CPA - XIRS - Newsletters

ACEs & the TRUTH about “Pennies on the Dollar” IRS Offer in Compromise (OIC) Promises.

TaxMaster’s August 2012 bankruptcy court filing, listed it had less than $5,000 in assets, and about 5,000 creditors.

Roni Deutch, in 2011 filed for bankruptcy and surrendered her law license after being sued by California’s Attorney General.

JK Harris & Co., October 2011 who operated in multiple States, after suits by States and unhappy clients filed for bankruptcy, leaving over 5,000 clients with unresolved IRS problems; whose customer list was promptly bought by a firm that is currently similarly advertising

Resolute Tax Services.

As far back as 2004 The IRS issued a consumer alert (IR-2004-130) warning taxpayers to beware of unscrupulous promoters’ charging excessive fees, inappropriately advising indebted taxpayers to file an (OIC) application with the IRS, promising unrealistic results to taxpayers who had no chance of meeting the requirements. It had little effect, and seven years later, with its Sept. 28, 2011 consumer alert update (IR-2004-17) then IRS Commissioner Mark W. Everson, stated “We are increasingly concerned about unscrupulous promoters … We urge taxpayers not to be duped by high-priced promises.”

While over time, such (typically out of area) firms that spend millions in TV ads to grossly overstate their ability to gain IRS concessions appear to be handled by the economy (to be quickly replaced by others) … bilking desperate Taxpayer’s.

Employ an ACE ([Tax] Attorney; Certified Public Accountant; or Enrolled Agent). They know, while some people do qualify for the program, in 2010 less than 25% of the applicants were approved. We recommend you hire an IRS Experienced, local ACE, that you can sit down and talk with, to see if the OIC, or a different alternative would best suit your needs, and to represent you before the I.R.S.

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Is the KENNY POA Case meant to send a message to us?

In these difficult economic times, can the Taxpayer Advocate still effectively aid TP's who believe they are being unjustly

treated ?

#A : In January 2012, The I.R.S. published the Highlights Of The TIGTA’s [Treasury Inspector General for Tax Administration] Report

On The Overall Independents Of Appeals, which said that one of his concerns was “The shifting of work from field operations to

[IRS] campus operations appears to affect the quality of appeals decisions due to the reduced number of face-to-face conferences,

a [IRS] campus environment is less conducive to a careful, candid assessment of the case, and taxpayers assigned to Appeals

campus sites might perceive they are receiving second-class treatment“.

Not surprisingly, the IRS' Findings were that the Appeals Employees "at both locations received similar training, and historical data establishes that more and more taxpayers/represent is prefer telephone conferences over the traditional face-to-face conferences due to the time saved … However, Appeals will continue to monitor…“

FRANK’s (& Apparently The National Taxpayer Advocate's) VIEW: In my considerable experience, I have always found that a

properly documented face-to-face meeting was infinitely more factually productive than a potentially quickly disposed of telephone

conference (even when I was the IRS Appeals Officer). WHAT HAS YOUR EXPERIENCE SHOWN ???

#B: July 19, 2012 in Kenny v. U.S., 2012 PTC 205 (3d Cir. 7/19/2012) District Court found: From 2004 to 2007, Robert Kenny, a Tax Attorney [POA] authorized to practice before the IRS, filed three administrative complaints with the Treasury Inspector General for Tax Administration (TIGTA) against IRS Collection Officer (R/O) Steven Wald, alleging interference with taxpayers' representation.

The TIGTA sent them to the R/O's Supervisor, who dismissed them, and per the POA recommended that the R/O file a practitioner misconduct complaint against the POA, which he did.The Office of Professional Responsibility (OPR) then opened an investigation into the POA's potential misconduct, and found the POA had filed late twice, without an extension. In May 2008, it sent POA a letter alleging he committed misconductunder Circular 230, Section 10.51(a) by

failing to file timely returns, and
by giving false information and attempting to coerce an IRS officer through false accusations in connection with his complaints against The R/O.

