I.R.S. Notice 2026-49, August 12, 2026

In an ongoing effort to modernize and streamline the administration of retirement assets, the Department of the Treasury and the Internal Revenue Service (IRS) have issued Notice 2026-49. Published in response to a congressional mandate, this notice marks a significant step toward standardizing the administrative processes that govern the movement of retirement savings. Specifically, Section 324 of Division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022), known as the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), directs the Secretary of the Treasury to “develop and issue guidance, in the form of sample forms (including relevant procedures and protocols), to simplify, standardize, facilitate, and expedite the completion of” rollovers to eligible retirement plans and trustee-to-trustee transfers from individual retirement plans.

Historically, the rollover of retirement funds between employer-sponsored plans and Individual Retirement Accounts (IRAs) has been plagued by a lack of uniformity, resulting in administrative friction, high transaction costs, and substantial security risks. Notice 2026-49 addresses these issues by proposing a series of four sample forms and establishing a standardized, five-step sequential rollover procedure designed to transition the industry toward electronic, plan-to-plan communications and transfers. This technical analysis explores the legal and operational mechanics of the proposed guidance, the underlying statutory authority, and the future regulatory changes currently under consideration by the IRS.

Maniktala v. Commissioner of Internal Revenue, No. 25-1366 (8th Cir. Aug. 11, 2026)

For decades, tax practitioners have operated under the strict assumption that the ninety-day filing deadline to petition the United States Tax Court for a redetermination of a deficiency under Internal Revenue Code (IRC) Section 6213(a) is an absolute, non-negotiable jurisdictional bar. Under this traditional paradigm, a late-filed petition, even by a single day, stripped the Tax Court of its power and left the taxpayer with no recourse but to pay the tax and sue for a refund in Federal District Court or the Court of Federal Claims. However, in Maniktala v. Commissioner of Internal Revenue, No. 25-1366 (8th Cir. Aug. 11, 2026), the United States Court of Appeals for the Eighth Circuit dramatically upended this orthodoxy. Following recent landmark Supreme Court decisions disciplining the term “jurisdictional,” the Eighth Circuit held that the filing deadline under Section 6213(a) is a nonjurisdictional claims-processing rule subject to equitable tolling. This decision aligns the Eighth Circuit with a growing multi-circuit consensus and marks a critical milestone in administrative tax equity.

Gerald A. Beacom and Jean A. Beacom v. Commissioner of Internal Revenue, T.C. Memo. 2026-65, (Aug. 11, 2026)

For tax professionals, advising clients on credit carryforwards and other carryover tax items is a routine task. However, a taxpayer’s failure to maintain the records necessary to substantiate the origin of these carryovers can lead to disastrous audit outcomes. The recent Tax Court memorandum decision in Gerald A. Beacom and Jean A. Beacom v. Commissioner provides a stark reminder of the perpetual nature of the taxpayer’s recordkeeping burden, the severe limitations of retail tax software as a defense, and a widespread, critical misunderstanding of IRS record retention guidelines.

In this case, the court addressed a taxpayer’s attempt to use Alternative Minimum Tax (AMT) credit carryforwards that allegedly originated more than two decades prior to the tax year in question. The decision highlights that the standard statute-of-limitations lookback period does not shield carryover items from audit and that casualty losses (such as fires or floods) do not relieve taxpayers of their absolute duty to substantiate.

Boechler, P.C. v. Commissioner of Internal Revenue, No. 25-2620, (8th Cir. Aug. 10, 2026)

For tax professionals, the landmark Supreme Court decision in Boechler, P.C. v. Commissioner, 596 U.S. 199 (2022) was heralded as a major victory for taxpayer rights. In that ruling, the High Court settled a long-standing circuit split by holding that the 30-day filing deadline under Internal Revenue Code (I.R.C.) § 6330(d)(1) to petition the United States Tax Court for review of a Collection Due Process (CDP) determination is a nonjurisdictional limitations period subject to equitable tolling. However, a critical distinction exists between a deadline being subject to equitable tolling and a taxpayer actually qualifying for such relief. The likely final chapter of this litigation—culminating in the United States Court of Appeals for the Eighth Circuit’s decision issued on August 10, 2026—serves as a stark reminder of how incredibly narrow and rigorous the equitable tolling doctrine remains in tax practice. For CPAs and EAs, the court’s final ruling highlights the severe professional risks of relying on “excusable neglect” and underscores that procedural discipline remains absolute.

