Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for December 12, 2025 – January 12, 2026.
December 12, 2025: The IRS issued Treasury Decision 10042, which modified and clarified the Internal Revenue Code (Code) Section 892 rules. The Treasury Decision contains final regulations regarding the taxation of income earned by foreign governments from investments in the United States. The regulations clarify how to determine when a foreign government is engaged in commercial activity and when an entity qualifies as a controlled commercial entity. These rules apply to foreign governments that earn income from US sources.
December 12, 2025: The IRS issued proposed regulations, which provided additional guidance under Section 892 and focus on:
Determining when an acquisition of debt by a foreign government is treated as a commercial activity
Determining when a foreign government has effective control of an entity engaged in a commercial activity
Clarifying that partnerships, including partnerships wholly owned by a single foreign sovereign, are not controlled entities under Section 892 for US tax purposes.
December 15, 2025: The IRS issued proposed regulations, updating points of contact within the US Department of Justice (DOJ) and the IRS to identify points of contact for matters involving internal revenue laws following a reorganization within the DOJ. The regulations would also update points of contact at the IRS for taxpayers submitting administrative claims for civil damages related to certain unauthorized collection actions or awards of administrative costs in specified administrative proceedings.
December 15, 2025: The IRS withdrew two notices of proposed rulemaking regarding innocent spouse relief.
December 22, 2025: The IRS issued proposed updates, which set forth a clearer, more predictable system for its Voluntary Disclosure Practice and a more streamlined penalty framework. The IRS seeks public comment on the proposed updates by March 22, 2026.
December 29, 2025: The IRS released Internal Revenue Bulletin 2026-1, which includes the following:
Revenue Procedure 2026-1, which contains the revised procedures for letter rulings and information letters issued by the different associate chief counsel offices. This revenue procedure also contains the revised procedures for determination letters issued by the Large Business and International Division, the Small Business/Self-Employed Division, the Wage and Investment Division, and the Tax Exempt & Government Entities (TE/GE) Division.
Revenue Procedure 2026-2, which explains when and how associate chief counsel offices should provide advice in technical advice memoranda (TAM) as well as taxpayers’ rights when a field office requests a TAM.
Revenue Procedure 2026-3, which provides a revised list of Code areas under the jurisdiction of the following associate chief counsel offices:
Corporate
Financial Institutions and Products
Income Tax and Accounting
Passthroughs and Special Industries
Procedure and Administration
Energy, Credits, and Excise Tax
Employee Benefits, Exempt Organizations, and Employment Taxes.
These relate to matters in which the IRS will not issue letter rulings or determination letters.
Revenue Procedure 2026-4, which provides guidance on the types of advice the IRS offers to taxpayers on issues under the jurisdiction of the IRS Commissioner, TE/GE Division, and Employee Plans Rulings and Agreements. It also details the procedures that apply to requests for determination letters and private letter rulings.
Revenue Procedure 2026-5, which provides the procedures for issuing determination letters on issues under the jurisdiction of the Exempt Organizations Rulings and Agreements. It also explains the procedures for issuing determination letters on tax-exempt statuses for organizations applying under Code Section 501 or 521, private foundation status, and other determinations related to tax-exempt organizations. The revenue procedure applies to revocation or modification of determination letters and provides guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under Code Section 7428.
December 29, 2025: The IRS released Notice 2026-10, which sets the optional 2026 standard mileage rates for calculating deductible automobile expenses for business, charitable, medical, and moving purposes effective January 1, 2026. The notice also updates the basis reduction amounts for depreciation, the maximum standard automobile cost for fixed and variable rate plans, and the maximum fair market value of employer-provided vehicles for applying the fleet-average valuation rule or the cents-per-mile valuation rule.
January 5, 2026: The IRS released Internal Revenue Bulletin 2026-2, which includes the following:
Revenue Procedure 2026-6, which provides the procedure for a state to make an election to be a “covered state” before identifying scholarship granting organizations in accordance with Code Section 25F(g), as added by the One Big Beautiful Bill Act (OBBBA). This election is a prerequisite for states participating in the new scholarship credit program.
Revenue Procedure 2026-7, which provides the areas under the jurisdiction of the associate chief counsel (international) in which letter rulings and determination letters will not be issued.
Revenue Ruling 2026-1, which provides tables of covered compensation under Section 401(l)(5)(E) for qualified pension, profit-sharing, and stock bonus plans effective January 1, 2026.
Notice 2026-2, which provides updates on the corporate bond monthly yield curve, the corresponding spot segment rates for November 2025 used under § 417(e)(3)(D), the 24-month average segment rates applicable for December 2025, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).
Notice 2026-3, which offers relief from additions to tax under Sections 6654 and 6655 for underpayment of estimated income tax. This guidance implements Section 70437 of the OBBBA, which introduces a new limited payment deferral election in Section 1062(a). The election applies to sales or exchanges of qualified farmland property to a qualified farmer. Under the notice, the IRS will waive a portion of the addition to tax under Sections 6654 and 6655 for transactions where a Section 1062 election is properly made. The amount of relief corresponds to the amount of tax deferred under the election.
Notice 2026-5, which provides guidance on changes that generally expand the availability of health savings accounts as enacted by the OBBBA. The notice also answers common questions surrounding these changes.
Notice 2026-6, which extends the transition period set out in Revenue Ruling 2025-4 by one additional year to calendar year 2026 for states that administer paid family and medical leave programs and participating employers. The notice gives states and employers additional time to make the necessary changes to their systems to comply with the tax and information reporting obligations set forth in Revenue Ruling 2025-4.
January 7, 2026: The IRS released Revenue Procedure 2026-10, which establishes a formal framework for passive foreign investment company shareholders to request private letter rulings for retroactive qualified electing fund elections. The guidance introduces structured eligibility criteria, documentation requirements, and user-fee rules to simplify and standardize the relief process.
January 7, 2026: The IRS released Announcement 2026-2, clarifying that the tax rate under Section 4611 for 2026 includes only the 18 cents per barrel Superfund financing tax. The “oil spill tax” (OST), which was 9 cents per barrel, expired on December 31, 2025, and will not apply to calendar year 2026 unless Section 4611(f)(2) is amended to extend the OST.
January 8, 2026: The IRS issued proposed regulations, which reflect changes from the OBBBA covering the regulations governing backup withholding. These changes affect third-party settlement organizations that make payments in settlements of third-party network transactions.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
