Basics & Beyond Monthly Update
Tax Newsletter
June 2026 | Volume 9, Issue 6
June Highlights
Heads Up!
Protective Claim opportunity with Issue 1. We only have until July 10, 2026, to file protective claims due to the Kwong Case. Please take the time to review the case and assess whether your client would qualify for a refund.
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Looking ahead to 2026
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In this Month’s Issue
- Issue 1 – Kwong Case: protective claims - act by July 10th
- Issue 2 – Business Tax Account renewals open June 15
- Issue 3 – Durable POA vs. Form 2848
- Issue 4 – New dyed fuel refund method
- Issue 5 – FIRE retirement and TCC changes
- Issue 6 – More time after ERC disallowance
- Issue 7 – Education assistance FAQ updates
- Issue 8 – When amended returns make sense
- Issue 9 – Offer in Compromise booklet update
- Issue 10 – New IRS tax debt tool
- Issue 11 – EA exam user fee reduced
- Issue 12 – 2026 filing season takeaways
- Issue 13 – More Social Security notices online
- Issue 14 – CP53E notice and direct deposit updates
- Issue 15 – June 2026 AFR tables
Issue 1 – A Major Refund Opportunity – But Taxpayers Must Act to Protect Their Rights
Tens of millions of taxpayers may be entitled to refunds or abatements of penalties and interest that the IRS assessed during the nearly 3.5-year COVID-19 federal disaster period. However, this relief will not happen automatically. To protect their rights, most taxpayers must file a claim for refund – generally by July 10, 2026.
Understanding the Kwong Decision and Its Implications
This issue arises from recent court decisions, most notably Kwong v. United States, 179 Fed. Cl. 382 (Nov. 2025), interpreting a tax code provision that governs disaster-related filing and payment deadline postponements. IRC § 7508A(d), as it existed when the COVID-19 federal disaster was declared, provides for the automatic postponement of filing and payment deadlines during the period a federal disaster declaration is in effect, plus 60 days.
For COVID-19, a federal disaster declaration was in effect from January 20, 2020, through May 11, 2023. Sixty additional days extended the period to July 10, 2023, for tax purposes.
Based on the court’s reasoning in Kwong, filing and payment deadlines were postponed during that entire period, and as a result, tax returns and payments due anytime within that window were not late until after July 10, 2023. By the court’s logic, the IRS should not have assessed penalties for late filing or payment during that 3.5-year period, nor charged interest on those amounts.
The government’s pleadings interpreted the postponement statute more narrowly and disagreed that the statute suspended filing and payment obligations for 3.5 years. It is anticipated that the Department of Justice will appeal the decision.
But the Kwong opinion is explicit in saying: “The plain meaning of that statute is that the automatic extension runs from the beginning of the disaster declaration, through the end of the declared disaster period, and until 60 days after the end of the declared disaster period.” It may take several years until the issue is finally resolved by the courts.
What This Means for Your Clients
Under the reasoning of the Kwong decision, your client may be entitled to a refund or abatement of certain amounts assessed during the COVID period, including:
- Penalties assessed for failure to timely file returns, failure to pay taxes, or failure to make estimated tax payments;
- Interest that began accruing earlier than it should have, or not at all; and
- Overpayment interest for the 2020–2023 disaster period.
Some practitioners believe that even where the underlying liability arose before the disaster period began, you may not have had to pay interest or penalties during that period.
Again, the IRS disagrees. Example 4 in Treas. Reg. § 301.7508A-1(f), states a taxpayer already delinquent before January 20, 2020, does not receive a windfall elimination of pre-disaster penalties and interest. But the regulation will not control the outcome if a court determines the statutory language provided for suspension of all timing penalties and interest accruals, and the Kwong opinion did not address pre-disaster delinquencies.
The bottom line: Your client may be entitled to a refund or reduction of assessed penalties and interest. For taxpayers dealing with financial pressures, these amounts can make a real difference. But most taxpayers must act by July 10, 2026, to request their potential refunds.
Who Could Be Affected
This issue is widespread and not limited to a small or specialized group of taxpayers. As noted, tens of millions of taxpayers have been assessed penalties or interest for late filings or payments during these years.
If the court’s decision in Kwong ultimately holds up, these taxpayers should be entitled to refunds of penalties or interest paid and to abatements of penalties or interest not yet paid.
In addition, for cases currently in litigation, the IRS could not assess penalties or interest for the relevant years.
