Issue Number: 2026-15Inside This Issue
IRS introduces automatic penalty relief for eligible taxpayers
The IRS is making it easier for eligible small businesses and individual taxpayers to receive penalty relief with a new Automatic Exemption from Penalty process launching this summer. The new process automatically provides relief to taxpayers with a history of filing and paying on time and applies to eligible tax year 2025 and 2026 quarterly returns, as well as future tax periods.
Under AEP, taxpayers qualify if they have a history of timely filing their return and paying any tax due in the three prior years or 12 consecutive quarters for quarterly returns. Taxpayers who qualify will automatically receive relief from common penalties like failure-to-file, failure-to-pay and failure-to-deposit. If eligible, the IRS will automatically apply AEP and send the taxpayer a notice confirming the relief was granted. The IRS will begin phasing out First Time Abate this summer, with AEP fully replacing it for eligible returns due on or after Jan. 1, 2027. Businesses and individual taxpayers who don't qualify for AEP can request penalty relief based on reasonable cause. See Penalty relief for reasonable cause for more information on this option. Information returns and returns filed only in response to specific transactions or infrequent events, such as Form 706, U.S. Estate Tax Return or Form 709, Gift Tax Return, generally aren’t eligible for AEP. Back to Top
Safe harbor provided for certain Trump Account contributions
Treasury and IRS are providing a gift tax reporting safe harbor for certain contributions to Trump accounts. Under this safe harbor, it’s easier for employers to participate in Trump Account programs by reducing concerns around gift tax reporting for individual contributions, making the impact administrative rather than financial. Employers can contribute up to $2,500 annually to an employee's Trump Account or the employee's dependent's Trump Account. Since employer contributions generally are excluded from the employee's taxable income, the safe harbor reduces compliance concerns and uncertainty about gift tax reporting. For individuals, if certain requirements are met, contributions made by individual donors to Trump accounts each year won’t be subject to gift tax reporting requirements for that year. See Revenue Procedure 2026-25 for more information about the safe harbor. To sign up for a Trump Account visit trumpaccounts.gov. Back to Top
IRS launches summer security series: Protect Your Clients; Protect Yourself
The IRS and Security Summit partners recently launched the summer “Protect Your Clients; Protect Yourself” campaign. This is a five-week series highlighting practical steps tax professionals can take to protect client data, their businesses, and themselves from evolving tax-related identity theft threats. This year’s summer campaign focuses on emerging scams aimed at tax professionals, core security safeguards, and steps to take if a data theft occurs. Highlights of the remaining weeks include:
- Phishing, spear phishing, whaling and the “Security Six.” This week highlights phishing scams and what the scams might look like and the “Security Six” protections to combat these directed attacks.
- Create a security plan. This week details the Written Information Security Plan that tax pros must have to keep customer and business information safe and secure.
- Tools to help Protect Your Clients; Protect Yourself. This week will cover multi-factor authentication, Identity Protection PINs, IRS Online Accounts, Tax Pro Accounts, and other resources to safeguard taxpayers’ information.
- Signs of identity theft and reporting theft. The final week of the summer series focuses on the most common security threat: identity theft.
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Business Tax Account has new features
BTA is self-service online tool that allows authorized users to access and manage their federal tax records and information online. New BTA features include:
- Access to an expanded library of digital IRS notices
- Ability to download an EIN verification notice
- Ability to submit Offer in Compromise payments
For more information about these new features, who can use BTA and how, read the fact sheet. Back to Top
Allowable Living Expense updated for 2026
The IRS recently updated the Allowable Living Expense standards for 2026. These are the basic living expenses taxpayers can claim when resolving delinquent tax debt. These standard allowances provide consistency and fairness in collection determinations by incorporating average cost of necessities for taxpayers in similar geographic areas. Back to Top
Other tax news
The following information may be of interest to individuals and groups in or related to small businesses:
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