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IRS roundup: October 23 – November 6, 2025

by Evan Walters, Samuel F. Hamer, Edward L. Froelich, Michael J. Scarduzio and Matthew J. Blaney | Nov 7, 2025 | IRS Guidance, Penalties, Tax Reform

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for October 23, 2025 – November 6, 2025.

October 23, 2025: The IRS issued frequently asked questions, addressing its revisions and updates to Form 1099-K following changes resulting from the One Big Beautiful Bill Act (OBBBA). The OBBBA retroactively reinstated the reporting threshold in effect prior to the passage of the American Rescue Plan Act of 2021 (ARPA). This means that a third-party settlement organization (TPSO), which is a type of payment settlement entity, is generally not required to file a Form 1099-K. However, TPSOs will be required to file a Form 1099-K if the gross amount of reportable payment transactions to a payee exceeds $20,000 and if the number of reportable payment transactions exceeds 200. Previously, under the ARPA reporting threshold, TPSOs had to file a Form 1099-K for any payee that received more than $600 in total payments for the sales of goods or services, regardless of the number of reportable payment transactions.

October 27, 2025: The IRS reminded tax preparers that preparer tax identification numbers (PTINs) must be renewed annually and that the 2026 renewal period is now open. All 2025 PTINs will expire on December 31, 2025.

November 3, 2025: The IRS released Internal Revenue Bulletin No. 2025-45, which includes Notice 2025-61. Notice 2025-61 provides guidance on the adjusted applicable dollar amount for the Patient-Centered Outcomes Research Trust Fund (PCORTF) fee, which is imposed on issuers of specified health plans and plan sponsors of applicable self-insured health plans to fund PCORTF. Notice 2025-61 specifically provides the increased adjusted applicable dollar amount for determining the PCORTF fee as $3.84 (from the previous set amount of $3.47) for all policies and plans ending on or after October 1, 2025, and before October 1, 2026. The IRS explained that the amount was calculated by US Department of the Treasury economists based on the percentage increase in the projected per capita amount of National Health Expenditures, which was published by the US Department of Health and Human Services in June 2025.

November 5, 2025: The IRS issued Notice 2025-62, providing guidance on penalty relief for taxable year 2025 in connection with the implementation of new information reporting requirements related to the deductions for qualified tips and qualified overtime compensation to reflect amendments resulting from the OBBBA. Notice 2025-62 specifically provides relief for taxable year 2025 from the penalty under Section 6721 for failure to file correct information returns and the penalty under Section 6722 for failure to furnish correct payee statements. The IRS also announced that guidance on how taxpayers can claim these deductions on their tax return for the 2025 tax year is forthcoming.

The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).

Suzanne Golshanara, a law clerk in the Washington, DC, office, also contributed to this post.

IRS roundup: October 7 – October 23, 2025

by Evan Walters, Samuel F. Hamer, Edward L. Froelich, Michael J. Scarduzio and Matthew J. Blaney | Oct 28, 2025 | IRS Guidance, Tax Reform

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for October 7, 2025 – October 23, 2025.

October 7, 2025: The IRS issued Notice 2025-55, providing guidance on relief from failure to deposit penalties under Internal Revenue Code (Code) Section 6656 as it relates to a new excise tax being imposed on particular remittance transfers under Section 4475 for the first three quarters of 2026. The notice also includes guidance on the deposit safe harbor under Treas. Reg. § 40.6302(c)-1(b)(2), explaining that a remittance transfer provider will not be affected by failure to make deposits of the remittance transfer tax if they satisfy certain requirements.

October 16, 2025: The IRS issued Revenue Ruling 2025-21, providing various prescribed rates (for federal income tax purposes) for November 2025, including:

The short-, mid-, and long-term applicable federal rates (AFRs) for November 2025 as it relates to Section 1274(d).
The short-, mid-, and long-term adjusted AFRs for November 2025 as it relates to Section 1288(b).
The adjusted federal long-term rate and the long-term tax-exempt rate described in Section 382(f).

October 17, 2025: The IRS issued Revenue Procedure 2025-32, modifying certain sections of Revenue Procedure 2024-40 to reflect amendments resulting from the One Big Beautiful Bill Act (OBBBA). Revenue Procedure 2024-40, which displays IRS inflation-adjusted items for 2025, was specifically revised by removing the existing sections on standard deductions and the election to expense certain depreciable assets. Revenue Procedure 2025-32 also describes inflation-adjusted items for 2026 for various Code provisions.

