Section 7508A refund claims, whistleblower award eligibility, and court restrictions on IRS collection

This roundup covers key Internal Revenue Service (IRS) developments from June 23 to July 2, 2026, including a notable executive nomination, new electronic filing procedures for COVID-19 disaster relief refund claims, and three significant court decisions shaping tax controversy.

June 23, 2026: US President Donald Trump nominated Jim Gadwood, a tax controversy partner at Miller & Chevalier, to serve as IRS chief counsel. The agency’s top legal official, the chief counsel is responsible for advising IRS leadership, issuing legal guidance, and overseeing the development of US Department of the Treasury regulations, including implementation of the One Big Beautiful Bill Act. Gadwood has focused his practice on federal tax controversies; transfer pricing; tax accounting; and representing large corporations, partnerships, and high-net-worth individuals before the IRS.

June 26, 2026: The IRS issued PLR 202626001, granting a limited liability company 120 days of § 9100 relief to file a late Form 8832 for electing to be treated as an association taxable as a corporation under the entity classification regulations. The IRS concluded that the taxpayer acted reasonably and in good faith and that granting relief would not prejudice the interests of the government after the taxpayer inadvertently failed to timely file its entity classification election despite intending corporate tax treatment from the desired effective date.

The taxpayer must file Form 8832 within 120 days and file all required federal income tax and information returns, including amended returns, consistent with the requested classification. The IRS emphasized that its ruling does not address the taxpayer’s eligibility to make the election or provide relief from any interest or penalties that may otherwise apply, and, as with all private letter rulings, the decision may not be cited as precedent.

July 2, 2026: The IRS announced an electronic filing option for taxpayers seeking to preserve potential claims for COVID-19 disaster relief refunds pending the government’s appeal in Kwong v. United States. Taxpayers with an IRS online account may electronically submit Form 843 before the July 10, 2026, deadline by identifying the claim as relating to Kwong. The IRS stated that it will process the claims only if the government is ultimately unsuccessful in its appeal. The Kwong decision held that the COVID-19 pandemic automatically postponed certain federal tax deadlines until July 10, 2023, potentially entitling taxpayers to refunds of penalties and interest previously assessed for late filing or payment. The IRS continues to challenge that ruling, but the new filing procedure allows taxpayers to preserve potential refund claims while the appeal remains pending.

The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).

Recent court developments

June 29, 2026: In White v. Commissioner, T.C. Memo. 2026-56, the US Tax Court held that the IRS abused its discretion by sustaining a proposed levy to collect restitution-based assessments (RBAs) under § 6201(a)(4) because the collection action conflicted with a prior US Department of Justice (DOJ) settlement resolving the taxpayer’s underlying income tax liabilities. The taxpayer had pleaded guilty to tax evasion for tax years 2000 – 2011, was ordered to pay $1.2 million in criminal restitution, and later entered into a DOJ settlement allowing him to satisfy his $1.89 million civil tax liability by paying $1.6 million in installments through July 2027. Although the IRS argued that the RBAs were separate liabilities not covered by the settlement, the Court concluded that the restitution assessments were identical to the taxpayer’s underlying tax liabilities and merely provided a different collection mechanism.

The Court emphasized that permitting the IRS to immediately levy the unpaid restitution assessments would effectively accelerate payment obligations that the government agreed could be satisfied over several years under the DOJ settlement. While recognizing that RBAs and return-based tax assessments are legally distinct, the Court held that they cannot result in double collection and that the IRS Independent Office of Appeals (IRS Appeals) failed to adequately balance efficient tax collection against the taxpayer’s contractual rights under the settlement agreement. Accordingly, the Court denied the IRS’s motion for summary judgment, granted summary judgment for the taxpayer, and declined to sustain the proposed levy.

June 29, 2026: In Besicorp Group, Inc. v. Commissioner, the Court of Appeals for the Second Circuit held that the IRS may not sustain federal tax liens or levies in a Collection Due Process proceeding without verifying compliance with the written supervisory approval requirement of § 6751(b)(1). Reversing the Tax Court, the Second Circuit concluded that § 6330(c)(1) requires IRS Appeals officers to verify compliance with all applicable legal requirements, including supervisory approval of penalties, even where the underlying tax liabilities and penalties had already been adjudicated.

The Court rejected the IRS’s arguments that res judicata excused verification because the taxpayers’ liabilities were previously determined, emphasizing that verification under § 6330(c)(1) is a separate procedural requirement governing collection actions rather than a challenge to the underlying liability. Although the decision does not invalidate the underlying tax deficiencies or penalties, it prevents the IRS from collecting the penalties through liens or levies absent the required verification. The Court remanded the case for further proceedings, leaving open the possibility that the IRS could cure a verification defect if supervisory approval had been timely obtained.

July 2, 2026: In Dee v. Commissioner, 167 T.C. No. 1, the Tax Court held that it had jurisdiction to review the IRS Whistleblower Office’s denial of an award where the whistleblower’s information was forwarded to an open IRS examination, even though the examination team already identified and addressed the relevant issues before receiving the information. Relying on recent Court of Appeals for the DC Circuit precedent, the Tax Court concluded that an examination remains “open” until it is closed under the standards of Revenue Procedure 2005-32, making jurisdiction dependent on the existence of an ongoing administrative action rather than on whether the whistleblower ultimately contributed to the IRS’s recovery.

On the merits, however, the Court upheld the Whistleblower Office’s denial of an award, finding no abuse of discretion because the taxpayer’s submission – based on publicly available US Securities and Exchange Commission filings – did not cause the IRS to initiate a new examination, expand the scope of the existing audit, or continue pursuing issues it otherwise would have abandoned. The examination team had independently identified and resolved the same issues before receiving the whistleblower’s submission, and the Court declined to supplement the administrative record with additional materials offered by the petitioner.