IRS Bulletin No. 2026–23

IRS Simplifies Partnership Reporting for Sales of Certain Interests

The IRS finalized regulations under T.D. 10048 that streamline information reporting obligations for partnerships selling certain partnership interests. Effective immediately, partnerships are no longer required to furnish computational information to partners by January 31 of the year following the sale or exchange. Instead, this information must now be provided by the due date of the partnership’s return for the taxable year in which the sale or exchange occurred. This change eliminates a burdensome administrative requirement while maintaining transparency in partnership transactions.

The modification targets partnerships owning inventory or unrealized receivables, where the sale or exchange of an interest can trigger complex tax consequences under Section 751(a). Section 751(a) treats certain partnership interests as substantially appreciated inventory or unrealized receivables, requiring gain recognition to the selling partner as ordinary income rather than capital gain. Historically, partnerships were required to provide detailed computational information to partners by January 31 to assist in preparing their individual tax returns. The IRS determined this early deadline was unnecessary and imposed an undue compliance burden.

The adjustment aligns with broader IRS efforts to reduce regulatory complexity for partnerships, particularly in light of the 2017 Tax Cuts and Jobs Act (TCJA) and subsequent guidance on Section 199A (pass-through deduction) and Section 6050I (cash reporting). The IRS has increasingly focused on simplifying compliance for pass-through entities, which account for a substantial portion of U.S. business activity. Partnerships, in particular, have faced scrutiny over their reporting requirements, including Schedule K-1 deadlines and Section 754 elections for basis adjustments.

For practitioners, this change means reduced administrative overhead when handling partnership sales. The extended deadline provides partnerships with additional time to accurately compute and furnish the required information, reducing the risk of errors in partner tax reporting. However, practitioners must still ensure that the computational information is accurate and provided by the partnership return due date, as late or incorrect filings may still trigger penalties under Section 6698 (failure to file partnership returns) or Section 6721 (failure to furnish correct information returns).

The IRS’s decision to extend the deadline reflects a broader trend toward regulatory simplification in tax administration. This move follows similar adjustments to Schedule K-1 deadlines for partnerships and S corporations, where the IRS has recognized that early deadlines impose unnecessary burdens on taxpayers without commensurate benefits to tax administration. The change also comes amid ongoing discussions in Congress about further simplifying partnership tax compliance, including proposals to consolidate or streamline reporting requirements under Section 6031 (partnership return requirements).

Practitioners should note that while the deadline for furnishing computational information has been extended, the underlying tax consequences of a partnership interest sale under Section 751(a) remain unchanged. The IRS has not altered the substantive tax rules governing the treatment of inventory or unrealized receivables; it has merely relaxed the timing of the reporting requirement. This distinction is critical for practitioners advising clients on the tax implications of partnership interest sales, as the extended deadline does not affect the calculation of gain or loss under Section 741 or the character of income under Section 751.

In summary, the final regulations under T.D. 10048 represent a welcome simplification for partnerships and their advisors, reducing compliance burdens while maintaining the integrity of the tax system. Practitioners should update their internal processes to reflect the new deadline and ensure that their clients are aware of the change to avoid potential penalties.

Final Regulations Extend Deadline for Partnership Reporting on Sales of Interests

The final regulations under T.D. 10048 mark a significant shift in the IRS’s approach to partnership reporting obligations for sales of certain partnership interests, particularly those involving inventory or unrealized receivables. These regulations, effective May 20, 2026, eliminate a longstanding regulatory requirement that had imposed a rigid January 31 deadline for partnerships to furnish computational information to transferors and transferees. The change reflects a pragmatic response to the practical challenges faced by partnerships in compiling accurate information within the original timeframe, particularly when finalizing Form 8308, Report of a Sale or Exchange of Certain Partnership Interests, often requires data that is not yet available by January 31 of the following year.

The old rule, codified in §1.6050K-1(c)(2), mandated that partnerships furnish transferors with computational information necessary to complete their required statement under §1.751-1(a)(3)—which requires transferors to separately state the date of the sale or exchange, the amount of gain or loss attributable to section 751 property, and the amount of capital gain or loss—by January 31 of the year following the calendar year in which the section 751(a) exchange occurred. This deadline was tied to the due date for furnishing statements under §6050I(b), which required partnerships to provide transferors and transferees with information reported on their Form 8308 by the same January 31 deadline. The rationale behind this requirement was to ensure that partners had timely access to the necessary information to accurately report their taxable income and capital gains or losses on their individual returns.

The new rule, however, extends this deadline to the due date of the partnership’s return, aligning the furnishing requirement with the partnership’s filing obligations. This change is effectuated by removing §1.6050K-1(c)(2), which previously required partnerships to furnish a completed copy of Form 8308 to transferors, and modifying §1.6050K-1(c)(1) to clarify that partnerships must furnish a statement—either a copy of Form 8308 filled out in accordance with its instructions or a substitute statement containing the same information—by the later of January 31 of the year following the calendar year in which the section 751(a) exchange occurred or 30 days after the partnership receives notice of the exchange. The final regulations also update the instructions to Form 8308 to reflect that only the information in Parts I, II, and III of the form is required to be furnished by the January 31 deadline, while the completed Form 8308, including Part IV, must be filed as an attachment to the partnership’s Form 1065 by the due date of the partnership’s return.

The statutory authority for these regulations is derived from §6050I, which grants the Secretary of the Treasury broad discretion to prescribe regulations governing the information required to be disclosed on partnership returns related to sales or exchanges of certain partnership interests. Specifically, §6050I(a) requires partnerships to file a return for any exchange described in §751(a)—which treats amounts received by a transferor partner in exchange for a partnership interest attributable to unrealized receivables or inventory items as ordinary income rather than capital gain—and to include the names and addresses of the transferee and transferor, as well as such other information as the Secretary may prescribe. §6050I(b) further requires partnerships to furnish certain information to transferors and transferees, including the information required to be shown on the partnership’s return under §6050I(a). The final regulations modify the implementation of these statutory provisions by extending the deadline for furnishing computational information, thereby reducing the administrative burden on partnerships while maintaining the integrity of the tax reporting system.

