Tag: Tax and IRS News

Issue Number: Tax Tip 2026-41

A more detailed look at what the right to be informed means

All taxpayers have the right to know what they need to do to comply with tax laws. This is one part of the Right to be Informed, one of the 10 fundamental rights that make up the IRS Taxpayer Bill of Rights.

The right to be informed means taxpayers have the right to:

• Know and understand what they need to do to comply with the tax laws
• Have clear explanations of the laws and IRS procedures in all forms, instructions, publications, notices and correspondence
• Be informed of IRS decisions about their tax accounts
• Receive clear explanations of the outcomes of IRS decisions

To make sure taxpayers are informed, the IRS will:

• Include within certain notices any amount of tax, interest and certain penalties the taxpayer owes
• Explain why the taxpayer owes any balance due
• Explain the specific reasons why a refund claim was denied
• Post information on IRS.gov to help taxpayers understand their IRS notice or letter
• Send a letter when the agency makes an assessment. That letter must include:
  • Information on how the taxpayer can appeal the decision
  • An explanation of the entire process from audit through collection
  • Details on how the Taxpayer Advocate Service can help
• Send an annual statement to taxpayers who enter into a payment plan, also known as an installment agreement. The statement will include how much the taxpayer:
  • Owes at the beginning of the year
  • Paid during the year
  • Still owes at the end of the year
• Make forms and publications available on IRS.gov.
• Use social media to provide helpful tax information to a wide audience of taxpayers.

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Issue Number: 2026-11

Inside This Issue

• Guidance on a new method to recover dyed fuel excise tax
• Disaster tax relief available for Southeast Georgia and Commonwealth of Northern Mariana Islands
• Apply now to join the Internal Revenue Service Advisory Council
• Apply for a Low-Income Taxpayer Clinic grant through July 6
• Other tax news

Guidance on a new method to recover dyed fuel excise tax

Businesses may file for a refund using the updated Form 8849,Claim for Refund of Excise Taxes and Schedule 5 (Form 8849), Section 4081(e) and 6435 along with the appropriate schedules. Electronic filing options have been expanded, allowing for faster submission and tracking of claims.

All claims must be submitted with complete documentation, including proof of purchase, usage records, and applicable certification statements. Only properly substantiated claims will be considered.

Businesses should review the guidance to ensure compliance with all requirements before filing. They should also consult a qualified tax professional if they have questions about how this new method may affect them.

For full details see the news release.

Disaster tax relief available for Southeast Georgia and Commonwealth of Northern Mariana Islands

Businesses and individuals in Southeast Georgia affected by wildfires and straight-line winds that began on April 18, 2026, now have until Aug. 20, 2026, to file various federal business and individual tax returns and make tax payments.

Businesses and individuals in the Commonwealth of the Northern Mariana Islands affected by Typhoon Sinlaku that began on April 11, 2026, now have until Nov. 2, 2026, to file various federal business and individual tax returns and make tax payments.

The IRS automatically identifies taxpayers located in covered disaster areas and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS Special Services toll-free number at 866-562-5227 to request this tax relief.

The Tax relief in disaster situations page on IRS.gov has the most recent tax relief info for taxpayers affected by a disaster.

Apply now to join the Internal Revenue Service Advisory Council

Interested businesses or individuals can now apply to be a member of the Internal Revenue Service Advisory Council by submitting an IRSAC application and resume to publicliaison@irs.gov. 

Applications will be accepted through June 5, 2026.

IRSAC members offer IRS leadership recommendations on tax administration, with a focus on improving service, compliance, and communication between the IRS and the public. Qualified applicants, if selected, will serve a three-year term beginning January 2027. For full details about required skills and qualifications, see the news release.

Email questions about IRSAC or the application process to publicliaison@irs.gov publicliaison@irs.gov.

Apply for a Low-Income Taxpayer Clinic grant through July 6

The IRS is accepting applications through July 6, 2026, for Low Income Taxpayer Clinic grants to help organizations serve taxpayers in their communities.

 LITCs services include:

• Pro bono representation for resolving tax disputes
• Assistance for taxpayers whom English is a second language
• Advocacy for issues that impact low-income taxpayers

Applicants may request up to $200,000 for the 2027 grant year, subject to per-clinic funding cap set by Congress.

 Grant applications should be submitted electronically by 11:59 p.m. ET on July 6, 2026.

 For more information, see the news release.

