Issue Number: 2026-03

Inside This Issue

1. Be informed about the upcoming Earned Income Tax Credit Awareness Day
2. IRS Advisory Council issues Annual Report
3. 2025 Nationwide Tax Forum Online: How to Avoid Processing Delays and Streamline Return Filing
4. Upcoming IRS webinars
5. Refer Practitioner Misconduct to the Office of Professional Responsibility
6. Treasury, IRS provide guidance for Qualified Opportunity Zone investments in rural areas under the One, Big, Beautiful Bill
7. Guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill
8. Supplemental basic allowance for housing payments to members of the military are not taxable
9. Technical guidance

1.  Be informed about the upcoming Earned Income Tax Credit Awareness Day

Preparations are in progress for the Earned Income Tax Credit (EITC) Awareness Day.

The event will take place this Friday, Jan. 23, 2026. IRS partners will conduct events across the country to raise awareness and promote outreach regarding the EITC, ensuring taxpayers are informed about this tax credit.

The IRS encourages tax professionals to communicate information about the EITC to their clients and to remind them that those eligible for the EITC must file a tax return to receive the credit.

The EITC began as a small tax credit aimed at providing financial support to low-income working families with children. For more than five decades various legislative changes have transformed the credit into one of the federal government's largest anti-poverty programs, helping to lift many individuals out of poverty through cash support to low-income working families.

For more information visit EITC Awareness Day on IRS.gov.

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2.  IRS Advisory Council issues Annual Report

The Internal Revenue Service Advisory Council (IRSAC) issued its annual public report, offering recommendations to the IRS on a range of new and continuing issues in tax administration.

The report includes recommendations on 29 issues addressing topics related to IRS operations, taxpayer service, compliance and administrative issues.
The full IRSAC Public Report is available on IRS.gov. For more information, visit IRS.gov/IRSAC.

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3.  2025 Nationwide Tax Forum Online: How to Avoid Processing Delays and Streamline Return Filing

One highlight of the IRS Nationwide Tax Forum Online (NTFO) is the seminar Getting Taxpayers Back on Track: Quickly Resolving Unpaid Tax Debts While Preventing New Ones from Occurring. This session will review some of the most common issues that can slow down the processing of a return, how to avoid them and how to resolve processing errors.

All NTFO self-study seminars cost $29 each. Tax pros can earn one continuing education credit for each NTFO self-study seminar or audit a presentation for free. For more information, visit irstaxforumonline.com.

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4.  Upcoming IRS webinars

Join the IRS for a free webinar taking place this week:

Topic: 2025 Adoption Tax Credit

Date: Wednesday, Jan. 21, 2026

Time: 2 p.m. Eastern, 1 p.m. Central, Noon Arizona & Mountain, 11 a.m. Pacific, 10 a.m. Alaska, 9 a.m. Hawaii

Duration: 60 minutes including live Q&A

CE credit category: One (1.0) federal tax law credit

Learn how to:

• Identify who qualifies for the adoption credit and which expenses count.

• Describe how the refundable and nonrefundable credit amounts work.

• Recognize when to claim based on rules for special needs children and foreign adoptions.

• Understand what records and documents taxpayers should keep to help calculate the credit when they file an income tax return.

Also, the IRS is offering another free webinar next week for small businesses. Tax professionals are invited to join:

Topic: Understanding Federal Taxes for Small Businesses

Date: Wednesday, Jan. 28, 2026

Time: 2 p.m. Eastern, 1 p.m. Central, Noon Arizona & Mountain, 11 a.m. Pacific, 10 a.m. Alaska, 9 a.m. Hawaii

Duration: 60 minutes including live Q&A

CE credit is not offered for this webinar

Learn how to:

• Understand IRS Form 1040 Schedule C Profit/Loss from Business.

• Explain the forms of business organizations.

• Find IRS Resources and Online Tools for Small Business Owners.

The webinars are offered with closed captioning in English.

Direct any questions to [email protected].

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5.  Refer Practitioner Misconduct to the Office of Professional Responsibility

The IRS needs tax professionals’ help in identifying other practitioners who fail to meet their obligations under Circular 230, including misconduct in the preparation of taxpayers’ federal tax returns. Use Form 14157, Return Preparer Complaint, to report suspected misconduct by practitioners and check the appropriate box if the preparer is an attorney, certified public accountant or enrolled agent. A Spanish-language Form 14157 is also available. For more information, visit OPR’s webpage.

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6.  Treasury, IRS provide guidance for Qualified Opportunity Zone investments in rural areas under the One, Big, Beautiful Bill

The Department of the Treasury and the IRS issued guidance on important rule changes regarding Qualified Opportunity Zone investments in rural areas under the One, Big, Beautiful Bill (OBBB).

