Tax News & Views Zippy ERC Refund Extension Roundup

Protect Your Employee Retention Credit Claim: Use IRS’s New Streamlined Process to Request an Extension - Erin Collins, NTA Blog:

A strict two-year deadline applies to taxpayers whose Employee Retention Credit (ERC) claims have been disallowed – and that clock does not stop while the IRS or the IRS Independent Office of Appeals (Appeals) reviews the case. If the deadline expires, the consequences are severe: the taxpayer loses the right to file suit in federal court, and the IRS is barred from issuing the refund, even if the claim is otherwise valid.

This is not a technicality – it is a significant and often overlooked risk that can permanently deprive taxpayers of relief Congress intended for them to receive. As I have previously observed, taxpayers should not assume that administratively working with the IRS, filing a protest, or meeting with an Appeals Officer will protect their refund rights. Once the statutory deadline passes, those rights are gone – it’s game over.

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Working closely with TAS, the IRS has recently taken an important step to address this problem for ERC taxpayers. Shortly after April 27, 2026, the IRS will send Notice CP320B, Important Reminder Regarding Your Disallowed Employee Retention Credit (ERC) Claim, to taxpayers who submitted a response after the IRS disallowed their ERC claim, and whose cases have six months or less remaining on the two-year period.

These new notices alert taxpayers to the approaching deadline and direct them to complete a Form 907, Agreement to Extend the Time to Bring Suit. This form, once signed by both the taxpayer and the IRS, extends the time to file a refund suit or receive payment. The notice includes a QR code linking to a fillable Form 907 that the taxpayer can print, sign, and electronically submit via the IRS Document Upload Tool (DUT). Upon receipt, the IRS will review the form and confirm the taxpayer’s case meets the specified criteria (i.e., the taxpayer responded to an ERC disallowance, and there are six months or less remaining on the two-year statute). If the taxpayer meets these criteria, the IRS will execute the form and return a signed copy to the taxpayer.

Congress: Capital Gain Indexing Hail Mary Pass?

Republicans Eye Capital Gains Tax Cut to Ease Voters’ Anxieties - Steven Dennis and Caitlin Reilly, Bloomberg ($):

Republican lawmakers are looking at ways to lower taxes on capital gains as the party searches for new ways to woo voters worried about the cost of living heading into November’s midterm elections.

A proposal to index capital gains for inflation could be in play for a tax-and-spending package later this year, though the likelihood of a bill coming together before the midterms remains a long shot. Some Republicans have also pushed President Donald Trump’s administration to make that change unilaterally.

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Indexing capital gains to inflation would allow taxpayers to adjust the value of an asset to account for rising prices across the economy and use that higher base value to calculate gains for tax purposes, ultimately reducing what they owe the Internal Revenue Service if they sell the asset.

Bipartisan Bill on Assault Victim Taxes Advances

Bill Shielding Sexual Assault Settlements From IRS Taxes Passes House - Robert Wood, Forbes:

The House of Representatives has passed the Survivor Justice Tax Prevention Act, H.R. 2347, bipartisan legislation that was introduced by Rep. Lloyd Smucker (PA-11) and Rep. Gwen Moore (WI-04). It would amend the Internal Revenue Code so that survivors of sexual abuse and unwanted, illegal sexual contact do not have to pay taxes on their legal settlement income.

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Unfortunately, how lawsuit settlements are taxed is complex. Although compensatory damages for personal physical injuries or physical sickness are tax free, damages for emotional injuries are fully taxable. Over many decades, this has made taxing emotional distress and physical sickness a kind of chicken and egg issue. Yet what constitutes physical injuries or physical sickness is still not defined.

House Passes IRS Services, Abuse, Disaster Relief Tax Bills - Kat Lucero, Law360 Tax Authority ($):

Introduced by Reps. David Schweikert, R- Ariz., and Donald Beyer, D-Va., H.R. 7971 would require the IRS to report call volumes, wait times and other metrics in real time on the agency's website. The bill aims to modernize taxpayer services.

H.R. 6495, cosponsored by Reps. Gregory Steube, R-Fla., and Jimmy Panetta, D-Calif., would aim to broaden requirements for the IRS to notify a taxpayer when requesting additional information from a financial institution or third party associated with a tax liability.

