decision came amid anxiety that residential ratepayers could wind up subsidizing the substations, poles, wires, battery storage facilities and other infrastructure needed to deliver all that power.

    But commissioners agreed with DTE’s conclusion that the deal with Oracle subsidiary Green Chile Ventures would actually save ratepayers $300 million annually, by tapping the tech firm to pay for battery storage and other costs to connect it to the grid.

    “That is a real cost savings at a time when affordability is so important,” said commissioner Katherine Peretick.

    The decision comes weeks after DTE filed a proposed contract with the MPSC, asking regulators to quickly approve the terms without a public hearing. Such ex-parte decisions are allowed when a contract won’t affect other utility customers’ rates

    But Attorney General Dana Nessel and other skeptics of the deal had called for a deeper review, contending that the publicly visible version of DTE’s proposed deal was so heavily redacted, it was impossible to vet DTE’s claims of affordability.

    Commissioners tacked on a host of conditions to their approval, giving DTE 30 days to agree to them. Among the most significant, DTE must agree to absorb the financial hit if, for whatever reason, the projected $300 million cost savings fails to materialize.

    “If the affordability analysis turns out to be overly optimistic for any reason, DTE bears the responsibility of any extra costs,” Peretick said.

    Other requirements include:

      1. In the event of an electricity shortage, the data center must be curtailed before other electric customers.

      2. DTE must file a host of documents showing how it will pay for data center related costs without subsidies from other customers. That includes renewable energy that, under Michigan’s clean energy law, must eventually be installed to serve the facility.

      3. Within 90 days, DTE must file an application for a standard rate structure applying to major power users like hyperscale data centers, which would eliminate the need for one-off contract requests like the one DTE filed for the Stargate project.

      4. DTE must file quarterly reports tracking the data center’s power demand and an annual report assessing Green Chile’s finances.

    Scripps said the contract terms and additional conditions set by commissioners “led us to believe that we could meet the standard of reasonableness and in the public interest.”

    The data center’s projected power demand would increase DTE’s electric load by 25%. DTE officials plan to absorb that surge without building new power plants. Instead, the utility will buy energy on the open market and get more use out of its existing power plants, including using them to charge the batteries during off-peak hours when other customers aren’t using much energy.

    DTE has told investors it aims to bring on as much as 8.4 gigawatts of total data center load in the coming years, a projection that would nearly double the utility’s total power demand.

    Consumers Energy, meanwhile, is projecting 2.65 gigawatts in new demand from data centers by 2035, a 35% increase in peak demand.

    Concerns that the utilities could pollute or overtax Michigan’s water and electricity systems have resulted in bipartisan pushback, including a new bill to repeal the recently enacted tax exemptions that have lured the industry to Michigan.

    Industry supporters, meanwhile, contend Michigan risks falling behind economically if it refuses to host the booming hyperscale industry. While data centers provide few jobs, they contend the facilities are the lynchpin of a broader tech economy in which Michigan is struggling to compete.

    “Michigan needs to decide if it wants to participate in the 21st Century economy, or rest on those who came before us and spend that wealth down,” said Detroit Regional Chamber President and CEO Sandy Baruah. He cast it as a race in which “Michigan already has ground to make up.”

    Since Gov. Gretchen Whitmer signed a 6% sales and use tax exemption that could save hyperscale facilities millions if not tens of millions annually, Michigan’s publicly announced hyperscale proposals have skyrocketed from zero to at least 15.

    Some localities have enacted moratoriums on data center development, looking to buy time to craft regulations governing noise, road setbacks and other concerns about the facilities. In Saline Township, meanwhile, a resident has filed a legal intervention seeking to block the Stargate project over allegations that township officials violated the Open Meetings Act when they approved a legal settlement that made way for the development.

    In addition to the utility contracts, developers need permits from the Michigan Department of Environment, Great Lakes and Energy to install diesel-powered backup generators and begin construction activities that would impact wetlands and the Saline River.

    This story was originally published by Bridge Michigan and distributed through a partnership with The Associated Press.

    Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

    Photos You Should See – December 2025

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  • China exploits US-funded research on nuclear technology, a congressional report says

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    WASHINGTON — China is exploiting partnerships with U.S. researchers funded by the Department of Energy to provide the Chinese military with access to sensitive nuclear technology and other innovations with economic and national security applications, according to a congressional report published Wednesday.

    The authors of the report say the U.S. must do more to protect high-tech research and ensure that the results of taxpayer-funded work don’t end up benefiting Beijing. They recommended several changes to better protect scientific research in the U.S., including new policies for the Department of Energy to use when deciding whether to fund work that involves Chinese partnerships.

    The investigation is part of a congressional push to raise a firewall blocking U.S. research from boosting China’s military buildup when the two countries are locked in a tech and arms rivalry that will shape the future global order.

    Investigators from the House Select Committee on the Chinese Communist Party and the House Committee on Education and the Workforce identified more than 4,300 academic papers published between June 2023 and June of this year that involved collaborations between DOE-funded scientists and Chinese researchers. About half of the papers involved Chinese researchers affiliated with China’s military or industrial base.

    Particularly concerning, investigators found that federal funds went to research collaborations with Chinese state-owned laboratories and universities that work directly for China’s military, including some listed in a Pentagon database of Chinese military companies with operations in the U.S. The report also detailed collaborations between U.S. researchers and groups blamed for cyberattacks as well as human rights abuses in China.

    The Energy Department routinely funds advanced research into nuclear energy and the development and disposal of nuclear weaponry, along with a long list of other high-tech fields like quantum computing, materials science and physics. It doles out hundreds of millions of dollars each year for research. The department oversees 17 national laboratories that have led the development in many technologies.

    The report followed a number of congressional investigations into federally funded research involving Chinese scientists and researchers. Last year, a report released by Republicans found that partnerships between U.S. and Chinese universities over the past decade had allowed hundreds of millions of dollars in federal funding to help Beijing develop critical technology that could help strengthen its military. Another investigation this year revealed that the Pentagon in a recent two-year period funded hundreds of projects in collaboration with Chinese entities linked to China’s defense industry.

    The Energy Department has failed for decades to take steps to ensure the research it funds doesn’t benefit China, the report’s authors found. They made several recommendations to tighten the rules, including a new standardized approach to assessing the national security risks of research, as well as requirements that the department share information about research ties with China with other U.S. government agencies to make it easier to spot problems.

    “These longstanding policy failures and inaction have left taxpayer-funded research vulnerable to exploitation by China’s defense research and industrial base and state-directed technology transfer activities,” the authors concluded.

    The Department of Energy did not immediately respond to questions about the report and its recommendations. A message seeking comment was left with the Chinese Embassy in Washington.

    Rep. John Moolenaar, a Michigan Republican who chairs the select committee, said in a statement that the “investigation reveals a deeply alarming problem: The Department of Energy failed to ensure the security of its research and it put American taxpayers on the hook for funding the military rise of our nation’s foremost adversary.”

    Moolenaar this year introduced legislation aimed at preventing research funding in science and technology and defense from going to collaborations or partnerships with “foreign adversary-controlled” entities that pose a national security risk.

    The legislation cleared the House but failed to advance to become part of the annual sweeping defense policy bill. It was met with strong opposition from scientists and researchers, who argued that the measures were too broad and could chill collaboration and undermine America’s competitive edge in science and technology.

    In an October letter, a group of more than 750 faculty members and senior staffers from American universities told congressional leaders overseeing the armed services that the U.S. is in a global competition for talent. They called for “very careful and targeted measures for risk management” to address security concerns.

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  • Hochul has extended higher taxes on wealthy individuals, corporations

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    Rep. Elise Stefanik began her campaign to unseat Gov. Kathy Hochul by claiming the Democratic incumbent has raised taxes. 

    Stefanik, a Republican, said in a Fox News interview that Hochul is “open to raising taxes, on top of the taxes she’s already raised for New Yorkers.” 

    Hochul says she will not raise personal income taxes in her next budget proposal, due in January, though she has not ruled out raising corporate taxes.

    We checked Stefanik’s claim that Hochul has raised taxes.  

    Since Hochul’s swearing in as governor in August 2021, she has proposed and negotiated budgets in 2022, 2023, 2024 and 2025. She frequently talks about maintaining the lowest middle-class personal income tax rate in 70 years in the state, and while we have rated a similar claim Mostly True, PolitiFact has covered the problems with comparing tax rates across decades.  

    Going into her first budget, she benefitted from tax increases on high-income earners and businesses that took effect in 2021, before she became governor. These increases led to strong tax collections in her first year in office.    

    There have been some tax increases during her tenure, and extensions of existing taxes, though many of these actions affect only certain tax filers, such as high income earners, some corporations, New York City businesses with large payrolls, and smokers. An extension of a tax dating back to the mid-1990s is broader, affecting people who purchase health insurance.    

    The budget enacted in April included one of the more significant tax increase extensions. A tax increase for the state’s highest earners that had been enacted as a temporary measure in 2021 was extended for five years. This affects married couples who file jointly with taxable incomes above $2.2 million. But this increase was paired with a counter measure for people in the lowest five tax brackets. Personal income tax rates went down for married couples earning $323,000 or less, according to an analysis from the Empire Center, a conservative think tank. 

    The 2023-24 budget also included an extension of an increase in the corporate franchise tax rate until 2027. Businesses with incomes of more than $5 million began paying 7.25% in 2021, and that rate was extended in the budget passed in 2023. The budget also increased the top rate of a tax that funds public transportation, known as the Metropolitan Commuter Transportation Mobility Tax.. This top rate increased for employers and self-employed workers in the five counties of New York City, and it was meant to fund operations for the Metropolitan Transit Authority, which saw steep declines in ridership during the pandemic. Employers and individuals in the seven other downstate counties contained in the Metropolitan Commuter Transportation District were not affected by the change.   