Employer Contributions to Trump Accounts and Nondiscrimination Rules for Dependent Care Assistance Programs, REG-101355-26, 91 FR 16314 (proposed Aug. 11, 2026)

The Department of the Treasury and the Internal Revenue Service (IRS) have released REG-101355-26, containing highly anticipated proposed regulations that provide comprehensive guidance regarding employer contributions to Trump accounts and the nondiscrimination testing rules for both Trump account contribution programs and dependent care assistance programs under Sections 128 and 129 of the Internal Revenue Code. Promulgated under the broad authority of Section 7805(a), which empowers the Secretary of the Treasury to “prescribe all needful rules and regulations for the enforcement of [the Code], including all rules and regulations as may be necessary by reason of any alteration of law in relation to internal revenue”, this regulatory package establishes a structured administrative framework for workforce benefit integration.

Backup Withholding on Third Party Network Transactions, T.D. 10053, 91 Fed. Reg. 16269 (Aug. 10, 2026) 

On August 10, 2026, the Department of the Treasury and the Internal Revenue Service (IRS) published final regulations under Treasury Decision 10053, governing backup withholding requirements on reportable payments made in settlement of third-party network transactions under Internal Revenue Code (IRC) § 3406. These final regulations adopt the proposed regulations published on January 9, 2026, in the Federal Register under REG-112829-25, without any substantive changes.

The regulatory changes reflect a lengthy statutory and administrative history regarding information reporting by third-party settlement organizations (TPSOs). Section 6050W, originally enacted by the Housing Assistance Tax Act of 2008 (Public Law 110-289), requires payment settlement entities to report the gross amounts of transactions settled via payment cards and third-party networks. For third-party networks specifically, the statute originally mandated information reporting on Form 1099-K only if payments to a participating payee exceeded a gross annual threshold of $20,000 and the aggregate number of transactions exceeded 200 in a calendar year.

In 2021, Congress enacted the American Rescue Plan Act (ARPA) (Public Law 117-2), which significantly tightened these reporting rules. Section 9674 of ARPA amended section 6050W(e) to lower the TPSO reporting threshold to a flat gross amount of $600 in a calendar year, completely eliminating the 200-transaction volume threshold. This drastic reduction of the reporting floor introduced substantial compliance challenges and administrative burdens for taxpayers and payment facilitators.

In response to the practical difficulties of implementing the $600 threshold, the IRS issued a series of transition notices—Notice 2023-10, Notice 2023-74, and Notice 2024-85—which administrative delays kept the lower threshold from taking full effect. However, as the preambles to the proposed and final regulations note, these notices were merely transition measures and “are inconsistent with the statutory revisions and are obsoleted as of January 9, 2026”.

The legislative gridlock was resolved on July 4, 2025, when Congress passed the One, Big, Beautiful Bill Act (OBBBA) (Public Law 119-21). Section 70432(a) of the OBBBA retroactively reverted the reporting threshold in section 6050W(e) back to its pre-ARPA levels, requiring TPSO reporting on Form 1099-K only when annual gross payments to a participating payee exceed $20,000 and the aggregate number of transactions exceeds 200. Under section 70432(a)(2) of the OBBBA, this change took effect “as if included in section 9674 of the American Rescue Plan Act,” effectively erasing the $600 threshold from the statutory history of section 6050W.

Notice 2026-48, August 7, 2026

In division T of the Consolidated Appropriations Act, 2023, Pub. L. 117-328, 136 Stat. 4459 (2022), known as the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), Congress introduced a paradigm shift in retirement savings incentives for low- and moderate-income taxpayers. Specifically, Section 103 of the SECURE 2.0 Act added Section 6433 to the Internal Revenue Code (Code), replacing the Retirement Savings Contributions Credit (commonly known as the Saver’s Credit) under Section 25B with a direct federal matching contribution of up to $1,000 per eligible individual. This match is paid directly by the Secretary of the Treasury to “applicable retirement savings vehicles” for taxable years beginning after December 31, 2026.

