Month: April 2026

Filing Your 2026 Tax Return? The Stakes Just Got Higher

Filing Your 2026 Tax ReturnPicture two things happening at the same time. The agency responsible for reviewing your tax return is understaffed and buried under a backlog, and the software that the agency uses to catch filing errors just keeps getting better.

That combination should give any taxpayer pause this season. Not because an audit is necessarily coming, but because if something does go wrong, the window for getting it resolved quickly has shrunk considerably.

The IRS Is Running Lean, But It’s Technology Isn’t

The agency lost more than a quarter of its workforce in 2025. The National Taxpayer Advocate’s most recent annual report to Congress documented the drop: from roughly 102,000 employees to about 74,000. Those departures, through a mix of voluntary exits and layoffs, spread across nearly every division.

Funding took a hit at the same time. Congress reversed a significant portion of the IRS budget boost approved through the Inflation Reduction Act, pulling back billions earmarked for enforcement and technology investment. A government shutdown that stretched across October and November of last year piled further delays onto an already strained system. The Treasury Inspector General for Tax Administration confirmed in a January report what tax practitioners were already seeing firsthand: a serious backlog in the processing of amended returns and taxpayer correspondence.

Here’s the part that catches people off guard. None of that has slowed the IRS’s ability to spot problems on your return. The agency’s systems cross-reference what you report against data received independently from employers, brokers, and financial institutions. Artificial intelligence and expanded automation have made error detection faster and more precise, staffing levels notwithstanding.

Fewer people are available to handle problems once they surface. But the technology responsible for finding those problems is running better than ever.

What This Looks Like in Practice

Tax professionals working with real clients are the best window into what this means day to day. Advisors report receiving IRS notices today that are resolving matters dating back to 2023, showing a multi-year lag on what should be routine correspondence. The practical response among preparers has been to tighten processes and leave less to chance.

Some advisors have added specific safeguards, such as obtaining power of attorney to monitor clients’ IRS online accounts directly rather than waiting for slow paper notices. Others describe the current environment plainly: the cost of needing to amend a return has gone up, not necessarily in dollars, but in time and uncertainty.

A poll of tax and financial advisors conducted during a recent industry webinar found that every respondent is maintaining at least the same level of care they applied when IRS staffing was at full strength. Nearly half said they are actively raising the bar this season.

What You Should Do Differently

Here are a few practical steps worth taking seriously this year:

  • Give your preparer complete and accurate information. Incomplete or inconsistent reporting is where most errors begin, and those errors are exactly what the IRS’ matching systems are built to catch.
  • If you are claiming something new on your return, ask your preparer to walk you through the basis for it. Understanding what you are filing and why is reasonable.
  • Set up an IRS online account at IRS.gov if you haven’t already. You can monitor your filing status, review transcripts, and spot potential issues before they become formal notices.
  • And if something does go sideways, respond early. Letting a notice sit without a response doesn’t slow the IRS down. It just costs you time you don’t have.

Conclusion

The agency may be a smaller operation than it was a few years ago. But the part of it designed to find mistakes on your return is still very much running.

Understanding Cash EBITDA

What is Cash EBITDAWhile Cash EBITDA isn’t recognized by generally accepted accounting principles (GAAP), it’s a way for company owners and investors to account for deferred revenue during valuation modeling. This financial metric measures a business’ year-over-year change in postponed revenue to analyze a company’s financial situation.

Defining EBITDA

Before Cash EBITDA is defined, EBITDA must be defined.

EBITDA = earnings before interest, taxes, depreciation, and amortization

This metric is used quite often in financial analysis. Business owners, investors and financial analysts use this metric to examine different companies’ fiscal achievements against sector competitors and to determine the business’ profits from its core functions. 

Since financial statements are required by the U.S. Securities and Exchange Commission (SEC) and financial analysts are presented with varied filings, it still needs to be standardized for analysis. Though it’s not GAAP recognized, EBITDA and adjusted EBITDA are often reported by companies that can make peer-to-peer businesses easier to compare financials.

Some believe it’s not the best comparison due to many factors, including varying tax profiles, capital structures, and capitalization policies that affect net income. It’s important to be mindful that EBITDA doesn’t give any details regarding how a business’ working capital varies with its reinvestment into a business’ capital expenditures.

Some say EBITDA overstates profitability. Others believe EBITDA doesn’t factor in the cost of assets in evaluating profitability. For example, if two companies have the same EBITDA, but one is highly levered, the company with no to little debt is in better shape. 

Determining EBITDA

The income statement has tax expenses, net income, and interest expenses on it. If not found on the cash flow statement, the depreciation and amortization figures may be found on the financial statement footnotes. While EBITDA is a start, further refinement of EBITDA by using Cash EBITDA is a better financial definition.

Calculating Cash EBITDA

It’s important to account for deferred revenue properly. Since deferred revenue is revenue remitted in advance for products or services to be delivered at a future date, and revenue is recorded on the income statement when fulfillment happens, Cash EBITDA helps businesses and investors obtain a better picture of a company’s financial situation.

The deferred revenue or prepayment is recorded as a liability since the product or service hasn’t been delivered. Once fulfillment has occurred, it’s recognized as income. Therefore, it’s calculated as follows:

Cash EBITDA = TTM EBITDA + Year-over-Year Change in Deferred Revenue 

TTM EBITDA is the 12-month trailing EBITA. Also referred to as last twelve months (LTM), it’s the immediate 12 months of operating earnings. This way, the figure can be updated on a monthly or quarterly basis as the company adds new accounts.

The second component, derived from the balance sheet, is the annual change in deferred revenue.    

This formula is important and useful because if a new client is booked in the first three months of the year, and during a valuation analysis, if Cash EBITDA isn’t calculated, it would skew the valuation since it wouldn’t include new accounts.        

While GAAP is an important institution in the accounting and financial industry, businesses and investors that use well-regarded financial metrics beyond GAAP standards can make better-informed decisions.