    In the budget passed in 2023, there was an extension of a tax on health insurance, known as Health Care Reform Act taxes. These taxes have been extended routinely since 1996, and add hundreds of dollars per year to the cost of health insurance for the average family, according to the Empire Center. This is the state’s third-largest revenue source after income and sales taxes.   

    In 2025, taxes that fund public transportation, known as the payroll mobility tax, went up by less than 1 percentage point on downstate companies with payrolls of more than $10 million, but went down for smaller employers and were eliminated for self-employed workers making $150,000 or less. Revenue was reinvested in the Metropolitan Transportation Authority.  

    There were much narrower tax changes too, such as a $1 increase in excise taxes on packs of cigarettes and little cigars in 2023, which only affect smokers. 

    In 2025, the state levied a tax on group health plans, known as the managed care tax, which the conservative Empire Center called “a tactic for exploiting Medicaid’s financing system.” The tax was intended to be revenue-neutral for managed care organizations, which receive other payments from the state, and were levied to draw in more federal revenue to the state. The federal government has told the state it must end the tax in March.  

    We approached Stefanik’s campaign for evidence of her claim, which provided some of the examples mentioned above.  

    Representatives from Hochul’s office maintain extensions of existing taxes are not tax increases, and that it’s standard for changes in the tax code to be subject to renewal.

    Hochul’s office said that it’s not correct to call the increased rates for high income earners enacted in 2021 under Gov. Andrew Cuomo “temporary.” However, in a review of the 2021-22 budget, the Office of the State Comptroller noted that the top rate will increase from 8.82% to as much as 10.9%: “The change will be in effect for tax years 2021 through 2027; in 2028 and thereafter, the rate will revert to 8.82 percent.” The 2027 expiration was also described in Cuomo’s budget materials at the time.

    E.J. McMahon, adjunct fellow at the conservative Manhattan Institute for Policy Research, called Hochul’s pre-emptive extension (it was passed in 2025 instead of 2027) “a tax increase by any standard.”

    “If she had done nothing, it would have ended two years from now,” McMahon said.  

    Hochul’s spokespeople also point to actions that reduced taxes on New Yorkers, including accelerating middle-class tax cuts to fully implement them in 2023 instead of 2025, and child tax credits for low- to moderate-income families. They also noted inflation refund checks for low- to moderate-income filers.  

    It’s a toll, not a tax, and therefore does not affect the rating of this claim, but we will note that perhaps the most controversial fee enacted during Hochul’s administration is congestion pricing, in which vehicles are charged for entering areas of Manhattan south of 60th Street. Hochul has praised the program, which took effect in January, for reducing congestion, increasing transit ridership and raising money for regional transit improvements.  

    Our ruling

    Hochul, backed by the State Legislature, has extended existing taxes for wealthy corporations and individuals, as well as health insurance companies. She has also cut taxes for the middle class. Other new increases, such as transit taxes on large businesses, were paired with cuts for smaller businesses. 

    Stefanik claimed Hochul has raised taxes on New Yorkers. That claim could lead every New Yorker to believe their taxes have gone up because of Hochul. But the new tax increases did not affect every New Yorker, and income taxes on the middle class went down. Extensions mostly affected select groups. A broad tax on health insurance was extended, but that has been in place since 1996. 

    This claim has some truth to it, but it lacks important context. We rate this Half True.  

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  • FACT FOCUS: Trump says tariffs can eventually replace federal income taxes. Experts disagree

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    President Donald Trump has long praised tariffs as key to increasing wealth in the United States, idealizing Gilded Age policies that preceded the implementation of a modern federal income tax.

    Among the potential benefits, Trump claims, is the ability to replace revenue from federal income taxes with money the U.S. is taking in from tariffs — a concept he has touted since his 2024 presidential campaign, most recently at a Cabinet meeting Tuesday.

    But tariff revenue doesn’t even come close to where it would need to be if federal income taxes were eliminated, and experts say such a plan isn’t at all feasible.

    Here’s a closer look at the facts.

    CLAIM: The U.S. is earning enough revenue from tariffs to eventually eliminate federal income taxes.

    THE FACTS: This is false. Individual income taxes brought in trillions more dollars than tariffs did in the last fiscal year, accounting for more than 50% of total U.S. revenue, according to Treasury Department data. Tariffs made up only 3.7% of the total. In the first month of the current fiscal year, which began Oct. 1, individual income taxes accounted for 54% of total revenue. Tariffs made up 7.75%.

    Trump’s proposal wouldn’t work regardless, according to experts, given the unreliability of tariff revenue as well as the harmful effects of tariffs on economic growth and their outsize impact on lower earners.

    “It’s not possible. It’s not feasible mathematically or economically,” said Brandon DeBot, senior attorney adviser and policy director at New York University’s Tax Law Center. “And analysts from a range of different perspectives agree with that conclusion. Even the very substantial tariffs imposed this year, which are at the highest levels in the postwar era, raise nowhere near the revenue that income tax does.”

    Steve Wamhoff, federal policy director at the Institute on Taxation and Economic Policy, called the idea “nonsensical.”

    But Trump has floated it twice in the last week — first during remarks on Thanksgiving at Mar-a-Lago and then again at Tuesday’s Cabinet meeting.

    “And I believe that at some point in the not too distant future, you won’t even have income tax to pay. Because the money we’re taking in is so great, it’s so enormous, that you’re not going to have income tax to pay,” he said at the meeting, which lasted more than two hours.

    The numbers don’t add up

    In the last fiscal year, Treasury Department data shows that revenue from individual income taxes was approximately $2.66 trillion out of about $5.23 trillion in total revenue. Corporation income taxes added approximately $452 billion. Customs duties earned nearly $195 billion. That’s a difference of around $2.8 trillion.

    The current fiscal year is shaping up in a similar fashion. Individual income taxes took in about $217 billion out of approximately $404 billion in total revenue the first month, with about $15 billion in additional funds from corporation taxes. Tariffs, meanwhile, earned around $31 billion.

    Trump has boasted of additional income from investments in the U.S. by other countries and international companies. But the precise terms of these investments have yet to be fully codified and released to the public, and some numbers are under dispute or involve potentially fuzzy math.

    The modern federal income tax was created with the ratification of 16th Amendment in 1913, ending the 43-year era when Trump says the country was wealthiest. He has not expressly detailed plans to end a national income tax since retaking the White House, and he can’t do so without an act of Congress and upending the federal budget.

    “President Trump is set to raise trillions in revenue for the federal government in the coming years with his tariffs — whose costs will ultimately be paid by the foreign exporters who rely on the American economy, the world’s biggest and best consumer market,” said White House spokesman Kush Desai. He also cited “trillions in historic investment commitments to make and hire in America” that have been fueled by tariffs.

    It is actually importers — American companies — that pay tariffs. Those companies typically pass their higher costs on to their customers in the form of higher prices. Still, tariffs can hurt foreign countries by making their products pricier and harder to sell abroad. Foreign companies might have to cut prices — and sacrifice profits — to offset the tariffs and try to maintain their market share in the United States.

    A burden on lower-income households

    Even if the numbers were made to add up, replacing revenue from federal income taxes with that of tariffs — a Republican talking point since the 1990s — poses many risks. Tariffs, especially at rates needed to make up for a loss in federal income taxes, could lead to retaliation from other countries and a lack of imports. In fact, revenue could start going down the more tariffs go up. There is also a lot of uncertainty about how much revenue tariffs will actually take in, given periodic changes to Trump’s policies.

    “We would be talking about living in a completely different world than the one we live in now,” said Wamhoff. “There was a time when the government’s finances were provided through tariffs. But I believe people were getting around with a horse and buggy back then and not cars. I mean, that was a completely different time.”

    Another reality is currently playing out. Trump’s tariffs are the subject of a Supreme Court case and could be struck down if the justices decide he does not have the authority to implement them. However, the president will still have plenty of options to keep taxing imports aggressively even if the courts rule against him. For example, he can reuse tariff powers he deployed in his first term and can reach for others, including one that dates back to the Great Depression. Many companies — including Costco — aren’t waiting for a decision from the Supreme Court. Instead, they’re filing suits against the Trump administration demanding refunds on the tariffs they’ve paid.

    Experts say there is also an issue of fairness, noting that tariffs would shift the tax burden to lower-income households given their propensity to increase costs on consumer goods. Plus, they lack the flexibility of income taxes, which can be set at any desired rate, and they wouldn’t allow for incentives such as charitable donations or child tax credits.

    “Inequality is very highly skewed toward the top,” said Michael Graetz, a professor of tax law at Yale University. “We’ve got more billionaires than we’ve ever had. We’ve got more millionaires than we’ve ever had. So it’s a strange time to be reducing the tax burden on the top and increasing it on the middle. It’s a proposal that is very effective for fundraising for Republicans and it always has been.”

    The White House did not immediately respond to a request for comment.

    ___

    Find AP Fact Checks here: https://apnews.com/APFactCheck.

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  • Late filers: Get your back taxes sorted before year-end – MoneySense

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    Consider the following: 

    The backdrop. Under the Income Tax Act, the normal reassessment period is three years from the date the notice of assessment or reassessment is mailed or received. However, under the taxpayer relief provisions, it is possible to request adjustments for errors or omissions for personal returns for 10 years. 

