Tax Newsletter - April 2026

Over 1.3 million people across the nation have unclaimed refunds for tax year 2022. Tax professionals should advise clients that the deadline is April 15 to submit tax year 2022 tax returns to claim a refund. unclaimed refunds 📌

The IRS estimates that approximately $1.2 billion in refunds remain unclaimed for taxpayers who have not filed their Form 1040 federal income tax return for the 2022 tax year.

Under the law, taxpayers usually have three years to file and claim their tax refunds. If they do not file within three years, the money becomes the property of the U.S. Treasury.

Tax professionals should also remind clients seeking a 2022 tax refund that those clients’ funds may be held if they have not filed tax returns for 2023 and 2024.

Estimated Potential Refunds for Tax Year 2022

The IRS recently released its annual list of the top tax scams that threaten the tax and financial information of taxpayers, businesses, and tax professionals. It’s called the Dirty Dozen 📌, which is part of a broader Security Summit campaign.A notable change to this year’s list is abusive undistributed long-term capital gains claims. The IRS continues to see an increase in overstated or fabricated claims tied to Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains. More on this item in Issue 12. Tax pros, businesses and taxpayers should be cautious year-round because criminals are always looking for ways to get money and personal information.

1. IRS impersonation by email and text (phishing + smishing). Scammers send emails, direct messages (DMs), and texts that appear to be from the IRS, often using alarming language and QR codes that direct taxpayers to fake IRS websites to “verify” accounts, enter personal information, or claim refunds. The IRS urges taxpayers not to click links or open attachments from unexpected messages and to report suspicious IRS-related emails, DMs, and texts. The IRS reported over 600 social media impersonators during fiscal year 2025.

   As a reminder, never click any unsolicited communication claiming to be from the IRS, as it may install malware surreptitiously. These links may install malicious software, including ransomware, on a taxpayer’s personal device, potentially preventing access to their files or personal information.

2. AI-enabled IRS impersonation by phone (robocalls, voice mimicry, spoofed caller ID). Phone scams continue to evolve, including calls that use computer-generated tactics and spoofed caller ID to appear legitimate. The IRS reminds taxpayers that it generally contacts taxpayers by mail first and does not leave urgent, threatening prerecorded messages, call to demand immediate payment, or threaten arrest. Taxpayers should not rely on AI-generated responses to complex tax questions, and they should verify any calculations or information provided by artificial intelligence.
3. Fake charities. Fraudsters often exploit tragedies and disasters by creating fake charities to collect donations and personal information. The IRS is committed to preventing fraudulent nonprofits from taking advantage of the American taxpayer.

   Taxpayers who give money or goods to a charity may be able to claim a deduction on their federal tax return if they itemize deductions, but charitable donations only count if they go to a qualified tax-exempt organization 📌 recognized by the IRS.

4. Misleading tax advice on social media. Viral “tax hacks” can push taxpayers to file returns with false information or claim credits they don’t qualify for, leading to refund delays, audits, penalties, or worse. The IRS continues to warn that social media-driven misinformation and disinformation remain a major driver of tax scams.

   The IRS and the Coalition Against Scam and Scheme Threats 📌 warn taxpayers not to fall for these scams 📌, and urge them to follow trusted advice from the IRS, tax professionals, and other reputable sources. The IRS reminds taxpayers who knowingly file fraudulent tax returns that they could potentially face significant civil and criminal penalties.

5. Identity theft involving IRS Online Account access. Criminals may attempt to use stolen personal information to gain unauthorized access to a taxpayer’s IRS online account or may pose as helpers to collect sensitive information during account setup. Taxpayers should create their account directly through IRS.gov and should not rely on unsolicited third parties offering assistance. The IRS provides official guidance to help taxpayers securely establish and protect their accounts.
6. Abusive undistributed long-term capital gains claims. The IRS identified an increase in the abuse of Form 2439. This form allows shareholders of certain investment funds or real estate trusts to claim a refundable credit for taxes paid on undistributed capital gains. Identified schemes involve overstated or fabricated Form 2439 claims, including claims tied to organizations that are not legitimate investment funds or real estate trusts. The IRS has also seen fake claims falsely linked to real, well-known organizations. Improper claims may result in refund delays, audits, penalties, or enforcement action.
7. Bogus “Self-Employment Tax Credit” promotion. Scammers use misleading claims about a broad “self-employment tax credit” to encourage inaccurate filings and generate improper refunds. The IRS reminds taxpayers to rely on trusted sources and qualified tax professionals, not social media promotions, when determining eligibility for credits.