In August 2008, POA filed suit in a District Court seeking monetary and injunctive relief, alleging

(1) retaliation in violation of Code Sec. 7804,

(2) an unauthorized collection action in violation of Code Sec. 7433,

(3) unauthorized inspections of return information in violation of Code Sec. 7431, and

(4) violation of his First and Fourth Amendment rights.

The District Court dismissed all counts. After numerous procedural filings and hearing, POA appealed to the Third Circuit, citing Code Sec. 7431, and asked for damages under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971) (i.e., Bivens).

Under Code Sec. 7431, a taxpayer can sue for damages for unauthorized access to tax return information. To establish a claim, a taxpayer must demonstrate

(1) a violation of Code Sec. 6103 which specifies that tax returns and return information are confidential and bars disclosure by U.S. employees, but provides a number of exceptions. One permits inspection by, or disclosure of returns to, officers and employees of the Treasury Department

whose official duties require such inspection or disclosure for tax administration purposes, another,
For use in any action or proceeding relating to legal practice before the Department is permitted to the extent necessary to advance or protect the interests of the United Statesand

(2) that the violation resulted from knowing or negligent conduct.

The Third Circuit affirmed the District Court because

the OPR is responsible for matters related to POA conduct and discipline, including disciplinary proceedings and sanctions under Section 10.1(a)(1) of Circular 230, and
because POA's failure to comply with federal tax law, including late filing, could constitute disreputable conduct subject to sanction and disbarment under Section 10.51(a)(6) of Circular 230,

the investigation of POA's returns by OPR employees fell within their official tax administration duties under Code Sec. 6103(h).

The Court stated, the investigation was permitted under Code Sec. 6103(l)(4)(B) because OPR employees investigated POA's returns in preparation for a proceeding under 31 U.S.C. Section 330(b) to suspend disbar . . . or censure a representative who . . . is disreputable.

The Court noted that POA suggested that because the OPR employees acted with a retaliatory motive, they could not have acted within the scope of their official duties. However, the Court observed, the plain text of Code Sec. 6103 does not provide such a limitation. It also noted that, in CCM 201001019, the IRS Chief Counsel has suggested that compliance checks on practitioners by IRS Collection employees may exceed their official duties.

With respect to POA's Bivens claim, the Court noted that the provisions governing potential disbarment or suspension before the IRS create a comprehensive remedial scheme for addressing allegations of practitioner misconduct, including any constitutional concerns raised by practitioners.

Since Congress and the Treasury Department elected to provide this manner to regulate the relationship between IRS and POAs, the Court declined to infer a Bivens remedy in this instance.

The Fact that OPR Employees Acted with a Retaliatory Motive Didn't Mean They Weren't Acting Within Scope of Official Duties. Thus, the investigation of a tax attorney's returns after he filed complaints against an IRS Revenue Officer did not violate Code Sec. 6103 thus were not unconstitutional.

EMAIL US YOUR VIEWS OF THE PROFESSIONALISM (OR LACK THEREOF) OF THE PARTIES INVOLVED.

#C: On January 11, 2012 the IRS issued IR-2012-6 entitled “National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on

IRS Taxpayer Rights” in which she predicted certain concerns, including her continuing concern that the

IRS’s expanding use of automated processes to adjust tax liabilities is causing harm to taxpayers”…

“TAXPAYER BILL OF RIGHTS The report urges Congress to codify a Taxpayer Bill of Rights that would clearly list the major rights and responsibilities of taxpayers. ‘The U.S. tax system is based on a social contract between the government and its taxpayers,’ [She] wrote. “Taxpayers agree to report and pay the taxes they owe and the government agrees to provide the service and oversight necessary to ensure that taxpayers can and will do so.”

It also states: “The IRS’s current examination strategy that discusses the IRS’s increasing use of automated

procedures not technically classified as audits to adjust tax liabilities. The report argues that these

procedures deprive taxpayers of traditional audit rights and make it difficult for taxpayers to

discuss their cases directly with an IRS examiner”.