H.R. 6956 would require the IRS to use barcodes, barcode scanning technology and other optical character recognition or similar technology. The bill would digitize certain federal tax return information and correspondence unless the technology were slower or less reliable than other IRS processes. Reps. Bradley Schneider, D-Ill., and Rudy Yakym, R-Ind., are the cosponsors of the bill.

Exempt Organizations: More Form 990 Information; First Amendment Fight

Treasury Moves To Require More Reporting And Paperwork From Tax-Exempts - Kelly Phillips Erb, Forbes:

The Treasury Department and the IRS have announced plans to revise Form 990, the primary disclosure form for tax-exempt organizations. The stated goal of the revisions is to “improve transparency, strengthen tax administration, and provide clearer reporting on certain activities of tax-exempt organizations.” That’s in keeping with the idea that when organizations receive public funds or tax-deductible contributions, the expectation is that they can clearly show—at least to the IRS—where the money comes from, who controls it, and how it is used. (Schedule B of the current 990, which discloses donors names and addresses to the IRS, is generally redacted before it’s made public.)

What exactly will change is not yet clear. Treasury was skimpy on specifics—this is still in the early stage. The IRS says it will issue proposed regulations and solicit public comments before finalizing any changes.

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Form 990 is required for larger tax-exempt organizations—generally those with gross receipts of $200,000 or more, or total assets of $500,000 or more. In addition to information about receipts and expenses, the form includes reporting on governance (such as key policies, including conflict-of-interest and whistleblower protections) and how executive compensation is set and paid.

IRS Donor Disclosure Dispute Will Test Scope of Court Deference - James Matheson, Bloomberg ($):

A First Amendment challenge to an IRS regulation requiring nonprofits to disclose major donors will allow the Sixth Circuit to determine what level of deference to use in reviewing information disclosures required by the tax code.

IRC Section 6033(b)(5) requires nonprofits to disclose the names and addresses of their significant contributors—those who donate more than $5,000 or 2% of an organization’s support—to the Treasury Department on Form 990, the annual information return for tax-exempt organizations.

The Sixth Circuit will hear oral arguments Wednesday about whether the statute should be evaluated under deferential rational basis review or a more demanding exacting scrutiny standard that requires a substantial relation between the disclosure requirement and a sufficiently important governmental interest.

Does Trump vs. IRS = Trump vs. Trump?

Judge Asks Justice Department: Will You Oppose Trump? - Andrew Duehren, New York Times:

But even if the judge dismissed Mr. Trump’s suit, the Justice Department could still potentially settle the case. Most government settlements are paid out of the Judgment Fund, an uncapped pot of money that does not require congressional approval for any individual payment. Top Justice Department officials, including Mr. Blanche, Mr. Trump’s former personal attorney, control the money spent from the fund.

“If this judge finds there’s no legitimate case before the court at this time, that doesn’t mean that a settlement would be illegal,” said Paul Figley, a former Justice Department official who worked on torts. “If the Department of Justice settles the claim, then the Judgment Fund would pay it.”

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Mr. Trump’s lawsuit against the I.R.S. is not his only attempt to extract money from the government. In private administrative claims, he has also asked for the Justice Department to pay him $230 million as compensation for the federal investigations into him. Mr. Trump’s I.R.S. suit seeks an order of magnitude more money, though. His demand for $10 billion, if fulfilled, could more than double his net worth.

I may be old-fashioned, but giving the President the ability to help himself to billions of taxpayer dollars seems to not be in line with the intent of the founders.

The Trump suit is nominally about unauthorized disclosure of confidential data - during the first Trump administration. How seriously does Trump II take data protection?

Treasury Didn't Protect Data During DOGE Reviews, GAO Says - Jack McLoone, Law360 Tax Authority ($):

The GAO identified numerous information security lapses that cropped up during DOGE's review of Treasury's Bureau of the Fiscal Service, including a Treasury DOGE employee bring improperly granted access to three BFS payment systems. The BFS also failed to configure its tools to block unencrypted payment information, which allowed an employee to improperly transmit payment information outside the bureau, the GAO said.

Additionally, a DOGE employee received a BFS laptop without ensuring the employee agreed to follow its information security rules, which made the BFS "not well positioned to hold the employee accountable for not following those rules," the GAO said.

Tariffs: The Refund Process and the Political Process

Over 11 Million Imports Entered For Tariff Refunds, CBP Says - Dylan Moroses, Law360 Tax Authority ($). "Importers have successfully submitted more than 11.2 million entries to Customs and Border Protection's tariff refund system, and more than 1.7 million imports have been validated and are ready for refunds, a CBP official told the U.S. Court of International Trade on Tuesday."