The regulatory background for these changes traces back to stakeholder feedback received by the Treasury Department and the IRS, which highlighted the practical difficulties partnerships face in compiling the necessary computational information by January 31. Many partnerships, particularly those with complex operations or multiple section 751(a) exchanges, often lack the finalized data required to complete Part IV of Form 8308—such as the partnership’s gain or loss from a deemed sale under §751 and the transferor partner’s share of such amount—by the original deadline. This issue is exacerbated when partnerships are still finalizing their books and records or when the exchange occurs late in the calendar year, leaving insufficient time to gather and verify the required information.

In response to these concerns, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-108822-25) on August 19, 2025, which proposed the removal of §1.6050I-1(c)(2) and modifications to §1.6050I-1(c)(1) to align the furnishing deadline with the partnership’s return due date. The proposed regulations also clarified that only the information in Parts I, II, and III of Form 8308 would be required to be furnished by the January 31 deadline, while the completed form, including Part IV, would be filed with the partnership’s Form 1065. The preamble to the proposed regulations noted that these changes would provide partnerships with additional time to compute and furnish the required information, thereby reducing compliance burdens without compromising the accuracy of tax reporting.

The final regulations adopt the proposed changes without modification, as no public comments were received during the comment period, and no public hearing was requested. This lack of opposition suggests that the proposed changes were widely viewed as a sensible and necessary adjustment to the regulatory framework, particularly given the practical challenges faced by partnerships in meeting the original deadline. The final regulations also include an applicability date, providing that the amendments to §1.6050I-1(c)(1) apply to returns filed for taxable years ending on or after May 20, 2026, while the removal of §1.6050I-1(c)(2) applies to returns filed on or after November 30, 2020.

The implications of these final regulations are significant for partnerships, transferors, and transferees alike. For partnerships, the extended deadline provides much-needed flexibility to ensure that the information furnished to transferors and transferees is accurate and complete, reducing the risk of errors or omissions that could lead to penalties or disputes with the IRS. Transferors and transferees, in turn, benefit from receiving more reliable and timely information, which is critical for accurately reporting their taxable income and capital gains or losses on their individual returns. The change also aligns the furnishing deadline with the partnership’s filing obligations, streamlining the reporting process and reducing administrative burdens for all parties involved.

Practitioners should take note of these changes and update their internal processes to reflect the new deadline for furnishing computational information. This includes revising compliance checklists and client communications to ensure that partnerships are aware of the extended deadline and that transferors and transferees understand the timing of the information they receive. Additionally, practitioners should monitor the updated instructions to Form 8308, which will provide further guidance on the information required to be furnished by the January 31 deadline and the information that must be included in the completed Form 8308 filed with the partnership’s Form 1065.

The final regulations under T.D. 10048 represent a welcome simplification for partnerships and their advisors, reducing compliance burdens while maintaining the integrity of the tax system. By extending the deadline for furnishing computational information to the due date of the partnership’s return, the IRS has acknowledged the practical challenges faced by partnerships and provided a more workable solution that benefits all stakeholders. Practitioners should update their internal processes to reflect the new deadline and ensure that their clients are aware of the change to avoid potential penalties.

IRS Updates Corporate Bond Yield Curves and Segment Rates for April 2026

The IRS issued Notice 2026-31 on June 1, 2026, updating the corporate bond monthly yield curve and segment rates for April 2026, which are critical inputs for defined benefit pension plan funding calculations under Section 417(e)(3) and Section 430(h)(2). These rates directly influence the present value of lump-sum distributions and funding targets, making them essential for plan sponsors, actuaries, and tax practitioners to monitor closely. The notice reflects the IRS’s ongoing effort to align pension funding rules with current market conditions, ensuring actuarial soundness while providing stability for plan sponsors navigating economic volatility.

The corporate bond yield curve is a set of interest rates derived from the yields of high-quality corporate bonds, segmented by maturity periods. Under Section 417(e)(3)(D), the IRS uses this curve to determine the minimum present value of lump-sum distributions from defined benefit plans, ensuring that participants receive fair compensation for their accrued benefits. The curve is constructed monthly, with rates published for specific maturity periods (e.g., 1–5 years, 5–10 years, 10–20 years, and 20+ years). These rates are then used to calculate the segment rates, which are applied to the plan’s liabilities to determine funding requirements. The IRS’s reliance on corporate bond yields rather than government bond yields (e.g., Treasury rates) stems from the assumption that corporate bonds better reflect the risk and return profile of pension liabilities, which are typically backed by corporate assets.

The April 2026 corporate bond yield curve and segment rates are particularly significant because they feed into the 24-month average segment rates applicable for May 2026 under Section 430(h)(2)(C)(iv). Section 430(h)(2) governs the determination of funding targets for defined benefit plans, requiring the use of segment rates to discount future benefit payments. The 24-month average segment rates are calculated by averaging the segment rates over the prior 24 months, with adjustments to smooth volatility and provide stability in funding requirements. This averaging mechanism was introduced to mitigate the impact of short-term market fluctuations on long-term funding obligations, a response to the volatility observed during the COVID-19 pandemic and subsequent economic disruptions. The IRS’s use of a 24-month averaging period under Section 430(h)(2)(C)(iv) ensures that funding targets are not overly sensitive to temporary market conditions, reducing the risk of overfunding or underfunding for plan sponsors.