Impacted taxpayers represent a broad cross-section of the public, including individuals, small businesses, large corporations, estates, and trusts. The issue reaches taxpayers with obligations related to income, employment, estate, gift, and excise taxes. It may also affect taxpayers who filed late international information returns, which can result in significant penalties even when no tax is due.
What You May Need to Do
In most cases, the IRS does not issue refunds or abate tax assessed but not yet paid unless a taxpayer files a claim. The taxpayer must generally file their claim within three years from the date they filed their tax return or two years from the date they paid their tax. Most taxpayers will need to file claims by July 10, 2026, using Form 843, Claim for Refund and Request for Abatement.
Because the law in this area is still being litigated, taxpayers should also consider filing protective claims to preserve their rights (see below).
Taxpayers with ongoing examinations, Appeals proceedings, or litigation may have open statutes for the applicable years that provide additional time to claim a refund. They should assess the impact of the Kwong issue on any settlement discussions or on their litigation approach.
What Is a Protective Claim?
A protective claim allows the client to preserve their right to a refund while the law is still uncertain. They do not need to calculate the exact amount of the requested refund.
In the IRS’s Internal Revenue Manual (IRM) procedures, IRM 25.6.1.10.3.2.5(2) says: “A valid protective claim need not state a particular dollar amount or demand an immediate refund; however:
- The claim must identify and describe the contingencies affecting the claim;
- Must be sufficiently clear and definite to alert the IRS as to the essential nature of the claim; and
- Must identify a specific year or years for which a refund is sought.”
As directed by this IRM provision, taxpayers would need to file a Form 843, write “Protective Refund Claim Pursuant to Kwong Case” or something similar across the top, and fill in as much detail as possible.
Generally, taxpayers will need to file the form by July 10, 2026. Protective claims are essential to preserve a taxpayer’s right to a refund when the final legal determination occurs after the standard period of limitations for filing a refund claim has expired. Taxpayers can also file protective claims for abatement of interest and penalties assessed but not yet paid.
Typically, the IRS holds protective claims for refunds in suspense until the underlying issue is resolved by the courts, and the claim can be perfected by providing the final numbers based upon the court’s decision. Protective claims prevent the period of limitations from expiring while waiting for a final resolution. Unfortunately, the resolution may take years.
A Practical Challenge: Paper Is Still the IRS’s Kryptonite
Even for taxpayers who learn about this issue, protecting their rights is not simple. Taxpayers cannot file Form 843 electronically, it must be submitted on paper. This creates real challenges.
For taxpayers, paper filing is slower, less accessible, and more difficult to track. The IRS does not provide immediate confirmation it has received the claim.
Avoiding Disparate Results for Similarly Situated Taxpayers
The right answer from a policy and fairness standpoint is clear: If the courts rule that filing and payment deadlines were postponed for the 3.5-year COVID-19 disaster period, all taxpayers assessed penalties and interest during that period should receive refunds or abatements. If the courts rule in favor the IRS’s position, no taxpayers should receive relief. But consistent treatment of taxpayers is unlikely because the law generally requires taxpayers to file claims to receive refunds or abatements.
Thus, without action, this situation may well produce dramatically different outcomes for the “well advised” versus the “unaware.” Taxpayers with advisors are more likely to learn about the issue, file timely claims, and potentially receive refunds. Taxpayers without representation, particularly lower-income taxpayers, may never hear about it and may lose their rights to refunds.
I encourage the IRS and the Treasury Department to do everything they can to avoid that result, including asking Congress to authorize retroactive relief if they determine they lack the administrative authority to ensure equal treatment under current law.
What Should the IRS Do? But Will Probably Not Employ
The IRS’s top priority should be to comply with the Taxpayer Bill of Rights. These rights include the rights to be informed, pay no more than the correct amount of tax, challenge the IRS’s position and be heard, and to a fair and just tax system.
The IRS should act now to protect taxpayer rights. The Taxpayer Advocate recommends the IRS take four steps:
- Publicize this issue to provide taxpayers with the information they need to understand it and to file refund claims, protective refund claims, or requests for abatement of interest and penalties. Even if the IRS disagrees with the Kwong decision, I believe it has an obligation to inform taxpayers about their rights, so taxpayers don’t miss the claims deadline if the ultimate resolution of this issue supports their right to the refund or abatement of interest and penalties.