    Tax year 2015 in focus. Tax year 2015 will become statute-barred under the 10-year taxpayer relief provisions after December 31, 2025. That means, for the 2015 tax year, the following opportunities to save tax dollars now and in the future will be lost:

    1. Tax refunds owed to you for the 2015 tax year.
    2. The opportunity to build RRSP contribution room for tax year 2015, which reduces the potential for retirement income security in the future.
    3. Deductions and non-refundable tax credits that have “carry over” legs attached to them, such as moving expenses, medical expenses, charitable donations and political contributions.
    4. Refundable tax credits owed such as Canada Child Benefit, GST/HST Credit, Canada Workers Benefit, and refundable medical expense supplement.
    5. Unreported losses including capital and non-capital losses will not be available to offset their respective income sources for 2015 or for carry-over purposes. This can significantly increase future taxes payable in some cases.
    6. The opportunity to use the lifetime capital gains exemption for dispositions that occurred in 2015. 
    7. AMT (Alternative Minimum Tax) carry-forwards from prior years can no longer be applied to 2015.

    Spousal returns could be affected. When one spouse fails to file, it means that household income is not properly reported for income-tested provisions. If the spouse who filed on time didn’t estimate their missing spouse’s net income properly, it is possible some of the tax preferences received by spouse who filed on time will have to be repaid in the event of a CRA audit, and/or taxes payable will be increased. In some situations, for example when certain properties are transferred or there are joint financial transactions, spouses may also liable for each other’s tax debts. 

    Income Tax Guide for Canadians

    Deadlines, tax tips and more

    Provincial tax credits have different rules. Not all provisions on the federal T1 return qualify for a 10-year adjustment for errors or omissions. The normal reassessment period for federal returns— three years from the date of the original notice of assessment—is all that is available for these purposes in most provinces. In Quebec that reassessment period is four years.  

    Pension income splitting with spouse. Certain elections that can reduce your taxes have different filing rules as well. For example, optimization of pension income splitting or joint elections to do the income splitting on Form T1032 have a three-year window only—that is, three calendar years after the filing due date. In the 2023 tax year for example, which had a filing deadline of April 30, 2024, adjustments can only be made for tax years 2024, 2025 and 2026. Taken another way, by April 30, 2026, adjustments for this provision can only be made for calendar year 2025, 2024, and 2023. 

    Beware the loss of social benefits. It is only possible to go back 11 months to claim missed Old Age Security (OAS) benefits that were not deferred, unless there was a severe incapacity that kept the senior from applying for the benefits. OAS is income-tested; that is, a clawback of the benefits you are entitled to may occur when net income exceeds certain thresholds for the year. So, filing a tax return is necessary.

    Other social benefits include the new Canada Dental Care Plan (CDCP) and the Canada Disability Benefit (CDB).  

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    • Under the CDCP, the CRA may reconsider an entitlement if you apply within 24 months after the benefit period ends. However, if a false or misleading statement was made, the government has 72 months (six years) to recover this tax debt from you. 
    • The CDB, available since July 2025, allows for retroactive payments for up to 24 months if you were eligible during that time, starting in July 2025. Again, the government has a six-year limitation period to recover any overpayments from beneficiaries.

    Why late filing is generally a bad idea

    It always pays to file a tax return on time for the reasons above. The missed deadlines can cost even more when timelines for other provisions come into play. Overdue taxes owing attract big penalties and interest. There are a number of expensive penalties that can pile up—with compounding interest charges and of course the taxes themselves due—for people who owe money to the CRA and miss filing their returns. These may be deemed one or more of:

    • Gross negligence. This is a civil penalty CRA can levy for turning a blind eye to tax filing obligations. It is calculated at 50% of the taxes due. Interest compounded at the prescribed rate plus 4% more can turn the tax balance due into a rapidly snowballing problem. Late filing penalties are of course added on as well.
    • Tax evasion. Other punitive penalties that may be possible in the case of deceit include tax evasion, which results in a penalty worth 200% of the taxes owing plus compounding interest plus civil penalties and up to five years in jail.
    • Tax fraud. Under Section 380 of the Criminal Code, delinquent tax filers may receive a sentence of up to 14 years in prison. Other consequences include fingerprinting and foreign-travel restrictions.

    To pay the least possible when you owe CRA, first have a tax specialist confirm the taxes were assessed correctly by the agency (sometimes they aren’t, due to missing information or certain gray areas in the law). Then pay quickly. 

    Bottom line

    Always bear in mind that access to any tax preferences and benefits starts with filing a tax return. Plan well before the end of 2025 to catch up. File missed tax returns or request adjustments for errors or omissions. There might even be a little financial freedom coming your way compliments of CRA in 2026. 

    Get free MoneySense financial tips, news & advice in your inbox.

    Read more about how to minimize taxes:



    About Evelyn Jacks, RWM, MFA, MFA-P, FDFS


    About Evelyn Jacks, RWM, MFA, MFA-P, FDFS

    Evelyn Jacks is President of Knowledge Bureau, a world-class financial education institute where readers can take micro-credentials in Financial Literacy, the Fundamentals of Income Tax Preparation, and earn career-enhancing Specialized Credentials, all online.

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    Evelyn Jacks, RWM, MFA, MFA-P, FDFS

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  • Trump’s $1.1 billion tax hike on toys and games

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    Asked in April about the potential consequences of hiking tariffs on nearly all American imports, President Donald Trump delivered a memorably blunt assessment.

    “Maybe the children will have two dolls instead of 30 dolls,” Trump said during a cabinet meeting on April 30. “And maybe the two dolls will cost a couple bucks more than they would normally.”

    A “couple bucks” here and a “couple bucks” there…and eventually, that adds up to a massive tax increase.

    Federal data covering the first eight months of the year show that the government collected more than $1.1 billion in tariffs on toys, dolls, and games.

    During the same seven months in 2024, the federal government collected no revenue on imports covered by those lines in the tariff code, because toys, dolls, and similar products entered the country duty-free thanks to trade agreemens that Trump’s tariffs now supercede, explained Ed Gresser, a former assistant U.S. trade representative and vice president at the Progressive Policy Institute, in an email to Reason. (Gresser wrote a post earlier this month pegging the figure at $888 million through July, but he shared more updated figures with Reason for this post.)

    Those higher taxes paid by American importers are likely to be passed along to consumers doing their holiday shopping—and the actual total is likely quite a bit higher, since the tariff data lags by a few months.

    The direct costs of the tariffs don’t even tell the whole story. As Reason has detailed, the tariffs have created headaches for board game and toy companies across the country, as normally reliable supply chains have become more expensive and sometimes totally unworkable amid the White House’s ever-shifting tariff edicts.

    “The U.S. is our least trustworthy trading partner right now—and I say that as an American,” Price Johnson, COO of Cephalofair Games, told Reason last month. “I can’t trust what the policy is going to be tomorrow, let alone next week.”

    Two weeks ago, the Trump administration seemingly admitted that its tariffs were making some goods more expensive. The White House rolled back tariffs on coffee, bananas, and several other items. That was framed as an attempt to lower grocery prices amid rising inflation and deepening skepticism from the American public about the merits of Trump’s tariff plans.

    As Gresser notes, however, the tariffs that remain in place are in many cases bigger tax increases than the ones on goods like coffee and bananas, which have now been removed.

    “The tariff hike on toys is twice as big as that of the banana and coffee tariffs put together, and that on shoes tariff increase alone offsets the entire 238-product exclusion list,” he wrote earlier this month.

    Indeed, some limited reductions on tariffs might be welcome, but they are hardly enough: The Yale Budget Lab estimates that Trump’s tariffs will cost the average American household around $1,700 this year.

    That might explain why retailers are bracing for a less robust holiday shopping season this year. Santa Claus might be able to smuggle toys past the authorities under the cover of darkness and with the help of magic, but many American parents are facing exactly the situation that the president predicted in April: Fewer and more expensive toys this holiday season.

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  • Why Some Collectors Sell Their Artworks Through Trusts

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    A charitable remainder unitrust provides art collectors looking to sell with a stream of income and a smaller tax burden than they would face if they sold a work outright. Observer Labs

    For all the good that a fine art piece may do for our spirits and souls, it remains a tangible object that costs money to buy and produces no income while it is owned. Artworks can be sold, but the former owner must then pay hefty capital gains taxes—28 percent to the IRS, plus 12 percent capital gains tax for New York State residents, plus a 3.8 percent federal surcharge for high-income individuals and couples, less the state income tax deduction on a taxpayer’s federal return, for a net combined tax rate of roughly 41 percent. One way a growing number of art and collectibles owners have found to earn income from their art while deferring capital gains taxes is through charitable remainder unitrusts.

    Called, somewhat inelegantly, a CRUT, a charitable remainder unitrust allows collectors to transfer tangible objects such as art to a trust and authorize a trustee to sell the artwork when the market appears to be at a high point. The proceeds of the sale are tax-deferred, and the money can be reinvested to grow over time within the trust. If Collector X owns a $1 million painting and sells it outright, that person will pay the 41 percent tax and be left with $590,000. If, however, Collector X places the painting in a CRUT and then sells it, that person will have the full $1 million working for him and will pay capital gains on a deferred basis.

    Once a sale occurs, a portion of the proceeds—ranging from five to 50 percent but typically 5-8 percent—will be distributed annually to the beneficiaries, usually the donor and their spouse. Although some CRUTs are designed to last a specified number of years, most charitable remainder unitrusts end at the death of the last individual beneficiary, and the remaining funds become gifts to designated charities.

    “This is a tax deferral strategy,” Lawton Leung, a trust and estates partner in the law firm Withers, told Observer. The charitable trust is considered a tax-exempt entity. “Let’s say you’re funding that CRUT with artwork, whatever type of appreciated property, the trust can sell it without a tax hit. The tax would apply when there’s a distribution of the annuity or the unitrust payment. So then the donor or the grantor of the trust will have to pay taxes on that sliver—what he or she gets from the trust every year. The payments from the trust may be made quarterly, annually, biannually or monthly. It depends on the type of frequency you want, but at least once a year.”