   Many taxpayers do not qualify for these credits, and the IRS is closely reviewing claims coming in under this provision, so taxpayers filing claims do so at their own risk.

8. Ghost preparers. A “ghost” preparer prepares a return but refuses to sign it and/or refuses to include a Preparer Tax Identification Number (PTIN). When a preparer refuses to sign or provide a PTIN, that is a major red flag; the taxpayer is legally responsible for what is filed. The IRS urges taxpayers to avoid preparers who will not sign the return and to choose reputable help. Taxpayers should never sign a blank or incomplete return. Instead, the IRS reminds taxpayers to use a trusted tax professional 📌 for help.
9. Non-cash charitable contribution schemes. Some schemes involve inflated appraisals of donated property using syndicated conservation easements or art. Promoters often promise to eliminate or substantially reduce tax liability. The IRS warns taxpayers not to file returns with made-up information and reminds taxpayers that it can hold refunds while verifying claims.
10. Overstated withholding schemes (fabricated wage/withholding data). Scammers encourage taxpayers to inflate withholding amounts (sometimes described as “other withholding”) to manufacture a larger refund by reporting zero or little income on incorrect forms. The IRS may delay processing while it verifies wages and withholding against third-party records. Inaccurate claims can lead to penalties and enforcement action.

    There are multiple variations of the overstated withholding credit scheme, including those involving Forms W-2 and W-2G; Forms 1099-R, 1099-NEC, 1099-DIV, 1099-OID, and 1099-B, as well as the Alaska Permanent Fund Dividend, Schedule K-1 with Withholding Reported, and Unspecified Source of Withholding Credit Claimed.

11. Spear-phishing and malware campaigns targeting tax professionals. Tax professionals and businesses remain targets of “new client” or “document request” emails that deliver malicious links or attachments to steal client data or access systems. The IRS and the Security Summit urge preparers to remain vigilant and to strengthen their security practices.

    Businesses and individuals, including tax pros, should always be cautious and look out for any suspicious requests or unusual behavior before sharing any sensitive information or responding to an email. Warning signs may include unexpected requests for sensitive information, mismatched or unfamiliar sender addresses, urgent payment demands, or links directing users to websites that do not clearly originate from IRS.gov. Be aware that by gaining access to a hacked email account, scammers can locate a genuine email from a previous victim's email account sent to their tax professional.

12. Aggressive or misleading Offer in Compromise marketing (“OIC mills”). The Offer in Compromise program can help certain eligible taxpayers resolve tax debt when they are unable to pay in full, but “OIC mills” often overpromise results and charge high fees to taxpayers who don’t qualify. Taxpayers can check eligibility using free IRS tools to avoid high-pressure sales tactics.

Before filing a federal tax return, taxpayers should make sure they have the necessary and correct documents.

Here’s what taxpayers should do if they haven't received their Form W-2 or Form 1099 📌 yet.

Taxpayer options for missing documents

• Contact the employer, payer or issuing agency and request the missing or corrected documents.
• Taxpayers who have an IRS Individual Online Account 📌 can view and download their available wage and income transcripts for 2025. In some cases, a transcript may not populate and a message of “No record of return filed” may show. This is because the IRS has not received the data from the employer. Other tax documents can be downloaded and include:

• Form W-2, Wage and Tax Statement
• Form 1095-A, Health Insurance Marketplace Statement
• Form 1099-NEC, Nonemployee Compensation
• Form 1099-DIV, Dividends and Distributions
• Form 1099-INT, Interest Income
• Form 1099-MISC, Miscellaneous Information

• If needed, taxpayers can estimate the wages or payments made to them, as well as any taxes withheld. To avoid filing an incomplete return, they should use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc. 📌
• If they receive the missing or corrected Form W-2 or Form 1099-R after filing their tax return and the information differs from their previous estimate, they must file Form 1040-X, Amended U.S. Individual Income Tax Return 📌.

What to do if a Form 1099-G for unemployment benefits is incorrect

Unemployment benefits are considered taxable income; therefore, taxpayers must report any unemployment compensation on their tax return.

