Rouzard v. United States, 179 Fed. Cl. 209 (2025), aff’d, No. 2026-1233 (Fed. Cir. Nov. 10, 2026) (per curiam)

Introduction and Statutory Overview

For tax practitioners representing clients in federal tax controversies, the procedural prerequisites for maintaining a tax refund suit against the sovereign are unforgiving. Under the doctrine of sovereign immunity, the United States may not be sued without its consent, and the terms of that consent define a court’s authority to entertain the action. In refund litigation, this principle is codified primarily in Section 7422(a) of the Internal Revenue Code (Title 26 of the United States Code). Section 7422(a) mandates that:

“No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof.”

The phrase “duly filed” carries significant substantive weight. While practitioners often view refund procedures through the lens of jurisdictional timeliness under I.R.C. § 6511, recent jurisprudence from the U.S. Court of Appeals for the Federal Circuit and the U.S. Court of Federal Claims has reinforced a critical distinction: the physical filing of an administrative claim addresses jurisdiction, but the adequacy of that claim—specifically its factual specificity and documentary substantiation—governs whether the taxpayer has stated a plausible claim upon which relief can be granted under Rule 12(b)(6).

The decision of the Court of Federal Claims in Rouzard v. United States, 179 Fed. Cl. 209 (2025), and its subsequent affirmance by the Federal Circuit (Rouzard v. United States, No. 2026-1233 (Fed. Cir. Nov. 10, 2026)), provide a textbook study of these principles. The litigation demonstrates the fatal consequences of asserting unsupported overpayment and withholding claims—particularly those premised on fringe or tax-protestor theories—and clarifies how the trial and appellate courts evaluate administrative adequacy, substantiation, and motion-to-dismiss standards in federal tax refund actions.

Anderson v. United States, No. 18-1133T, Fed. Cl,. Nov. 9, 2026

For tax professionals representing individuals and closely held business owners, determining the deductibility of legal expenses under Internal Revenue Code (IRC) § 162(a) requires a rigorous application of the “origin of the claim” doctrine. On November 9, 2026, the United States Court of Federal Claims issued a published opinion in Anderson v. United States that offers critical guidance on the intersection of trade or business deductions, collateral estoppel across successive tax years, and the jurisdictional limits of tax refund tribunals when confronted with collateral attacks on underlying criminal convictions.

Writing for the court, Judge Stephen S. Schwartz granted summary judgment in favor of the government, holding that the taxpayers were collaterally estopped from relitigating the business characterization of post-conviction legal fees and reaffirming that a civil tax forum lacks subject-matter jurisdiction to re-examine or disregard a final state court criminal conviction.

Riddle Aggregates, LLC, Ornstein-Schuler, LLC, Tax Matters Partner v. Commissioner of Internal Revenue, T.C. Memo. 2026-117, November 10, 2026

For certified public accountants and enrolled agents advising clients on conservation contributions, partnership taxation, and valuation controversies, the United States Tax Court’s decision in Riddle Aggregates, LLC v. Commissioner provides an instructive dissection of the valuation mechanics governing conservation easements. The opinion forcefully reinforces the judicial consensus regarding the severe limitations of discounted cash flow (DCF) modeling for unmined, undeveloped real property, the preeminence of comparable sales under the principle of substitution, the probative weight of recent arm’s-length entity-level transactions, and the strict, non-waivable application of the 40% gross valuation misstatement penalty under Internal Revenue Code (IRC) Section 6662(h).

Robert E. Braun v. Commissioner of Internal Revenue, Docket No. 25467-21S (U.S. Tax Court Oct. 20, 2026) (Bench Opinion by STJ Diana L. Leyden)

Executive Summary

Tax practitioners frequently encounter clients who misapprehend the federal income tax consequences associated with whole life insurance policy conversions, lapse events, and policy loan offsets. In Braun v. Commissioner, Docket No. 25467-21S, the United States Tax Court evaluated whether a taxpayer realized ordinary income under Internal Revenue Code (I.R.C.) Section 72(e) when an insurer converted lapsed whole life policies into term insurance policies, using accumulated cash value to extinguish outstanding policy loans and purchase term coverage.