To bridge the gap between statutory enactment and operational implementation, the Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2026-48. The notice serves as an official “Notice of Intent to Issue Regulations with Respect to Saver’s Match Contributions”. It outlines key administrative, tax, and plan compliance rules that the agencies expect to integrate into forthcoming proposed regulations. It provides practitioners, plan sponsors, and financial institutions with a technical roadmap to prepare for the 2027 effective date, incorporating feedback from Notice 2024-65, 2024-39 IRB 633, and addressing directives from Executive Order No. 14403.

Internal Revenue Service, Fact Sheet FS-2026-13, “Updates to Questions and Answers About the New Deduction for Qualified Overtime Compensation” (August 2026)

The enactment of the One, Big, Beautiful Bill Act (OBBBA), Public Law 119-21, 139 Stat. 72 (July 4, 2025), introduced a landmark, temporary income tax deduction for “qualified overtime compensation” under the newly created Internal Revenue Code (IRC) Section 225. Grounded in the statutory mandate to provide tax relief for hourly workers, the deduction is effective for taxable years beginning after December 31, 2024, and terminates for taxable years beginning after December 31, 2028. In the initial implementation phase, the Department of the Treasury and the Internal Revenue Service (IRS) recognized that employers and payroll processors lacked the administrative infrastructure to track and report this new category of compensation. Consequently, Notice 2025-62 established taxable year 2025 as a transition period, granting comprehensive relief from information reporting penalties under IRC Sections 6721 and 6722. Notice 2025-69 subsequently provided guidance for individual taxpayers filing their taxable year 2025 returns, allowing them to use “reasonable approximation methods” (Methods A through G) based on pay stubs, daily logs, and other personal documentation to calculate and claim their deductions in the absence of formal employer-provided reporting statements.

On August 6, 2026, the IRS issued Fact Sheet FS-2026-13, which officially “updates frequently asked questions for qualified overtime compensation” and “supersedes earlier FAQs that were posted in FS 2026-01 on Jan. 23, 2026”. This latest administrative release marks a crucial transition from the flexible, taxpayer-relying reporting posture of 2025 to a strict, compliance-driven framework for the remaining years of the deduction (taxable years 2026 through 2028). For CPAs and Enrolled Agents (EAs), understanding the technical mechanics of Fact Sheet FS-2026-13 and its intersection with statutory provisions is vital to ensuring proper compliance, avoiding accuracy-related penalties, and advising both individual and corporate clients.

SIH Partners LLLP, Explorer Partner Corp., Tax Matters Partner v. Commissioner of Internal Revenue, 167 T.C. No. 8 (August 6, 2026)

In the highly structured world of corporate tax planning, practitioners often seek comfort in the mechanical safe harbors provided by the Treasury Regulations. The presumption is that if a transaction can be mathematically engineered to comply with a bright-line test, the taxpayer’s tax position is secure. However, the recent United States Tax Court decision in SIH Partners LLLP v. Commissioner, 167 T.C. No. 8 (August 6, 2026), serves as a stark reminder that subjective anti-abuse rules can completely override formal regulatory compliance.

In this case, the Tax Court examined a sophisticated dividend arbitrage transaction involving hundreds of millions of dollars in Swiss equities, a portfolio swap, and a pre-existing firm-wide hedge. While the taxpayer successfully engineered the transaction to comply with the mechanical “Substantial Overlap Test” under the portfolio rules of Treasury Regulation § 1.246-5(c)(1)(iii), the Court ultimately disallowed over $170 million in qualified dividend income (QDI) and more than $25 million in foreign tax credits (FTCs) by applying the broad, subjective “Anti-Abuse Rule” of Treasury Regulation § 1.246-5(c)(1)(vi). For CPAs and Enrolled Agents (EAs), the decision provides invaluable lessons on the limits of literal compliance and the rigorous standards the IRS and courts will apply to pre-transaction economic profit analyses.

Rev. Proc. 2026-30, August 5, 2026.