    The trust functions much like a 401(k) or IRA, as the assets can be reinvested and grow on a tax-deferred basis. “We particularly like to use charitable remainder trusts when there’s an opportunity to defer a large capital gain,” Leung said.

    He noted that CRUTs offer collectors a way to take advantage of today’s art prices in a tax-efficient manner, generate income for retirement and satisfy philanthropic objectives. “The charity has to receive at least a 10 percent actuarial value at the time of setting up the trust. The amount that goes to charity at the end of the term could vary. There is some unpredictability to what the charity actually gets, but at least at the start of the trust, it’s intended that the charity would receive at least 10 percent of what was put in.”

    Collectors can reduce their capital gains and estate taxes, but it isn’t entirely win-win. Once they place works of art in a CRUT, they cannot keep them in their homes or offices—the rules governing remainder trusts are similar to those for individuals setting up private foundations—so most keep the art elsewhere. That may be at a bank, a law firm or an art gallery willing to hold it; many collectors choose fine art storage facilities. Once an artwork has been donated to the charitable remainder trust, it stays there; the collector cannot change his mind and take it back.

    Charitable remainder trusts are typically not created in isolation but rather as part of a broader estate planning strategy for individuals with a range of valuable assets. Still, Leung said, the typical cost of setting up a CRUT is $10,000. The first step is for the donor to transfer art or other personal assets irrevocably to the trustee, usually a lawyer or banker. An IRS actuarial table calculates, based on the age of the beneficiaries, the percentage payout rate and an interest rate, both the amount the beneficiaries are expected to receive over the lifetime of the CRUT and the amount that will go to one or more designated charities. The donor then deducts the calculated percentage gift to the charities at the time the trust is created, based on the original cost of the objects rather than their current fair market value. That deduction may be spread out over five years. For example, if the IRS actuarial table indicates that 70 percent of the trust’s assets will go to the beneficiaries and the remaining 30 percent to a charity, the donor would be entitled to deduct 30 percent of the cost of the assets. A painting purchased for $100,000 and transferred to a CRUT would entitle the donor to a $30,000 deduction.

    Every year after the trustee sells the art, the individual beneficiaries will typically receive a fixed percentage of the annual value of the trust assets. If a painting in a CRUT generates $1,000,000 in net proceeds and the payout percentage is set at five percent, the beneficiary will receive $50,000 in the first year of the trust. These distributions, known as unitrust payments, are taxable to the beneficiary in the year they are made, based on the beneficiary’s overall income and the manner in which trust income has been invested. Meanwhile, assets remaining in the CRUT continue to earn income and realize capital gains without immediate tax cost to the trust or the beneficiary. As a result, five percent annual unitrust payments may grow over time as trust assets appreciate on a tax-deferred basis. The collector receives an upfront tax deduction and pays taxes as they receive annuity payments.

    There is more than one type of charitable remainder trust. A charitable remainder annuity trust provides the collector with a predetermined payment each year, while a unitrust may pay out varying amounts annually depending on the trust’s performance.

    Frequently, those considering a CRUT are planning for retirement, a period in life when they want to maximize income and minimize costs. Long-time art collectors may hold highly appreciated assets that carry high costs for storage, security and insurance and would generate large capital gains taxes if sold. People in that situation often want to simplify their lives by shedding some of their art assets, but they prefer not to incur a large tax bill in the process. A charitable remainder unitrust provides them with a stream of income and a smaller tax burden than they would face if they sold the assets outright, preserving more of their money for one or more charities of their choice.

    While trust assets must go to charity, there is no requirement that the charity be designated when the trust is created. People change their minds about which charities they want to support, and that’s fine. The trustee may also name the charity.

    Why Some Collectors Sell Their Artworks Through Trusts

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  • Thousands protest in Bulgaria before budget with steep tax increases gets approval

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    SOFIA, Bulgaria — Thousands took to the streets of Sofia, Bulgaria’s capital, Wednesday to denounce steep tax increases in next year’s draft budget before its final vote in parliament.

    The opposition coalition We Continue the Change – Democratic Bulgaria organized the rally, which drew an estimated 20,000 protesters. The protest comes as the Balkan country prepares to join the eurozone at the beginning of next year.

    The protest reflects widespread concern over the budget’s economic impact on individuals and businesses, including the increase in social security contributions and the doubling of the dividend tax.

    Protesters formed a human chain around parliament and tried to block deputies’ cars, prompting police intervention to prevent violence. Police reported that demonstrators threw bottles and firecrackers at officers, injuring three.

    Despite opposition from various social groups and warnings from economists that the draft carries significant risks, the budget will likely be approved since the coalition government holds a comfortable majority in parliament.

    The budget sets a record for government spending at nearly 46% of GDP. This increase will be financed primarily through higher taxes on businesses and workers, as well as a sharp rise in public debt.

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  • Trump administration says lower prices for 15 Medicare drugs will save taxpayers billions

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    NEW YORK — Pharmaceutical companies have agreed to slash the Medicare prices for 15 prescription drugs after months of negotiations, reductions that are expected to produce billions in savings for taxpayers and older adults, the Trump administration said.

    But the net prices it unveiled for a 30-day supply of each drug are not what Medicare recipients will pay at their pharmacy counters, since those final amounts will depend on each individual’s plan and how much they spend on prescriptions in a given year.

    Health Secretary Robert F. Kennedy Jr. touted the deals as part of the administration’s efforts to address affordability concerns among Americans. The Medicare drug negotiation program that made them possible is mandated by law and began under President Joe Biden’s administration.

    “President Trump directed us to stop at nothing to lower health care costs for the American people,” Kennedy said in a statement Tuesday evening. “As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”

    The announcement marks the completion of a second round of negotiations under a 2022 law that allows Medicare to haggle over the price it pays on the most popular and expensive prescription drugs used by older Americans, bringing the total number of negotiated drug prices to 25. The new round of negotiated prices will go into effect in 2027. Reduced prices for the inaugural round of 10 drugs negotiated by the Biden administration last year will go into effect in January.

    The latest negotiated prices apply to some of the prescription medications on which Medicare spends the most money, including the massively popular GLP-1 weight-loss and diabetes drugs Ozempic, Rybelsus and Wegovy. Some of the other drugs involved in the negotiations include Trelegy Ellipta, which treats asthma; Otezla, a psoriatic arthritis drug; and various drugs that treat diabetes, irritable bowel syndrome and different forms of cancer.

    Dr. Mehmet Oz, Centers for Medicare and Medicaid Services administrator, said the administration delivered “substantially better outcomes for taxpayers and seniors in the Medicare Part D program” than the previous year’s deals.

    Under the first round of Medicare price negotiations, the Biden administration said the program would have saved about $6 billion on net covered prescription drug costs, or about 22%, if it had been in effect the previous year. The Trump administration said its latest round would have saved the government about $8.5 billion in net spending, or 36%, if it had been in effect last year.

    It’s unclear exactly how much money the newly announced deals could save Medicare beneficiaries when they are buying prescription drugs at the pharmacy because those costs are determined by various individual factors.

    A new rule that kicked off this year also caps out-of-pocket drug costs for Medicare beneficiaries at $2,000, giving some relief to older adults affected by high-cost prescriptions. The administration said estimated out-of-pocket savings for Medicare beneficiaries with drug plans is about $685 million.

    Spencer Perlman, director of health care research at Veda Partners, said the Trump administration’s improved outcomes probably resulted from the mix of drugs being negotiated and lessons learned from the first year of negotiations.

    Net drug prices are proprietary, he said, but “if we take the administration at their word, I think it demonstrates that they have secured meaningful price concessions for seniors, meaning the Medicare Drug Price Negotiation Program is working as intended.”

    The GLP-1 weight-loss drugs that were part of the negotiations have been especially scrutinized for their high out-of-pocket costs. Yet it’s still unclear to what extent Medicare beneficiaries who want to use the drugs to treat obesity will be able to do so.

    Medicare has long been prohibited from paying for weight-loss treatments, but a separate deal recently announced between the Trump administration and two pharmaceutical companies included plans for a pilot program that will expand coverage for the drugs to additional high-risk obese and overweight people.

    The Trump administration this year has also negotiated several unrelated deals with drug companies to lower the cost of their products for the wider population.

    Pharmaceutical companies, meanwhile, have sued over the Medicare drug negotiations enabled by the 2022 Inflation Reduction Act and remain opposed to them.

    “Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” Alex Schriver, senior vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, or PhRMA, said in a statement. “These flawed policies also threaten future medical innovation by siphoning $300 billion from biopharmaceutical research, undermining the American economy and our ability to compete globally.”

    Next year, Medicare will negotiate prices for another round of 15 drugs, including physician-administered drugs for the first time.

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  • Trump Administration Says Lower Prices for 15 Medicare Drugs Will Save Taxpayers Billions

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    NEW YORK (AP) — Pharmaceutical companies have agreed to slash the Medicare prices for 15 prescription drugs after months of negotiations, reductions that are expected to produce billions in savings for taxpayers and older adults, the Trump administration said.

    But the net prices it unveiled for a 30-day supply of each drug are not what Medicare recipients will pay at their pharmacy counters, since those final amounts will depend on each individual’s plan and how much they spend on prescriptions in a given year.

    Health Secretary Robert F. Kennedy Jr. touted the deals as part of the administration’s efforts to address affordability concerns among Americans. The Medicare drug negotiation program that made them possible is mandated by law and began under President Joe Biden’s administration.

    “President Trump directed us to stop at nothing to lower health care costs for the American people,” Kennedy said in a statement Tuesday evening. “As we work to Make America Healthy Again, we will use every tool at our disposal to deliver affordable health care to seniors.”

