Soroban Capital Partners LP v. Commissioner of Internal Revenue, Nos. 25-2079 (L), 25-2250 (CON) (2d Cir. Sept. 17, 2026), aff’g 161 T.C. 310 (2023), and T.C.M. (RIA) 2025-52.

K Alain, L.L.L.P. v. Commissioner of Internal Revenue, No. 24-60240, 184 F.4th 766 (5th Cir. Aug. 12, 2026), granting reh’g, withdrawing and substituting 165 F.4th 374 (5th Cir. 2026), vacating and remanding Nos. 11587-20, 30118-21 (U.S. Tax Court Feb. 20, 2024)

The tax world has reached a defining moment regarding the application of the federal Self-Employment Contributions Act (SECA) tax to partnership distributive shares. For over a decade, asset managers, private equity sponsors, hedge fund operators, and pass-through entities have relied heavily on state-law limited partnership structures to insulate active partner distributive shares from the 15.3% SECA tax imposed under Internal Revenue Code (I.R.C.) § 1401(a)–(b). That reliance has encountered a formidable wall of judicial precedent.

On September 17, 2026, the United States Court of Appeals for the Second Circuit issued its highly anticipated decision in Soroban Capital Partners LP v. Commissioner of Internal Revenue, Nos. 25-2079 (L), 25-2250 (CON) (2d Cir. Sept. 17, 2026), affirming the United States Tax Court’s rulings in Soroban Capital Partners LP v. Commissioner (“Soroban I”), 161 T.C. 310 (2023), and Soroban Capital Partners LP v. Commissioner (“Soroban II”), T.C.M. (RIA) 2025-52, 2025 WL 1517432 (May 28, 2025). The Second Circuit held unequivocally that the statutory exemption under I.R.C. § 1402(a)(13) for a “limited partner, as such” does not protect partners who exert operational or managerial control over a partnership’s business, regardless of their formal designation under state partnership law.

This significant ruling comes shortly after the United States Court of Appeals for the Fifth Circuit granted rehearing, withdrew its initial opinion in Sirius Solutions, L.L.L.P. v. Commissioner, 165 F.4th 374 (5th Cir. 2026), and issued a revised opinion under the taxpayer’s renamed entity, K Alain, L.L.L.P. v. Commissioner, No. 24-60240, 184 F.4th 766 (5th Cir. Aug. 12, 2026).

For CPAs, Enrolled Agents, and tax attorneys advising pass-through entities, understanding the precise statutory mechanics, procedural jurisdictional hurdles, and substantive functional standards established by these decisions is critical. This article provides a comprehensive technical analysis of the facts in Soroban, the taxpayers’ request for relief, the Second Circuit’s statutory analysis, the application of law to facts, and a rigorous comparison with the Fifth Circuit’s revised decision in K Alain to evaluate whether a true circuit split exists.

H.R. 9500, 119th Cong., 2d Sess. (2026), passed the House of Representatives on September 15, 2026

On September 15, 2026, the United States House of Representatives passed H.R. 9500, titled the “Tax Relief for Fraud Victims Act”. Introduced by Representative Max Miller (OH) alongside Representative Thomas Suozzi (NY), the proposed legislation enacts substantive modifications to Title 26 of the United States Code (Internal Revenue Code of 1986). The bill addresses long-standing practitioner concerns regarding the restrictive personal casualty loss rules imposed under the Tax Cuts and Jobs Act (TCJA) of 2017, while instituting unprecedented relief, elections, and extended refund statutes for taxpayers who suffer theft losses stemming from fraud, deceit, or misrepresentation.

Legislative Status Note: Tax practitioners must advise clients that while H.R. 9500 has passed the House of Representatives, it remains a proposed bill. To become law, H.R. 9500 must still be considered and approved by the United States Senate and subsequently signed into law by the President of the United States.

Notice 2026-54, 2026-41 I.R.B. 1 (Sept. 28, 2026)

The Internal Revenue Service (IRS) issued Notice 2026-54 to provide critical relief under Section 1033(e)(2) of the Internal Revenue Code (I.R.C.) for agricultural producers who were forced to sell draft, breeding, or dairy livestock due to persistent drought conditions. Under general tax principles, gain realized from the sale or exchange of property must be recognized unless a specific nonrecognition provision applies. I.R.C. § 1033(e)(1) treats weather-related excess sales of qualified livestock as involuntary conversions, allowing taxpayers to defer gain by reinvesting the sales proceeds in qualified replacement property. While the statutory replacement period under I.R.C. § 1033(e)(2)(A) is four years for sales occurring in federally designated disaster areas, persistent multi-year weather events can prevent timely herd replenishment or farm reinvestment.

