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A Look at the Hegseth IRS Notice

By Joe Kristan
February 18, 2025
IRS Building and Sign

Key Takeaways

  • The Secretary of Defense gets an audit notice.
  • He's not the only one.

Pete Hegseth, the new Secretary of Defense, got a letter from the IRS:

Hegseth IRS Notice

The Secretary says that this was a parting shot from the Biden administration. Eide Bailly tax controversy specialist Elyse Katz says there is a less exciting but much more likely explanation:

In fact, it likely pertains to the electric motor vehicle credit. IRS has a campaign and sending out tons of exams like that to substantiate the credit. The same notice also goes on for solar credit claims. In any case we have seen plenty of these notices from people without cabinet nominations.

The image shared by Secretary Hegseth doesn't include the explanation of the $33,558.16 proposed tax adjustment. There are a number of possible causes for the adjustment. For example, the motor vehicle credit is limited to $7.500, and it is disallowed for high incomes. A solar credit could have been submitted missing information.

Other than publicizing a notice on social media, what should a taxpayer who receives a similar notice do? Elyse has some ideas that may be more productive:

Reach out to your CPA or tax practitioner that prepared the return. There are specific requirements to claim the credit including substantiation that needs to be provided to the IRS. Once taxpayers provide sufficient proof that they are eligible for the credit, the IRS will reverse the assessment. However, if it can’t be substantiated then taxpayers will have to pay back the credit they received.

Elyse Katz is a Partner with the Eide Bailly Tax Controversy Team. 

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About the Author(s)

Joe Kristan

Joe B. Kristan, CPA

Partner
After 38 years centered on tax consulting for closely held businesses and their owners, Joe is joining Eide Bailly's National Tax Office. Joe's responsibilities include communication, process improvement and training. He is a principal contributor to the Eide Bailly Tax News and Views blog, providing daily updates on tax reform and other tax news. Joe is a Certified Public Accountant and a member of the AICPA Tax Section and Iowa Society of Public Accountants.
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