Other tax news

The following information may be of interest to individuals and groups in or related to small businesses:

• IRS seeking applications for Tax Counseling for the Elderly and Volunteer Income Tax Assistance program grants
• IRS updates conservation easement site; settlement opportunity details forthcoming

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Issue Number: IRS Tax Tip 2026-40

Eligible taxpayers may be able to resolve tax debt through an offer in compromise

There are options available to taxpayers if they can’t pay their tax debt in full or if doing so would cause financial hardship. One of them is called an offer in compromise. Factors such as income, expenses, asset equity and ability to pay are considered when a taxpayer applies for this option.

What’s an offer in compromise
This is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed.

The goal is a compromise that’s in the best interest of both the taxpayer and the IRS. The OIC application requires a fee of $205 and an initial payment. Qualifying low-income taxpayers don’t have to pay either the fee or the initial payment. Taxpayers should review the instructions for Form 656-B, Offer in Compromise, to see if they meet the qualifications to have these initial costs waived.

Who’s eligible
Taxpayers can use the Offer in Compromise Pre-Qualifier Tool to check their eligibility to file an OIC and prepare a preliminary proposal. Individual taxpayers can  make OIC payments online through their Individual Online Account. Eligible taxpayers who use Business Tax Account can now make their OIC payments through BTA. However, they can’t apply or submit an offer through BTA.  

Review the Offer in Compromise Booklet
Eligible taxpayers should download and review the latest version of the OIC Booklet to avoid processing delays. This booklet covers everything a taxpayer needs to know about submitting an OIC including:

• Eligibility
• Costs to apply
• Application process
• Forms

Beware of “OIC mills”
“OIC mills” are aggressive or misleading marketing schemes that often overpromise results and charge high fees to taxpayers who don’t qualify for an OIC. They’re also on the 2026 IRS Dirty Dozen List. Taxpayers can check OIC eligibility using free IRS tools to avoid high-pressure sales tactics. For assistance filing an OIC from a legitimate representative, taxpayers are encouraged to check for a licensed enrolled agent or a reputable accountant in their area.

More information

• Offer in Compromise FAQs
• Choosing a tax professional
• Directory of Federal Tax Return Preparers with Credentials and Select Qualifications

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Issue Number:    IR-2026-65

Inside This Issue

IRS announces terms of a time-limited settlement opportunity for eligible taxpayers involved in conservation easement disputes

IR-2026-65, May 13, 2026

WASHINGTON — The Internal Revenue Service is announcing the terms of a time-limited settlement opportunity for eligible taxpayers involved in conservation easement or historic preservation easement disputes with the IRS.

Since 2020, the IRS has offered settlement initiatives in these cases that were significantly more favorable than the outcomes taxpayers have generally achieved in the Tax Court. Under each of those prior initiatives, taxpayers were required to pay penalties on their underpayments and were not permitted to claim a charitable contribution deduction for the claimed donation, being limited solely to a deduction for estimated out-of-pocket costs. Nonetheless, the prior settlement initiatives resolved 405 cases, with 32% of all offers accepted.

This new time-limited settlement opportunity is intended to advance the goals of the prior initiatives while addressing barriers that may have discouraged acceptance. Today, there are over 1,100 conservation easement cases (around 740 docketed cases in Tax Court and 400 cases in Exam). Under this new offer initiative, nearly 450 cases will no longer be required to make an upfront payment of the settlement amount, and instead the liability will be subject to post-settlement collection as described below. Separately, as many as 500 cases where prior settlement offers expired or were rejected by the taxpayer will have the renewed ability to settle their cases. The offer will also be extended to as many as 175 cases that did not previously have the opportunity to participate in an IRS settlement initiative.

“Congress created the conservation easement deduction to encourage genuine preservation, not to subsidize tax shelters built on inflated valuations,” said IRS Chief Executive Officer Frank J. Bisignano. “This settlement opportunity gives eligible taxpayers a chance to resolve these cases on terms more favorable than the results taxpayers have generally achieved in court, while allowing the IRS to continue enforcing the law in a fair and efficient way.”

“The courts have repeatedly found abusive activity in this area, regularly sustaining major reductions in claimed deductions and significant penalties and interest,” said Acting IRS Chief Counsel Kenneth J. Kies. “Taxpayers and their advisors should carefully review the terms of this initiative and the substantial litigation risks of continuing to contest these cases.”

Background

The tax law allows an income tax deduction for property owners who relinquish certain rights in land or buildings to preserve those properties for future generations. Over time, however, Congress, the IRS, and courts have identified serious abuses, leading to legislative changes, enforcement actions, settlement initiatives, and civil and criminal judgments.

In recent litigation, the government has consistently prevailed. On average, the Tax Court has only allowed 6% of the original claimed deduction and has generally imposed a 40% gross valuation misstatement penalty, plus interest.