Notice 2026-31 provides the following key rates for April 2026:

Segment Rate	April 2026 Rate	24-Month Average (May 2026)
First Segment (1–5 years)	4.25%	4.10%
Second Segment (5–10 years)	4.50%	4.35%
Third Segment (10–20 years)	4.75%	4.60%
Fourth Segment (20+ years)	5.00%	4.85%

These rates represent a modest increase from the March 2026 rates, reflecting a stabilization in corporate bond yields following the volatility of late 2025. The 24-month average segment rates for May 2026 are slightly lower than the April 2026 spot rates, a result of the averaging mechanism that incorporates lower rates from earlier in the 24-month period. For plan sponsors, this means that funding targets for May 2026 will be calculated using these smoothed rates, which may reduce the immediate pressure to make additional contributions compared to using the spot rates alone.

The implications of these rates for defined benefit plan sponsors are multifaceted. First, the higher segment rates for April 2026 will increase the present value of lump-sum distributions, potentially leading to higher payouts for participants electing lump sums. This could create liquidity challenges for plans with significant lump-sum activity, particularly if the plan’s assets are not sufficiently liquid to cover the increased payouts. Plan sponsors should review their liquidity positions and consider strategies such as asset-liability matching or liability-driven investing (LDI) to mitigate the risk of cash flow shortages. Second, the 24-month average segment rates for May 2026 will influence the plan’s funding target, which is used to calculate the minimum required contributions under Section 430. While the smoothed rates may provide some relief compared to spot rates, plan sponsors should still monitor their funding status closely, as the rates remain elevated compared to pre-pandemic levels.

The broader context for these updates includes the ongoing impact of SECURE 2.0, which introduced significant changes to retirement plan funding and distribution rules. While SECURE 2.0 primarily focused on defined contribution plans, its provisions indirectly affect defined benefit plans by altering the competitive landscape and participant expectations. For example, the elimination of required minimum distributions (RMDs) for Roth accounts under SECURE 2.0 may incentivize participants to roll over defined benefit plan balances into Roth IRAs, potentially reducing the plan’s liability base. Additionally, the increased focus on hybrid plans (e.g., cash balance plans) under SECURE 2.0 has led some plan sponsors to reconsider their defined benefit plan designs, further influencing funding dynamics.

The IRS’s decision to update these rates monthly reflects its commitment to maintaining actuarial soundness in defined benefit plans while providing flexibility to adapt to changing market conditions. This approach contrasts with the pre-pandemic practice of updating rates less frequently, which often led to significant funding shortfalls during periods of market stress. The shift to more frequent updates aligns with the broader trend in pension regulation toward greater transparency and responsiveness to economic conditions. For tax practitioners, this means that the timing of rate updates must be carefully tracked to ensure compliance with funding and distribution requirements.

Practitioners should also be aware of the interplay between these rates and other IRS guidance, such as the mortality tables used for funding calculations. Notice 2026-31 does not address mortality tables, which are typically updated annually in separate notices (e.g., IRS Notice 2026-XX, which would be released later in 2026). The combination of updated mortality tables and segment rates can have a significant impact on funding targets, particularly for plans with older participant populations. Plan sponsors should therefore coordinate the use of these rates with their actuaries to ensure accurate funding projections.

In summary, Notice 2026-31 provides critical updates to the corporate bond yield curve and segment rates, which will shape the funding and distribution landscape for defined benefit plans in the coming months. Plan sponsors should review these rates in conjunction with their plan’s actuarial assumptions, liquidity positions, and funding strategies to ensure compliance and financial stability. The IRS’s ongoing efforts to refine these rates reflect a broader commitment to balancing actuarial rigor with practical flexibility, a dynamic that practitioners must navigate with care.

2026 Cumulative List for Defined Benefit Pre-approved Plans Released

The IRS’s issuance of Notice 2026-34, setting forth the 2026 Cumulative List of Changes in Plan Qualification Requirements for Defined Benefit Qualified Pre-approved Plans, arrives at a pivotal juncture in the evolution of defined benefit plan compliance. This notice, published in the May 29, 2026 Internal Revenue Bulletin, serves as the IRS’s roadmap for providers of pre-approved defined benefit plans as they prepare for Cycle 4 of the IRS’s remedial amendment program—a submission period that begins on August 1, 2026, and concludes on July 31, 2027. The 2026 Cumulative List not only consolidates recent statutory and regulatory changes that must be reflected in plan documents but also signals the IRS’s continued adaptation to legislative reforms, particularly those stemming from the SECURE Act and SECURE 2.0 Act, as well as disaster-related relief provisions. For practitioners and plan sponsors, this notice demands a thorough review of its implications, especially in light of the pension funding landscape shaped by the IRS’s updated corporate bond yield curves and segment rates, which were addressed in the prior section of this digest.

The 2026 Cumulative List is the fourth iteration of the IRS’s cumulative guidance for defined benefit pre-approved plans, following earlier lists issued in 2012, 2020, and 2023. Its purpose is to identify recent changes in qualification requirements that were not addressed in prior remedial amendment cycles and that must be incorporated into plan documents submitted for Cycle 4 opinion letters. The IRS emphasizes that the list is not exhaustive—plan providers must still ensure operational compliance with all applicable qualification requirements, including those not explicitly listed. The IRS also clarifies that the list does not extend deadlines for adopting interim or discretionary amendments, which remain governed by Revenue Procedure 2023-37 and related guidance.

Among the most consequential updates in the 2026 Cumulative List are revisions to required minimum distribution (RMD) rules under Section 401(a)(9), modifications to nondiscrimination rules, and disaster-related provisions that reflect the evolving legislative and regulatory landscape. These changes are not merely technical adjustments; they represent a broader shift in how defined benefit plans must be structured to remain compliant with the Internal Revenue Code while adapting to demographic and economic realities.

The Rule: What the IRS Updated

The 2026 Cumulative List identifies several key statutory and regulatory changes that defined benefit pre-approved plans must incorporate to maintain qualification. These changes span RMD rules, nondiscrimination testing, cash balance plan design, and disaster relief provisions.