    The announcement marks the completion of a second round of negotiations under a 2022 law that allows Medicare to haggle over the price it pays on the most popular and expensive prescription drugs used by older Americans, bringing the total number of negotiated drug prices to 25. The new round of negotiated prices will go into effect in 2027. Reduced prices for the inaugural round of 10 drugs negotiated by the Biden administration last year will go into effect in January.


    Price negotiations apply to drugs treating diabetes, asthma, cancers and more

    The latest negotiated prices apply to some of the prescription medications on which Medicare spends the most money, including the massively popular GLP-1 weight-loss and diabetes drugs Ozempic, Rybelsus and Wegovy. Some of the other drugs involved in the negotiations include Trelegy Ellipta, which treats asthma; Otezla, a psoriatic arthritis drug; and various drugs that treat diabetes, irritable bowel syndrome and different forms of cancer.

    Dr. Mehmet Oz, Centers for Medicare and Medicaid Services administrator, said the administration delivered “substantially better outcomes for taxpayers and seniors in the Medicare Part D program” than the previous year’s deals.

    Under the first round of Medicare price negotiations, the Biden administration said the program would have saved about $6 billion on net covered prescription drug costs, or about 22%, if it had been in effect the previous year. The Trump administration said its latest round would have saved the government about $8.5 billion in net spending, or 36%, if it had been in effect last year.

    It’s unclear exactly how much money the newly announced deals could save Medicare beneficiaries when they are buying prescription drugs at the pharmacy because those costs are determined by various individual factors.

    A new rule that kicked off this year also caps out-of-pocket drug costs for Medicare beneficiaries at $2,000, giving some relief to older adults affected by high-cost prescriptions. The administration said estimated out-of-pocket savings for Medicare beneficiaries with drug plans is about $685 million.

    Spencer Perlman, director of health care research at Veda Partners, said the Trump administration’s improved outcomes probably resulted from the mix of drugs being negotiated and lessons learned from the first year of negotiations.

    Net drug prices are proprietary, he said, but “if we take the administration at their word, I think it demonstrates that they have secured meaningful price concessions for seniors, meaning the Medicare Drug Price Negotiation Program is working as intended.”


    Medicare recipients can’t get GLP-1 drugs for obesity, but the administration is making changes

    The GLP-1 weight-loss drugs that were part of the negotiations have been especially scrutinized for their high out-of-pocket costs. Yet it’s still unclear to what extent Medicare beneficiaries who want to use the drugs to treat obesity will be able to do so.

    Medicare has long been prohibited from paying for weight-loss treatments, but a separate deal recently announced between the Trump administration and two pharmaceutical companies included plans for a pilot program that will expand coverage for the drugs to additional high-risk obese and overweight people.

    The Trump administration this year has also negotiated several unrelated deals with drug companies to lower the cost of their products for the wider population.

    Pharmaceutical companies, meanwhile, have sued over the Medicare drug negotiations enabled by the 2022 Inflation Reduction Act and remain opposed to them.

    “Whether it is the IRA or MFN, government price setting for medicines is the wrong policy for America,” Alex Schriver, senior vice president of public affairs at the Pharmaceutical Research and Manufacturers of America, or PhRMA, said in a statement. “These flawed policies also threaten future medical innovation by siphoning $300 billion from biopharmaceutical research, undermining the American economy and our ability to compete globally.”

    Next year, Medicare will negotiate prices for another round of 15 drugs, including physician-administered drugs for the first time.

    Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

    Photos You Should See – Nov. 2025

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  • West Virginia Sen. Jim Justice agrees to pay nearly $5.2 million in overdue personal taxes

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    Republican Sen. Jim Justice of West Virginia has agreed to pay nearly $5.2 million in overdue personal taxes, the latest saga for the former billionaire who has been followed by a trail of financial challenges going back well over a decade.

    An attorney for Justice and his wife, Cathy, entered into a joint motion for consent judgment with the federal government on Monday, the same day the government filed a lawsuit saying the couple “have neglected or refused to make full payment” for the income taxes dating to 2009. An attorney for the Justice Department’s tax division signed off on the agreement.

    Justice had a fortune estimated at $1.9 billion last decade by Forbes magazine, which stripped his billionaire title in 2021, when Justice’s worth had dwindled to an estimated $513 million. Earlier this year, Forbes estimated that Justice’s net worth had disintegrated to “less than zero” due to liabilities that far exceeded assets.

    A spokesperson for Justice’s office didn’t immediately respond to an email seeking comment Tuesday. 

    During a briefing with local media in October, Justice asserted that his companies “are complicated and complex” and that his children “are doing a magnificent job” running them. He then repeated past assertions that collection efforts against him were politically motivated, before concluding: “At the end of the day, I’d say just let it be and see how it all plays out.”

    Justice, a former two-term governor who owns dozens of businesses that include coal and agricultural operations, was elected last November to the Senate. He took over the seat vacated by the retiring Joe Manchin, a Democrat who became an independent in 2024 near the end of his second full term.

    Justice still has other financial challenges to work out.

    The Internal Revenue Service last month filed liens totaling more than $8 million against Justice and his wife on unpaid personal taxes. In September, state tax officials filed $1.4 million in liens against the Justice family’s historic hotel, The Greenbrier, and the resort’s Greenbrier Sporting Club, over unpaid sales taxes.

    Last month, a foreclosure auction on several hundred lots owned by the Justice family at a resort community near Beckley was paused. The auction centered on a dispute between the Glade Springs Village Property Owners Association and Justice Holdings over unpaid fees. The state Supreme Court plans to review the case more closely.

    In 2021, the IRS filed liens over $1.1 million in unpaid taxes on the Greenbrier Hotel and an additional $80,000 on the resort’s medical clinic. Those debts were paid off later that year. 

    Justice’s family settled debts last year in a separate case to avoid the Greenbrier Hotel’s foreclosure. The 710-room hotel, which has hosted U.S. presidents, royalty and congressional retreats, had come under threat of being auctioned off on the steps of a Lewisburg courthouse. That was after JPMorgan Chase sold a longstanding loan taken out by Justice to a credit collection company, Beltway Capital, which declared it to be in default.

    The state Democratic Party has said efforts to seize the hotel from Justice were “a direct consequence of his own financial incompetence.”

    Last year, a union official at the Greenbrier said that Justice’s family was at least $2.4 million behind in payments to an employees’ health insurance fund, putting workers’ coverage at risk. In 2023, dozens of properties owned by the Justice family in three counties were auctioned as payment for delinquent real estate taxes. Others have sought to recoup millions in fines for environmental issues and unsafe working conditions at his company’s coal mines.

    Justice bought The Greenbrier resort out of bankruptcy in 2009 for $20.1 million. The sporting club is a private equity club and residential community on the property that opened in 2000.

    The resort in White Sulphur Springs that dates to 1778 also has a casino, spa and dozens of amenities and employs around 2,000 workers. The resort held a PGA Tour golf tournament from 2010 until 2019 and has welcomed NFL teams for training camp and practices. A once-secret 112,000-square-foot underground bunker built for Congress at the Greenbrier in case of nuclear attack during the Cold War now hosts tours.

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  • What is the CRA’s Voluntary Disclosures Program? – MoneySense

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    Tax owing still applies but “to be fair to all, the CRA grants a higher level of relief to those who are correcting an error before being contacted than those who are correcting errors after being prompted by communications from the CRA or any other authority of administration.”

    How to quality for the VDP

    There are five primary conditions for the VDP. The disclosure must:

    1. Be voluntary
    2. Include information that relates to a tax year/reporting period that is at least one year/reporting period past the due date
    3. Involve the application of a penalty or interest
    4. Include all known errors or omissions
    5. Include a payment or a request for a payment arrangement

    Recent changes to the VDP

    New guidelines began on October 1, 2025 that impact disclosures related to income tax, sales tax, withholding tax, excise duties, and several other taxes. 

    The application form has been simplified. The four page Form RC199, Voluntary Disclosures Program (VDP) Application can be completed by a taxpayer or their authorized representative. It contains a brief description of the facts relating to the omission or error. 

    The filer must also address the payment of any tax owing, if applicable, or request a payment arrangement to be discussed with a CRA collections officer. 

    Eligibility has also been expanded; if a CRA communication about a potential non-compliance issue prompts the disclosure, it may still be accepted. This differs from past practice. As a result, a CRA education letter about ineligible deductions or unreported income may not prevent a taxpayer from benefitting from the VDP.

    What are the relief provisions?

    There are two tiers of relief that can apply to taxpayers submitting a VDP application:

    1. General relief. This is meant for those who come forward voluntarily without a nudge from CRA. All of the penalties can be waived by CRA, and 75% of the interest on the balance owing. 
    2. Partial relief. An application that is prompted by CRA can still benefit from a full waiver of penalties. However, only 25% of the resulting interest is waived if a CRA communication is what leads to the VDP application. 

    What to do if you have made a tax filing mistake

    If you have unreported income, overstated deductions, or overlooked elections, among other tax filing errors, you should seek to rectify those mistakes as soon as you can. 

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    An unprompted VDP application can be less painful from an interest perspective and help you sleep better at night if you are aware of an oversight. Although you can file a VDP application on your own, if you do your own taxes, consider getting professional input for a situation like this.

    Leave your question for Jason Heath

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    About Jason Heath, CFP


    About Jason Heath, CFP

    Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

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    Jason Heath, CFP

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  • Your tax refund could be $1,000 higher in 2026. Here’s why.

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    Federal tax refunds often represent a family’s single largest check of the year, and next year’s refunds could be even bigger, with the average payment set to increase by about $1,000 per filer, according to a recent analysis from financial services company Piper Sandler. 

    That could boost the typical refund check to roughly $4,151 per filer, based on IRS data that shows the average tax refund was $3,151 for the 2025 tax filing season. Americans will file their 2025 individual returns in early 2026, with most people receiving their refunds within 21 days of submitting their forms to the tax agency.