Special Trial Judge Diana L. Leyden, rendering an oral bench opinion pursuant to I.R.C. Section 7459(b) and Tax Court Rule 152, held that the taxpayer constructively received taxable gross income to the extent the cash surrender value used in the transaction exceeded his basis (aggregate premiums paid). However, the Court ruled in favor of the taxpayer regarding the accuracy-related penalty under I.R.C. Section 6662(a) because the Commissioner failed to satisfy his statutory burden of production under I.R.C. Section 6751(b) regarding supervisory approval or automated penalty calculation. This decision offers important technical guidance for CPAs and Enrolled Agents regarding gross income realization under I.R.C. Section 61(a)(9), information return dispute mechanics under I.R.C. Section 6201(d), and mandatory penalty verification standards.

Rev. Proc. 2026-35, November 5, 2026

Overview and Legislative Authority

The Internal Revenue Service released Revenue Procedure 2026-35, establishing the annual inflation adjustments for key tax provisions applicable to tax year 2027. Under Section 1 of the Revenue Procedure, the IRS emphasizes the underlying authority and potential for statutory modification:

“This revenue procedure sets forth inflation-adjusted items for 2027 for various Code provisions as in effect on [Release Date, 2026]. The inflation adjusted items for the Code sections set forth in section 3 of this revenue procedure are generally determined by reference to § 1(f). If amendments to the Code are enacted for 2027 after [Release Date, 2026], taxpayers should consult additional guidance to determine whether these adjustments remain applicable for 2027.”

Furthermore, Section 2.01 addresses statutory amendments impacting small business stock gain exclusions:

“Section 70431 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act amends § 1202(b). Certain amounts referred to in § 1202(b) are adjusted for inflation for years beginning after 2026.”

This article provides a technical analysis of the revised figures across key tax categories for tax planning, compliance, and client advisory engagements.

Moiseshyn v. Commissioner, T.C. Memo. 2026-114, November 4, 2026

Executive Summary

In Moiseshyn v. Commissioner, the United States Tax Court addressed a bit of confusion the taxpayers encountered when handling employee stock plan dispositions. The taxpayers believed they could defeat an IRS deficiency determination for omitted securities gains by asserting that the capital income was already embedded within Box 1 compensation on Form W-2, or at least that their employer’s guidance was so confusing their error should be excused. Writing for the Court, Judge Fung sustained the Internal Revenue Service’s deficiency determination regarding unreported securities gain from an Employee Stock Purchase Plan (ESPP), as well as omitted dividend and Treasury interest income.

The decision underscores the rigorous substantiation requirements imposed on taxpayers under Internal Revenue Code (I.R.C.) § 61 and Tax Court Rule 142(a). For CPAs and Enrolled Agents (EAs), Moiseshyn serves as a critical reminder that third-party informational disclaimers—such as brokerage guides stating that ESPP income is “usually” included in Box 1—do not constitute probative evidence of actual wage inclusion, nor do they shift the burden of proof back to the Commissioner.

Columbus Orthopaedic Clinic, P.A. v. United States, Civil Action No. 1:25-cv-78-RPC-RP (N.D. Miss. Oct. 30, 2026)

For Certified Public Accountants (CPAs) and Enrolled Agents (EAs) representing clients facing Employee Retention Credit (ERC) audits or litigation under Internal Revenue Code (I.R.C.) § 3134, the decision in Columbus Orthopaedic Clinic, P.A. v. United States serves as a benchmark. Decided by the United States District Court for the Northern District of Mississippi (Aberdeen Division), this case reinforces a rigorous, narrow interpretation of the “full or partial suspension” requirement under I.R.C. § 3134(c)(2)(A)(ii)(I).

The court granted summary judgment in favor of the United States, holding that essential medical service providers who modified operations, experienced throughput reductions, or voluntarily complied with non-binding public health recommendations failed to satisfy the statutory prerequisites for the ERC. Crucially, the court adopted the stringent legal framework established by the U.S. Court of Federal Claims in Northeast Health Services, LLC v. United States, holding that entitlement under the partial suspension prong requires proof that a compulsory governmental order carrying force of law and enforcement penalties was both the factual and proximate cause of a cessation of a discrete, more-than-nominal portion of business operations.