- Provide taxpayers with an additional six-month extension to file refund claims. IRC § 6081 allows the Secretary of the Treasury to grant a reasonable extension of time to file any return, declaration, statement, or other required document under the tax code or regulations. The IRS should consider providing this extension in the case of refunds or protective claims. That would give taxpayers more time to learn about the issue, reduce the risk of unintentionally losing their rights, and promote fair and consistent treatment. It is a straightforward and appropriate step.
- Consider providing relief systemically to all eligible taxpayers so that taxpayers do not have to file refund claims, protective refund claims, or requests for abatements. To me, this is a fundamental taxpayer rights issue. It would be unfair in the extreme to end up with different results for the “well advised” and the “unaware.” This result should be avoided. The IRS should explore every plausible legal means to ensure equitable treatment. Similarly situated taxpayers should get similar results.
- Create an electronic portal or mailbox to which taxpayers may submit Kwong-related refund claims and receive acknowledgements that their claims have been received. As noted above, Forms 843 currently must be submitted on paper. That imposes considerable burden on taxpayers, who are advised to obtain proof of mailing and generally must travel to the Post Office to do so. If the IRS makes it possible for taxpayers to e-file Kwong-related refund claims (and eventually all refund claims) and receive immediate electronic acknowledgements of receipt, that burden would be alleviated.
What Should Practitioners, Members of Congress, and the Press Do?
We Need to Get the Word Out.
Taxpayers should not lose their rights simply because they were unaware of a complex legal development – or because the process to protect those rights is too burdensome.
I encourage:
- Members of Congress to highlight this issue in their constituent communications;
- Members of the media report about it for their subscribers; and
- Tax professionals to make sure their clients are informed.
Awareness, access, and fairness are essential to effective tax administration.
An Important Note
This is a complex and evolving legal issue. The Taxpayer Advocate’s BLOG is intended to raise awareness – not to provide legal advice. Taxpayers should review their individual circumstances and consider seeking professional guidance where appropriate.
Part II of the blog series, will explain how to find relevant information on your client’s tax transcript, and Part III, which will provide guidance on filing claims for refund and protective claims. Use the links Part II and Part III to access articles below.
Issue 2 – Business Tax Account S and C Corporations Designated Officials Must Renew Registration Starting June 15 to July 29
Any tax professional or client who registered as a Business Tax Account user in 2025 as a Designated Official for an S or C corporation must revalidate their status between June 15 and July 29 to renew their role. They must renew annually to maintain access to Business Tax Account. To renew, sign in.
Issue 3 – Not All Powers Are the Same: Using a Durable Power of Attorney Rather Than a Form 2848 in Tax Matters
Normally, a taxpayer must sign an IRS Form 2848, Power of Attorney and Declaration of Representative, to allow another individual to represent them in a tax matter with the IRS, and generally the representative must also have certain professional credentials, such as a law or CPA license or enrollment to practice before the IRS as an enrolled agent.
Sometimes, however, a taxpayer is unable to complete and sign a Form 2848 because they have become physically or mentally incompetent and thus lack the legal capacity to appoint a representative
What can you do to prepare for the day when you or someone you know may be in that situation? Plan ahead. In particular, a “durable power of attorney,” which is often used for estate planning or other purposes, can be used to overcome a legally incompetent taxpayer’s inability to complete a Form 2848.
Durable powers of attorney give a designated agent or “attorney-in-fact” authority to make healthcare and financial decisions for the individual granting the authority, the “principal.”
The word “durable” means the authorization has staying power and will remain in effect if the principal later becomes incompetent. The durable power of attorney must, of course, be created before you become physically or mentally incompetent.
For the durable power of attorney to work for federal tax matters, certain specific information, required under the Internal Revenue Code and regulations, needs to be included. The requirements related to acceptance and use of durable power of attorneys in federal tax matters are stated in IRS Procedural Rule 601.503(b) (Title 26, Code of Federal Regulations (CFR), section 601.503), which can be found in Publication 216, Conference and Practice Requirements, click below.
Note: By their nature, nearly all durable powers of attorney will not specify all of the required items for federal tax purposes – notably, a description of the matter (or matters) for which the representation is authorized, including the type of tax involved (such as income tax, gift tax, or civil penalties unrelated to an income or other tax return), tax form number, and specific tax year(s) or period(s) involved.