YOUR VIEW?:

When I was assigned to Miami, decades ago several times I met Nancy Olson, in passing. This

was before she founded the Taxpayer Advocates' Office. While I am not in the habit of touting

services the IRS may (rightfully) provide, recognizing that the excessiveuse of power, per some

complicated, irrational perversion of Tax Law can convert compliant taxpayers into protesters,

I was impressed, even then, by Nancy’s intense motivation, and fighting spirit. Through the

years she has waged an uphill battle FOR our Clients, despite conversion of line authority to staff

authority, decreasing her budget, and every other conceivable obstacle set in her way, She still

has the courage to face-down the IRS, and report to Congress "Telling It like it is". Thus I

believe her Taxpayers Advocates Office is the best (& perhaps smartest) thing for public

relations the I.R.S. has ever done, to assure Taxpayers that some degree of reasonableness may

still sometimes be heard, despite the limitless power the IRS wields.

Much More importantly, however, are your views!

How do you, as reputable tax preparers & representatives feel about the above items ?

Now that Government is energetically seeking funds, is the Kenny case meant to modify your

representation zeal, or just Coincidencidental? Will it affect your Client Representation efforts?

Share your thoughts at Frank@CPA–xIRS.com; & we will publish some of the more interesting

comments, anonymously.

Your viewpoint is sought!

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About 830,000 taxpayers are having their tax refunds held up due to the move away from paper checks and Democratic leadership on the House Ways and Means Committee is seeking information on what the IRS is doing to expedite the issuance of those refunds.

House Ways and Means Subcommittee on Worker and Family Support Ranking Member Danny Davis (D-Ill.) and Subcommittee on Oversight Ranking Member Terri Sewell (D-Ala.), in a March 9, 2026, letter to IRS Acting Commissioner Scott Bessent, noted that to date 530,000 notices have been sent to individual taxpayers who did not include bank account information on their tax returns and are planning to send another 300,000 notices this week.

“As a result of President Trump’s Executive Order 14247 mandating electronic payments of tax refunds, these taxpayers could face more than a 10-week delay (over 2.5 months) in receiving their refunds by paper check,” the letter states, adding a National Taxpayer Advocate citation stating that more than 10 million individual taxpayers received their refunds by check.

They continued: “Having reviewed the IRS notice and called the IRS phone lines, we learned that there is no simple process for these taxpayers to request an immediate release of their refund by paper check without waiting at least 10 weeks. Effectively, the President, unilaterally through his Executive Order, is causing undue hardship on millions of Americans by delaying their paper refunds for months. This delay is not mandated by the Internal Revenue Code.”

The ranking members ask Bessent a series of questions, including how IRS taxpayers without an online account can apply for a paper check and immediate release of funds; how many notices have been sent and are expected to be released; how many tax payers have exceptions have been successfully filed; and how many paper checks have been mailed to date.

The representatives asked for answers by March 23, 2026.

By Gregory Twachtman, Washington News Editor

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The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2026 and the lease inclusion amounts for business vehicles first leased in 2026.

Luxury Passenger Car Depreciation Caps

The luxury car depreciation caps for a passenger car placed in service in 2026 limit annual depreciation deductions to:

$12,300 for the first year without bonus depreciation
$20,300 for the first year with bonus depreciation
$19,800 for the second year
$11,900 for the third year
$7,160 for the fourth through sixth year

Depreciation Caps for SUVs, Trucks and Vans

The luxury car depreciation caps for a sport utility vehicle, truck, or van placed in service in 2026 are:

$12,300 for the first year without bonus depreciation
$20,300 for the first year with bonus depreciation
$19,800 for the second year
$11,900 for the third year
$7,160 for the fourth through sixth year

Excess Depreciation on Luxury Vehicles

If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends.

The annual cap for this excess depreciation is:

$7,160 for passenger cars and
$7,160 for SUVS, trucks, and vans.

