Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for April 20, 2026 – May 1, 2026.
April 23, 2026: The IRS has reportedly begun the process of terminating a lead criminal investigation agent involved in probes of Malta pension structures and Puerto Rico’s Act 60 tax incentives, raising concerns about the continuity of those enforcement efforts. The agent was actively pursuing complex cases involving wealthy taxpayers and multinational structures, and his removal comes amid broader IRS workforce reductions and enforcement resource constraints.
The development has prompted questions from practitioners and policymakers about whether enforcement momentum in these areas will slow, even as the IRS continues to signal that investigations into offshore pension arrangements and Puerto Rico tax planning strategies remain ongoing.
April 24, 2026: The IRS Office of Chief Counsel issued Chief Counsel Advice 202617012, addressing when small corporations may qualify for a more liberal application of reasonable cause relief from penalties under § 6038A for failure to file Form 5472. The guidance explains that corporations with gross receipts of $20 million or less may be eligible if they meet specific criteria, including a lack of knowledge of the filing requirements, limited US presence, and prompt compliance once notified by the IRS.
The Office of Chief Counsel clarified that a “liberal” standard means the IRS should apply greater flexibility in evaluating reasonable cause, but taxpayers must still demonstrate good faith and reasonable cause to the satisfaction of the secretary.
April 29, 2026: The IRS published a notice announcing a public hearing on proposed regulations under § 45Z (the Clean Fuel Production Credit). The hearing has been expanded to run May 27 – 29, 2026, beginning at 9:00 am EDT each day. The proposed regulations address credit eligibility, life cycle emissions rates, and certification and registration requirements for clean fuel producers. Individuals seeking to attend the hearing must request access by May 22, 2026.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice)
Recent court decisions
April 21, 2026: In Liberty Global, Inc. v. United States, in a split decision, the US Court of Appeals for the Tenth Circuit held that the codified economic substance doctrine under § 7701(o) applied to a taxpayer’s multistep transaction. The Court found that the taxpayer’s transaction structure generated no meaningful economic change and had no substantial non-tax purpose.
April 22, 2026: In Simmons v. Commissioner, T.C. Memo. 2026-34, the US Tax Court sustained the IRS’s deficiency determinations and accuracy-related penalties under § 6662(a), holding that the taxpayer failed to adequately substantiate several business and rental deductions. The Court found that the taxpayer did not meet the strict substantiation requirements of § 274(d) for automobile expenses and provided no evidence supporting claimed food expenses while also disallowing interest deductions under § 163(a) because the taxpayer failed to show that the expenses arose from the partnership’s own indebtedness rather than personal obligations.
The Court allowed limited, substantiated advertising expenses related to charity events, but disallowed additional amounts because of insufficient documentation and similarly limited rental repair deductions to substantiated amounts while denying utility deductions where tenants were contractually responsible. The Court upheld penalties, concluding that the taxpayer’s inadequate recordkeeping constituted negligence and that she failed to demonstrate reasonable cause or good faith.
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