Notice 2026-54 invokes the administrative extension mechanism established under I.R.C. § 1033(e)(2)(B) and Notice 2006-82, 2006-2 C.B. 529, extending the replacement period for affected taxpayers until the end of their first taxable year ending after a “drought-free year” for their applicable region. This article delivers a comprehensive technical analysis of Notice 2026-54 for CPAs and Enrolled Agents, detailing the statutory framework, administrative background, factual determinations, legal application, and practical reporting considerations for client compliance.

Darrin Johnson, Jr. v. Internal Revenue Service, No. 1:25-cv-02117 (D. Md. Sept. 11, 2026)

For tax professionals advising clients on tax controversy and refund claims, maintaining strict adherence to statutory filing formalities is paramount. In Darrin Johnson, Jr. v. Internal Revenue Service, No. 1:25-cv-02117 (D. Md. Sept. 11, 2026), the United States District Court for the District of Maryland addressed whether a taxpayer’s addition of restrictive phrases above the signature line on an amended tax return invalidates the return for purposes of bringing a federal refund suit. Holding that qualifying or modifying the mandatory “penalties of perjury” jurat destroys the legal validity of IRS Form 1040X, the court dismissed the taxpayer’s refund complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to meet the statutory prerequisite of a “duly filed” claim under Internal Revenue Code (IRC) § 7422(a). This decision reinforces long-standing tax jurisprudence: tax administrative mechanics cannot be circumvented through “sovereign citizen” style disclaimers or jurat alterations.

Justin Joseph Moore v. Commissioner of Internal Revenue, T.C. Memo. 2026-85, Docket No. 2249-25L (Sept. 15, 2026).

Tax practitioners representing clients in IRS Collection Due Process (CDP) proceedings must maintain strict compliance with procedural rules governing standard of review, underlying tax liability challenges, and lien withdrawal requests. In Justin Joseph Moore v. Commissioner of Internal Revenue, T.C. Memo. 2026-85 (Docket No. 2249-25L, filed September 15, 2026), the United States Tax Court evaluated the Internal Revenue Service’s (IRS) refusal to withdraw a Notice of Federal Tax Lien (NFTL) securing $730,027 in unpaid income tax liabilities. Beyond providing a rigorous framework regarding the scope of review under Internal Revenue Code (I.R.C.) §§ 6320 and 6330, the decision offers a stern judicial warning regarding the unverified use of generative artificial intelligence (AI) in legal drafting. This article analyzes the facts, legal framework, judicial holdings, and practical implications of Moore v. Commissioner, while examining companion authority from the Arizona Court of Appeals on AI-related sanctions.

Tunkl v. Commissioner, T.C. Memo. 2026-83 (Sept. 10, 2026)

For federal income tax professionals advising high-net-worth clients, dealers, and corporate entities engaged in informal joint ventures, the line separating taxable gross income from nontaxable receipts—such as deposits or bona fide loans—is a critical compliance boundary. In Tunkl v. Commissioner, T.C. Memo. 2026-83 (Sept. 10, 2026), the United States Tax Court addressed whether $16.5 million received by an art dealer’s S corporation for an intended artwork acquisition constituted unreported gross income under Internal Revenue Code (IRC) § 61(a) or a nontaxable financial flow.

The decision by Judge Landy offers an instructive analysis of the economic dominion doctrine, the strict temporal requirements for establishing customer deposits under Commissioner v. Indianapolis Power & Light Co., and the Ninth Circuit’s multifactor framework for bona fide debt under Welch v. Commissioner.

Department of the Treasury, Internal Revenue Service, Allocation and Apportionment of Deductions to Foreign Source Section 951A Category Income and Deduction Eligible Income, Notice of Proposed Rulemaking, REG-117273-25, RIN 1545-BR90, 26 C.F.R. Part 1, 91 Fed. Reg. (scheduled for publication Sept. 11, 2026).

The Department of the Treasury and the Internal Revenue Service (IRS) have issued a Notice of Proposed Rulemaking (REG-117273-25, RIN 1545-BR90) providing long-awaited regulatory guidance regarding the “allocation and apportionment of deductions to foreign source section 951A category income for foreign tax credit limitation purposes and for purposes of calculating deduction eligible income”. These proposed regulations primarily implement the statutory mandates enacted under Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA).