Trump pursues new import taxes to replace the tariffs the Supreme Court rejected - Paul Wiseman, Associated Press:

Starting this week, the Office of the U.S. Trade Representative will begin hearings in two investigations that are expected to lead to a new round of U.S. tariffs — taxes paid by importers in the United States and usually passed on via higher prices to consumers who are already fed up with the high cost of living.

Trump’s newest tariff push is sure to face more challenges in court but is likely to prove sturdier than the one the Supreme Court tossed out.

First up is a hearing Tuesday and Wednesday into whether 60 economies — from Nigeria to Norway and accounting for 99% of U.S. imports — do enough to prohibit the trade in products created by forced labor.

The Trump Tax Increase of 2026 - Phil Gramm and Michael Solon, Wall Street Journal:

The Joint Committee on Taxation estimates that taxpayers will receive about a $188 billion reduction in federal tax liability for 2025 that they wouldn’t have received if the president’s tax cuts hadn’t become law. Those refunds and tax benefits, however, have been more than offset by the $195 billion in new tariffs collected in 2025.

Things will get worse in 2026. The Congressional Budget Office projects that Mr. Trump’s tariffs will generate $331 billion this year, while the CBO estimates the new tax cuts will save taxpayers $230 billion. Families and businesses will be worse off on net. This will matter in the election. By October, Mr. Trump’s new tariffs from his second term will have cost American consumers and businesses $443 billion, while the tax cuts will have provided them with $379 billion. If the president successfully restores his tariffs to the levels where they were before the Supreme Court’s decision in February, the tariff tax in 2026 will be 44% larger than the new tax cuts contained in the Big Beautiful Bill.

Blogs & Bits

IRS sets larger 2026 tax allowances for expensive housing abroad - Kay Bell, Don't Mess With Taxes. "Basically, it grants an allowance to employees officially stationed in a foreign location where the cost of living, exclusive of quarters costs, is substantially higher. This lets U.S. taxpayers in those designated locales to exclude from their income (or deduct, if self-employed) an amount greater than the maximum housing expenses amount, which for 2026 is $39,870."

You Have Foreign Bank Accounts? Questions Your Tax Professional Should Be Asking - Manasa Nadig, The Buzz About Taxes. "Even now, there are plenty of taxpayers who are still unaware of their foreign account filing and reporting obligations."

Pied-à-Terre Taxes Aren't a Solution to Poor Property Valuations - Jared Walczak, The SALT Road. "The proposed pied-à-terre tax falls on the sort of residents most likely to change their behavior in response to higher tax burdens, it reduces the attractiveness of new construction, and it sends a signal that New York is not interested in getting its fiscal house in order."

A Wondrous Story With an Unhappy Ending

Illinois man pleads guilty to failure to file and to pay employment taxes - IRS (Defendant name omitted, emphasis added):

Brad D. Schimel, First Assistant U.S. Attorney for the Eastern District of Wisconsin, announced that Defendant, of Inverness, Illinois, pled guilty to one count of failure to truthfully account for and pay employment taxes to the Internal Revenue Service (IRS), in violation of 26 U.S.C. § 7202. On April 20, 2026, the district court accepted Defendant’ guilty plea.

According to the plea agreement, Defendant was the president and part-owner of NG Enterprises, Inc., a company that provided elderly home personal care in the Milwaukee area and over time employed from 50 to 110 workers. Defendant was required to withhold federal income taxes, Social Security taxes, and Medicare taxes from his employees’ wages, hold those amounts in trust, and pay them over to the IRS. Additionally, he was responsible for filing quarterly tax returns (Forms 941) reporting those amounts to the IRS, and for paying the employer’s matching portion of Social Security and Medicare taxes. For 17 quarters in tax years 2019 through 2023, Defendant willfully failed to file Forms 941 and to pay over the taxes due. Including all relevant conduct, the loss to the IRS totaled more than $1.2 million.

I will never understand this crime. All of those 50 to 110 workers will file tax returns claiming those withheld payments. The IRS computers will shudder and cough up information for follow-up. There is no chance of going unnoticed. And the IRS doesn't accept that you are just "borrowing" that money.

What day is it?

It's National Zipper Day! There should be a national zipper.