• Taxpayers who receive an inaccurate Form 1099-G should contact the state issuing agency to request a revised Form 1099-G showing their correct benefits. If they are unable to get a timely, corrected form from the state, they should still file an accurate tax return, reporting only the income received.
• If the taxpayer didn’t receive unemployment benefits but did receive a Form 1099-G for unemployment compensation, this may be a sign that the taxpayer’s identity was stolen 📌.

In a recent federal court decision, Kwong v. United States 📌 (§7508A), certain tax deadlines were automatically postponed during the national disaster period from January 20, 2020, through July 10, 2023. During this period, the IRS cannot assess penalties or interest for late filing or payment and taxpayers’ deadlines for filing refund claims or suits are similarly extended. The IRS may only assess penalties if the taxpayer fails to act by the new, postponed deadline, and the limitations period for refund suits does not begin to run until after the postponement period ends. As a result, the IRS may not have had authority to assess some failure-to-file and failure-to-pay penalties or underpayment of interest during that time.

The case involved a taxpayer seeking refunds of penalties across multiple years, arguing that pandemic-related relief extended filing deadlines and affected the timing of his claims. The court permitted certain claims to proceed but dismissed others as either untimely or lacking sufficient support.

Although the decision does not automatically grant refunds, it may allow eligible taxpayers to file claims for refund or abatement. Tax professionals should review client accounts carefully and consider statute of limitation deadlines as additional guidance, or appeals may follow.

Coal mining company owner sentenced for evading $22.1M in taxes

For years, West Virginia resident John Quintrell ran his Kentucky coal mining company, Civil LLC, like the rules didn’t apply to him.

From September 2018 to April 2025, Quintrell served as Civil LLC’s sole owner, and each pay day between October 2019 and March 2025, Quintrell’s employees trusted that taxes withheld from their paychecks went where they were supposed to go.

Unfortunately, they didn’t.

Beyond failing to pay his employees withheld taxes, Quintrell also failed to pay Civil LLC’s employer share of payroll taxes, causing a loss to the IRS of approximately $22.1 million.

In February, Quintrell was sentenced to four years in prison and three years of supervised release. He was also ordered to pay $22.1 million in restitution.

The Department of the Treasury and the Internal Revenue Service today issued proposed regulations 📌 providing general requirements for Trump Accounts, certain definitions relating to Trump Accounts, election rules to open an initial Trump Account by an authorized individual for an eligible individual, and rules for who is the responsible party for the initial Trump Account once the account has been opened. These proposed regulations provide useful information for parents and guardians who may want to elect to open an initial Trump Account, and for prospective trustees of Trump Accounts.

The proposed regulations request comments on all aspects of these proposed regulations.

Opening initial Trump Accounts

The proposed regulations provide that the election to open an initial Trump Account must be made by an authorized individual on Form 4547, Trump Account Election(s) 📌 or through the online Form 4547: Trump Account Election Form - IRS Form 4547 📌 in accordance with applicable instructions. An election to open an initial Trump Account must be made on or before December 31 of the calendar year in which the eligible individual attains age 17.

The election form also provides an opportunity for the authorized individual to request the $1,000 pilot program contribution from the Secretary for an eligible child (under section 6434 of the Internal Revenue Code).

The instructions 📌 to Form 4547 are currently available on IRS.gov. The Department of the Treasury and the Internal Revenue Service have sought to make the election process as simple and frictionless as possible by permitting individuals to file a one-page Form 4547 at the time of filing their tax return or in a separate online portal: Trump Account Election Form - IRS Form 4547 📌.

If an election for the $1,000 pilot program contribution is being made at the same time as the election to open the initial Trump Account, the authorized individual is the individual able to make the election for a pilot program contribution.

If no election for a pilot program contribution is being made at the same time as the election to open an initial Trump Account, a different rule applies for determining who is an authorized individual. Under the proposed ordering rule for who may make the election, the authorized individual would be, in order of priority:

• a legal guardian,
• parent,
• adult sibling, then
• grandparent of the eligible individual.