Lease Inclusion Amounts for Cars, SUVs, Trucks and Vans

If a vehicle is first leased in 2026, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:

$62,000 for a passenger car, or
$62,000 for an SUV, truck or van.

The 2026 lease inclusion tables provide the lease inclusion amounts for each year of the lease.

The lease inclusion amount results in a permanent reduction in the taxpayer’s deduction for the lease payments.

Vehicles Exempt from Depreciation Caps and Lease Inclusion Amounts

The depreciation caps and lease inclusion amounts do not apply to:

cars with an unloaded gross vehicle weight of more than 6,000 pounds; or
SUVs, trucks and vans with a gross vehicle weight rating (GVWR) of more than 6,000 pounds.

So taxpayers who want to avoid these limits should "think big."

Rev. Proc. 2026-15

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The IRS has released guidance on the withdrawal of an election to be an excepted trade or business for the Code Sec. 163(j) business interest limitation for the 2022, 2023, and 2024 tax year. The election is made by filing an amended income tax return, amended Form 1065, or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitation. The withdrawal allows a taxpayer to make depreciation adjustments or a late election not to deduct the additional first-year depreciation (bonus depreciation) for certain property in light of recent legislative changes.

The IRS has released guidance on the withdrawal of an election to be an excepted trade or business for the Code Sec. 163(j) business interest limitation for the 2022, 2023, and 2024 tax year. The election is made by filing an amended income tax return, amended Form 1065, or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitation. The withdrawal allows a taxpayer to make depreciation adjustments or a late election not to deduct the additional first-year depreciation (bonus depreciation) for certain property in light of recent legislative changes. Guidance is also provided on the early election or revocation of a controlled foreign corporation (CFC) CFC group election.

Background

A taxpayer’s deduction of business interest expenses paid or incurred for the tax year is generally limited under section 163(j) to the taxpayer’s business interest income for that year and 30 percent of the taxpayer’s adjusted taxable income (ATI). The deduction limit does not apply to certain excepted businesses, including an electing real property trade or business, electing farming business, or regulated utility trade or business.

The election applies to the current tax year and all subsequent tax years. The election is irrevocable but may automatically terminate in certain circumstances. An electing real property trade or business or electing farming business that elects out of the section 163(j) limit must depreciate certain property using alternative depreciation system (ADS) and as a result cannot claim bonus depreciation for that property.

Election Withdrawal

An election to be an excepted trade or business for the section 163(j) business interest limit may be withdrawn for the 2022, 2023, and 2024 tax year. The withdrawal is made by attaching a statement to the taxpayer’s amended income tax return, amended Form 1065 , or administrative adjustment request (AAR) on or before October 15, 2026, or applicable statute of limitations per the IRS guidance.

A taxpayer that receives an amended Schedule K-1 as a result of an amended return or Form 1065 should similarly file an amended return, amended Form 1065, or AAR with a similar attached statement. If a taxpayer withdraws an election, the taxpayer will be treated as if the election had never been made.

Depreciation Adjustments

A taxpayer that is withdrawing an excepted trade or business interest election under section 163(j) must determine its depreciation deduction and basis for the property that is affected by the withdrawn election in accordance with Code Sec. 168. A taxpayer that makes the withdrawals may make a late election under Code Sec. 168(k)(7) to opt certain property out of bonus depreciation on the same amended Federal income tax return, amended Form 1065, or AAR filed for withdrawing the section 163(j) excepted trade or business election.

CFC Group Election

A taxpayer that is a designated U.S. person may revoke or make a CFC group election without regard to the 60-month limitation of § 1.163(j)-7(e)(5)(ii) for the first specified period of a specified group beginning after December 31, 2024. A taxpayer that chooses to revoke the election or make a new election must follow all procedures specified in the regulation other than the 60-month limit. In addition, the 60-month limitation applies to subsequent specified periods.

Rev. Proc. 2026-17

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Internal Revenue Service CEO Frank Bisignano highlighted the early successes of the tax provisions in the One Big Beautiful Bill Act before the House Ways and Means Committee while defending or deflecting critical commentary from the panel’s Democratic representatives.