Specifically, the rulemaking updates existing regulations under Treasury Regulation § 1.250(b)-1, amends Treasury Regulation § 1.861-8 and § 1.904(b)-3, and introduces new Proposed Treasury Regulation § 1.904(b)-4. The provisions significantly alter how domestic corporations determine foreign-derived deduction eligible income (FDDEI) and calculate foreign tax credit (FTC) limitations under Internal Revenue Code (I.R.C.) § 904(a) for foreign source global intangible low-taxed income (GILTI) category income (section 951A category income).

This article provides tax practitioners, CPAs, and Enrolled Agents (EAs) with a rigorous technical examination of the background, statutory revisions, administrative rationale, effective dates, and taxpayer reliance rules established by Treasury in these proposed regulations.

Treasury Department, Internal Revenue Service, Notice of Proposed Rulemaking: Information Reporting Regarding Qualified Opportunity Zones and Updated Qualified Opportunity Fund Certification and Decertification Procedures, REG-116506-25, RIN 1545-BR82, 26 CFR Parts 1 and 301, 91 FR _____ (scheduled for publication Sept. 11, 2026)

On September 11, 2026, the Department of the Treasury and the Internal Revenue Service issued Notice of Proposed Rulemaking REG-116506-25 (RIN 1545-BR82), titled Information Reporting Regarding Qualified Opportunity Zones and Updated Qualified Opportunity Fund Certification and Decertification Procedures. This regulatory package implements new statutory mandates enacted under Section 70421 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA). The OBBBA permanently extended subchapter Z of chapter 1 of the Internal Revenue Code (Code) and established rigorous information reporting regimes under Code Sec. 6039K and Code Sec. 6039L, backed by severe daily assessable penalties under Code Sec. 6726.

The proposed regulations amend Income Tax Regulations (26 CFR Part 1) under Code Secs. 1400Z-2, 6039K, 6039L, and 6045, as well as Procedure and Administration Regulations (26 CFR Part 301) under Code Secs. 6011, 6037, 6722, 6724, and 6726. Treasury issued these proposed rules pursuant to express delegations of statutory authority under Code Sec. 1400Z-2(e)(4) (authorizing certification rules for Qualified Opportunity Funds (QOFs) and anti-abuse provisions); Code Sec. 6039K(a), (b)(9), and (c) (prescribing annual QOF returns and investor disposition statements); Code Sec. 6039L(a) (mandating operational disclosures from Qualified Opportunity Zone Businesses (QOZBs) to QOFs); Code Sec. 6045(a) (governing broker information reporting); and Code Sec. 7805 (general rulemaking authority).

For tax professionals—specifically CPAs and Enrolled Agents (EAs) advising QOFs, QOZBs, and opportunity zone investors—these proposed regulations fundamentally alter the compliance landscape. The regulations convert Form 8996 (Qualified Opportunity Fund) into an independent annual information return, establish exclusive procedural mechanics for voluntary QOF decertification and inadvertent election revocation, create mandatory inter-entity reporting flows between QOZBs and QOFs, and enforce compliance through non-waivable per-day administrative penalties.

Katanga Properties, LLC, R. Brent Evans, Partnership Representative v. Commissioner, 167 T.C. No. 10 (2026)

The United States Tax Court recently issued a reported decision interpreting the statute of limitations governing centralized partnership audits under the Bipartisan Budget Act of 2015 (BBA). In Katanga Properties, LLC v. Commissioner, 167 T.C. No. 10 (2026), the Court addressed a pivotal procedural question for tax practitioners representing partnerships under audit: When a partnership executes a Form 872–M consent extending the limitations period under Internal Revenue Code (I.R.C.) § 6235(a)(1), does the subsequent issuance of a Notice of Proposed Partnership Adjustment (NOPPA) trigger a rigid 330-day deadline under I.R.C. § 6235(a)(3) that cuts short the agreed-upon extension period?

Writing for the Court, Judge Weiler held that under the plain language of I.R.C. § 6235(a), the statute of limitations for issuing a Notice of Final Partnership Adjustment (FPA) does not expire until the later of the dates determined under paragraphs (1), (2), and (3) of subsection (a). The Court clarified that an extension agreement executed pursuant to I.R.C. § 6235(b) extends the baseline limitations period under paragraph (1), and the Internal Revenue Service (IRS) may issue a valid, timely FPA at any point before that extended period expires—even if more than 330 days have elapsed since the NOPPA was mailed.