Glass Warehouse, LLC v. Commissioner, T.C. Memo. 2026-111, November 2, 2026

Executive Summary and Practice Insights

For tax practitioners advising closely held corporate clients, Glass Warehouse, LLC v. Commissioner serves as a stark reminder of the foundational evidentiary burdens required under the Internal Revenue Code. The decision underscores two key operational lessons for certified public accountants and enrolled agents: first, reporting shareholder payments on Form 1040 as “other income” does not satisfy the corporation’s statutory obligation under Section 162 and Section 6001 to substantiate trade or business expenses; and second, invoking a defense of reasonable cause based on professional tax reliance under Section 6664(c) requires concrete affirmative evidence of communication, full disclosure, and actual advice, rather than mere assertions that a return was prepared by an external CPA.

Bialer v. Commissioner, T.C. Memo. 2026-110, October 29, 2026

Editor’s Note: On November 4, 2026, the United States Tax Court reissued a corrected version of Bialer v. Commissioner, T.C. Memo. 2026-110. The corrected opinion reflects minor administrative and typographical adjustments: adding the “CORRECTED” designation on page 1, updating the official service date to November 4, 2026, and correcting respondent’s counsel’s middle initial to Gary J. Merken. The court’s legal analysis, statutory interpretations, factual findings, and ultimate holding remain entirely unchanged.

In Bialer v. Commissioner, T.C. Memo. 2026-110 (Docket No. 6983-19W, filed October 29, 2026), the United States Tax Court granted summary judgment in favor of the Commissioner of Internal Revenue, sustaining the IRS Whistleblower Office’s (WBO) final determination to deny a mandatory whistleblower award under Internal Revenue Code (I.R.C.) § 7623(b). Opinion author Judge Gustafson reexamined two recurring statutory issues in tax whistleblower litigation: first, whether an IRS operating division (such as Large Business & International, or LB&I) possesses delegated authority to issue a reviewable award determination; and second, whether the IRS “proceeded based on” a whistleblower’s submission when the examining audit team relied instead on independent information provided by another informant and a public congressional report.

For tax professionals representing informants before the WBO, Bialer provides crucial guidance on the strict evidentiary standards required under Treas. Reg. § 301.7623-1(c)(1), the non-reviewability of internal audit referral decisions under I.R.C. § 6201, and the narrow scope of record supplementation under Van Bemmelen v. Commissioner.

Consolidated Sportsmen of Lycoming County v. Commissioner, T.C. Memo. 2026-109, October 29, 2026

Tax-exempt social clubs operating under Internal Revenue Code (I.R.C.) § 501(c)(7) frequently generate revenues outside member dues, ranging from investment income to third-party facility leases and natural resource exploitation. A common misconception among tax advisors and exempt organization managers is that passive or third-party commercial activities—where club members spend virtually zero physical labor or administrative hours—do not count as non-exempt “activities” of the club for qualification purposes.

In Consolidated Sportsmen of Lycoming County v. Commissioner, T.C. Memo. 2026-109 (Oct. 29, 2026), the United States Tax Court unequivocally repudiated this “member-hours” insulation theory. In a fully stipulated declaratory judgment action under I.R.C. § 7428(a)(1)(E), Judge Gustafson sustained the Internal Revenue Service’s (IRS) revocation of a social club’s tax-exempt status because its gas and mineral royalty income regularly exceeded 50% of its total annual gross receipts. The court held that non-member commercial operations conducted on club property by third-party contractors constitute activities “of the club” under I.R.C. § 501(c)(7). Furthermore, monetary earnings serve as a primary metric for measuring the substantiality of non-exempt activities, overriding member-centric time allocations.