On September 4, 2026, a significant shift in tax administration takes effect for practitioners representing qualified retirement plans and tax-exempt organizations. The Internal Revenue Service (IRS) has issued Revenue Procedure 2026-30, which establishes that all requests for letter rulings and nonbank trustee approval letters under the jurisdiction of the Employee Plans Rulings and Agreements Office must be submitted electronically. Specifically, this procedure mandates the use of Form 15662, Application for Private Letter Rulings, and requires that all submissions and associated user fees be processed through the Pay.gov website. Mailed or hand-delivered paper submissions, along with physical paper checks, will no longer be accepted and will be returned to the applicant. This article analyzes the background, legal authority, and section-by-section modifications enacted by this new procedure, providing a technical roadmap for tax professionals.

Scott L. Reed and Stacy N. Reed v. Commissioner of Internal Revenue, T.C. Memo. 2026-64, Docket No. 13757-20 (August 5, 2026)

The United States Tax Court’s recent decision in Scott L. Reed and Stacy N. Reed v. Commissioner of Internal Revenue, T.C. Memo. 2026-64 (filed August 5, 2026), offers tax professionals a valuable case study in the federal income tax consequences of aggressive tax positions paired with inadequate recordkeeping. The case involved Scott L. Reed, a real estate development consultant, and Dr. Stacy N. Reed, a medical doctor, who during the taxable years 2012 through 2015 received income from a myriad of sources and were involved in several highly complex projects. These projects spanned historic real estate development, the starting of a private dermatology practice, and the commercial sale of reclaimed wood. Across these varied activities, however, the Court noted that “recordkeeping left much to be desired”.

The Commissioner of Internal Revenue issued a Notice of Deficiency determining that the taxpayers underreported ordinary income from multiple sources, realized unreported net capital gains, improperly claimed Schedule C business expense deductions and Schedule E unreimbursed partnership expenses, and were not entitled to a claimed Section 38 general business credit. The Commissioner also asserted additions to tax under Section 6651(a)(1) for late filing and accuracy-related penalties under Section 6662(a). Judge Toro, writing for the Tax Court, sustained the vast majority of the Commissioner’s deficiency determinations, concluding that “the Reeds have carried their burden of proof only with respect to some of the issues that remain”. For Certified Public Accountants (CPAs) and Enrolled Agents (EAs), the decision highlights the strict application of IRC Section 162 expense substantiation standards, the stringent boundaries of the Lohrke exception, the absolute binding nature of the form of chosen business transactions, and the fatal consequences of failing to address issues in post-trial briefing.

Big Apple Tompkins Realty LLC, Mojahed H. Bhutta, Partnership Representative v. Commissioner of Internal Revenue, 167 T.C. No. 7 (August 5, 2026)

In tax controversy, the line between a jurisdictional requirement and a mere claim-processing rule can make or break a taxpayer’s case. If a filing deadline is jurisdictional, an untimely petition leaves the court completely powerless to hear the dispute, and equitable considerations cannot save the taxpayer from dismissal. Conversely, if a deadline is a nonjurisdictional claim-processing rule, the court retains the authority to hear the case, and late filings may be excused under principles such as equitable tolling.

In a landmark decision of first impression, the U.S. Tax Court in Big Apple Tompkins Realty LLC v. Commissioner evaluated the jurisdictional status of the 90-day filing deadline for judicial review of a Notice of Final Partnership Adjustment (FPA). Operating under the centralized partnership audit procedures enacted by the Bipartisan Budget Act of 2015 (BBA), the court navigated the statutory text, the broader administrative scheme, and Supreme Court precedent. The court’s holding represents a major development for tax practitioners: the 90-day deadline under Section 6234(a) is not jurisdictional, opening the door for partnerships to seek equitable relief in untimely filings.

Notice 2026-28, 2026-28 I.R.B. 1 (Aug. 5, 2026)

The enactment of the One, Big, Beautiful Bill Act (OBBBA), Pub. L. No. 119-21, 139 Stat. 72 (July 4, 2025), has fundamentally reshaped the tax landscape for employer-provided fringe benefits by making the employer credit for paid family and medical leave under Internal Revenue Code (I.R.C.) § 45S permanent. Prior to the OBBBA, the credit was a temporary incentive prone to statutory expirations. Notice 2026-28 provides critical administrative guidance regarding a significant statutory expansion: the addition of the “premium method” under I.R.C. § 45S(a)(1)(B). This new calculation method permits eligible employers to elect to determine the credit based on the premiums paid or incurred for an insurance policy providing family and medical leave coverage, rather than solely on wages actually paid to employees on leave.

