Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for April 1, 2026 – April 9, 2026.
April 3, 2026: The White House proposed significant budget cuts to the Treasury Inspector General for Tax Administration (TIGTA), reducing its funding by nearly 17% for fiscal year 2027 to the lowest level since 2007. TIGTA warned that the cuts, combined with recent staffing losses, could lead to a 35% reduction in oversight activities at a time when risks at the IRS are increasing and have already forced the watchdog to cancel dozens of audits and reviews.
The proposal comes alongside broader reductions to IRS funding and staffing, including cuts to enforcement resources, raising concerns among practitioners that diminished oversight could weaken accountability and tax administration – particularly as the IRS undergoes workforce reductions and expands its use of new technologies, such as artificial intelligence.
April 6, 2026: Taxpayers are urging the Supreme Court of the United States to consider whether the Seventh Amendment guarantees a right to a jury trial for IRS civil penalties in Hirsch v. US Tax Court, arguing that the Court’s 2024 decision in SEC v. Jarkesy should apply in the tax context. Hirsch arises from fraud penalties exceeding $15 million that were assessed against taxpayers who allegedly misrepresented US Virgin Islands residency. A ruling in the plaintiffs’ favor could significantly alter IRS enforcement by making penalties harder to impose and potentially slowing audits and collections.
To date, courts have largely rejected similar arguments, relying on the “public rights” doctrine and long-standing precedent treating tax penalties as remedial rather than punitive, but practitioners note that the issue is gaining traction. If the Supreme Court requires jury trials for certain tax penalties, it could reshape the balance between taxpayers and the IRS, particularly for high-dollar cases, while raising concerns about reduced deterrence and increased administrative burdens on the agency.
April 6, 2026: The IRS issued Revenue Procedure 2026-14, providing guidance for states to nominate population census tracts for designation as qualified opportunity zones, effective January 1, 2027, under §§ 1400Z-1 and 1400Z-2, as amended by the One Big Beautiful Bill Act. The revenue procedure outlines eligibility requirements for low-income communities, limits designations to 25% of eligible tracts per state, and establishes deadlines for nominations and US Department of the Treasury certification.
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Proposed changes to the Voluntary Disclosure Program (VDP)
April 6, 2026: The IRS proposed updates to VDP that would replace the one-time 75% civil fraud penalty with 20% accuracy-related penalties applied annually over the six-year disclosure period while also imposing a new requirement that taxpayers pay all taxes, penalties, and interest and file all required returns within 90 days of conditional acceptance. Practitioners generally support the move away from the 75% penalty but warn that the cumulative penalties (along [...]
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