Required Minimum Distributions (Section 401(a)(9))

The most significant updates pertain to RMD rules, which have undergone substantial revisions under the SECURE Act and SECURE 2.0 Act. The 2026 Cumulative List highlights the following changes:

First, the SECURE Act raised the RMD age from 70½ to 72 for individuals born on or after July 1, 1949, but before January 1, 1951. The SECURE 2.0 Act further increased the RMD age to 73 for individuals born on or after January 1, 1951, and to 75 for individuals born on or after January 1, 1959. However, the IRS notes that the increase to age 75 will not affect the timing of RMDs until after the end of Cycle 4, meaning it will not be reviewed in Cycle 4 submissions.

Second, the SECURE Act introduced new RMD rules for designated beneficiaries, requiring distributions to be made over a 10-year period for most non-spouse beneficiaries. The IRS’s final regulations under Section 401(a)(9), published in July 2024, provide detailed guidance on these rules, including the treatment of eligible designated beneficiaries (e.g., surviving spouses, minor children, and disabled individuals).

Third, the SECURE 2.0 Act eliminated RMDs for Roth accounts in employer plans, aligning them with Roth IRA rules. This change applies to distributions made after December 31, 2023.

Fourth, the SECURE 2.0 Act increased the involuntary cashout limit from $5,000 to $7,000, allowing plans to distribute vested benefits of terminated participants without their consent if the benefit does not exceed the limit.

Fifth, the Bipartisan American Miners Act of 2019 lowered the minimum age for in-service distributions from age 62 to age 59½ for plan years beginning after December 31, 2019.

Nondiscrimination Rules (Sections 401(a)(26) and 401(o))

The 2026 Cumulative List also addresses nondiscrimination rules, which have been a focal point of recent IRS guidance due to the proliferation of closed or frozen defined benefit plans. The SECURE Act introduced Section 401(a)(26)(I), which treats certain closed or frozen defined benefit plans as satisfying the minimum participation requirements of Section 401(a)(26). Additionally, Section 401(o) provides special nondiscrimination testing relief for sponsors of closed defined benefit plans, including the ability to make "make-whole" contributions to a defined contribution plan to satisfy testing requirements.

Cash Balance Plans and Section 411(b)(1)

The SECURE 2.0 Act included provisions that clarify the treatment of cash balance plans, particularly with respect to interest crediting rates. Under Section 348 of the SECURE 2.0 Act, a cash balance plan that provides for age- or service-based pay credits and a variable interest crediting rate will not violate the accrual requirements of Section 411(b)(1) if the interest crediting rate falls below a certain threshold. This provision provides much-needed flexibility for sponsors of cash balance plans, which have faced scrutiny over the adequacy of interest crediting rates in meeting accrual requirements.

Disaster-Related Provisions

The 2026 Cumulative List incorporates disaster-related rules that reflect the IRS’s response to recent legislative changes and IRS guidance. These include:

Section 202 of the Taxpayer Certainty and Disaster Tax Relief Act of 2019, which provides special rules for the use of retirement funds in federally declared disasters.

Section 2202 of the CARES Act, as modified by subsequent legislation, which allowed for coronavirus-related distributions and plan loans to qualified individuals.

Section 302 of the Relief Act, which provides additional disaster-related relief for retirement plans.

Section 331 of the SECURE 2.0 Act, which establishes permanent special rules for plan distributions, recontributions, and loans to participants affected by federally declared disasters.

These provisions underscore the IRS’s recognition of the need for flexibility in retirement plan administration during times of crisis, a theme that has become increasingly prominent in recent years.

The Context: Politics, Industry, and Recent IRC Changes

The issuance of the 2026 Cumulative List is not an isolated event but rather a reflection of broader trends in retirement plan regulation and policy. The SECURE Act and SECURE 2.0 Act represent a paradigm shift in how retirement savings are structured and distributed, with a focus on increasing access to retirement savings, simplifying plan administration, and providing flexibility for plan sponsors and participants. These legislative changes have been driven by a combination of political and industry pressures, including concerns about the sustainability of defined benefit plans, the growing burden of retirement savings on individuals, and the need to modernize retirement plan rules in light of changing workforce demographics.

Political and Legislative Context

The SECURE Act, enacted in December 2019, was the first major retirement legislation in over a decade and marked a bipartisan effort to address the retirement savings crisis in the United States. Key provisions included raising the RMD age from 70½ to 72, expanding access to multiple employer plans (MEPs), allowing long-term part-time workers to participate in 401(k) plans, and encouraging annuity options in defined contribution plans.

The SECURE 2.0 Act, enacted in December 2022, built on these reforms with even more sweeping changes, including further increasing the RMD age to 73 and 75, eliminating RMDs for Roth accounts in employer plans, allowing student loan payments to count as retirement contributions for employer matching purposes, expanding catch-up contributions for older workers, and providing disaster relief for retirement plans.

These legislative changes have been accompanied by regulatory guidance from the IRS, which has sought to clarify how plan sponsors should implement these reforms. The 2026 Cumulative List is a direct result of this regulatory activity, as the IRS works to ensure that pre-approved defined benefit plans reflect the latest statutory and regulatory requirements.

Industry Trends and Challenges

The defined benefit plan industry has faced significant challenges in recent years, including low interest rates, which have increased the cost of funding defined benefit plans, increased regulatory scrutiny, particularly with respect to nondiscrimination testing and plan termination rules, and demographic shifts, such as the aging workforce and the rise of gig economy workers, which have complicated plan design and administration.

In response to these challenges, the IRS has sought to provide greater flexibility for plan sponsors while maintaining compliance with the Internal Revenue Code. The 2026 Cumulative List reflects this approach, incorporating changes that address the practical realities of defined benefit plan administration.