Rev. Rul. 2026-22, October 28, 2026

In Revenue Ruling 2026-22, the Internal Revenue Service addresses a critical intersection between retiree health benefit accounts under Internal Revenue Code (I.R.C.) § 401(h) and in-service distribution provisions under I.R.C. § 401(a)(36). The IRS formally rules that a qualified pension plan may utilize surplus assets held in a § 401(h) retiree medical account to fund active medical plan benefits for current employees who have attained age 59½ and are eligible for in-service retirement distributions. The ruling confirms that utilizing surplus 401(h) assets for these active, working participants does not violate the statutory mandates of I.R.C. § 401(h) or Treasury Regulation (Treas. Reg.) § 1.401-14, nor does it adversely affect the plan’s tax-qualified status under I.R.C. § 401(a).

Lontrac Enterprises, LLC, Lontrac Investors, LLC, Tax Matters Partner v. Commissioner of Internal Revenue, T.C. Memo. 2026-108, October 22, 2026

In Lontrac Enterprises, LLC v. Commissioner, T.C. Memo. 2026-108 (filed October 22, 2026), Chief Judge Urda delivered a scathing opinion dismantling a syndicated conservation easement tax shelter that claimed a $74.5 million charitable contribution deduction for real property previously listed on the open market for $2.9 million with no interested buyers. Describing the transaction as “resembling the movie Groundhog Day” and featuring “the same old moves,” the United States Tax Court reduced the allowable charitable deduction under Internal Revenue Code (I.R.C.) § 170 to $500,000 and sustained a 40% gross valuation misstatement penalty under I.R.C. § 6662(h).

This article provides a comprehensive, highly technical analysis of the factual record, the relief sought by the taxpayers, the legal standards governing easement valuation and penalty approval, the Court’s rigorous factual application, and the critical practice takeaways for tax practitioners advising clients on valuation methodologies and partnership tax controversy.

Rev. Proc. 2026-33, October 22, 2026

The Internal Revenue Service has issued Revenue Procedure 2026-33, establishing the IRA Compliance Resolution System (ICRS). Effective May 1, 2027, this administrative mechanism provides IRA Custodians and IRA Owners a formal, centralized path to correct specified “Eligible Inadvertent Failures” that historically threatened the tax-favored status of individual retirement arrangements or triggered significant tax penalties.

At launch, ICRS consists solely of the IRA Voluntary Correction Program (IVCP). Revenue Procedure 2026-33 also marks a major administrative shift by transitioning requests for waivers of the 60-day rollover requirement under Internal Revenue Code (IRC) §§ 402(c)(3)(B) and 408(d)(3)(I) away from costly Private Letter Ruling (PLR) requests under Rev. Proc. 2026-4 toward the newly structured IVCP framework.

This article provides tax practitioners—CPAs, Enrolled Agents, and tax attorneys—with a technical analysis of the statutory authority underlying ICRS, the scope of program eligibility, the mechanics of the four covered failure categories, the general correction principles and excise tax relief provisions, and the procedural mandates required to secure a binding compliance statement.

Rev. Proc. 2026-34, October 22, 2026

Executive Summary and Regulatory Scope

The Internal Revenue Service (IRS) issued Revenue Procedure 2026-34 to establish an updated, consolidated statement of the Employee Plans Compliance Resolution System (EPCRS). Operating under the authority of the Department of the Treasury, EPCRS governs the statutory and administrative mechanisms by which Plan Sponsors of retirement plans intended to satisfy Internal Revenue Code (Code) §§ 401(a), 403(a), 403(b), 408(k) (Simplified Employee Pensions, or SEPs), and 408(p) (SIMPLE IRA Plans) can remediate operational, plan document, demographic, and employer eligibility failures without incurring plan disqualification or loss of tax-favored status.

Revenue Procedure 2026-34 formally supersedes Revenue Procedure 2021-30, 2021-31 I.R.B. 172, while also modifying and superseding prior interim administrative guidance issued under Notice 2023-43, Notice 2024-2 (Section II.I), and Notice 2024-77. The procedure continues the historical tripartite structure of EPCRS, comprising the Self-Correction Program (SCP), the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). However, Rev. Proc. 2026-34 fundamentally expands the scope and availability of self-correction, alters long-standing rules regarding benefit overpayment recoupments, and provides permanent statutory safe harbors for elective deferral errors.