    The analysis aligns with other forecasts predicting a bumper year for tax refunds, driven by the “one big, beautiful” tax and spending law signed by President Trump in July. The legislation enacted a bevy of new tax breaks retroactive to 2025, including eliminating taxes on some overtime and tipped income, as well as lifting the cap on the deduction for state and local taxes, or SALT, from $10,000 to $40,000. 

    “When people go to file, they’ll be surprised by really, really large refunds,” Don Schneider, deputy head of U.S. policy at Piper Sandler and one of the report’s authors, said in a recent podcast about the analysis. “In a typical year, we might have about $270 billion in tax refunds, and it’ll be that plus another $90 billion.”

    Americans generally aren’t adjusting their withholding to reflect the new law’s retroactive tax cuts, largely because it’s hard for employees to estimate the impact, Schneider added. As a result, when people file their taxes in early 2026, their refunds could be about one-third larger than usual — that amounts to roughly an extra $1,000 per filer, according to the report’s calculations.

    “It could be one of the largest tax refund seasons ever,” Schneider added. 

    Still, the impact won’t be evenly distributed, with the benefits largely going toward middle- and upper-middle-income households, or those earning between $60,000 to $400,000 per year, according to Piper Sandler.  

    That echoes earlier tax analyses projecting that higher-income Americans are likely to see a bigger relative boost from the new tax law compared with lower-income households. People who earn over $217,000 a year are likely to get $6 of every $10 in new tax breaks from the law, according to a Tax Policy Center analysis published in July. 

    Some of the law’s benefits won’t reach the highest-earning households because of income phase-outs, Piper Sandler noted. For example, the new $40,000 SALT deduction begins to phase out for filers with annual income of more than $500,000.

    The lowest-earning households are also likely to see little benefit from parts of the new tax law. For instance, the higher SALT deduction cap only helps people whose state and local taxes exceed the 2025 standard deduction, which stands at $15,750 for single filers and $31,500 for married couples.

    Because filers must itemize to claim the SALT deduction, lower-income households typically can’t take advantage of it, according to tax experts.

    “This isn’t going to the very bottom of the distribution. It isn’t going to the very top of the distribution either,” Scheider said.

    Edited by

    Alain Sherter

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  • Britain’s unpopular government prepares a high-stakes budget and hopes for growth

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    LONDON (AP) — After being elected in a landslide last year, Britain’s Labour Party government delivered a budget it billed as a one-off dose of tax hikes to fix the public finances, get debt down, ease the cost of living and spur economic growth.

    A year on, inflation remains stubbornly high, government borrowing is up and the economy is turgid. The annual budget, due on Wednesday, is expected to bring more tax hikes in pursuit of the same elusive economic boom.

    Rain Newton-Smith, head of business group the Confederation of British Industry, said Monday that “it feels less like we’re on the move, and more like we’re stuck in ‘Groundhog Day.’”

    It’s not just businesses who are concerned. Alarmed by the government’s consistently dire poll ratings, some Labour lawmakers are mulling the once-unthinkable idea of ousting Prime Minister Keir Starmer, who led them to victory less than 18 months ago.

    Luke Tryl, director of pollster More in Common, said voters “don’t understand why there has not been positive change.

    “This could be a last-chance saloon moment for the government.”

    Not much room for maneuver

    The government says Treasury chief Rachel Reeves will make “tough but right decisions” in her budget to ease the cost of living, safeguard public services and keep debt under control.

    She has limited room for maneuver. Britain’s economy, the world’s sixth-largest, has underperformed its long-run average since the global financial crisis of 2008-2009, and the center-left Labour government elected in July 2024 has struggled to deliver promised economic growth.

    Like other Western economies, Britain’s public finances have been squeezed by the costs of the COVID-19 pandemic, the Russia-Ukraine war and U.S. President Donald Trump’s global tariffs. The U.K. bears the extra burden of Brexit, which has knocked billions off the economy since the country left the European Union in 2020.

    The government currently spends more than 100 billion pounds ($130 billion) a year servicing the U.K.’s debt, which stands at around 95% of annual national income.

    Adding to pressure is the fact that Labour governments historically have had to work harder than Conservative administrations to convince businesses and the financial markets that they are economically sound.

    Reeves is mindful of how financial markets can react when the government’s numbers don’t add up. The short-lived premiership of Liz Truss ended in October 2022 after her package of unfunded tax cuts roiled financial markets, drove down the value of the pound and sent borrowing costs soaring.

    Luke Hickmore, an investment director at Aberdeen Investments, said the bond market is the “ultimate reality check” for budget policy.

    “If investors lose faith, the cost of borrowing rises sharply, and political leaders have little choice but to change course,” he said.

    Mixed pre-budget signals

    The government has ruled out public spending cuts of the kind seen during 14 years of Conservative government, and its attempts to cut Britain’s huge welfare bill have been stymied by Labour lawmakers.

    That leaves tax increases as the government’s main revenue-raising option.

    “We’re very much not in the position that Rachel Reeves hoped to be in,” said Jill Rutter, a senior fellow at the Institute for Government think tank.

    Instead of an economy that has “sparked into life,” enabling higher spending and lower taxes, Rutter said Reeves must decide whether “to fill a big fiscal black hole with tax increases or spending cuts.”

    The budget comes after weeks of messy mixed messaging that saw Reeves signal she would raise income tax rates – breaking a key election promise – before hastily reversing course.

    In a Nov. 4 speech, Reeves laid the groundwork for income tax hikes by arguing that the economy is sicker and the global outlook worse than the government knew when it took office.

    After an outcry among Labour lawmakers, and a better-than-expected update on the public finances, the government signaled it preferred a smorgasbord of smaller revenue-raising measures such as a “mansion tax” on expensive homes and a pay-per-mile tax for electric vehicle drivers.

    The government will try to ease the sting with sweeteners including an above-inflation boost to pension payments for millions of retirees and a freeze on train fares.

    Critics say more taxes on employees and businesses, following tax hikes on businesses in last year’s budget, will push the economy further into a low-growth doom loop.

    Patrick Diamond, professor in public policy at Queen Mary University of London, said satisfying both markets and voters is difficult.

    “You can give markets confidence, but that probably means raising taxes, which is very unpopular with voters,” he said. “On the other hand, you can give voters confidence by trying to minimize the impact of tax rises, but that makes markets nervous because they feel that the government doesn’t have a clear fiscal plan.”

    High stakes for Reeves and Starmer

    The budget comes as Starmer is facing mounting concern from Labour lawmakers over his dire poll ratings. Opinion polls consistently put Labour well behind the hard-right Reform UK party led by Nigel Farage.

    The prime minister’s office sparked a flurry of speculation earlier this month by preemptively telling news outlets that Starmer would fight any challenge to his leadership. What looked like an attempt to strengthen Starmer’s authority backfired. The reports set off jitters verging on panic among Labour lawmakers, who fear the party is heading for a big defeat at the next election.

    That election does not have to be held until 2029, and the government continues to hope that its economic measures will spur higher growth and ease financial pressures.

    But analysts say a misfiring budget could be another nail in the coffin of Starmer’s government.

    “Both Starmer and Reeves are really unpopular,” Rutter said. “They may be hanging on for now, but I don’t think people will be giving you great odds that they’ll necessarily last the course of the Parliament,” which runs until the next election.

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  • Britain’s unpopular government prepares a high-stakes budget and hopes for growth

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    LONDON — After being elected in a landslide last year, Britain’s Labour Party government delivered a budget it billed as a one-off dose of tax hikes to fix the public finances, get debt down, ease the cost of living and spur economic growth.

    A year on, inflation remains stubbornly high, government borrowing is up and the economy is turgid. The annual budget, due on Wednesday, is expected to bring more tax hikes in pursuit of the same elusive economic boom.

    Rain Newton-Smith, head of business group the Confederation of British Industry, said Monday that “it feels less like we’re on the move, and more like we’re stuck in ‘Groundhog Day.’”

    It’s not just businesses who are concerned. Alarmed by the government’s consistently dire poll ratings, some Labour lawmakers are mulling the once-unthinkable idea of ousting Prime Minister Keir Starmer, who led them to victory less than 18 months ago.

    Luke Tryl, director of pollster More in Common, said voters “don’t understand why there has not been positive change.

    “This could be a last-chance saloon moment for the government.”

    The government says Treasury chief Rachel Reeves will make “tough but right decisions” in her budget to ease the cost of living, safeguard public services and keep debt under control.

    She has limited room for maneuver. Britain’s economy, the world’s sixth-largest, has underperformed its long-run average since the global financial crisis of 2008-2009, and the center-left Labour government elected in July 2024 has struggled to deliver promised economic growth.

    Like other Western economies, Britain’s public finances have been squeezed by the costs of the COVID-19 pandemic, the Russia-Ukraine war and U.S. President Donald Trump’s global tariffs. The U.K. bears the extra burden of Brexit, which has knocked billions off the economy since the country left the European Union in 2020.

    The government currently spends more than 100 billion pounds ($130 billion) a year servicing the U.K.’s debt, which stands at around 95% of annual national income.

    Adding to pressure is the fact that Labour governments historically have had to work harder than Conservative administrations to convince businesses and the financial markets that they are economically sound.

    Reeves is mindful of how financial markets can react when the government’s numbers don’t add up. The short-lived premiership of Liz Truss ended in October 2022 after her package of unfunded tax cuts roiled financial markets, drove down the value of the pound and sent borrowing costs soaring.

    Luke Hickmore, an investment director at Aberdeen Investments, said the bond market is the “ultimate reality check” for budget policy.

    “If investors lose faith, the cost of borrowing rises sharply, and political leaders have little choice but to change course,” he said.