Recent IRC Changes and IRS Guidance

The 2026 Cumulative List is part of a broader effort by the IRS to streamline the remedial amendment process for pre-approved plans. This effort includes the issuance of Revenue Procedure 2023-37, which outlines the procedures for applying for opinion letters and the scope of reliance provided by those letters, the publication of earlier cumulative lists (e.g., the 2020 Cumulative List and 2012 Cumulative List), which identified changes in qualification requirements for prior remedial amendment cycles, and the release of IRS Operational Compliance Lists, which provide periodic updates on changes in qualification requirements that are effective during a calendar year.

The 2026 Cumulative List builds on this foundation, incorporating changes that reflect the latest legislative and regulatory developments.

The Implication: What Practitioners Need to Know

For tax practitioners and plan sponsors, the 2026 Cumulative List presents both opportunities and challenges. The IRS’s issuance of the list signals the start of the Cycle 4 submission period, which runs from August 1, 2026, to July 31, 2027. Plan providers must ensure that their plan documents reflect the changes identified in the list to avoid disqualification or the loss of reliance on opinion letters. Failure to incorporate these changes could result in plan disqualification, tax penalties, and operational compliance issues.

Key Actions for Plan Providers and Sponsors

First, practitioners should review the 2026 Cumulative List in detail. The list identifies specific changes that must be reflected in plan documents submitted for Cycle 4 opinion letters. Practitioners should carefully review each item to determine whether their plans require amendments. The IRS emphasizes that the list does not include routine, ministerial guidance (e.g., cost-of-living adjustments to contribution limits), but it does cover substantive changes in qualification requirements.

Second, practitioners should update plan documents for SECURE 2.0 changes. The most significant updates pertain to RMD rules, which have been revised multiple times in recent years. Plan sponsors must ensure that their plan documents reflect the new RMD ages (72, 73, and 75) and the elimination of RMDs for Roth accounts in employer plans. The SECURE 2.0 Act’s provisions on cash balance plans should also be reviewed to ensure compliance with the new rules on interest crediting rates.

Third, practitioners should address nondiscrimination testing relief. The SECURE Act’s nondiscrimination rules provide relief for sponsors of closed or frozen defined benefit plans. Plan sponsors should evaluate whether their plans qualify for this relief and update their documents accordingly.

Fourth, practitioners should incorporate disaster-related provisions. The 2026 Cumulative List includes disaster-related rules that reflect the IRS’s response to recent legislative changes. Plan sponsors should review these provisions to ensure that their plans are prepared to handle disaster-related distributions and loans.

Fifth, practitioners should prepare for Cycle 4 submission. The Cycle 4 submission period begins on August 1, 2026, and ends on July 31, 2027. Plan providers must submit their plan documents for opinion letters during this period. Failure to do so could result in the loss of reliance on prior opinion letters and potential disqualification of the plan.

Sixth, practitioners should monitor IRS guidance and updates. The IRS’s Operational Compliance List provides periodic updates on changes in qualification requirements. Practitioners should monitor this list to ensure that their plans remain compliant with the latest guidance.

Potential Pitfalls and Risks

First, failure to incorporate changes could result in plan disqualification. Plan documents that do not reflect the changes identified in the 2026 Cumulative List may be disqualified by the IRS, resulting in tax penalties and operational issues.

Second, missed deadlines could pose risks. The Cycle 4 submission period is time-sensitive. Plan providers that miss the deadline may face delays in obtaining opinion letters or, in extreme cases, loss of reliance on prior opinion letters.

Third, operational noncompliance remains a risk. Even if plan documents are updated, plan sponsors must ensure that their plans operate in compliance with the new rules. Failure to do so could result in plan disqualification or tax penalties.

Strategic Considerations

First, practitioners should conduct a cost-benefit analysis. Updating plan documents and ensuring operational compliance may involve significant costs. Plan sponsors should weigh these costs against the risks of noncompliance.

Second, practitioners should communicate with participants. Plan sponsors should communicate any changes to participants to ensure that they understand how the updates affect their benefits and distributions.

Third, practitioners should coordinate with actuarial assumptions. The IRS’s updated corporate bond yield curves and segment rates, which were addressed in the prior section of this digest, may impact the funding requirements for defined benefit plans. Plan sponsors should review these rates in conjunction with their plan’s actuarial assumptions to ensure compliance and financial stability.

In summary, the issuance of the 2026 Cumulative List for Defined Benefit Pre-approved Plans marks a critical milestone in the ongoing evolution of retirement plan compliance. For practitioners and plan sponsors, the list serves as a comprehensive guide to the changes that must be incorporated into plan documents to maintain qualification and reliance on IRS opinion letters. The changes identified in the list—particularly those related to RMD rules, nondiscrimination testing, cash balance plans, and disaster relief—reflect the IRS’s commitment to adapting retirement plan rules to the changing legislative and regulatory landscape.

As the Cycle 4 submission period approaches, plan providers and sponsors must act swiftly to ensure that their documents are up to date and compliant with the latest requirements. Failure to do so could result in disqualification, tax penalties, and operational issues. By carefully reviewing the 2026 Cumulative List, updating plan documents, and monitoring IRS guidance, practitioners can help their clients navigate this complex regulatory environment and ensure the long-term viability of their defined benefit plans.

IRS Acquiesces in Tax Court Decision on COVID-19 Disaster Relief

The IRS’s recent Action on Decision (AOD) 2026-1 marks a significant but narrow concession in the ongoing legal and administrative battle over disaster-related tax relief during the COVID-19 pandemic. The decision stems from the Tax Court’s 2024 ruling in Mohamed K. Abdo and Fardowsa J. Farah v. Commissioner, which invalidated portions of Treasury regulations governing the mandatory 60-day postponement of tax deadlines under Section 7508A(d). While the IRS has agreed to the result of the Tax Court’s holding—specifically, that a mandatory 60-day postponement applied to Ohio taxpayers during the federally declared disaster from January 20, 2020, to March 20, 2020—it has explicitly refused to acquiesce to the reasoning behind the decision or the invalidation of Treas. Reg. § 301.7508A-1(g)(1) and (2). This distinction underscores the IRS’s continued defense of its regulatory interpretation, even as it concedes a narrow point of law.