Clergy Act, Pub. L. No. 119-148, §§ 1–3, 140 Stat. 88 (Oct. 20, 2026) (enacting H.R. 227, 119th Cong. (2026); non-codified provision impacting 26 U.S.C. § 1402 and 42 U.S.C. § 401 et seq.)

Legislative Overview and Background

On October 20, 2026, the President signed into law H.R. 227, 119th Congress, officially designated as the Clergy Act. Passed with overwhelming bipartisan support—by a roll call vote of 350 to 5 in the House of Representatives on April 27, 2026, and by Unanimous Consent in the Senate on September 30, 2026—this enactment addresses a long-standing structural challenge in the taxation of ordained and licensed religious ministers under the Self-Employment Contributions Act (SECA).

The House Committee on Ways and Means, in House Report 119-425 accompanying H.R. 227, succinctly stated the core objective of the legislation:

“The bill, H.R. 227, the ‘Clergy Act,’ as ordered reported by the Committee on Ways and Means on December 10, 2025, allows for the permanent revocation of an exemption from payment of Self-Employment Contributions Act (SECA) taxes on income associated with ministerial services performed by certain church ministers, members of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order), and Christian Science practitioners...”

For tax practitioners—specifically CPAs and Enrolled Agents advising clergy clients—the enactment of the Clergy Act provides a critical, time-limited planning opportunity. Congress last provided a statutory window to revoke a ministerial SECA tax exemption over a quarter-century ago under Section 403 of the Ticket to Work and Work Incentives Improvement Act of 1999 (Pub. L. No. 106-170). As House Report 119-425 emphasizes in its background analysis:

“Every year, roughly 2,000 members of the clergy apply for and receive an exemption... By law, this exemption must generally be sought early in a clergy member’s ministerial career and, after being granted, is irrevocable. As a result, some members of the clergy who received an exemption at the start of their career may struggle to prepare for retirement in later years. The Social Security Amendments of 1977, the Tax Reform Act of 1986, and the Ticket to Work and Work Incentives Improvement Act of 1999 provided members of the clergy with temporary, time-limited opportunities to revoke their exemption from SECA taxes and Social Security coverage. However, it has been roughly 26 years since members of the clergy were provided with this option.”

IRS Notice of Partial Withdrawal of Notice of Proposed Rulemaking, Guidance Under Section 355 Concerning Device and Active Trade or Business, REG-134016-15, RIN 1545-BN47, 91 Fed. Reg. 68420 (scheduled publication Oct. 21, 2026) (partially withdrawing REG-134016-15, 81 Fed. Reg. 46004 (July 15, 2016); codified at 26 C.F.R. pt. 1).

Under the general rules of Subchapter C of the Internal Revenue Code, corporate distributions of appreciated property trigger gain recognition at the corporate level under Section 311(b), while distributee shareholders are taxed on the receipt of property as dividend income under Section 301(c)(1), basis recovery under Section 301(c)(2), or capital gain under Section 301(c)(3). Section 355 provides a vital exception to these general dividend and recognition rules, permitting a distributing corporation (Distributing) to distribute stock and securities of a controlled corporation (Controlled) to its shareholders and security holders without triggering corporate-level gain or shareholder-level income recognition.

To prevent tax-free corporate separations from being converted into mechanisms for avoiding dividend taxation on corporate earnings and profits (E&P), Section 355 imposes stringent statutory requirements. Principally, Section 355(a)(1)(B) mandates that the transaction must not be used “principally as a device for the distribution of the earnings and profits of the distributing corporation or the controlled corporation or both.” Concurrently, Section 355(a)(1)(C) and Section 355(b) require that both Distributing and Controlled be engaged, immediately after the distribution, in the active conduct of a five-year active trade or business (Active Business) that was not acquired in a taxable transaction within the preceding five-year period under Section 355(b)(2)(B)-(D).