** The durable power of attorney nevertheless can still be used if the taxpayer’s appointed agent completes and signs a Form 2848 on the taxpayer’s behalf that contains the missing information.
** But it is crucial that the scope of the durable power of attorney extends to the handling of federal tax matters. A broad authorization will suffice (e.g., authority to perform any and all acts that the principal could, but for their incapacity), though more ideally, federal taxes should be explicitly referenced in some manner in the power of attorney.
If care isn’t taken in preparing the durable power of attorney, it may not be sufficient to authorize the agent to act for the client, or whoever is the appointing taxpayer, in dealings with the IRS. If so, the agent may also have to be appointed a guardian or similar fiduciary, which is typically done by a state court and can be a lengthy process. Once the agent is designated as fiduciary, they would then have to file an additional form (Form 56) that informs the IRS of the fiduciary relationship.
Issue 4 – Guidance on a New Method to Recover Dyed Fuel Excise Tax
These temporary regulations provide the procedures by which a taxpayer may recover federal excise taxes paid on clear diesel fuel or kerosene if that taxpayer later removed the fuel from a terminal as dyed fuel for nontaxable use. They also limit the claimants to taxpayers that paid to the IRS the original tax on the dyed fuel to which the claim relates.
Submitting a dyed fuel refund claim
The temporary regulations provide guidance to determine eligibility and rules for filing a claim for a dyed fuel refund. Taxpayers who paid tax on diesel fuel or kerosene and later removed the fuel from a terminal as eligible dyed fuel on or after Dec. 31, 2025, can submit a claim for refund, provided the following requirements are met:
- The dyed fuel was previously taxed, and the tax was not credited or refunded.
- The fuel is indelibly dyed by mechanical injection and removed from an approved terminal for nontaxable use on or after Dec. 31, 2025.
- The claimant must be the taxpayer that paid the prior fuel excise tax imposed on such fuel.
- The claimant meets the reporting requirements as described in today’s guidance.
- The claimant uses updated Form 8849, Claim for Refund of Excise Taxes and Schedule 5 (Form 8849), Section 4081(e) and 6435 Claims , including all information and documentation required by the forms and form instructions.
- The claimant follows all other procedures listed in the guidance.
Treasury and IRS recognize the importance of providing clarity to taxpayers through guidance that can be relied on to file claims and structure business arrangements as soon as possible. To enable this, the temporary regulations are effective immediately.
They will expire no later than 3 years from today’s effective date and will be replaced with permanent regulations. Treasury and IRS also note that absent a statutory change, they currently lack the authority to pay the claims to anyone other than the person that paid the prior fuel excise tax to the IRS.
Issue 5 – FIRE System Retirement and TCC Application Changes
Tax professionals who plan to file information returns should be aware that, due to the planned retirement of the
Filing Information Returns Electronically (FIRE) System, the IRS will no longer accept new Information Returns Applications for Transmitter Control Codes (TCCs) beginning July 21, 2026.
Existing applicants can continue to update their applications through Dec. 2026, after which they will become read-only and retained for historical reference.
IRIS will be the only information returns electronic filing system, including current year, prior year, or corrections, after January 1, 2027.
Issue 6 – New Option for Requesting More Time After ERC Claim Disallowance
The IRS recently announced a new, streamlined way for small businesses to extend the period for the IRS and the IRS Independent Office of Appeals to review a response to the disallowance of an Employee Retention Credit claim to avoid refund litigation.
- Waiting for the IRS to consider their response to the notice of disallowance in the Letter 105-C or 106-C
- Have six months or less remaining before their two-year period expires.
The IRS is sending Notice CP320B to taxpayers identified as eligible for this new Form 907 submission method. Step-by-step instructions are available at
IRS.gov/CP320B.
Issue 7 – Updates to Frequently Asked Questions about Educational Assistance Programs IR-2026-55
These frequently asked questions supersede earlier FAQs that were posted in FS-2024-22.
This fact sheet updates frequently asked questions related to educational assistance programs under § 127.
The FAQ revisions are as follows:
- Revised background description
- Revised throughout for One, Big, Beautiful Bill Act amendments and minor clarifications and renumbering
- Modified sample plan
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case.
Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. /
Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so.
Background on educational assistance programs
You may exclude educational assistance benefits from gross income if they are provided under a § 127 educational assistance program and the amount does not exceed $5,250 (adjusted for increases in the cost of living for taxable years beginning after 2026).