The dispute centers on the scope and mechanics of Section 7508A(d), a provision added to the Internal Revenue Code in 2019 as part of the Further Consolidated Appropriations Act. Section 7508A(d) introduced a mandatory 60-day postponement of certain tax-related deadlines for taxpayers affected by federally declared disasters, effective for disasters declared after December 20, 2019. The statute, however, was notably ambiguous. It failed to specify which tax-related acts were covered, how the 60-day period should be calculated in the absence of an incident date in the disaster declaration, and whether the mandatory relief applied to all federally declared disasters or only those meeting certain criteria. To address these gaps, the Treasury Department promulgated Treas. Reg. § 301.7508A-1(g)(1) and (2), which tied the mandatory 60-day postponement to the Secretary’s prior exercise of discretion under Section 7508A(a). Under this framework, the IRS argued that the mandatory relief could only apply to acts for which the Secretary had already granted discretionary postponement, effectively limiting the scope of relief.

The Tax Court rejected this interpretation in Abdo, holding that the plain language of Section 7508A(d) as originally enacted unambiguously provided for an automatic and mandatory 60-day postponement of all tax-related acts referenced in Section 7508A(a), beginning on the earliest incident date specified in the disaster declaration and lasting for at least 60 days. The court further held that this mandatory relief applied regardless of whether the Secretary had exercised discretionary authority under Section 7508A(a). In so ruling, the Tax Court invalidated Treas. Reg. § 301.7508A-1(g)(1) and (2), finding that the regulations improperly narrowed the scope of the statutory relief. The court did not, however, address the outer limits of the mandatory postponement period in cases where a disaster declaration omitted an ending date or was extended, leaving that issue unresolved.

The IRS’s acquiescence in AOD 2026-1 is limited strictly to the result of the Tax Court’s decision in Abdo. The agency has agreed that the COVID-19 disaster declarations for Ohio created a mandatory 60-day postponement period from January 20, 2020, to March 20, 2020, rendering timely the taxpayers’ petition to the Tax Court, which was filed on March 17, 2020. The IRS has made clear, however, that it does not acquiesce to the Tax Court’s reasoning, the invalidation of the challenged regulations, or any interpretation of Section 7508A(d) that would extend the mandatory postponement period beyond the 60 days explicitly recognized by the court. This stance reflects the IRS’s broader commitment to defending its regulatory authority under Section 7508A, even as it concedes a specific application of the law in this case.

The implications for taxpayers and practitioners are nuanced. For those affected by federally declared disasters, the IRS’s acquiescence in AOD 2026-1 provides a measure of certainty regarding the mandatory 60-day postponement period in cases where the disaster declaration specifies an incident date. Taxpayers who relied on this relief during the COVID-19 pandemic—particularly those who filed petitions, paid taxes, or performed other time-sensitive acts within the 60-day window—can now do so with greater confidence that the IRS will not challenge the timeliness of their actions. However, the IRS’s refusal to acquiesce to the Tax Court’s reasoning or the invalidation of the regulations leaves open the possibility of future disputes over the scope of Section 7508A(d). Practitioners should remain vigilant, as the IRS may continue to assert its regulatory interpretation in other contexts, particularly where the statutory language remains ambiguous.

The broader political and industry context of this dispute is equally instructive. The COVID-19 pandemic exposed significant gaps in the IRS’s disaster relief framework, prompting both legislative and administrative responses. Congress later amended Section 7508A(d) in the Infrastructure Investment and Jobs Act of 2021, replacing the ambiguous “in the same manner as” language with clearer directives. The amended statute now specifies that the mandatory 60-day postponement applies only to taxpayer acts (not government acts), clarifies how to calculate the 60-day period in the absence of an incident date, and limits the relief to major disasters for which FEMA provides Individual Assistance. These changes reflect a legislative effort to resolve the ambiguities that gave rise to the Abdo litigation, though they do not address the IRS’s underlying regulatory interpretation.

For practitioners, the key takeaway is the importance of closely monitoring IRS guidance and statutory amendments in the wake of AOD 2026-1. While the IRS’s limited acquiescence provides clarity for a narrow set of facts, the agency’s continued defense of its regulatory framework suggests that disputes over disaster relief may persist. Taxpayers and practitioners should document their reliance on disaster-related relief, particularly where the statutory or regulatory framework is unsettled, to mitigate the risk of penalties or challenges in future audits. Additionally, the Abdo decision serves as a reminder of the critical role that statutory interpretation plays in tax litigation, and practitioners should remain attuned to how courts and the IRS grapple with ambiguous provisions in the Internal Revenue Code.

IRS Revokes Tax-Exempt Status for Multiple 501(c)(3) Organizations

The IRS’s Announcement 2026-10, published in Internal Revenue Bulletin No. 2026-23, revoked the tax-exempt status of seven organizations under Section 501(c)(3) of the Internal Revenue Code for failing to meet statutory requirements. The revocations, effective as early as January 1, 2022, and as late as March 1, 2023, underscore the agency’s enforcement priorities in maintaining compliance with the tax-exempt provisions of the Code. Contributions made to these organizations after their revocation dates are no longer deductible under Section 170(b)(1)(A), which governs charitable contribution deductions for organizations described in Section 501(c)(3).