Responsible Party for the Trump Account:

In general, the individual who makes the election to open an initial Trump Account for an eligible individual will be the responsible party of the initial Trump Account. The responsible party generally will have the authority, while the account beneficiary does not have legal capacity, to select among eligible investments (if more than one eligible investment is offered), request a qualified rollover contribution to a rollover Trump Account, request a transfer for a qualified ABLE rollover contribution (subject to certain rules), or select a successor responsible party for the account.

IRS extended the temporary relief provided in sec 4.02 of Notice 2025-7, 2025-5 IRB 524 📌 for an additional year. Specifically, this notice allows eligible taxpayers to use certain alternative methods for making an adequate identification, within meaning of Reg § 1.1012-1(j)(3)(ii) 📌, with respect to units of a digital asset to be sold, disposed of, or transferred from the taxpayer's units held in the custody of a broker.

IRS clarified that this notice doesn’t prohibit taxpayers from complying with the reg or affect how the safe harbor described in Rev. Proc. 2024-28,2024-31 IRB 326 📌 applies and doesn’t affect requirement for brokers to report gross proceeds on Form 1099-DA beginning in 2025 (taxpayers relying on the revenue procedure safe harbor may rely on the temporary relief provided herein once the rev proc requirements are satisfied). Notice 2025-7, 2025-5 IRB 524 📌 is modified.

Specifically, during this extended relief period, taxpayers can make an adequate identification by:

• Identifying, no later than the date and time of the sale, disposition, or transfer, on their books and records, the particular units to be sold, disposed of, or transferred by reference to any identifier (e.g., purchase date and time or purchase price) sufficient to identify the basis and holding period.
• Recording a standing order on their books and records, provided it includes sufficient information to identify any digital asset units sold, disposed of, or transferred, and is entered before the units covered by the order are sold, disposed of, or transferred.

In the 2025 filing season, the Internal Revenue Service’s (IRS) tax return processing and customer service performance were similar to prior years. IRS did not meet its 13-day goal to process paper returns but took fewer days to do so in 2025 (16) than in 2024. IRS also answered about 9 million phone calls in both years.

IRS’s backlog of taxpayer correspondence remained above pre pandemic levels at the end of filing season and fiscal year 2025 as IRS continued to struggle balancing demands of phone service and correspondence.

But IRS does not have a plan to reduce the backlog. Without a plan, IRS risks not effectively reducing its backlog and may provide less timely service to taxpayers.

In 2025, IRS experienced large-scale changes to its workforce. IRS adjusted operations to comply with new directives, including return to in-person work. IRS data show that 17,047 employees - around 17 % of IRS’s workforce as of January 2025 - left IRS via deferred resignation and early retirement programs in 2025. This included 5,162 filing season staff in units that process returns and provide customer service.

However, the 2025 filing season was mostly insulated from these changes. IRS required filing season staff who accepted deferred resignation or early retirement to stay until after the filing season. IRS officials told GAO that IRS is developing a new strategic workforce plan to align with the current administration’s priorities, and its prior plans are on hold. If IRS’s new plan does not address its workforce challenges, IRS will be unable to systematically identify future workforce needs and strategies for related goals.

IRS had vacancies and turnover in leadership roles throughout 2025, including having seven different commissioners through August. IRS officials were uncertain about the status of some workforce changes like agency reorganization plans, and some modernization efforts for filing season functions have been in flux, such as activities to digitize paper documents. However, IRS lacks a team that is responsible for day-to-day management of agency reforms and ensures quality information is shared across IRS. Without such an implementation team, IRS may struggle to ensure that reform efforts are successful and sustainable, which could in turn hinder IRS’s ability to provide quality services to taxpayers. In addition, in December 2025, amid implementing the One Big Beautiful Bill Act (OBBBA), an IRS internal report stated that critical technology systems would not be ready for the 2026 filing season start. It also stated that return processing and customer service functions would enter the season undertrained or understaffed, which could result in errors and poor service for taxpayers.

For its recent report, the CTR conducted 53 mystery shopping visits to non-credentialed preparers – testing three scenarios in six states – with test returns consistently being incorrect. Testers obtained returns in 25 visits; preparers refused to prepare a return in other instances, typically where the tester lacked a Social Security card for a claimed child.

In a scenario involving unmarried parents each claiming one child in a household, nine of 11 prepared returns (82%) were incorrect. In a test involving a sole proprietor with cash income, all eight prepared returns were incorrect, with preparers fabricating deductions, omitting cash income, and improperly claiming home office expenses.