The statutory device prohibition and active business requirement have evolved through decades of judicial interpretation, legislative amendments, and administrative guidance. Following early abuses where corporations transferred cash and liquid surplus into new subsidiaries prior to spin-offs—prompting the Supreme Court’s seminal decision in Gregory v. Helvering, 293 U.S. 465 (1935)—Congress re-authorized spin-offs in Section 317(a) of the Revenue Act of 1951 (65 Stat. 452, 493) with strict device and active business safeguards. As noted in the congressional record during debate on the 1951 Act, Senator Hubert Humphrey emphasized that “[u]nless strictly safeguarded, [a spin-off provision] can result in a loophole that will enable a corporation to distribute earnings and profits to stockholders without payment of the usual income taxes.”

Watson Lake Investments, LLC, Terry J. Heath, Tax Matters Partner v. Commissioner, consolidated with Meadow Lake Investments, LLC, Terry J. Heath, Tax Matters Partner v. Commissioner, T.C. Memo. 2026-106, Docket Nos. 13696-20, 24239-22 (filed October 19, 2026).

Del Monte LLC, Dev X Investment 2015, LLC, Tax Matters Partner v. Commissioner, consolidated with Continental Downtown Properties, LLC, Historic Preservation Fund 2016, LLC, Tax Matters Partner v. Commissioner, T.C. Memo. 2026-107, Docket Nos. 3411-21, 6084-21 (filed October 19, 2026).

The United States Tax Court recently issued a pair of landmark memorandum opinions addressing syndicated conservation easement tax shelters: Watson Lake Investments, LLC v. Commissioner, T.C. Memo. 2026-106, and Del Monte LLC v. Commissioner, T.C. Memo. 2026-107. Decided on the same date, these decisions underscore the Tax Court’s unwavering scrutiny of transactions wherein real estate partnerships claim multi-million-dollar charitable contribution deductions under Internal Revenue Code (I.R.C.) § 170(h) based on speculative development schemes that dramatically inflate property values far beyond historical acquisition costs.

In Watson Lake Investments, LLC v. Commissioner, Judge Lauber evaluated syndicated conservation easement donations over two unimproved, rural land parcels in Emanuel County, Georgia. Writing for the Court, Judge Lauber framed the central issue succinct:

“These syndicated conservation easement (SCE) cases have a familiar fact pattern, and this Opinion will have a familiar denouement... Petitioner’s appraiser calculated these values on the assumption that the highest and best use (HBU) of each tract was mixed-use development, supposedly including 66 to 69 single-family lots, 35 to 45 acres of multifamily and senior housing, and numerous commercial and office sites. These back-of-the-envelope development schemes were wholly unrealistic in a rural county with a total population of roughly 22,000. We conclude that the HBU of each tract was its current use—for low-density, single-family residences, with agriculture, recreation, and timber harvesting as complementary uses.”

In Del Monte LLC v. Commissioner, Chief Judge Urda analyzed syndicated historic façade preservation easement donations and relinquished vertical air development rights over two commercial office buildings in downtown Columbus, Ohio. Chief Judge Urda similarly rejected the taxpayers’ multi-million-dollar valuation theories:

“In these syndicated conservation easement cases, we return to ground previously plowed by this Court and by the U.S. Court of Appeals for the Sixth Circuit in Corning Place Ohio, LLC v. Commissioner... Once again, owners of historic buildings in Ohio... claim entitlement to tens of millions of dollars in charitable contribution deductions following the donations of easements placed over the buildings’ façades. The cheap sophistry at the heart of these positions remains empty and unconvincing. We conclude that the easements are not protected in perpetuity, as the statute requires, and therefore a deduction is not allowed. We further conclude that the actual easement values are a tiny fraction of the amounts claimed and that penalties for gross valuation overstatements are richly deserved.”

Together, these two cases provide tax practitioners, CPAs, and Enrolled Agents with a comprehensive roadmap of the legal standards governing highest and best use determinations under Treasury Regulation § 1.170A-14(h)(3)(ii), judicial extinguishment formulas under Treasury Regulation § 1.170A-14(g)(6)(ii), appraiser qualification rules, partnership syndication expense disallowances under I.R.C. § 709(a), and the mandatory application of the 40% gross valuation misstatement penalty under I.R.C. § 6662(h).