    The government has ruled out public spending cuts of the kind seen during 14 years of Conservative government, and its attempts to cut Britain’s huge welfare bill have been stymied by Labour lawmakers.

    That leaves tax increases as the government’s main revenue-raising option.

    “We’re very much not in the position that Rachel Reeves hoped to be in,” said Jill Rutter, a senior fellow at the Institute for Government think tank.

    Instead of an economy that has “sparked into life,” enabling higher spending and lower taxes, Rutter said Reeves must decide whether “to fill a big fiscal black hole with tax increases or spending cuts.”

    The budget comes after weeks of messy mixed messaging that saw Reeves signal she would raise income tax rates – breaking a key election promise – before hastily reversing course.

    In a Nov. 4 speech, Reeves laid the groundwork for income tax hikes by arguing that the economy is sicker and the global outlook worse than the government knew when it took office.

    After an outcry among Labour lawmakers, and a better-than-expected update on the public finances, the government signaled it preferred a smorgasbord of smaller revenue-raising measures such as a “mansion tax” on expensive homes and a pay-per-mile tax for electric vehicle drivers.

    The government will try to ease the sting with sweeteners including an above-inflation boost to pension payments for millions of retirees and a freeze on train fares.

    Critics say more taxes on employees and businesses, following tax hikes on businesses in last year’s budget, will push the economy further into a low-growth doom loop.

    Patrick Diamond, professor in public policy at Queen Mary University of London, said satisfying both markets and voters is difficult.

    “You can give markets confidence, but that probably means raising taxes, which is very unpopular with voters,” he said. “On the other hand, you can give voters confidence by trying to minimize the impact of tax rises, but that makes markets nervous because they feel that the government doesn’t have a clear fiscal plan.”

    The budget comes as Starmer is facing mounting concern from Labour lawmakers over his dire poll ratings. Opinion polls consistently put Labour well behind the hard-right Reform UK party led by Nigel Farage.

    The prime minister’s office sparked a flurry of speculation earlier this month by preemptively telling news outlets that Starmer would fight any challenge to his leadership. What looked like an attempt to strengthen Starmer’s authority backfired. The reports set off jitters verging on panic among Labour lawmakers, who fear the party is heading for a big defeat at the next election.

    That election does not have to be held until 2029, and the government continues to hope that its economic measures will spur higher growth and ease financial pressures.

    But analysts say a misfiring budget could be another nail in the coffin of Starmer’s government.

    “Both Starmer and Reeves are really unpopular,” Rutter said. “They may be hanging on for now, but I don’t think people will be giving you great odds that they’ll necessarily last the course of the Parliament,” which runs until the next election.

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  • GST/HST credit payment dates: When to expect your money in 2025 – MoneySense

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    What is the GST/HST credit?

    The GST/HST credit is a tax-free quarterly payment issued by the Canada Revenue Agency (CRA). It’s meant to help lower- and middle-income Canadians offset the goods and services tax (GST) or harmonized sales tax (HST) you pay on daily purchases. It’s automatically deposited into your bank account every three months, or delivered via cheque if you don’t have direct deposit. 

    How is the GST/HST credit calculated?

    The GST/HST credit is calculated based on your net income, marital status, and the number of children in your household, according to the Canada Revenue Agency (CRA). Generally, the lower your household income, the larger your quarterly payment will be. 

    The CRA uses the information from your tax return for the previous year to determine your eligibility and calculate the amount you’ll receive each pay period. Below is a table you can use to see which payment dates will be affected by which years:

    Base year (tax return filed) Payment period Payment months
    2025 July 2026 – June 2027 July 2026, October 2026, January 2027, April 2027
    2024 July 2025 – June 2025 July 2025, October 2025, January 2026, April 2026
    2023 July 2024–June 2025 July 2024, October 2024, January 2025, April 2025
    2022 July 2023 – June 2024 July 2023, October 2023, January 2024, April 2024
    2021 July 2022 – June 2023 July 2022, October 2022, January 2023, April 2023

    GST/HST credit payment dates for 2026

    The GST/HST credit is paid quarterly by the Canada Revenue Agency, typically in January, April, July, and October, as long as you’ve filed your taxes for the previous year.

    For 2026, the official GST/HST credit payment dates are:

    • January 5, 2026
    • April 2, 2026
    • July 3, 2026
    • October 5, 2026

    If you receive your GST/HST credit by direct deposit, the funds should appear in your account on these dates. If your GST/HST credit payments are delivered via cheque by mail, it may take up to 10 business days to arrive. 

    How to check your payment schedule 

    You can view your personalized GST/HST credit payment schedule any time through your CRA My Account. Here’s how:

    1. Log in to CRA My Account
    2. Click on “Benefits and credits”
    3. Look for GST/HST credit under your payment summary

    This portal will show your next payment date, amount, and whether it’s being sent by direct deposit or mail.

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    What to do if your payment is late or missing

    If your payment hasn’t arrived by the expected date, don’t panic. Here’s what to check first:

    1. Allow for processing delays

    If you receive payment by mail, wait 10 business days after the scheduled date before contacting the CRA. If you signed up for direct deposit, double-check your bank account and CRA My Account to confirm the deposit status.

    2. Review CRA My Account

    Your CRA My Account will tell you:

    • If the payment has been issued
    • If there are delays or holds
    • If your account info is outdated

    3. Check for address or bank changes

    If you moved recently or changed banks, your GST/HST credit may have been delayed or returned. You can update your info online through CRA My Account or by calling the CRA.

    4. Contact the CRA

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    Thomas Kent

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  • Tea tariffs once sparked a revolution. Now they are creating angst

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    NEW YORK — A tax on tea once sparked rebellion. This time, it’s just causing headaches.

    Importers of the prized leaves have watched costs climb, orders stall and margins shrink under the weight of President Donald Trump’s tariffs. Now, even after Trump has given them a reprieve, tea traders say it won’t immediately undo the damage.

    “It took a while to work its way through the system, these tariffs, and it will take a while for it to work its way out of the system,” says Bruce Richardson, a celebrated tea master, tea historian and purveyor of teas at his shop, Elmwood Inn Fine Teas, in Danville, Kentucky. “That tariffed tea is still working its way out of our warehouses.”

    While a handful of bigger firms are behind the biggest supermarket brands, the premium tea market is largely the work of smaller businesses, from family farms to specialty importers to a web of little tea shops, tea rooms and tea cafes across the U.S. Amid an onslaught of tariffs, they have become showcases for the levies’ effects.

    On their shelves, selection has narrowed, with some teas now missing because they’re no longer viable products to stock with steep levies on top. In their warehouses, managers are consumed with uncertainty and operational headaches, including calculating what a blend really costs, with ingredients from multiple countries on a roller coaster of tariffs. And in backrooms where the wafting scent of fresh tea permeates, owners have been forced to put off job postings, raises, advertising and other investments so they can have cash available to pay duties when their containers arrive at U.S. ports.

    “If I were to add up all the money I’ve spent on tariffs that weren’t there a year ago, it could equal a new employee,” says Hartley Johnson, who owns the Mark T. Wendell Tea Company in Acton, Massachusetts.

    Johnson’s prices used to stay static for a year or longer. He ate the tariff costs before being forced to respond. His most popular tea, a smoky Taiwanese one called Hu-Kwa, has steadily risen from $26 to $46 a pound.

    He knows some customers are reconsidering.

    “Where is that tipping point?” Johnson asks. “I’m kind of finding that tipping point is happening now.”

    Though Trump backed off some tariffs on agricultural products last week, many in the tea trade are wary of celebrating too soon and caution tea drinkers shouldn’t either. Much of next year’s supply has already been imported and tariffed and the full impact of those duties may not have fully spilled downhill.

    Meantime, other tariff-driven price hikes persist. All sorts of other products tea businesses import, from teapots to infusers, remain subject to levies, and costs for some American-made items, like tins for packaging, have spiked because they rely on foreign materials.

    “The canisters, the bamboo boxes, the matcha whisks, everything that we import, everything that we sell has been affected by tariffs,” says Gilbert Tsang, owner of MEM Tea Imports in Wakefield, Massachusetts.

    Though globally, tea reigns supreme, imbibed more than anything but water, it has long been overshadowed by coffee in the U.S. Still, tea is entwined in American history from the very beginning, even before colonists angry with tariffs dumped tons of it in Boston Harbor.

    Boston may run on Dunkin’ today, but it was born on tea.

    The 1773 revolt that became known as the Boston Tea Party rose out of the British Parliament’s implementation of tea tariffs on colonists, who rejected taxation without representation in government. After an independent United States was born, one of the new government’s first major acts, the Tariff Act of 1789, ironically set in law import taxes on a range of products including tea. In time, though, trade policy came to include carve-outs for many products Americans rely on but don’t produce.

    For more than 150 years, most tea has passed through U.S. ports with little to no duties.

    That began to change in Trump’s first term with his hardline approach to China. But nothing compared to what came with his return to the White House.

    In July, the most recent month for which the U.S. International Trade Commission has tallied tariff numbers, tea was taxed at an average rate of over 12%, a huge increase from a year earlier when it was just under one-tenth of a percent. In that single month, American businesses and consumers paid more than $6 million in tea import taxes, amassing in just 31 days more tariffs than any previous full year on record.

    “All over again, taxation without representation,” says Richardson, an adviser to the Boston Tea Party Ships & Museum. “Our wants and needs and our voices are not being represented because Congress is avoiding the issue by simply allowing the president to act like George III.”

    All told, tea importers paid about $19.6 million in tariffs in the first seven months of 2025, nearly seven times as much as the same period last year.