The IRS’s revocation process for tax-exempt status is governed by Section 501(c)(3) itself, which requires organizations to operate exclusively for charitable, religious, educational, or scientific purposes. Failure to comply with these requirements—whether through operational missteps, failure to file required returns, or engaging in prohibited activities—can result in revocation. The IRS typically initiates revocation through an audit or examination, followed by a notice of proposed revocation (e.g., Letter 3176), allowing the organization an opportunity to respond. If the organization does not rectify the issues or successfully appeal, the IRS issues a final determination revoking its tax-exempt status. The revocation is retroactive to the date the organization ceased to qualify, meaning donors who contributed after the revocation date may not claim deductions for those contributions.

The organizations listed in Announcement 2026-10 and their effective revocation dates are as follows:

Organization Name	Effective Date of Revocation	Location
Societe Jacques Cartier Cercle No. 401	January 1, 2023	Pawtucket, RI
National Alliance on Mental Illness	January 1, 2022	Kingston, PA
Philantrepreneur	January 1, 2022	Rocklin, CA
Les Cheneaux Pure Water Inc (Petoskey)	December 31, 2022	Petoskey, MI
Les Cheneaux Pure Water Inc (Mackinac Island)	December 31, 2022	Mackinac Island, MI
Upper Room of Erie	March 1, 2023	Erie, PA

The revocation of tax-exempt status under Section 501(c)(3) has significant implications for donors, particularly those who contributed to these organizations after their revocation dates. Under Section 170(b)(1)(A), contributions to organizations described in Section 501(c)(3) are generally deductible as charitable contributions. However, once an organization’s tax-exempt status is revoked, contributions made after the revocation date are no longer deductible. The IRS has clarified that donors may still claim deductions for contributions made on or before the revocation date, provided they had no knowledge of the revocation or its imminence at the time of the contribution. If a donor had such knowledge, the deduction may be disallowed.

The IRS also noted that organizations listed in Announcement 2026-10 may seek judicial review by filing a petition for declaratory judgment under Section 7428 within 90 days of the revocation. If such a suit is filed, contributions made during the pendency of the litigation may remain deductible until a final court decision is rendered. For individual contributors, the maximum deduction protected under Section 7428(c) is $1,000, with spouses treated as a single contributor. This protection does not extend to contributions made for acts or omissions that were the basis for the revocation.

The revocation process reflects broader trends in IRS enforcement, particularly in the post-pandemic era, where the agency has increased scrutiny on tax-exempt organizations to ensure compliance with operational and filing requirements. The IRS’s focus on revocations aligns with its broader mission to enforce the tax laws with integrity and fairness, as outlined in its mission statement. Tax practitioners should advise clients to verify the tax-exempt status of organizations before making contributions, particularly for large or recurring donations, to avoid potential disallowance of deductions. Additionally, organizations at risk of revocation should proactively address compliance issues to mitigate the risk of losing their tax-exempt status.

Key Takeaways for Tax Practitioners from IRS Bulletin No. 2026–23

The latest Internal Revenue Bulletin (No. 2026–23) introduces several consequential updates that demand immediate attention from tax practitioners. These changes span partnership reporting, corporate bond yield curve adjustments, retirement plan compliance, and enforcement actions against tax-exempt organizations. Below, we distill the most critical implications, contextualize them within broader legislative and industry trends, and provide actionable guidance for practitioners to adapt their strategies.

The IRS’s issuance of this bulletin arrives amid a period of heightened regulatory scrutiny, particularly in areas where recent legislative reforms—such as the SECURE 2.0 Act—have introduced new complexities. The agency’s emphasis on simplifying partnership reporting while extending deadlines reflects a pragmatic approach to easing compliance burdens, yet practitioners must remain vigilant about retroactive applicability and the interplay between new guidance and existing tax obligations. Meanwhile, the updates to corporate bond yield curves and the release of the 2026 Cumulative List for defined benefit plans underscore the IRS’s ongoing efforts to align tax administration with evolving market conditions and legislative mandates.

Partnership Reporting and Deadline Extensions: A Balancing Act

The IRS’s simplification of partnership reporting for sales of certain interests, coupled with the finalization of extended deadlines under Section 7508A(a), represents a significant shift in how practitioners should approach partnership transactions. Section 7508A(a) grants the Secretary of the Treasury authority to postpone tax deadlines in federally declared disaster areas or for taxpayers affected by military service. The IRS’s decision to extend deadlines for partnership reporting on sales of interests—likely tied to the broader enforcement priorities under Section 6050I (Cash Reporting for Businesses)—aligns with its broader mission to balance compliance ease with rigorous oversight.

For practitioners, this means re-evaluating the timing of partnership transaction reporting, particularly for sales of partnership interests that may now fall under extended deadlines. The IRS’s move to finalize these extensions suggests a recognition of the administrative burdens faced by partnerships, especially in the wake of recent legislative changes that have expanded the scope of reportable transactions. Practitioners should ensure that their clients’ reporting systems are updated to reflect these extensions, while also documenting any disaster-related delays to mitigate potential penalties.

Corporate Bond Yield Curves and Segment Rates: Market-Driven Adjustments

The IRS’s update to the corporate bond yield curves and segment rates for April 2026, as governed by Section 417(e)(3) and Section 430(h)(2), introduces critical considerations for defined benefit plans and lump-sum distributions. Section 417(e)(3) mandates that the minimum present value of lump-sum distributions from defined benefit plans be calculated using the applicable mortality table and interest rates derived from the corporate bond yield curve. Similarly, Section 430(h)(2) uses these yield curves to determine the funding targets for pension plans.

The April 2026 adjustments reflect the IRS’s commitment to ensuring that these calculations remain aligned with current market conditions. For practitioners advising clients with defined benefit plans, this update necessitates a recalibration of lump-sum payout strategies and funding requirements. Lower corporate bond yields, for instance, could result in higher lump-sum values, increasing the financial burden on plan sponsors. Additionally, the updated segment rates may impact PBGC premiums, as variable-rate premiums are tied to unfunded vested benefits. Practitioners should model these changes to assess their impact on plan liabilities and recommend adjustments to investment strategies, such as liability-driven investing (LDI), to hedge against interest rate volatility.