IRS Newsroom, “IRS has begun issuing automatic refunds to individuals who claimed Adoption Tax Credit carryforward from prior years,” IR-2026-123 (Oct. 16, 2026).

The Internal Revenue Service has announced a significant administrative shift regarding the treatment of the adoption tax credit carryforward. This development follows a clarification from the Treasury Department regarding the interpretation of the Working Families Tax Cuts and its specific impact on the adoption tax credit. For tax professionals managing client files for the 2025 tax year, this represents a critical departure from standard carryforward mechanics, specifically regarding the availability of refundable credits.

Treasury Decision 10060, Update of Regulations Regarding Payment of Tax by Commercially Acceptable Means, 91 Fed. Reg. [page] (Oct. 19, 2026) (codified at 26 C.F.R. § 301.6311-2)

The Department of the Treasury and the Internal Revenue Service (IRS) have promulgated final regulations under Treasury Decision 10060 (RIN 1545-BP66), adopting without substantive change the proposed regulations issued under REG-120137-19 (89 FR 54746). These regulatory actions overhaul 26 C.F.R. § 301.6311-2 to implement statutory amendments enacted under section 2303 of the Taxpayer First Act (TFA), Public Law 116-25, 133 Stat. 981, 1013 (July 1, 2019). The statutory amendments modify section 6311(d)(2) of the Internal Revenue Code (Code) to grant the Secretary of the Treasury discretionary authority to enter into contracts providing for the payment of fees related to receiving payments of tax by credit card or debit card, provided that any such fee paid by the IRS is fully recouped from the taxpayer making the card payment.

Under prior statutory law and existing Treasury Regulations—promulgated via Treasury Decision 8969 (66 FR 64740, Dec. 14, 2001)—Internal Revenue Code section 6311(d)(2) authorized the Secretary to enter into contracts for credit and debit card processing services but strictly contained a “prohibition on the payment of any fee by the IRS under any contracts related to payment of taxes by credit, debit, or charge card.” Concurrently, existing 26 C.F.R. § 301.6311-2(e) mandated that the IRS “may not impose any fee or charge on persons making payment of taxes by credit card or debit card.” Consequently, the IRS was required to route taxpayers wishing to pay by credit or debit card to independent third-party payment processors. Under that administrative framework, taxpayers paid processing fees directly to third-party processors—typically structured as a variable percentage fee for credit card transactions and a flat fee for debit card transactions—while the IRS received no portion of the fee and incurred no direct fee liability.

The statutory shift under Section 2303 of the TFA, and its administrative implementation through REG-120137-19 and T.D. 10060, fundamentally alters this operational constraint. By removing the blanket prohibition on IRS fee payments, Congress and Treasury have enabled the IRS to directly accept tax payments by credit or debit card without requiring taxpayers to be redirected or connected to external third-party processing portals.

Southern Arizona Health Services Phoenix, LLC v. United States, No. 25-62T, Fed. Cl. , 2026 WL 29374 (Oct. 14, 2026)

The United States Court of Federal Claims has issued a published opinion granting summary judgment to the government in Southern Arizona Health Services Phoenix, LLC v. United States, reinforcing strict judicial standards for Employee Retention Credit (ERC) eligibility under Section 2301 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (codified as amended at 26 U.S.C. § 3134). Addressing a refund claim brought by a healthcare staffing agency operating during the COVID-19 pandemic, the court held that compliance with the Occupational Safety and Health Administration (OSHA) Healthcare Emergency Temporary Standard (Healthcare ETS) does not satisfy the statutory “suspension-of-business” eligibility test under 26 U.S.C. § 3134(c)(2)(A)(ii)(I).

For tax practitioners representing clients in ERC controversies, the decision written by Judge Armando O. Bonilla highlights three essential principles: (1) workplace safety standards and protective protocols (such as wearing PPE, physical distancing, and health screenings) do not constitute government orders that limit commerce or group meetings; (2) mandatory exclusion of COVID-19-positive or exposed personnel does not amount to a partial suspension of business operations under the statute; and (3) operational disruptions or increased work difficulty during a pandemic cannot support an ERC claim where the taxpayer’s core revenue-generating operations continued unabated.