October 21, 2025: The IRS issued Notice 2025-57, providing guidance on returns related to certain interest on specified passenger vehicle loans received in a trade or business from individuals, which are required to be filed under the new Section 6050AA as enacted in the OBBBA. Recognizing the need for efficient administration of Section 6050AA, Section 3 of Notice 2025-57 provides a means for interest recipients to report obligations under Section 6050AA.

October 22, 2025: The IRS issued frequently asked questions (FAQs) addressing Employee Retention Credits (ERC) under the ERC compliance provisions of the OBBBA. Although not final guidance, “a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax.”

October 23, 2025: The IRS issued Notice 2025-63, announcing the US Department of the Treasury and IRS’s intentions to issue proposed regulations providing that certain borrow fees are sourced based on the recipient’s residence. Currently, neither the Code nor Treasury regulations specify how to determine borrow fees as they relate to securities lending transactions and sale-repurchase transactions. Thus, the Treasury and the IRS intend to clarify this in Notice 2025-63.

The IRS also released its weekly list of written determinations (e.g., Private [...]

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3M Co. v. Commissioner: IRS shipwrecks hard on the shoals of Loper Bright

by Edward L. Froelich | Oct 16, 2025 | Appellate Courts, Court Procedure Matters, Transfer Pricing Resource

3M Co. v. Commissioner, 136 AFTR 2d 2025-, (8th Cir.) (Oct.1, 2025), is perhaps the most significant tax case to date that implements Loper Bright’s instruction regarding evaluation of an agency’s exercise of delegated authority.[1] The unanimous panel held that:

The Internal Revenue Services’ (IRS) adjustment imputing additional royalty income to 3M from its Brazilian affiliate was invalid because it was outside the authority delegated by Internal Revenue Code Section 482.
The underlying regulation, Reg. § 1.482-1(h)(2) (the blocked income regulation), was invalid for the same reason.

The IRS’s change of tack

Those following the US Court of Appeals for the Eighth Circuit’s consideration of the case were aware that the Court had asked the parties to file supplemental briefing on the impact of the Loper Bright decision, which was handed down after the US Tax Court’s decision. The focus of the Tax Court dispute was whether the blocked income regulation was a valid implementation of the statute under Chevron and the Administrative Procedure Act. A plurality of that court agreed it was.

In its briefing before the Eighth Circuit, the IRS pivoted[2] and argued that even if the Court determined that the blocked income regulation was invalid, Code Section 482 provided direct authority to the IRS to make adjustments to income. The IRS maintained that it did not need a regulation to support the adjustment in the case. Moreover, the IRS argued, where adjustments relate to the transfer of intangible property (such as here), its authority was only constrained by the requirement that the adjustment conform to the income commensurate with that attributable to the intangible.[3] Because the parties agreed that the higher royalty would have been paid to an unrelated party, slip op. at 2, the IRS maintained it was authorized to make the adjustment to 3M’s income.

No one can be taxed on income they can’t have

The IRS’s maneuver did not deter the Eighth Circuit from carefully following the mandate it had received via Loper Bright to evaluate whether the agency’s exercise of authority was within its statutory mandate. In other words, even if the IRS could act without a regulation to make adjustments under Code Section 482, the exercise of its authority under that section must remain within the confines of the statute: “[I]t is still our job to ‘fix[] the boundaries of [that] delegated authority’ based on the statute’s text, as we have done today.” Slip. op. at 11 (quoting Loper Bright). Viewed through this lens, the Eighth Circuit found that the adjustments asserted by the IRS were well outside the authority granted by Code Section 482. Because the blocked income regulation purported to exercise the same extra-statute authority, it too was found deficient.

According to the Eighth Circuit, Code Section 482’s broad delegation to the IRS by its terms is limited to making adjustments where necessary to avoid evasion or distortion of income. However, in Comm’r v. First Sec. Bank of Utah, N.A., 405 U.S. [...]

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IRS roundup: September 19 – October 1, 2025

by Evan Walters, Samuel F. Hamer, Edward L. Froelich, Michael J. Scarduzio and Matthew J. Blaney | Oct 8, 2025 | Appellate Courts, Court Procedure Matters, IRS Guidance, Tax Reform, Transfer Pricing Resource

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for September 19, 2025 – October 1, 2025.

September 19, 2025: The US Department of the Treasury (Treasury) and the IRS issued proposed regulations, providing guidance on the “no tax on tips” provision of the One Big Beautiful Bill Act. The proposed regulations define “qualified tips” and identify which occupations customarily and regularly receive tips on or before December 31, 2024.

September 23, 2025: The IRS issued Notice 2025-54, providing guidance on the 2025 – 2026 special per diem rates for taxpayers when determining their ordinary and necessary business expenses incurred while traveling away from home, including meal and incidental expenses rates, rates for the incidental expenses only deduction, and rates for (and a list of) high-cost localities for purposes of the high-low substantiation method.