This means that the client will not have to pay any tax on the first $5,250 of those benefits per calendar year for 2025 and 2026 and the employer must not include those benefits in your wages, tips and other compensation shown in box 1 of your Form W-2.
However, it also means that the client cannot use any of those education expenses as the basis for any other deduction or credit, including the lifetime learning credit.
If any benefits are received under a program that does not comply with § 127, or to the extent that benefits exceed $5,250 (adjusted for increases in the cost of living for taxable years beginning after 2026), those amounts are not excluded from gross income under §127 although they may be excluded from income under § 117 or § 132 or deducted under §162 or § 212 if the requirements of such section are satisfied.
Questions and answers on educational assistance programs
Q1. What is an educational assistance program?
A1. An educational assistance program is a separate written plan of an employer for the exclusive benefit of its employees to provide employees with educational assistance.
To qualify as a § 127 educational assistance program, the plan must be written, and it must meet certain other requirements. Your employer must tell you whether there is a § 127 educational assistance program where you work and the terms of any such program.
A sample plan for employers is available. An employer may tailor its plan to include, for example, conditions for eligibility, when an employee’s participation in the plan begins and prorated benefits for part-time employees. However, a program cannot discriminate in favor of officers, shareholders, self-employed or highly compensated employees in requirements relating to eligibility for benefits.
Q2. What are educational assistance benefits?
A2. Tax-free educational assistance benefits under a § 127 educational assistance program include payments for tuition, fees, and similar expenses, books, supplies and equipment. The payments may be for either undergraduate- or graduate-level courses. The payments do not have to be for work-related courses.
Beginning March 27, 2020, tax-free educational assistance benefits also include principal or interest payments on certain qualified education loans (as defined in §221(d)(1) of the Code) incurred by the employee for the education of the employee. The payments of any qualified education loan can be made directly to a third party such as an educational provider or loan servicer or directly to the employee, and it does not matter when the qualified education loan was incurred.
Educational assistance benefits do not include payments for the following items:
- Meals, lodging or transportation.
- Tools or supplies (other than textbooks) that you can keep after completing the course of instruction (for example, educational assistance does not include payments for a computer or laptop that you keep).
- Courses involving sports, games or hobbies unless they:
- Have a reasonable relationship to the business of your employer, or
- Are required as part of a degree program.
An employer may choose to provide some or all of the educational assistance described above. The terms of the plan may limit the types of assistance provided to employees.
Q3. What is the total amount that can be excluded from gross income under §127 of the Code per year?
A3. Under § 127, the total amount that can be excluded from gross income for payments of principal or interest on qualified education loans and other educational assistance combined is $5,250 per calendar year (adjusted for increases in the cost of living for taxable years beginning after 2026). For example, if an employer pays $2,000 of principal or interest on any qualified education loan incurred by the employee for the education of the employee, only $3,250 in additional educational assistance may be excluded from income under § 127.
If an employee seeks reimbursement for expenses incurred, only $5,250 (adjusted for increases in the cost of living for taxable years beginning after 2026) of the reimbursement may be excluded from the employee’s gross income during the calendar year, and the expenses must not have been incurred prior to employment. “Unused” amounts of the $5,250 annual limit (adjusted for increases in the cost of living for taxable years beginning after 2026) cannot be carried forward to subsequent years.
Q4. What is a qualified education loan?
A4. A qualified education loan (as defined in § 221(d)(1)) is a loan for education at an eligible educational institution. Eligible educational institutions include any college, university, vocational school or other postsecondary educational institution as defined in § 221(d)(2) (cross-referencing § 25A(f)(2)). The Department of Education determines whether an organization is an eligible education institution. A loan does not have to be issued or guaranteed under a Federal postsecondary education loan program to be a qualified education loan.
For purposes of §127, qualified education loans may be incurred by the employee prior to employment, and payments of principal and interest may be made by the employer in a subsequent year.
Q5. How can payments of qualified education loans be made?
A5. Depending on how a particular employer has designed its § 127 educational assistance program, an employer may provide payments of principal or interest on an employee’s qualified education loans (as defined in § 221(d)(1) of the Code) for the employee’s own education directly to a third party such as an educational provider or loan servicer, or make payments directly to the employee.
Generally, the payment by an employer of principal or interest on any qualified education loan incurred by the employee for the education of the employee under §127 is only available if an employer amends the terms of its plan to include the benefit. If the plan is currently written to provide generally for all allowed benefits, then it is possible that the plan would not need to be amended to provide for the qualified education loan benefit.
