IRS roundup: June 10 – June 21, 2026

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for June 10, 2026 – June 21, 2026.

June 9, 2026: A Treasury Inspector General for Tax Administration (TIGTA) report found that the IRS lost a significant number of experienced employees during the workforce reductions and voluntary departures that occurred in the first year of the second Trump administration. Approximately 40% of departing employees had more than 11 years of experience while another 45% had between one and 11 years of service, raising concerns about the loss of institutional knowledge and expertise within the agency.

The report also noted that the IRS has redirected personnel to maintain taxpayer service operations, including hiring approximately 2,000 customer service representatives and tax examiners and detailing more than 1,100 employees from other divisions to assist with return processing. TIGTA observed that many reassigned employees retained higher-grade salaries while performing lower-grade taxpayer service duties and announced a separate review examining the impact of these resource reallocations on IRS operations and enforcement activities.

June 10, 2026: The IRS issued Notice 2026-39, updating the list of qualifying energy communities for purposes of the bonus credit amounts and rates available under Internal Revenue Code (Code) §§ 45, 45Y, 48, and 48E. The notice provides updated county and census tract information for the Statistical Area and Coal Closure Categories, reflecting 2025 unemployment data, newly identified coal mine closures, and coal-fired electric generating unit retirements.

The updated designations determine whether eligible clean energy projects qualify for enhanced energy community bonus credits. The notice also provides revised appendices identifying qualifying counties, metropolitan and non-metropolitan statistical areas, and census tracts, with the updated energy community status generally effective beginning June 10, 2026.

June 13, 2026: US Department of the Treasury officials announced that forthcoming proposed regulations under Code § 987 will allow certain controlled foreign corporations to make an election to not compute foreign currency gains and losses for their qualified business units and that the election may be made on amended 2025 tax returns. The election was first outlined in Notice 2026-17 and is intended to simplify compliance with the complex § 987 foreign currency rules.

The Treasury indicated that taxpayers will be given additional time to decide whether to make the election, but the election must be made within a reasonable period rather than years later. The proposed regulations are intended to reduce compliance burdens, simplify the operation of the § 987 regime, and limit the application of certain rules to routine business transactions involving US-owned foreign corporations.

June 15, 2026: The IRS issued Revenue Ruling 2026-12, providing the applicable federal rates (AFRs) for July 2026, including short-, mid-, and long-term rates under Code § 1274; adjusted AFRs under § 1288; and rates relevant to §§ 382, 42, 7520, and 7872. The ruling sets the § 7520 rate at 5.20% and the adjusted federal long-term rate under § 382 at 3.77%.

The ruling also provides the low-income housing credit percentages for July 2026, including an 8.09% rate for the 70% present value credit and 3.47% for the 30% present value credit, along with monthly AFR tables used in various federal tax valuation, financing, and transfer pricing calculations.

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

June 16, 2026: In Smith v. Commissioner, T.C. Memo. 2026-50, the US Tax Court held that an architectural firm was entitled to partial research credits under Code § 41 for certain large-scale sustainable building projects, rejecting the IRS’s argument that the research was entirely excluded as funded research. The Court concluded that although payments under all six project contracts were not contingent on the success of the research, the firm retained substantial rights in four of the six projects, including rights to use or exploit the resulting designs and intellectual property. As a result, the firm could claim reduced research credits under the funded-research allocation rules of Treasury Regulation § 1.41-4A(d)(3).

The opinion is notable for its consideration of the taxpayer’s argument that the Treasury’s funded-research regulations improperly added the “contingent on success” and “substantial rights” requirements to § 41(d)(4)(H) and that those criteria were therefore invalid under Loper Bright. The Court upheld these criteria, holding that Loper Bright did not undermine prior precedents and emphasizing both statutory stare decisis and the persuasive weight of the Treasury’s long-standing interpretation. The Court further held that the firm’s partners’ compensation was reasonable under § 174(e), applying the US Court of Appeals for the Seventh Circuit’s independent investor test and finding that the extraordinarily high returns generated for the firm supported the compensation amounts claimed.

June 17, 2026: In Novak v. Commissioner, T.C. Memo. 2026-52, the Tax Court granted summary judgment to the IRS, holding that the IRS Independent Office of Appeals (IRS Appeals) did not abuse its discretion in sustaining a federal tax lien and rejecting the taxpayer’s request for an installment agreement. The taxpayer owed more than $1.7 million in additional tax and interest for 2017 – 2019 and had previously reported substantial assets, including tens of millions of dollars in stock and significant real estate equity. IRS Appeals repeatedly requested updated financial information after the taxpayer claimed his circumstances had changed, but the requested documentation was never provided.

The taxpayer argued that the lien was filed before his installment agreement was formally rejected and that the IRS failed to satisfy certain notice requirements. The Court rejected those arguments, finding that the IRS properly verified compliance with applicable procedures, timely issued the lien notice, and followed Internal Revenue Manual guidance permitting the filing of a notice of federal tax lien while an installment agreement request is pending. The Court emphasized that IRS Appeals may reject a collection alternative when a taxpayer fails to provide requested financial information and when the record indicates the taxpayer has sufficient assets to satisfy the liability. Accordingly, the lien filing was sustained, and the proposed installment agreement was properly denied.