In his opening statement during the March 4, 2026, hearing, Bisignano noted that the tax benefit to individuals under these provisions is “estimated to be $220 billion,” noting key aspects like the no tax on tips, no tax on overtime, and the Trump accounts helping to pave the way to the benefits.

He also highlighted the growth of 43 percent in usage of online tools, which he said is coinciding with a decrease in demand for phone service.

“Our goal is for taxpayers is our transformational efforts to create a seamless customer experience where taxpayers can interact with the IRS with the same ease they expect from the private sector,” Bisignano told the committee.

Bisignano during the hearing framed AI simply as a tool in the technology toolbox and stated that he didn’t simply want to “modernize” IRS systems because all that does is lead to future obsolescence, but framed information technology upgrades as “transforming” the systems to be able to evolve with technology, which “will increase compliance and increase simplification.”

He was put on the defensive on the subject of audit rates, with questions suggesting that the agency is not doing its job in terms of auditing high income and other wealthy taxpayers, which will lead to a greater tax gap.

Bisignano tried to interject that there was a $2 billion settlement reached but was not given an opportunity to expand upon the circumstances around the recovery, as Rep. Mike Thompson (D-Ca.) noted that “fewer audits of wealthy tax cheats and more scrutiny of working families” doesn’t build “trust among the American taxpayers.”

In answering a separate question regarding audit rates, he pushed back on the increase or decrease in audit rates, testifying that there has never been a standard audit rate that has been proven to be the right number and it could be more or less than where things are at now.

Bisignano defended the cutting of the National Treasury Employees Union contract, stating that by statute, federal employees already have “greater benefits that any union in the world can provide for their people,” including pay, health, and other benefits that are guaranteed by law. “So they are losing nothing,” he said.

He also defended the elimination of the Direct File program, citing its lack of utilization and its costs to operate the program, while promoting Free File as “well-received” and a well-used and trusted program.

Bisignano avoided any discussion regarding the IRS turning over taxpayer information to the Department of Homeland Security without proper authorization, noting that litigation on this issue was still ongoing. He confirmed that so far, no one has been fired or disciplined for this unauthorized information transmission.

He also would not commit to opening any of the closed Taxpayer Assistance Centers, noting that the current centers were experiencing increased activity, although he did add that there were no plans to close any of the existing centers.

Adoption Credit Update

Bisignano told the committee that the IRS will be implementing a provision that for tax year 2025, carry forward amounts of the adoption credit for prior years are refundable up to $5,000 per qualifying child, “and the IRS is implementing this policy as expeditiously as possible without disrupting the current filing season.”

He said there is will be information on this published “very soon” and that taxpayers “should continue to claim the credit as directed by the current tax forms and instructions during the tax season, since the IRS is pursuing post-filing remedies to solve this issue.”

By Gregory Twachtman, Washington News Editor

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The IRS has finalized regulations to include unmarked vehicles used by firefighters, members of rescue squads, or ambulance crews in the list of “qualified nonpersonal use vehicles” exempt from the IRC §274(d) substantiation requirements. The final rule adopts, with only minor, non-substantive changes, the text of the proposed regulations (NPRM REG-106595- 22) issued on December 3, 2024. The amendments ensure that specially equipped unmarked vehicles are subject to the same tax treatment as other emergency vehicles used by first responders.

Qualified Nonpersonal Use Vehicles

IRC §274(d) requires that taxpayers satisfy additional substantiation requirements when claiming certain business deductions including the business use of an automobile or other means of transportation. A qualified nonpersonal use vehicle is any vehicle that, by reason of its nature, is not likely to be used more than a de minimis amount for personal purposes. Reg. §1.274-5(k)(2)(ii) provides a list of such vehicles, which includes, in part: ambulances; clearly marked police, fire, public safety officer vehicles; and unmarked police vehicles.