Qualified Opportunity Zones provide a tax benefit for people who invest in economically distressed communities in the United States. The new rules make rural QOZ investments more attractive for investors, improving economic growth and job creation in underserved communities.

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7.  Guidance on the additional first year depreciation deduction amended as part of the One, Big, Beautiful Bill

The Department of the Treasury and the IRS issued Notice 2026-11 that provides tax professionals and their clients with guidance on the permanent 100% additional first year depreciation deduction for eligible depreciable property acquired after Jan. 19, 2025, provided by the OBBB. The notice also provides guidance on certain qualified sound recording productions that the OBBB added as property that may be eligible for the additional first year depreciation deduction.

Generally, when taxpayers acquire property for business use, they must depreciate it over several years based on various depreciation schedules.

The notice also provides interim guidance to tax professionals and their clients that they may generally rely on the existing additional first year depreciation deduction regulations. The notice provides rules for determining whether depreciable property is eligible for the additional first year depreciation deduction and for determining the amount of such deduction allowable under the OBBB. In general, the OBBB provides a permanent 100 percent additional first year depreciation deduction for qualified property acquired, or specified plants that are planted or grafted, after Jan. 19, 2025.

Additional interim guidance is included in the notice on elections taxpayers can make for certain property to be eligible for the additional first year depreciation deduction. Under the OBBB, taxpayers may elect:

• To deduct 40-percent (60-percent for certain property having longer production periods or certain aircraft) instead of the 100-percent additional first year depreciation deduction for qualified property placed in service during the first tax year ending after Jan. 19, 2025,

• To deduct additional first year depreciation for one or more specified plants,

• To treat certain acquired or self-constructed components of larger self-constructed property as generally eligible for the additional first year depreciation deduction, and

• Not to deduct the additional first year depreciation for a qualified sound recording production.

In addition, the notice provides interim guidance for qualified sound recording productions. In general, a qualified sound recording production:

• Is treated as acquired on the date principal recording commences,

• Is considered placed in service at the time of initial release or broadcast, and

• Qualifies for the additional first year depreciation deduction if the sound recording production commences in a taxable year ending after July 4, 2025.

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8.  Supplemental basic allowance for housing payments to members of the military are not taxable

Tax professionals with clients in the military take note: the Department of the Treasury and the IRS confirmed that supplemental basic allowance for housing payments made to members of the uniformed services in December 2025 are not to be included in income by those who received the payments; they are not taxable.

In the One, Big, Beautiful Bill enacted last July, Congress appropriated $2.9 billion to supplement the basic allowance for housing payable to members of the uniformed services. In December, President Donald J. Trump announced that 1,450,000 military service members would receive a special “Warrior Dividend” before Christmas.

The resulting one-time supplemental payments of $1,776 made primarily to active-duty members of the uniformed services in the pay grades of O-6 and below and eligible Reserve Component members as of Nov. 30, 2025, of the Army, Air Force, Navy, Marine Corps and Space Force were funded by this appropriation.

Federal tax law specifically excludes from gross income a “qualified military benefit.” The basic allowance for housing payments are qualified military benefits and, therefore, are not taxable.

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9.  Technical guidance

Notice 2026-12 sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for December 2025 used under Section 417(e)(3)(D), the 24-month average segment rates applicable for January 2026, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

Notice 2026-13 contains guidance for certain retirement plan administrators, updating safe harbor explanations to reflect tax law changes made after Aug. 6, 2020. The notice provides safe harbor explanations that plan administrators may used when they provide written explanations to retirement plan participants about eligible rollover distributions, satisfying their requirements under section 402(f). In the notice, the first safe harbor explanation applies to non-Roth accounts and the second safe harbor explanation applies to Roth accounts. The notice also addresses, among other things, changes to the 10% additional tax on early withdrawals from retirement plans, the required minimum distribution rules for surviving spouses, and the increased age for determining required beginning dates for required minimum distributions. It modifies the safe harbor explanations previously provided in Notice 2020-62.

Revenue Ruling 2026-04 holds that the private activity bond rules do not apply to certain tax-exempt bonds issued by the Railroad Corporation to finance the improvement, construction or acquisition of certain property described therein. The revenue ruling also states that other rules applicable to tax-exempt bonds do apply to such bonds.

Notice 2026-11 (mentioned above), Notice 2026-12, Notice 2026-13 and Revenue Ruling 2026-04 will be in Internal Revenue Bulletin 2026-06, dated Feb. 2, 2026.

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