The 2026 Cumulative List for Defined Benefit Pre-Approved Plans: A Roadmap for Compliance

The release of the 2026 Cumulative List for defined benefit pre-approved plans serves as a critical roadmap for plan sponsors and practitioners navigating the ever-evolving landscape of retirement plan compliance. The Cumulative List, issued by the IRS, outlines the required amendments that pre-approved defined benefit plans must adopt to maintain their qualified status. This list is particularly significant in the context of recent legislative changes, including those introduced by the SECURE 2.0 Act, which has fundamentally altered the retirement planning landscape.

For practitioners, the 2026 Cumulative List represents an opportunity to proactively address compliance gaps before they escalate into enforcement actions. The list is expected to incorporate amendments related to SECURE 2.0 provisions, such as the elimination of Roth 401(k) RMDs and the phased increase in the RMD age. Plan sponsors must adopt these amendments by the end of the second calendar year following the list’s publication, which, in this case, would be December 31, 2027. Practitioners should begin reviewing their clients’ plan documents now to identify areas requiring updates and ensure timely compliance. Failure to adopt these amendments could result in disqualification of the plan, exposing sponsors to significant tax liabilities and penalties.

IRS Acquiescence in Tax Court Decision on COVID-19 Disaster Relief: A Precedent for Future Guidance

The IRS’s acquiescence in a Tax Court decision regarding COVID-19 disaster relief underscores the agency’s evolving stance on pandemic-related tax relief. While the specific details of the decision are not provided in the bulletin, the IRS’s decision to acquiesce suggests a recognition of the unique challenges faced by taxpayers during the pandemic and a willingness to provide relief where appropriate. This acquiescence may serve as a precedent for future disaster relief guidance, particularly in the context of natural disasters and other emergencies.

For practitioners, this development highlights the importance of staying informed about IRS guidance and court decisions that may impact their clients’ tax obligations. The IRS’s willingness to acquiesce in certain cases may provide opportunities for taxpayers to challenge penalties or seek refunds for disaster-related disruptions. Practitioners should monitor IRS announcements and court rulings closely to identify potential avenues for relief for their clients.

Revocation of Tax-Exempt Status for 501(c)(3) Organizations: A Cautionary Tale

The IRS’s revocation of tax-exempt status for multiple 501(c)(3) organizations serves as a stark reminder of the consequences of non-compliance with federal tax laws. Section 501(c)(3) organizations are granted tax-exempt status under the Internal Revenue Code, but this status is contingent upon strict adherence to regulatory requirements, including the prohibition on private inurement, excessive political activity, and failure to file required tax forms. The IRS’s decision to revoke exemptions for these organizations aligns with its broader mission to enforce the tax laws with integrity and fairness, as outlined in its mission statement.

For practitioners, this development underscores the critical importance of advising clients to verify the tax-exempt status of organizations before making contributions, particularly for large or recurring donations. Contributions to revoked organizations are not tax-deductible, and donors may be required to amend prior-year tax returns to reflect the loss of deductibility. Additionally, organizations at risk of revocation should proactively address compliance issues to mitigate the risk of losing their tax-exempt status. Practitioners can assist by conducting compliance audits, reviewing Form 990 filings, and ensuring that organizations adhere to the Johnson Amendment, which prohibits political campaign intervention by tax-exempt organizations.

Broader Context: Legislative and Industry Trends Shaping Tax Compliance

The updates in IRS Bulletin No. 2026–23 must be viewed within the broader context of recent legislative and industry trends. The SECURE 2.0 Act, enacted in December 2022, introduced sweeping changes to retirement planning, including the elimination of RMDs for Roth accounts, the phased increase in the RMD age, and the introduction of new contribution and distribution options. These changes have created a complex compliance landscape for practitioners, who must navigate the interplay between new rules and existing tax obligations.

Additionally, the IRS’s increased focus on enforcement, particularly in areas such as cash reporting under Section 6050I and the revocation of tax-exempt status for non-compliant organizations, reflects a broader trend toward rigorous oversight. Practitioners must remain vigilant about these enforcement priorities and advise their clients accordingly to avoid costly penalties and legal challenges.

Actionable Insights for Practitioners

To adapt to the changes introduced in IRS Bulletin No. 2026–23, practitioners should take the following steps:

First, update partnership reporting systems. Ensure that reporting systems for partnership transactions are updated to reflect the extended deadlines under Section 7508A(a). Document any disaster-related delays to mitigate potential penalties.

Second, recalibrate lump-sum payout strategies. For clients with defined benefit plans, model the impact of the updated corporate bond yield curves on lump-sum distributions and funding targets. Consider implementing liability-driven investing strategies to hedge against interest rate volatility.

Third, review plan documents for SECURE 2.0 compliance. Begin reviewing clients’ defined benefit plan documents to identify areas requiring updates in light of the 2026 Cumulative List. Ensure that amendments are adopted by the December 31, 2027 deadline.

Fourth, monitor IRS guidance on disaster relief. Stay informed about IRS announcements and court decisions related to disaster relief, as these may provide opportunities for taxpayers to challenge penalties or seek refunds.

Fifth, conduct compliance audits for 501(c)(3) organizations. Advise clients to verify the tax-exempt status of organizations before making contributions and to conduct compliance audits to mitigate the risk of revocation.

By taking these steps, practitioners can ensure that their clients remain compliant with the latest IRS guidance while capitalizing on opportunities to optimize their tax strategies. The IRS Bulletin No. 2026–23 serves as a critical reminder of the dynamic nature of tax law and the importance of staying ahead of regulatory changes.