Q6. Can student debt be reimbursed under a § 127 educational assistance program?
A6. Maybe. Student debt may consist of a variety of expenses. If the debt was incurred as a result of expenses that are permissible benefits under § 127 of the Code (such as tuition, books, equipment, qualified education loans, etc.), the employer may reimburse the employee for these expenses as educational assistance benefits, and the employee could then use those funds to help satisfy his or her debt. The reimbursed amounts are then excluded from the employee’s gross income, provided that the employee can substantiate the expenses to the employer.
Q7. Can a §127 educational assistance program benefit spouses or dependents of the employee?
A7. No. An educational assistance program must be provided for the exclusive benefit of employees. A program that provides benefits to the spouse or dependents of an employee is not a § 127 educational assistance program unless those spouses or dependents are themselves employees. Spouses and dependents of employees who are officers, shareholders, self-employed, or highly compensated and who are themselves employees may receive benefits under the program in their capacity as employees, but the program’s requirements relating to eligibility for benefits must not discriminate in favor of these employees. Spouses and dependents of certain 5-percent shareholders and owners who are themselves employees may also receive these benefits, but the benefits that may be provided to them (and to such shareholders and owners) are limited to 5 % o f the benefits provided under the program during the year.
Q8. Can officers, shareholders, self-employed individuals, highly compensated employees and owners receive educational assistance under a § 127 educational assistance program?
A8. Yes. While there are no specific income limits for receiving educational assistance benefits, an educational assistance program must satisfy certain requirements under § 127 of the Code and Treasury Regulation § 1.127-2, including not being discriminatory in favor of employees who are officers, shareholders, self-employed or highly compensated employees.
While shareholders and owners may receive educational assistance, not more than 5 percent of the amounts paid or incurred by the employer for educational assistance during the year may be provided for the class of individuals who are shareholders or owners (or their spouses or dependents), each of whom (on any day of the year) owns more than 5 % of the stock or of the capital or profits interest in the employer.
As a practical matter, if the owners are the only employees, they cannot receive educational assistance under § 127 because of the 5 percent benefit limitation described above. The following formula can be used to determine the amount of educational assistance that an owner/employee can receive: [total amount of educational assistance provided to employees other than the owner/employee] x .05263158 = [amount of educational assistance that the owner/employee can receive (rounded down to two decimal places but not greater than $5,250 (adjusted for increases in the cost of living for taxable years beginning after 2026))].
Q9. Are there other exclusions from gross income for educational assistance?
A9. Yes.
Working condition fringe benefit: If the benefits qualify as a working condition fringe benefit, regardless of amount, they are excluded from your gross income, and your employer does not have to include them in your wages. A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense in relation to your employer’s trade or business. For more information on working condition fringe benefits, see Working Condition Benefits in § 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits.
Educator expense deduction: A deduction of up to $300 ($600 if married filing jointly and both spouses are eligible educators, but not more than $300 each) is available for unreimbursed business expenses of eligible educators. This deduction, claimed on Form 1040, Schedule 1, Line 11, is available even if an educator doesn’t itemize their deductions. You must be a kindergarten teacher, instructor, counselor, principal or aide for at least 900 hours a school year in a school that provides elementary or secondary education as determined under state law.
Those who qualify can deduct costs like books, supplies, computer equipment and software, classroom equipment and supplementary materials used in the classroom. Expenses for participation in professional development courses are also deductible. Athletic supplies qualify if used for courses in health or physical education.
Starting in 2026, educator expenses may also be deducted as itemized deductions.
Issue 8 – When to Amend a Tax Return
Tax professionals and their clients who discover an error after filing a federal tax return may need to
file an amended return.
Most commonly, tax professionals need to file an amended return if there are changes to key items on a client’s original return, including:
- Filing status
- Income
- Deductions
- Credits
- Dependents
- Tax liability
Tax professionals can use the
Should I file an amended return? tool within the IRS Interactive Tax Assistant to help decide if they should file an amended return to correct an error or make other changes.
To claim a refund, an amended return must generally be filed within:
- Three years from the date the original return was filed, or
- Two years from the date the tax was paid, whichever is later.
If the original return was filed early, the three-year period begins from the April tax deadline.
