e-News for Tax Professionals 2026-36

Issue Number:  2026-36

Inside This Issue

1. Strengthen defenses against tax identity theft

2. Encourage paycheck checkups during National Payroll Week

3. Did you know? Enhancements to the Paid Family and Medical Leave Tax Credit

4. Technical guidance

1.  Strengthen defenses against tax identity theft

In the fourth installment of the “Protect Your Clients; Protect Yourself” summer series, the IRS and Security Summit partners highlight the benefits of multifactor authentication (MFA), Identity Protection PINs, and secure IRS online accounts.

All tax preparation firms must use multifactor authentication to protect access to customer information, unless a qualified individual approves in writing an equivalent secure access control. MFA strengthens account security by requiring at least two independent factors to verify a user’s identity. This helps protect against phishing, social engineering, and other technology attacks that exploit weak or stolen passwords.

An IRS Identity Protection PIN is a six-digit number known only to the taxpayer and the IRS. It helps the IRS verify the taxpayer’s identity when their tax professional files their federal tax return. Tax professionals cannot obtain an IP PIN on behalf of clients; taxpayers must obtain their own.

Individual clients can create an IRS Online Account to securely view their tax account information and to help protect against identity theft and fraud. Tax professionals can encourage clients to use IRS Online Account and use Tax Pro Account to submit power of attorney and tax information authorization requests, manage active authorizations, and access eligible client information. Creating secure IRS accounts helps prevent fraudsters from creating accounts in taxpayers’ or tax professionals’ names.

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2.  Encourage paycheck checkups during National Payroll Week

National Payroll Week, observed Sept. 7-11, is a great time for tax professionals to remind their individual and business clients to review withholding and payroll tax responsibilities.

Individual clients should check their withholding periodically, particularly after a major life change, income change, or tax law change. The IRS Tax Withholding Estimator can help these clients determine whether they’re having too much or too little federal income tax withheld. They can then complete a new Form W-4 and submit it to their employer.

Employers and payroll professionals should regularly review their payroll processes and use current IRS guidance. Publication 15, (Circular E), Employer’s Tax Guide, provides federal employment tax responsibilities for business clients with employees. Publication 15-T, Federal Income Tax Withholding Methods, provides federal income tax withholding methods and tables.

Tax professionals can also prepare their clients for the Saver’s Match, which starts in 2027.

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3.  Did you know? Enhancements to the Paid Family and Medical Leave Tax Credit

Business clients that provide paid family and medical leave to their employees may be eligible for an employer tax credit. The Working Families Tax Cuts made several enhancements to the credit:

• The credit is now permanent.

• Expanded eligibility: Business clients can claim the credit for employees with six months of service and for part-time employees working 20 hours or more per week.

• Expanded coverage: Business clients can claim the credit for insurance premiums paid to provide leave or for wages paid during leave.

• State and local mandates: Employers can count leave provided under state or local mandates toward the eligibility for this federal tax credit, but not toward the credit calculation.

Tax professionals can help employers choose to claim the credit using one of these methods:

• New premium-based: Based on qualifying premiums the employer paid for paid family and medical leave insurance policies; or

• Wage-based: Based on the wages paid while the employee is on family and medical leave.

Notice 2026-28 compares the two methods, addresses how to allocate the qualifying premiums, and explains how to elect between the premium method and the wage method.

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4.  Technical guidance

The Department of the Treasury and the IRS recently:

• Proposed regulations to end federal tax-exempt status for private schools that engage in racial discrimination;

• Provided procedures for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting for research or experimental expenditures;

• Began accepting applicants for 2027 Compliance Assurance Process; and

• Issued guidance on 45Z Clean Fuel Production Tax Credit.

Proposed regulations to end federal tax-exempt status for private schools that engage in racial discrimination

Under the proposed rule, a private school would not qualify for federal tax-exempt status under section 501(c)(3) if it adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin. The rule would apply across admissions, educational policies, scholarships and loans, athletics, and every other school-administered or school-supported program.

The proposed regulations – found here – would apply to tax-exempt private primary and secondary schools, colleges, universities, professional schools, and trade schools. Treasury and the IRS estimate that the proposal may affect as many as 18,000 private educational institutions.

The final regulations would apply to taxable years beginning on or after May 31, 2027.

Procedures for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting for research or experimental expenditures

Revenue Procedure 2026-32 provides procedures under Section 446 of the Internal Revenue Code and Section 1.446-1(e) for obtaining automatic consent of the Commissioner of Internal Revenue to change methods of accounting for research or experimental expenditures (i) to comply with Section 174, as in effect after amendment by Section 13206(a) of Public Law 115-97, 131 Stat 2054 (Dec. 22, 2017), commonly known as the Tax Cuts and Jobs Act (TCJA), and prior to amendment by Section 70302(b)(1) of Public Law 119-21, 139 Stat. 189, 239 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (OBBBA), and (ii) to comply with Sections 174 and 174A, as amended and enacted by the OBBBA, respectively.

Revenue Procedure 2026-32 also provides procedures under Section 446 and Section 1.446-1(e) for obtaining automatic consent of the Commissioner to change methods of accounting for contracts entered into in taxable years beginning after July 4, 2025, to comply with Section 460(e), as amended by the OBBBA.

IRS accepting applicants for 2027 Compliance Assurance Process

Tax professionals with large corporate clients should be aware that the IRS opened the application period for the 2027 Compliance Assurance Process (CAP) program. Applications will be accepted until Oct. 30, 2026. The IRS will notify applicants in February 2027 whether they have been accepted into the program.

CAP uses real-time issue resolution through transparent and cooperative interaction between large corporate taxpayers and the IRS. The program improves federal tax compliance by identifying and resolving tax issues before a return is filed, providing greater certainty for taxpayers while allowing the IRS to more effectively focus its resources.

Guidance 45Z Clean Fuel Production Tax Credit

The guidance in Notice 2026-53 on the Section 45Z Clean Fuels Production Tax Credit empowers America’s crop and livestock farmers, ranchers, and fuel producers across the country and helps them access the growing domestic biofuels market.

The notice provides the 2026 emissions rate table used to calculate the clean fuel production credit and provides additional guidance, including guidance on the use of manure-derived fuels and regenerative agricultural practices.

Note: Revenue Procedure 2026-32 will be in Internal Revenue Bulletin 2026-39, dated Sept. 21, 2026. Notice 2026-53 will be in IRB 2026-41, dated Oct. 5, 2026.

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