    It’s all been confounding to those steeped in the world of tea, on which the U.S. depends on foreign countries for nearly all of the billions of pounds Americans brew each year. Though a number of small tea farms exist in the U.S., they can’t fill Americans’ cups for more than a few hours of the year.

    “We don’t have an industry and we can’t produce one overnight,” says Angela McDonald, president of the United States League of Tea Growers.

    Trump’s suspension of tea tariffs came too late for some businesses, including Los Angeles-based International Tea Importers Inc., for which tariffs created an untenable cash-flow crunch.

    “We just became over-leveraged financing not just the inventory, but also the tariffs,” says the company’s CEO, Brendan Shah.

    Tariffs weren’t the only thing the 35-year-old business was facing, but without them, Shah says it may have survived.

    “Unpredictable tariff policies,” he wrote to customers in announcing the company’s closure, “have created the final, insurmountable barrier.”

    ___

    Matt Sedensky can be reached at msedensky@ap.org and https://x.com/sedensky

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  • The IRS Is Facing a Huge Backlog After the Government Shutdown. What It Means for Businesses

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    The U.S. government is getting back up to speed after the longest government shutdown in history. Airports have resumed their full schedules, which is a relief to anyone who’s planning to fly this holiday season. At the Internal Revenue Service, however, things are taking a bit longer to ramp back up, which could cause tax headaches for business owners and individual taxpayers over the next few months.

    A tremendous backlog of correspondence, appeals and filings built up during the 44 days workers were furloughed. Operations have resumed, but the IRS was short-staffed long before the shutdown, after massive DOGE layoffs earlier this year and funding cuts. That means cutting through that accumulation of work is slow-going.

    “The system is simply overwhelmed,” says Sharon Goldstein-Shapiro, a spokesperson for Legal Tax Defense, which provides legal representation to individuals and businesses facing tax problems. “Taxpayers waiting for refunds, installment approvals, or audit resolutions are seeing long delays.”

    That backlog is going to cause a host of problems. Communications are likely to be delayed, which could give the impression to some people that timeliness isn’t as high a priority as it normally is for the IRS. That would be incorrect.

    There’s not a lot you can do when it comes to getting a response in a faster period of time, but it’s critical for business owners to take steps to protect themselves and their businesses from being financially impacted by the backlog.

    That’s especially true if you’re in the midst of a dispute with the IRS. It could be weeks before submitted requests for penalty abatements or compromise offers are seen. Penalties and interest continue to accrue in that period, however.

    The best way to minimize that is through careful record keeping. Keep copies of all of the letters, notices and payment confirmations you receive and send. And any correspondence should be sent through a certified tracking system, so you can confirm when it was accepted.

    Most importantly, Goldstein-Shapiro says, don’t assume a lack of response means your case has been closed. And if you are facing a lien or levy, she suggests securing legal representation to ensure you are protected as case processing gets back underway.

    “For small businesses, a two-month delay can disrupt cash flow and planning,” she says. “Having professional representation ensures your case is documented and prioritized once review resumes.”

    It’s not just existing cases that experts are worried about. With the 2026 filing season just around the corner, the backlog could cause delays with new filings as well.

    “It’s too early to say definitively, but any sustained shutdown has a ripple effect that can carry well beyond the immediate timeline,” says Garrett Wagner, founder of accounting firm consultancy C3 Evolution Group. “The IRS was already facing delays and a growing backlog. Even a short pause in IRS operations will expand the issues we are already seeing.”

    Meanwhile, changes to the tax law as part of the 2025 budget bill that was passed earlier this year, are extensive, requiring the IRS to create new forms and instructions, which need to be sent out to tax professionals and reworking of software systems. The shutdown put that on pause, which could create a crunch as the 2026 tax season gets underway – and could delay the start of the season.

    Will that mean the filing deadline is extended? That’s possible, but it’s much too early to say with any certainty.

    The IRS does seem to grasp just how overwhelming the situation could be on its end. Over the first half of 2025, the IRS reduced its workforce from 100,000 to 60,000 employees, but later realized that created serious gaps in expertise and key areas, including IT and tax processing. In August, officials halted planned layoffs and began reaching out to employees who had been let go, encouraging them to rejoin the agency. There’s also been volatility when it comes to leadership at the agency. Since the start of 2025, the IRS has had seven directors or acting directors (and, as of October, one CEO). 

    The final deadline for the 2026 Inc. Regionals Awards is Friday, December 12, at 11:59 p.m. PT. Apply now.

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    Chris Morris

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  • Future data centers are driving up forecasts for energy demand. States want proof they’ll get built

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    HARRISBURG, Pa. (AP) — The forecasts are eye-popping: utilities saying they’ll need two or three times more electricity within a few years to power massive new data centers that are feeding a fast-growing AI economy.

    But the challenges — some say the impossibility — of building new power plants to meet that demand so quickly has set off alarm bells for lawmakers, policymakers and regulators who wonder if those utility forecasts can be trusted.

    One burning question is whether the forecasts are based on data center projects that may never get built — eliciting concern that regular ratepayers could be stuck with the bill to build unnecessary power plants and grid infrastructure at a cost of billions of dollars.

    The scrutiny comes as analysts warn of the risk of an artificial intelligence investment bubble that’s ballooned tech stock prices and could burst.

    Meanwhile, consumer advocates are finding that ratepayers in some areas — such as the mid-Atlantic electricity grid, which encompasses all or parts of 13 states stretching from New Jersey to Illinois, as well as Washington, D.C. — are already underwriting the cost to supply power to data centers, some of them built, some not.

    “There’s speculation in there,” said Joe Bowring, who heads Monitoring Analytics, the independent market watchdog in the mid-Atlantic grid territory. “Nobody really knows. Nobody has been looking carefully enough at the forecast to know what’s speculative, what’s double-counting, what’s real, what’s not.”

    Suspicions about skyrocketing demand

    There is no standard practice across grids or for utilities to vet such massive projects, and figuring out a solution has become a hot topic, utilities and grid operators say.

    Uncertainty around forecasts is typically traced to a couple of things.

    One concerns developers seeking a grid connection, but whose plans aren’t set in stone or lack the heft — clients, financing or otherwise — to bring the project to completion, industry and regulatory officials say.

    Another is data center developers submitting grid connection requests in various separate utility territories, PJM Interconnection, which operates the mid-Atlantic grid, and Texas lawmakers have found.

    Often, developers, for competitive reasons, won’t tell utilities if or where they’ve submitted other requests for electricity, PJM said. That means a single project could inflate the energy forecasts of multiple utilities.

    The effort to improve forecasts got a high-profile boost in September, when a Federal Energy Regulatory Commission member asked the nation’s grid operators for information on how they determine that a project is not only viable, but will use the electricity it says it needs.

    “Better data, better decision-making, better and faster decisions mean we can get all these projects, all this infrastructure built,” the commissioner, David Rosner, said in an interview.

    The Edison Electric Institute, a trade association of for-profit electric utilities, said it welcomed efforts to improve demand forecasting.

    Real, speculative, or ‘somewhere in between’

    The Data Center Coalition, which represents tech giants like Google and Meta and data center developers, has urged regulators to request more information from utilities on their forecasts and to develop a set of best practices to determine the commercial viability of a data center project.

    The coalition’s vice president of energy, Aaron Tinjum, said improving the accuracy and transparency of forecasts is a “fundamental first step of really meeting this moment” of energy growth.

    “Wherever we go, the question is, ‘Is the (energy) growth real? How can we be so sure?’” Tinjum said. “And we really view commercial readiness verification as one of those important kind of low-hanging opportunities for us to be adopting at this moment.”

    Igal Feibush, the CEO of Pennsylvania Data Center Partners, a data center developer, said utilities are in a “fire drill” as they try to vet a deluge of data center projects all seeking electricity.

    The vast majority, he said, will fall off because many project backers are new to the concept and don’t know what it takes to get a data center built.

    States also are trying to do more to find out what’s in utility forecasts and weed out speculative or duplicative projects.

    In Texas, which is attracting large data center projects, lawmakers still haunted by a blackout during a deadly 2021 winter storm were shocked when told in 2024 by the grid operator, the Electric Reliability Council of Texas, that its peak demand could nearly double by 2030.

    They found that state utility regulators lacked the tools to determine whether that was realistic.

    Texas state Sen. Phil King told a hearing earlier this year that the grid operator, utility regulators and utilities weren’t sure if the power requests “are real or just speculative or somewhere in between.”

    Lawmakers passed legislation sponsored by King, now law, that requires data center developers to disclose whether they have requests for electricity elsewhere in Texas and to set standards for developers to show that they have a substantial financial commitment to a site.

    Electricity bills are rising, too

    PPL Electric Utilities, which delivers power to 1.5 million customers across central and eastern Pennsylvania, projects that data centers will more than triple its peak electricity demand by 2030.

    Vincent Sorgi, president and CEO of PPL Corp., told analysts on an earnings call this month that the data center projects “are real, they are coming fast and furious” and that the “near-term risk of overbuilding generation simply does not exist.”

    The data center projects counted in the forecast are backed by contracts with financial commitments often reaching tens of millions of dollars, PPL said.

    Still, PPL’s projections helped spur a state lawmaker, Rep. Danilo Burgos, to introduce a bill to bolster the authority of state utility regulators to inspect how utilities assemble their energy demand forecasts.

    Ratepayers in Burgos’ Philadelphia district just absorbed an increase in their electricity bills — attributed by the utility, PECO, to the rising cost of wholesale electricity in the mid-Atlantic grid driven primarily by data center demand.

    That’s why ratepayers need more protection to ensure they are benefiting from the higher cost, Burgos said.

    “Once they make their buck, whatever company,” Burgos said, “you don’t see no empathy towards the ratepayers.”

    ___

    Follow Marc Levy at http://twitter.com/timelywriter.

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