This decision delivers critical insights for CPAs, Enrolled Agents (EAs), and tax attorneys evaluating procedural defenses in BBA audit controversies. It reaffirms that statutory extension agreements under I.R.C. § 6235(b) preserve the IRS’s adjustments period broadly and cannot be circumvented by interpreting notice timing provisions as sequential statutory cutoffs.

United States v. Rund, No. 24-1958, ___ F.4th ___ (4th Cir. Sep. 4, 2026), affirming 743 F. Supp. 3d 779 (E.D. Va. 2024)

As tax professionals representing clients with international assets, we continuously grapple with the severe civil penalties associated with non-compliance under the Bank Secrecy Act (BSA). In United States v. Richard M. Rund, No. 24-1958, ___ F.4th ___ (4th Cir. Sep. 4, 2026), the Fourth Circuit Court of Appeals affirmed a $2,915,633 willful FBAR penalty against a taxpayer, Richard Rund. This case provides a critical roadmap for CPAs and EAs regarding the court’s strict application of the objective recklessness standard for “willfulness” and the formidable barriers to asserting an Excessive Fines defense under the Eighth Amendment.

Car Loan Interest Deduction, T.D. 10054, 91 Fed. Reg. 18219 (scheduled for publication Sep. 8, 2026)

The release of the final regulations under Treasury Decision (T.D.) 10054 marks a historic shift in the deductibility of personal interest, restoring a tax benefit for passenger vehicle financing that has been virtually non-existent since the passage of the Tax Reform Act of 1986. Enacted to implement the statutory changes introduced by the One, Big, Beautiful Bill Act (OBBBA) of 2025, these regulations provide the long-awaited administrative and interpretive framework for both taxpayers claiming the deduction and lenders navigating the accompanying information reporting requirements.

For CPAs, Enrolled Agents, and other tax practitioners, understanding the technical nuances of these regulations is critical. The rules govern not only the individual taxpayer’s ability to deduct up to $10,000 of interest paid on a specified passenger vehicle loan (SPVL) but also establish stringent new reporting obligations under Internal Revenue Code (I.R.C.) Section 6050AA, complete with electronic filing requirements and failure-to-file penalties. This article provides a comprehensive, highly technical analysis of T.D. 10054, focusing on the statutory alignment, revisions from the proposed regulations, and the IRS’s underlying legal justifications.

Rev. Proc. 2026-32, September 4, 2026

The Department of the Treasury and the Internal Revenue Service (IRS) issued Revenue Procedure 2026-32 to provide updated administrative and procedural rules for taxpayers seeking to change their federal tax accounting methods. Specifically, this guidance modifies Section 7 and Section 19 of Revenue Procedure 2025-23, which lists the automatic accounting method changes for which the Commissioner’s consent is deemed granted. The revenue procedure is designed to facilitate compliance with statutory changes made to Internal Revenue Code (IRC) Section 174 and Section 460 by the One, Big, Beautiful Bill Act (OBBBA).

Revenue Procedure 2026-32 governs the administrative mechanisms by which taxpayers may transition their tax treatments of research or experimental (R&E) expenditures and residential construction contracts. For R&E expenditures, the ruling covers both “specified research or experimental expenditures” (SRE expenditures) paid or incurred in taxable years beginning after December 31, 2021, and before January 1, 2025, under TCJA Section 174, as well as domestic R&E expenditures governed by Section 174A after OBBBA’s enactment. For long-term construction contracts, the procedure establishes rules for residential and home construction contracts entered into in taxable years beginning after July 4, 2025.

Wales v. Commissioner, T.C. Memo. 2026-82, (Sept. 3, 2026)

In the practice of tax controversy, few issues are as critical as the precise boundaries of the United States Tax Court’s jurisdiction. Under the Internal Revenue Code, key deadlines for seeking judicial review are strictly triggered by the administrative mailings of the Internal Revenue Service. A recent decision by the Tax Court, Dania Wales v. Commissioner of Internal Revenue, T.C. Memo. 2026-82, highlights a severe evidentiary pitfall for the IRS and provides tax professionals with a powerful precedent for defending taxpayer access to judicial review when the government fails to document its mailings meticulously.