September 29, 2025: The IRS issued Revenue Procedure 2025-30, providing updated procedures for taxpayers requesting private letter rulings from the IRS after September 29, 2025, regarding transactions intended to qualify under Internal Revenue Code § 3551. This guidance specially provides details on the representations, information, and analysis taxpayers should submit when requesting these rulings.

September 30, 2025: The IRS issued Notice 2025-46 and Notice 2025-49, providing guidance on the application of the corporate alternative minimum tax (CAMT).

Notice 2025-46 provides interim guidance to domestic corporate transactions, financially troubled companies, and tax consolidated groups. This notice also announces the Treasury and the IRS’s intent to partially withdraw the CAMT Proposed Regulations (described in Section 2.03 of this notice) and instead issue revised proposed regulations with guidance similar to Sections 3 – 6 of this notice. The proposed regulations will reduce compliance burdens related to, and costs associated with, application of the CAMT.

Notice 2025-49 provides interim guidance regarding application of the CAMT as it relates to §§ 55, 56A, and 59. This notice also announced the Treasury and the IRS’s intent to partially withdraw the CAMT Proposed Regulations (described in Section 2.03 of this notice) and instead issue revised proposed regulations with guidance similar to Sections 3 – 10 of this notice.

October 1, 2025: The Treasury and the IRS issued final regulations, providing guidance on interest capitalization requirements on designated property. The final regulations specifically remove the associated property rule (including similar rules in existing regulations), modifies how “improvement” is defined when applying those similar rules, and primarily affects taxpayers making improvements to real or tangible personal property if those improvements are the production of designated property.

October 1, 2025: The US Court of Appeals for the Eighth Circuit released its opinion in 3M Company v. Commissioner. The Eighth Circuit reversed the US Tax Court’s decision that 3M must pay taxes on royalties – that it could not legally receive – from a Brazilian subsidiary and remanded the Tax Court’s decision with instructions to redetermine 3M’s tax liability. Relying [...]

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IRS roundup: August 28 – September 15, 2025

by Evan Walters, Samuel F. Hamer, Edward L. Froelich, Michael J. Scarduzio and Matthew J. Blaney | Sep 18, 2025 | Appellate Courts, Court Procedure Matters, IRS Guidance, Tax Reform, Transfer Pricing Resource

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for August 28, 2025 – September 15, 2025.

August 28, 2025: The IRS issued Revenue Procedure 2025-28, providing guidance on making certain elections for domestic research or experimental expenditures under § 70302(f) of the One Big Beautiful Bill Act (OBBBA). Revenue Procedure 2025-28 specifically modifies procedures under Internal Revenue Code (Code) § 446 and Treasury Regulation § 1.446-1(e) for obtaining automatic consent from the commissioner of the Internal Revenue to:

Change methods of accounting for research or experimental expenditures under § 174, as amended by the Tax Cuts and Jobs Act of 2017

Change methods of accounting to comply with §§ 174 and 174A, as amended by OBBBA.

Revenue Procedure 2025-28 also prescribes the procedure for electing to amortize domestic research or experimental expenditures paid or incurred in the taxable years beginning after December 31, 2024, under Code § 174A(c).

September 2, 2025: The IRS issued Tax Tip 2025-59, reminding employers that they can use educational assistance programs to help employees pay for various educational expenses for undergraduate- or graduate-level studies. These programs can help pay for books, equipment, supplies, tuition, and other fees, as well as for qualified education loans. This tax-free benefit is allowed only up to $5,250 per employee per year and does not include meals, lodging, or transportation.

September 3, 2025: In Medtronic, Inc. v. Commissioner, the US Court of Appeals for the Eighth Circuit vacated the US Tax Court’s order, rejecting the Tax Court’s three-step unspecified method to value the arm’s length royalty rate for intercompany licensing agreements. The Eight Circuit also held that the Tax Court incorrectly rejected the application of the comparable profits method, explaining that, on remand, the Tax Court should consider whether the proposed comparable companies were “sufficiently similar” to Medtronic Puerto Rico.

September 15, 2025: The IRS released Internal Revenue Bulletin 2025–38, which includes Notice 2025-38. This notice republishes the inflation adjustment factor and the clean electricity production credit allowable under Code § 45Y for the 2025 calendar year. The inflation adjustment factor – and applicable amounts allowable for the 2025 calendar year – are used to determine the amount of Code § 45Y credits that may apply to calendar year 2025 sales, consumption, or storage of electricity produced at a qualified facility in the United States.

The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).