This article provides a technical examination of Notice 2026-28 and I.R.C. § 45S, detailing the statutory background of Section 45S, the mechanical application of the traditional wage method, the operation of the new premium method, the complex rules governing “creditable coverage” and “blended premiums,” aggregation rule modifications, double-dipping prohibitions, and the compliance implications of the corresponding business deduction disallowances under I.R.C. § 280C(a).

Appeal of J. Otting and Y. Otting, OTA Case No. 230914221 (Cal. Off. Tax App. 2026)

For tax practitioners representing executive clients who relocate from California, the tax sourcing of post-termination payments is a frequent and high-stakes battleground. On February 11, 2026, the California Office of Tax Appeals (OTA) held an oral hearing and subsequently issued its opinion in the Appeal of J. Otting and Y. Otting (OTA Case No. 230914221). The OTA’s decision provides a highly sophisticated, bifurcated sourcing framework for termination payments. By distinguishing between severance payments, medical premium reimbursements, and restricted stock units (RSUs), the OTA clarified the boundaries between service-based wage sourcing under California Revenue and Taxation Code (R&TC) Section 17951 and intangible-based contract-right sourcing under R&TC Section 17952. This article analyzes the facts, legal arguments, and the court’s detailed statutory application, providing critical takeaways for CPAs and EAs handling multi-state executive compensation.

Zhang v. Internal Revenue Service, No. 26-cv-00525-VKD (N.D. Cal. July 30, 2026)

The compliance burden for U.S. taxpayers receiving foreign gifts has intensified over the last decade, particularly under the disclosure regime mandated by Internal Revenue Code (IRC) § 6039F. Under this section, U.S. persons who receive aggregate foreign gifts exceeding $10,000 (adjusted for inflation, with the threshold historically set at $100,000 for gifts from foreign individuals) during any taxable year must file an information return via Form 3520. Failure to timely file Form 3520 triggers severe penalties equal to 5% of the amount of the foreign gift for each month the failure continues, capped at 25% in the aggregate.

While the statute provides a “reasonable cause” exception under IRC § 6039F(c)(2), the Internal Revenue Service (IRS) routinely rejects ignorance of the law as a valid defense. When the IRS assesses these substantial penalties and denies administrative relief, taxpayers often seek judicial review. In a recent opinion, Ziyue Zhang v. Internal Revenue Service, et al., the United States District Court for the Northern District of California addressed whether a taxpayer can challenge a Form 3520 penalty assessment under the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq.. The court’s decision in this case reinforces a significant jurisdictional hurdle for taxpayers seeking to bypass the traditional tax litigation pathways in favor of APA review.

PLR 202631001, July 31, 2026

For tax practitioners managing estate administrations, the post-mortem division of individual retirement accounts (IRAs) represents a significant compliance challenge. In Private Letter Ruling 202631001, the Internal Revenue Service (IRS) addressed a critical question: whether a trustee-to-trustee transfer of a decedent’s traditional and Roth IRAs to separate transferee IRAs, partitioned in equal shares for the estate’s beneficiaries, constitutes a taxable distribution or a prohibited rollover. The Service ruled in favor of the taxpayer, confirming that such transfers, when properly structured, are non-taxable events and do not trigger immediate income recognition under Section 408(d)(1) of the Internal Revenue Code (IRC).

Section 898(c) Transition Rule for Allocating Foreign Taxes and Section 960(d)(4) Foreign Tax Credit Disallowance, REG-115145-25, July 31, 2026

The Department of the Treasury and the Internal Revenue Service have issued proposed regulations under REG-115145-25 (RIN 1545-BR76) addressing two critical statutory changes introduced by the One, Big, Beautiful Bill Act (OBBBA), Public Law 119-21. The proposed regulations provide essential transition guidance for specified foreign corporations (SFCs) forced to alter their taxable years due to the repeal of the one-month deferral election under Section 898(c)(2), and implement the ten percent foreign tax credit (FTC) disallowance on distributions of previously taxed earnings and profits (PTEP) under Section 960(d)(4). This article explores the statutory impetuses, the specific regulatory modifications, the IRS’s legal justifications, and the transitional reliance rules available to practitioners.