Department of the Treasury, Internal Revenue Service, Notice of Proposed Rulemaking: Racial Nondiscrimination in Private Schools, REG-119986-25, RIN 1545-BS05, FR Doc. 2026-18127 (filed September 3, 2026, 8:45 a.m., scheduled for publication in the Federal Register on September 4, 2026)

On September 3, 2026, the Department of the Treasury and the Internal Revenue Service (IRS) released a significant Notice of Proposed Rulemaking (REG-119986-25) that codifies and expands the racial nondiscrimination requirements for private schools seeking or maintaining tax-exempt status under Section 501(c)(3) of the Internal Revenue Code. Under the proposed regulations, which add a new Section 1.501(c)(3)-2 to the Income Tax Regulations, any private school that adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin will be deemed not “operated exclusively for exempt purposes” and will consequently lose its federal tax exemption.

Crucially, the proposed rules make no exceptions for “benign” or race-conscious affirmative action, diversity, or remedial programs. This regulatory shift represents a direct response to recent federal jurisprudence—most notably the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College. The proposed regulations also formally modify long-standing administrative guidelines by stripping Revenue Procedure 75-50 of its safe harbors for race-conscious admissions and financial aid programs. This article provides tax professionals with a technical analysis of the proposed rules, their judicial justifications, the specific modifications to existing guidance, and the expected timeline for compliance.

Hank Risan, et al. v. Commissioner of Internal Revenue, T.C. Memo. 2026-78 (Sept. 2, 2026)

Hank Risan is a California-based music enthusiast and inventor who claimed to have an advanced, multi-disciplinary academic background in theoretical mathematics and topology, vintage guitar restoration, and software development. He founded and served as President and CEO of Media Rights Technologies, Inc. (MRT), an intellectual property and digital rights management software firm in which he held a 51% to 67% majority ownership stake. Although MRT had no customers from 2014 through 2017, it claimed more than 400 shareholders by the end of 2017 and maintained substantial salary expenses for software engineers, marketing staff, and “music rippers” who digitially uploaded tracks onto BlueBeat.com, a music broadcasting site.

Risan also controlled BlueBeat, Inc. (incorporated in 2003) and Encryptos, Inc. (incorporated in 2016), which held “The Enigma” network security technology. BlueBeat ran an online guitar museum called TheMomi.org and streamed music, generating negligible revenue of approximately $3,500 annually in advertisements. Despite their separate corporate statuses, Risan kept only one set of books for MRT and BlueBeat, commingling their bank transactions and records. Risan would regularly withdraw funds from corporate Wells Fargo bank accounts for his personal credit card payments, groceries, and other living expenses, or deposit investor loans directly into his personal Bank of America account. On paper, Risan was entitled to a salary of $50,000 per month from both MRT and BlueBeat, but he withdrew only small amounts and reported W-2 wages of just $1,200 per year from MRT.

In addition to his software ventures, Risan claimed to own an extensive collection of 700 to 1,000 vintage celebrity guitars, which he repaired at his home workshop. He claimed that in 2004, his secretary’s boyfriend stole his guitar business records and demanded a ransom—asking Risan to murder the secretary and pay $150,000 in cash—which Risan refused, leaving him without historical documentation for his cost of goods sold (COGS). He also received a real estate portfolio from his mother, which he traded via Section 1031 exchanges, eventually retaining two valuable Santa Cruz properties (Moore Creek and Rockridge), one of which he mortgaged for $500,000 to fund MRT.

The IRS audited Risan’s individual returns for 2014–2017 and MRT’s corporate returns for 2016–2017. Because Risan refused to cooperate with Revenue Agent (RA) Miguel Delgado, the IRS conducted a bank-deposits analysis across six accounts over which Risan had signatory authority. The IRS issued notices of deficiency proposing multi-million dollar deficiencies, Section 6662(a) negligence penalties, and Section 6651(a)(1) late-filing additions to tax.

Goldman v. United States, 172 Fed. Cl. 548 (2026), 2026 WL 2849033 (Fed. Cl. Sept. 1, 2026)

For tax controversy practitioners, navigating the intersection of a client’s severe medical hardships and the rigid statutory deadlines of the Internal Revenue Code (I.R.C.) represents one of the most challenging areas of practice. In the recent decision of Goldman v. United States, Chief Judge Matthew H. Solomson of the United States Court of Federal Claims addressed a scenario that is as tragic as it is instructive for CPAs and Enrolled Agents. While the court expressed deep sympathy for the taxpayer’s significant mental health struggles, it ultimately dismissed his refund claim for failure to state a claim under Rule 12(b)(6). The decision reinforces a critical controversy lesson: the “financial disability” tolling exception of I.R.C. § 6511(h) is strictly construed and is entirely unavailable if an authorized representative, such as an accountant or spouse, has authority to act on the taxpayer’s behalf during the period of disability.

