In this release, we cover highlights from Internal Revenue Bulletin 2026-05, including proposed and final regulations affecting income tax, excise tax, employment tax, and information reporting requirements.
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ADMINISTRATIVE
REG-112829-25, page 452.
These proposed regulations would amend regulations under section 3406 to change the threshold for when certain third party settlement organizations (TPSOs) are required to perform backup withholding. These proposed regulations would clarify that in the case of certain payments made through third parties, the amount subject to backup withholding under section 3406 is determined by taking into account the exception for de minimis payments by TPSOs in section 6050W(e). These proposed regulations would also clarify the amount subject to backup withholding and clarify situations when the threshold does not apply. The proposed regulations reflect recent changes to the statutory law.
ADMINISTRATIVE, INCOME TAX
REG-113515-25, page 455.
This document contains proposed regulations regarding the deduction for certain taxpayers for an amount up to $10,000 of qualified passenger vehicle loan interest. This document also contains proposed regulations regarding new information reporting requirements for certain persons who, in a trade or business, receive from any individual interest aggregating $600 or more for any calendar year on a specified passenger vehicle loan, including applicable penalties for failures to file information returns or furnish payee statements as required. The proposed regulations would affect taxpayers that may deduct qualified passenger vehicle loan interest, and also persons subject to these information reporting requirements. This document also provides notice of a public hearing on these proposed regulations.
ADMINISTRATIVE, EMPLOYMENT TAX, EXCISE TAX, INCOME TAX
T.D. 10039, page 403.
These final regulations contain amendments to provisions of 26 CFR part 1 (Income Tax Regulations) under section 6417 of the Internal Revenue Code (Code) and 26 CFR part 301 (Procedure and Administration Regulations) under section 7701 of the Code that address the Federal tax treatment of an entity wholly owned by one or more Indian Tribal governments within the meaning of section 7701(a) (40) that is organized or incorporated under the laws of the Tribe or Tribes that own it (final regulations). Specifically, the final regulations provide that such an entity is not recognized as an entity separate from its owner for Federal income tax purposes but is recognized as separate for employment and excise tax purposes. Additionally, the final regulations provide that such entities, as well as corporations incorporated under section 17 of the Indian Reorganization Act of 1934, as amended, 25 U.S.C. 5124, or under section 3 of the Oklahoma Indian Welfare Act, as amended, 25 U.S.C. 5203, are treated solely for purposes of section 6417 (“Elective payment of applicable credits”) as instrumentalities of the Indian Tribal government(s) that own them.
EXCISE TAX
Announcement 2026-2, page 447.
Announcement 2026-2 provides important information for taxpayers who are liable for the tax on petroleum under § 4611 of the Internal Revenue Code.
REG-103430-24, page 447.
These proposed regulations would amend the Branded Prescription Drug Fee Regulations regarding the annual fee imposed on covered entities engaged in the business of manufacturing or importing certain branded prescription drugs by section 9008 of the Patient Protection and Affordable Care Act, as amended. These proposed regulations reflect statutory changes made to Medicare Part D that, in turn, affect the calculation of the branded prescription drug fee. I
INCOME TAX
T.D. 10040, page 416.
This document contains final regulations regarding the exclusion from gross income of certain Tribal general welfare benefits. The regulations address the requirements that apply to determine whether the benefits an Indian Tribal government program provides qualify as Tribal general welfare benefits. These regulations affect Indian Tribal governments, agencies or instrumentalities of such governments, federally recognized Tribes, members of such Tribes, such members’ spouses and dependents, and other Tribal program participants.