Walter D. Prezioso & Kimberly J. Prezioso v. Commissioner, T.C. Memo. 2026-63, July 28, 2026

The taxpayer, Walter D. Prezioso, joined GSP Precision, Inc. (GSP)—an aerospace manufacturing company incorporated under California law in 1983 by his father, Juan Pablo Prezioso, and George J. Gottardi—as an employee in 1992. Following Walter’s acquisition of a 25% interest in GSP from his father in 1997, George retained a 50% interest, while Juan Pablo and Walter each held 25%. In 2001, GSP’s board of directors adopted a resolution designating Walter’s signature as the sole requirement for any checks issued by GSP. By June 2002, George and Juan Pablo effectively retired from GSP’s day-to-day operations, vesting Walter with sole authority over day-to-day operations and future employment decisions, except for the employment of family members. Walter turned the company's declining financials around and became chief executive officer in 2007.

The Court found that beginning in 2007, GSP began paying certain personal expenses for Walter. GSP's board minutes dated December 22, 2009, authorized GSP to "continue to pay personal leased vehicle, vehicle insurance, gas, family medical insurance, Sentry life insurance[,] and credit card expenses for lunch, dinner, customer expenses[,] or company expenses." However, the Court found that GSP paid for a vast array of Walter's personal expenses that far exceeded those authorized by the board. Specifically, the Court found that GSP paid for Walter’s "personal credit cards, home renovations, a home-equity line of credit, landscaping services, tennis court and pool contractors, and audio/visual equipment." GSP also paid Walter’s boat and recreational vehicle loans and leased vehicles on his behalf, issuing over 400 checks for Walter’s personal expenses during the tax years in issue (2009–12).

The Court found that for all years in issue except 2012, "the amounts GSP paid for Walter’s personal expenses exceeded the losses reported on its Forms 1120, U.S. Corporation Income Tax Return." None of these payments were reported on Forms W-2 or Forms 1099-MISC issued to Walter, exempting them from payroll taxes and federal income tax reporting. Nonetheless, the Court found that Walter understood these benefits were compensatory, noting that on a credit application for a Ferrari lease, Walter listed his income as "Verifiable $52,950 W-2" and "Actual $275,000."

HBM Holdings Co. v. Commissioner, 167 T.C. No. 6 (July 27, 2026)

The United States Tax Court recently issued a reported decision in HBM Holdings Co. v. Commissioner, 167 T.C. No. 6 (2026), providing critical guidance on the intersection of Section 381 corporate liquidations, the "lonely parent" exception, and the Separate Return Limitation Year (SRLY) subgroup rules. For tax professionals advising corporate groups, this case underscores the rigidity of the consolidated return regulations and serves as a stark reminder that the Tax Court will not substitute "economic reality" or "common control" arguments for the explicit text of the Treasury Regulations.

This article provides a technical analysis of the facts in HBM Holdings, the taxpayer’s arguments for relief, the court's structural analysis of the consolidated return regulations, and the ultimate planning lessons for CPAs and tax practitioners.

I Health and Life Insurance Services v. United States, No. 25-1315T, United States Court of Federal Claims, July 23, 2026

For tax professionals advising clients on the Employee Retention Credit (ERC), the litigation landscape continues to evolve, establishing rigorous pleading and evidentiary standards. In I Health and Life Insurance Services v. United States, the United States Court of Federal Claims addressed the critical "suspension-of-business" prong under 26 U.S.C. § 3134(c)(2)(A)(ii)(I). The court's decision, authored by Judge Armando O. Bonilla, highlights the high bar taxpayers must clear to survive a motion for judgment on the pleadings under Rule 12(c) of the Rules of the United States Court of Federal Claims (RCFC). Specifically, the court held that a taxpayer must allege that government-mandated occupancy restrictions and worker exclusions caused a "discrete, more-than-nominal portion" of its active trade or business to temporarily cease. While finding that I Health failed to sufficiently plead a partial suspension, the court deferred ruling on the government's motion and granted the taxpayer leave to amend, recognizing the newly emerging precedents in the Circuit.