Filipowski v. Commissioner, No. 25-11382 (11th Cir. 2025), September 2, 2026

For tax professionals representing clients with significant tax delinquencies, the Offer-in-Compromise (OIC) program under Internal Revenue Code (IRC) Section 7122 represents a crucial collection alternative. However, the program is not a guaranteed escape route for taxpayers, especially when liabilities stem from aggressive tax-avoidance schemes. In Filipowski v. Commissioner, the United States Court of Appeals for the Eleventh Circuit provided a stark reminder that the Internal Revenue Service (IRS) possesses broad discretion to reject settlements on public policy grounds, even when a taxpayer’s assets are demonstrably insufficient to pay the full debt.

This decision highlights the critical intersection of tax collection, public disclosure, and the preservation of voluntary compliance. It serves as an essential case study for Certified Public Accountants (CPAs) and Enrolled Agents (EAs) on the limits of collection alternatives in the face of tax shelter liabilities and a history of noncompliance.

Estate of Paul Bruyea v. United States, F.4th , No. 25-1563, ECF No. 58 (Fed. Cir. Aug. 31, 2026), reversing Bruyea v. United States, 174 Fed. Cl. 238 (2024).

Matthew Christensen & Katherine Kaess Christensen v. United States, F.4th , No. 24-1284, ECF No. 71 (Fed. Cir. Aug. 31, 2026), reversing Christensen v. United States, 168 Fed. Cl. 263 (2023)

On August 31, 2026, the United States Court of Appeals for the Federal Circuit issued two highly anticipated companion decisions that definitively resolve a long-standing controversy regarding the interaction between treaty-based foreign tax credits and the Net Investment Income Tax (NIIT) imposed under Internal Revenue Code (IRC) § 1411. In Estate of Paul Bruyea v. United States and Matthew Christensen & Katherine Kaess Christensen v. United States, the court reversed previous taxpayer victories in the Court of Federal Claims, holding that neither the U.S.-Canada Income Tax Convention nor the U.S.-France Income Tax Convention provides a foreign tax credit (FTC) to offset the NIIT. For tax professionals, these rulings establish a strict, text-first standard for treaty interpretation, confirming that double taxation is not absolutely prohibited under bilateral agreements and that statutory limitations in the Code remain paramount unless explicitly overridden by treaty text.

Peter J. Janangelo, Jr. and Mary Ann Janangelo v. Commissioner of Internal Revenue, T.C. Summary Opinion 2026-8 (Tax Ct. Aug. 27, 2026)

Tax professionals are often held to a higher standard of compliance due to their education, credentials, and experience. In Janangelo v. Commissioner, T.C. Summary Opinion 2026-8, the United States Tax Court delivered a stark reminder that professional tax expertise can be a double-edged sword. Rather than shielding a taxpayer from scrutiny, professional sophistication can serve as the primary catalyst for proving fraudulent intent.

The South Saskatchewan Community Foundation Inc. v. United States, No. 24-1391T (Fed. Cl. Aug. 25, 2026)

For tax professionals advising cross-border tax-exempt organizations, navigating the interplay between general treaty residency rules and specific exemption provisions is a recurring challenge. On August 25, 2026, the United States Court of Federal Claims issued its highly anticipated decision in The South Saskatchewan Community Foundation Inc. v. United States. The court addressed a critical question: Can a Canadian registered charity utilize the general “fiscal transparency” provisions of Article IV(6) of the United States-Canada Income Tax Treaty to claim a reciprocal tax exemption on U.S.-source dividend income received through a Canadian unit trust that does not otherwise qualify under the specific exempt organization pooled-investment rules of Article XXI(3)?

In an opinion authored by Judge Richard A. Hertling, the court granted summary judgment for the United States, concluding that the treaty’s specific pooled-investment provisions under Article XXI(3) are exclusive. Consequently, charities investing through collective investment vehicles that are not restricted solely to tax-exempt entities cannot obtain reciprocal tax exemptions by claiming the vehicle is “fiscally transparent” under Article IV(6). This article provides a technical analysis of the case facts, the legal framework, the court’s multi-layered interpretive analysis, and the broader planning implications for practitioners.