Unmarked Emergency Vehicles

Recently, some municipalities have been providing unmarked vehicles to these first responders as a response to an increase in incidents of vandalism and harassment. These unmarked vehicles are typically equipped with special equipment such as lights and sirens, medical emergency equipment, communication radios, and personal protective equipment. Most fire and emergency response departments retain the title to these unmarked vehicles and have policies that limit the use of the vehicles for personal purposes.

The intent and use of these unmarked vehicles meet the definition of qualified nonpersonal vehicles provided in IRC §274(i). However, prior to the amendments, fire and emergency response departments had to substantiate the time the first responders spent using these unmarked vehicles for work related purposes. Personal use of these vehicles, no matter how minute, was required to be included in that employee’s income.

In addition to adding unmarked rescue to the list of qualified nonpersonal use vehicles provided in Reg. §1.274-5(k)(2)(ii), the amendments add Reg. §1.274-5(k)(7) which provides the definitions for “unmarked firefighter, rescue squad or ambulance crew vehicles”, “firefighter,” and “member of a rescue squad or ambulance crew.”

The amendments apply to tax years beginning on or after the date the final regulations are published in the Federal Register. However, taxpayers may rely on the guidance provided in the proposed regulations until that date.

T.D. 10043

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Proposed regulations under Code Sec. 530A, providing guidance on making an election to open a Trump account, and under Code Sec. 6434, relating to the Trump account contribution pilot program, have been issued. Comments are requested and should be submitted via the Federal eRulemaking Portal (indicate IRS and REG-117270-25 for comments related to Code Sec. 530A or IRS and REG-117002-25 for comments related to Code Sec. 6434). The proposed regulations are proposed to apply on or after January 1, 2026.

Background

Code Sec. 530A, as added by the One Big Beautiful Bill Act (P.L. 119-21) provides for the creation of a Trump account for an eligible individual. A Trump account is subject to certain special rules that do not apply to other types of individual retirement accounts during the growth period, which is the period that begins when an initial Trump account is established and ends on December 31st of the year in which the account beneficiary of the initial Trump account reaches the age of 17. Proposed regulations on the special rules that apply during and after the growth period are reserved and will be proposed at a later date.

In addition, Code Sec. 6434 was added, which provides for a one-time $1,000 pilot program contribution to the Trump account of an eligible child with respect to whom an election is made. The qualifications to be an eligible child are less restrictive than those to be an eligible individual. Finally, Code Sec. 128 allows for employer contributions to a Trump account of an employee or a dependent of an employee. These contributions must be made in accordance with the rules of a Code Sec. 128(c) Trump account contribution program. Guidance on this section is expected to be released in the future.

General Requirements and Election to Open an Account

A Trump account is either (1) an initial Trump account, created or organized by the Treasury Secretary for an eligible individual or (2) a rollover Trump account, which is an account created during the growth period and funded by a qualified rollover contribution from the account beneficiary's existing Trump account. An individual can only have one Trump account containing funds in existence at a time. The written governing instrument of a Trump account must generally meet the rules of Code Sec. 408(a)(1) through (6) and Code Sec. 530A (b)(1)(C)(i) through (iii). Any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA would have automatic approval to act as a trustee of a Trump account. The written instrument must clearly identify the account as a Trump account at the time of creation.

An election to open an account can be made by either an authorized individual or by the Secretary. If a pilot program contribution election is made at the same as the election to open the initial account, the authorized individual would be the individual authorized to make (and making) the pilot program contribution election. If a pilot contribution program election is not being made, Prop. Reg. §1.530A-1(c)(1)(i)(B) provides an ordering rule to determine who the authorized individual is. In order of priority, the authorized individual would be a legal guardian, parent, adult sibling, or grandparent of the eligible individual. The election to open an initial Trump account is made on or before December 31st of the calendar year in which the eligible individual attains age 18. The election is made on Form 4547 or through an electronic application or webpage made available by the Secretary.

