Worldwide: Tax Authorities

The IRS has launched its new Information Return Intake System (IRIS), replacing the legacy FIRE platform and mandating electronic filing for all information returns starting in 2027. Higher education institutions must navigate new registration requirements, transmitter control codes, and filing modalities based on volume, with the transition affecting multiple departments and third-party vendors.

The Treasury Department and IRS have issued Notice 2026-50, expanding the safe harbor for section 45Q carbon capture tax credits by extending Subpart RR reporting requirements to enhanced oil recovery projects and establishing a transition period tied to future guidance. This interim relief addresses critical gaps in the carbon capture regulatory framework while Treasury seeks public comment on permanent alternatives to EPA's Greenhouse Gas Reporting Program requirements.

The IRS has introduced a new Automatic Exemption from Penalty program while a federal court struck down key GILTI regulations in a significant post-Loper Bright decision. The Treasury and IRS also finalized guidance on life insurance contract transactions and updated various energy-related tax credits and reporting requirements.

The IRS and Treasury Department issued significant guidance during late July and early August 2026 addressing foreign tax credits, family leave credits, overtime deductions, and backup withholding rules. Meanwhile, the US Tax Court delivered three precedential opinions that clarified consolidated group net operating loss limitations, partnership petition deadlines, and the application of anti-abuse rules to hedged foreign-dividend transactions.

A New York administrative law judge ruled that combined reporting groups must have each member independently qualify for the state's reduced qualified emerging technology company (QETC) franchise tax rate. The decision means that even one nonqualifying entity can prevent an entire combined group from receiving New York's preferential QETC tax treatment, creating significant implications for businesses with mixed-member combined filing structures.

The August 2026 Section 7520 rate remains at 5.20% for estate planning techniques. Treasury Decision 10051 targets CRAT abuse schemes as listed transactions requiring disclosure. New guidance addresses Trump Account contributions, charitable LLC arrangements face IRS scrutiny, and Florida introduces streamlined trustee discharge procedures.

California's Department of Tax and Fee Administration held its first implementation workshop on Senate Bill 122, which extends sales and use tax to digital software and SaaS starting January 1, 2027. The workshop revealed significant unresolved questions about sourcing rules, the $5 million threshold mechanism, custom versus prewritten software distinctions, and the human-effort exemption that will require emergency regulations and potentially litigation to clarify.

The IRS Office of Professional Responsibility has issued new guidelines clarifying how existing Circular 230 obligations apply when tax practitioners use generative AI in their practice. These guidelines establish that while AI can assist professional judgment in tax work, it cannot replace the practitioner's ultimate responsibility for accuracy, competence, confidentiality, and ethical billing practices.

The forms support the final Section 987 regulations issued in December 2024, which provide guidance for determining taxable income, loss, and earnings and profits for qualified business units (QBUs) that use a different functional currency than their owners. The regulations apply to tax years beginning in 2025.