Only 21 out of the 25 returns included the preparer's preparer tax identification number (PTIN). And just 15 preparers provided testers with Form 8867, Due Diligence Checklist 📌.

Based on these findings, CTR made several recommendations focused on federal oversight. Among the recommendations is for Congress to authorize the IRS to establish a program to register and require minimum competencies for all federal income tax return preparers.

The group also highlighted the IRS' low penalty collection rate, noting that through January 2025, the agency had collected only 18.85% of penalties assessed against non-credentialed preparers for tax years 2018 through 2021. It recommended the agency prioritize the collection of the civil preparer penalties it assesses and regularly publishes data on assessment and collection of these penalties.

The report has added urgency to calls for congressional action. Senate Finance Committee Chair Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) recently introduced bipartisan legislation, the Taxpayer Assistance and Service Act, S. 3931, that would establish minimum requirements for preparers. The bill also would ramp up penalties for preparer misconduct – such as failing to provide a valid PTIN or misappropriating client refunds – and create new criminal penalties for willful failures.

The full report can be found here.

https://taxpayer-rights.org/wp-content/uploads/2026/03/Mystery-Shopping-Report-03-16-26.pdf 📌

The IRS Office of Professional Responsibility (OPR) reminds tax practitioners to review and withdraw client authorizations as part of ongoing Circular 230 compliance. Form 2848, Power of Attorney and Declaration of Representative, remains active until it is revoked by the taxpayer, withdrawn by the representative or removed under IRS record retention rules.

As long as an authorization remains active in the IRS Central Authorization File (CAF), it may create a risk that unauthorized parties could access taxpayer information. Because a practitioner’s duty to protect client confidentiality continues after an engagement ends, OPR recommends withdrawing authorizations promptly and periodically requesting a CAF listing to identify outdated forms.

While no standard withdrawal method exists, practitioners should submit a written request, often by marking “WITHDRAW” on Form 2848, and include the relevant tax matters, tax periods, signature and date

Rev. Proc. 2026-15 📌 provides: (1) two tables of limitations on depreciation deductions for owners of passenger automobiles placed in service by the taxpayer during calendar year 2026; and (2) a table of dollar amounts that must be used to determine income inclusions by lessees of passenger automobiles with a lease term beginning in calendar year 2026. The tables detailing these depreciation limitations and amounts used to determine lessee income inclusions reflect the automobile price inflation adjustments required by section 280F(d)(7) 📌. For purposes of this revenue procedure, the term “passenger automobiles” includes trucks and vans.

The IRS has identified an increase in abusive claims involving Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains 📌. Form 2439 allows shareholders of certain regulated investment companies or real estate investment trusts – known as REITs – to claim a credit for tax paid on undistributed long-term capital gains.

Recent schemes involve overstated or entirely fabricated Form 2439 claims, including credits tied to entities that are not legitimate investment funds or REITs. In some cases, the IRS received false claims using the names of well-known organizations without authorization.

The IRS is closely reviewing returns claiming Form 2439 credits. Improper claims may result in refund delays, examinations, penalties or other enforcement action. Tax professionals should carefully review documentation supporting any Form 2439 credit claimed on a return.

Consistent with applicable law and longstanding practice, the Secretary of the Treasury oversees the operations of all Treasury offices and bureaus, including the Internal Revenue Service. Secretary Scott Bessent’s service as Acting Commissioner of the IRS under the Federal Vacancies Reform Act has expired, and he has not served in that capacity since that time.In accordance with the Federal Vacancies Reform Act, the Secretary retains the authority and responsibility to perform the functions and duties of vacant Treasury offices that are not filled on an acting basis. The IRS continues to operate without interruption, with Chief Executive Officer Frank J. Bisignano successfully leading day-to-day operations and reporting directly to the Secretary.

REV. RUL. 2026-7 TABLE 1

Applicable Federal Rates (AFR) for April 2026

REV. RUL. 2026-7 TABLE 2

Adjusted AFR for April 2026

REV. RUL. 2026-7 TABLE 3

Rates Under Section 382 for April 2026

REV. RUL. 2026-7 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for April 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%.

REV. RUL. 2026-7 TABLE 5

Rate Under Section 7520 for April 2026

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