Contribution Pilot Program

A pilot program election with respect to an eligible child must be made by a pilot program-electing individual so that the Secretary can make the $1,000 pilot program contribution into the Trump account of en eligible child. An eligible child is a pilot program-electing individual's anticipated qualifying child, as defined in Code Sec. 152(c), for the tax year of the pilot program-electing individual in which the pilot program election is made; is born in 2025, 2026, 2027, or 2028; is a U.S. citizen; has been issued a social security number; and with respect to which no prior pilot program election has been made by any individual and processed by the Secretary.

A pilot program election is made with respect to the eligible child's "special taxable year" (defined in Prop. Reg. §301.6434-1(c)(1)), instead of with respect to any calendar based tax year for the eligible child's federal income tax liability. Once an election is processed, the eligible child is treated as making a $1,000 payment against a federal income tax liability for the eligible child's special taxable year, resulting in a $1,000 overpayment. The overpayment is then refunded by the Secretary as a pilot program contribution to the eligible child's Trump account. The overpayment is not refunded unless the eligible child has an established Trump account.

An election may be made on the day that a child becomes eligible, and the last day to make the election is December 31st of the calendar year in which the eligible child attains age 17. In addition, only the first pilot program contribution election processed by the IRS will result in a $1,000 contribution to the eligible child's Trump account. The pilot program contribution election is made on Form 4547.

Proposed Regulations, NPRM REG-117270-25

Proposed Regulations, NPRM REG-117002-25

IR 2026-31

IR 2026-33

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The IRS expects to delay the applicability date of proposed regulations on required minimum distributions (RMDs) until the distribution calendar year that would begin 6 months after the date the regulations are finalized. Specifically, the announcement relates to proposed amendments of Reg. §§1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6, issued pursuant to NPRM REG–103529–23 .

Background

Prior to this announcement, provisions under NPRM REG–103529–23 (2024) were proposed to apply for determining RMDs for calendar years beginning on or after January 1, 2025. This ensured the provisions would begin to apply at the same time as final regulations under T.D. 10001 (2024).

Following a request for comments, concerns included difficulty to implement many provisions of future final regulations in a timely manner if the January 1, 2025, applicability date were to be retained in future final regulations.

Future Final Regulations

The IRS expects future final regulations that would amend Reg. §§1.401(a)(9)-4, 1.401(a)(9)-5, and 1.401(a)(9)-6, issued pursuant to NPRM REG–103529–23, to apply to determine RMDs for the distribution calendar year that would begin no earlier than six months after the date that any future final regulations would be issued in the Federal Register. For periods before the applicability date of such future final regulations, taxpayers must continue to apply a reasonable, good-faith interpretation.

Announcement 2026-7

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The IRS has issued a waiver for individuals who failed to meet the foreign earned income or deduction eligibility requirements of Code Sec. 911(d)(1) because adverse conditions in certain foreign countries prevented them from fulfilling the requirements for the 2025 tax year. Qualified individuals may elect to exclude from gross income their foreign earned income and to exclude or deduct the housing cost amount.

Relief Provided

The IRS, in consultation with the Secretary of State, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following countries, effective from the dates specified: (1) Haiti – January 1, 2025; (2) Ukraine – January 1, 2025; (3) Democratic Republic of the Congo – January 28, 2025; (4) South Sudan – March 7, 2025; (5) Iraq – June 11, 2025; (6) Lebanon – June 22, 2025; and (7) Mali – October 30, 2025. An individual who left any of these countries on or after the respective dates will be treated as a qualified individual for the period during which the individual was a bona fide resident of, or was present in, the country. To qualify for relief, an individual must establish that, but for these adverse conditions, they would have met the requirements of Code Sec. 911(d)(1). Additionally, the waiver does not apply to individuals who first established residency or were physically present in any of these countries after the respective dates listed above. Taxpayers seeking guidance on how to claim this exclusion or file an amended return should refer to the Foreign Earned Income Exclusion section at https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion or contact a local IRS office.

Rev. Proc. 2026-16

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