Special rules apply when there are net operating losses, foreign tax credits, bad debts or other issues. Additionally,
taxpayers in disaster relief situations,
combat zone service, have bad debts, foreign tax credits, or loss or credit carrybacks may have more time to file an amended return.
Tax professionals and their clients can
check the status of an amended return approximately three weeks after it’s submitted. It generally takes 8 to 12 weeks for it to be processed. However, in some cases, processing could take up to 16 weeks.
Issue 9 – IRS Issues Annual Update to Form 656-B, Offer in Compromise Booklet
An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed. The offer program provides eligible taxpayers an opportunity to resolve their tax debt.
Form 656-B leads tax professionals through a series of steps to help calculate an appropriate OIC based on a client’s assets, income, expenses and future earning potential.
Form 656-B includes helpful information such as:
- The definition of an Offer in Compromise
- Eligibility requirements
- Payment options
- How to apply and complete the application
- An application checklist
Form 656-B includes all the forms tax professionals need to file an offer in compromise and includes new information on how to file an offer electronically through an
Individual Online Account.
Tax professionals should use the latest version of Form 656-B for all new submissions of OIC applications.
Issue 10 – New IRS Debt Tool Available Online
The IRS now offers an online Tax Debt Help tool that helps taxpayers who can’t pay their full tax bill explore options for resolving what they owe.
Users answer a series of questions about their financial situation and tax debt. Based on their responses, the tool provides guidance on available solutions such as payment plans, temporary delays in collection or an offer in compromise for those who qualify.
Taxpayers can review potential next steps without entering personal identifying information and before formally applying for relief. In addition to the tool, the IRS outlines other ways to manage tax debt, including making payments over time, requesting penalty relief and seeking assistance through the Taxpayer Advocate Service.
Issue 11 – IRS and Treasury Lower EA Exam Fees
The IRS and Treasury issued interim final and proposed regulations reducing the user fee for the special enrollment examination for enrolled agents (EA SEE). Each part of the SEE will have a reduced fee from $99 to $66. This decrease follows a required biennial review under OMB Circular A-25, which found that the government’s cost to administer the exam has declined. The reduction is largely due to updated timekeeping methods and a higher number of candidates taking the exam. As more candidates test, fixed administrative costs are spread across a larger group, lowering the per-part fee.
While the user fee was reduced, the contractor fees for EA SEE increased from $168 to $251. As a reminder, PSI Services LLC is the new administrator of the exam.
Issue 12 – 2026 Filing Season Operations Summary
On April 15, IRS Chief Executive Officer Frank Bisignano testified before the Senate Finance Committee, offering a detailed look at the 2026 filing season and the agency’s operational priorities.
- Filing season performance reflects continued modernization.
- Workforce changes remain part of the conversation.
- Technology and data continue to guide operations.
- Enforcement remains a focus, with evolving methods.
- Tax professionals should watch a steady shift as to how IRS Operates.
Issue 13 – Access More of Your Social Security Benefit Information Online
Starting in June, clients can view even more benefit notices online in their personal my Social Security account. Access secure notices anytime, weeks before they arrive in the mail.
New online notices include:
- Changes to your payment amount, suspensions, and terminations
- How earnings affect your payments
- Medicare enrollment, premium amounts, and changes
- Direct deposit changes
- Entitlement to additional or higher benefits
- Your rights and responsibilities and how to file an appeal
- Tax withholding information
Go Digital! It's Easy
Get fast, secure notifications about your benefits by choosing paperless delivery. Update your preferences by May 30 to start receiving electronic notifications.
How to Switch
- Sign in to your online my Social Security account.
- Select “paperless notifications” in your communication preferences.
Issue 14 – Understanding the CP53E Notice – IRS Update
When you receive the CP53E notice the client has 30 days to update or add a new bank account or select an exception condition to allow a paper check.
If they opted-in to receive refund status notifications in their online account, when they receive the notification, they may immediately update direct deposit information.
How to update your direct deposit information
- Sign in or create an online account.
- Check your Notifications in your Account Home.
- Select the Add bank account notification.
(This option will only be present when a CP53E notice has been issued)
- Follow the prompts to add your account details. Guidance is provided if you don’t have a bank account.
- Allow around 2-5 business days for your refund status to update in your online account.
If they encounter any systemic issues that prevent them from updating the bank account information, read the message carefully and try again later.
Note: When the refund is issued, it may be subject to offset if they have other outstanding liabilities.