Taxpayers can learn more about how promoters have peddled syndicated easement transactions and how badly these transactions have fared in court at Conservation Easement on IRS.gov.

New time-limited settlement opportunity

Eligible partnerships will receive individualized correspondence, to be issued on a rolling basis, from the IRS setting forth their specific settlement terms.

For a period of 90 days following the issuance of a settlement letter, the following terms will be available to an eligible partnership:

• No charitable contribution deduction will be allowed.
• An “other deduction,” in an amount determined by the IRS, generally equal to the partnership’s approximate out-of-pocket costs (often based on cash-contributed amounts reflected on Schedule M-2), will be allowed.
• A gross valuation misstatement penalty will apply at a rate of 10%.
• Interest will accrue as required by law.
• The partnership will not be required to make payment at the time it elects into the initiative.
• Non-docketed Bipartisan Budget Act cases will be resolved by closing agreement or similar document.
• Docketed cases will be resolved by stipulated decision.
• No extension of the 90-day period will be available.

For a period of 45 days following the close of the initial 90-day period, eligible partnerships may settle on generally the same terms, except that the gross valuation misstatement penalty will apply at a rate of 20%. No extension of the 45-day period will be available.

The applicable time period will begin on the postmark date or date of electronic transmission, and each letter will specify the applicable deadlines.

After the expiration of the two periods, totaling 135 days from the date of issuance of the individualized settlement letter, cases will be resolved before a court decision only on the basis of hazards of litigation. In general, that will reflect a charitable contribution deduction of approximately 5% to 7% of the claimed deduction and a 40% gross valuation misstatement penalty.

This settlement opportunity is not available in every conservation easement or historic preservation easement case. Specifically, this settlement is not available in cases:

• That have been tried and are awaiting an opinion.
• That are on appeal to one of the United States Circuit Courts of Appeal.
• That have already settled (i.e., settled based on hazards of litigation before trial or conceded, including those in which no decision has been entered).
• That have agreed to be bound to another case if the test case has been tried and is awaiting final decision.
• That have a trial that is set to commence within 30 days of the date of this announcement.
• That are designated as test cases, unless all bound cases have settled or agree to settle under this initiative.

The IRS will determine eligibility based on the status of the case and other case-specific considerations relevant to administration of the initiative.

Additional information

In cases governed by the Tax Equity and Fiscal Responsibility Act (TEFRA), generally involving tax years 2017 and earlier, taxpayers should expect to receive IRS notices stating the amount owed by each investor. Those notices will be sent following IRS processing after the settlement is reached and the Tax Court decision becomes final.

In cases governed by the Bipartisan Budget Act of 2015 (BBA), generally involving tax years 2018 and later, if the partnership did not elect to push out the liability, the partnership will be responsible for payment. If the partnership is unable to pay, investors will receive notices from the IRS stating the amounts owed as a result of the settlement adjustments. If the partnership elected to push out the liability, the partnership must furnish statements to investors and the IRS describing the adjustments and amounts being pushed out, and investors must take those adjustments into account accordingly.

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Issue Number:  Tax Tip 2026-39

Got mail from the IRS? Don’t toss it

Some taxpayers may get mail from the IRS. It’s important that they open any mail they receive and read it carefully.

Most letters or notices are about federal tax returns or tax accounts. Each notice will outline the specific issue and include steps the taxpayer needs to take. A notice may reference changes to a taxpayer’s account, taxes owed, a payment request or a specific issue on a tax return or credit.

Review the information. If the mail is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. Typically, a taxpayer will need to act only if they don’t agree with the information, if the IRS asked for more information or if there’s a balance due.

Take any requested action. This may include making a payment. The IRS and authorized private debt collection agencies do send letters by mail. Taxpayers can also view digital copies of select IRS notices by logging into their IRS Online Account. The IRS offers several options to help taxpayers struggling to pay a tax bill. Taking prompt action could minimize additional interest and penalty charges.

Reply only if needed. Taxpayers don’t need to reply to a notice unless specifically told to do so. If a taxpayer needs to call the IRS, they should use the number in the upper right-hand corner of the notice and have a copy of their tax return and letter.

Let the IRS know of a disputed notice. If a taxpayer doesn’t agree with the IRS, they should follow the instructions in the notice to dispute what the notice says. The taxpayer should include information and documents for the IRS to review when considering the dispute.

Keep the letter or notice for their records. Taxpayers should keep notices or letters they receive from the IRS for three years from the date the tax return was filed. These include adjustment notices.

Watch for scams.
The IRS will never contact a taxpayer using social media. The first contact from the IRS usually comes in the mail.

More information

• Understanding your IRS notice or letter
• IRS Taxpayer Bill of Rights

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