Frequently asked questions
Q1. Why do I need to provide a bank account for a direct deposit?
A1. Executive Order 14247, mandates the transition to electronic payments for all Federal disbursements, including tax refunds, except under certain circumstances. Refer to IRS.gov/ModernPayments for more information.
Q2. What if I cannot access or create an online account? (added May 11, 2026)
A2. You may access IRS.help.id.me for assistance in creating or accessing your online account.
Q3. How will I know if my bank account was updated successfully? (added May 11, 2026)
A3. You will receive a confirmation message indicating your bank account update was successful.
If there are any issues with your changes, you will receive an error message.
Read all messages carefully and follow any instructions given promptly.
Q4. Can I use a bank account that doesn’t belong to me, like a family member or a friend? (Added May 11, 2026)
A4. No, the IRS requires you to use a direct deposit account under your own name or a joint account you share. If we are unable to validate your bank account information, we will issue a paper check.
Q5. Can I update my bank account if I call in to the toll-free line?
A5. No, you can only update your bank account by accessing your online account. IRS employees cannot update bank account information. You must access your online account within 30 days from the date of the CP53E notice to receive your refund via direct deposit.
Q6. What if I added or updated my bank account information, but made a mistake, can I correct it?
A6. No, you will only have one opportunity to add or update your bank account using your online account. If your direct deposit is not accepted by the bank and is rejected, we will issue a paper check.
Q7. What if I don’t have a direct deposit account, how will I get my refund? (Modified May 11, 2026)
- Pre-paid debit cards
- Mobile payment applications.
There are limited exception conditions to request a paper check using your online account.
Q8. What if I don’t respond to the CP53E? (Modified May 11, 2026)
A8. If you don’t respond to the notice, we will issue a paper check after 6 weeks. For updates on your refund status, visit Where’s My Refund.
Q9. How do I know the link or QR code is safe? (Added May 11, 2026)
A9. If you use the link or QR code, look for:
Issue 15 – Applicable Federal Rates for June 2026, Rev. Rul. 2026-11
REV. RUL. 2026-11 TABLE 1
Applicable Federal Rates (AFR) for June 2026
| | Period for Compounding |
|---|
| Annual | Semiannual | Quarterly | Monthly |
|---|
| Short-term |
| AFR | 3.85% | 3.81% | 3.79% | 3.78% |
| 110% AFR | 4.23% | 4.19% | 4.17% | 4.15% |
| 120% AFR | 4.62% | 4.57% | 4.54% | 4.53% |
| 130% AFR | 5.01% | 4.95% | 4.92% | 4.90% |
| Mid-term |
| AFR | 4.13% | 4.09% | 4.07% | 4.06% |
| 110% AFR | 4.55% | 4.50% | 4.47% | 4.46% |
| 120% AFR | 4.97% | 4.91% | 4.88% | 4.86% |
| 130% AFR | 5.39% | 5.32% | 5.29% | 5.26% |
| 150% AFR | 6.23% | 6.14% | 6.09% | 6.06% |
| 175% AFR | 7.29% | 7.16% | 7.10% | 7.06% |
| Long-term |
| AFR | 4.87% | 4.81% | 4.78% | 4.76% |
| 110% AFR | 5.36% | 5.29% | 5.26% | 5.23% |
| 120% AFR | 5.85% | 5.77% | 5.73% | 5.70% |
| 130% AFR | 6.35% | 6.25% | 6.20% | 6.17% |
REV. RUL. 2026-11 TABLE 2
Adjusted AFR for June 2026
| | Annual | Semiannual | Quarterly | Monthly |
|---|
| Short-term adjusted AFR | 2.91% | 2.89% | 2.88% | 2.87% |
| Mid-term adjusted AFR | 3.13% | 3.11% | 3.10% | 3.09% |
| Long-term adjusted AFR | 3.68% | 3.65% | 3.63% | 3.62% |
REV. RUL. 2026-11 TABLE 3
Rates Under Section 382 for June 2026
| Adjusted federal long-term rate for the current month | 3.68% |
| Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal long-term rates for the current month and the prior two months.) | 3.68% |
REV. RUL. 2026-11 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for June 2026
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than 9%.
| Appropriate percentage for the 70% present value low-income housing credit | 8.05% |
| Appropriate percentage for the 30% present value low-income housing credit | 3.45% |
REV. RUL. 2026-11 TABLE 5
Rate Under Section 7520 for June 2026
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