Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for February 9, 2026 – February 17, 2026.
IRS guidance
February 9, 2026: The IRS issued Revenue Procedure 2026-13, providing discount factors for insurance companies to compute Section 846 discounted unpaid losses and recoverable Section 832 discounted estimated salvage for the 2025 accident year. This revenue procedure also provides discount factors to be used in tax years beginning in 2025 for losses incurred in the 2024 accident year and earlier accident years. Discount factors for tax years prior to 2025 were previously provided in Revenue Procedure 2025-15 and Revenue Procedure 2023-10.
February 12, 2026: The IRS issued Notice 2026-15, describing interim guidance on restrictions for certain energy credits related to the status of, and sourcing from, a prohibited foreign entity (PFE). These restrictions were enacted by Public Law 119- 21, 139 Stat. 72 (July 4, 2025) and provide:
- Descriptions of rules the US Department of the Treasury (Treasury) and the IRS intend to provide in proposed regulations regarding material assistance from a PFE.
- Descriptions of the Sections 45X, 45Y, and 48E interim safe harbor guidance for determining a qualified facility’s, energy storage technology’s, or eligible component’s material assistance cost ratio related to determining whether there was material assistance from a PFE.
- PFE restrictions that the Treasury and the IRS will include in forthcoming proposed regulations.
- A glossary of defined terms, a request for comments, and guidance on substantiation and taxpayer ability to rely on guidance provided in Sections 3 – 5 of the notice.
February 17, 2026: The IRS released Internal Revenue Bulletin No. 2026-8, which includes Revenue Ruling 2026-5. This revenue ruling provides Section 6621 interest rates for underpayments and overpayments for Q2 2026, as described below:
- 6% for overpayments generally
- 5% for overpayments in the case of a corporation, which drops to 3.5% for the portion of a corporate overpayment exceeding $10,000
- 6% for underpayments generally
- 8% for large corporate underpayments
The IRS also released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums, and Chief Counsel Advice).
Penalty disclosure guidance
February 9, 2026: The IRS released Internal Revenue Bulletin No. 2026-7, which includes Revenue Procedure 2026-12. This revenue procedure specifies when information shown on a return is considered an adequate disclosure for purposes of reducing an understatement of income tax under Section 6662(d) and avoiding a Section 6694(a)’s preparer penalty.
Under Revenue Procedure 2026-12, taxpayers generally “must furnish all required information in accordance with the applicable forms and instructions, and the money amounts entered on these forms must be verifiable.” An amount is verifiable where, “on audit, the taxpayer can prove the origin of the amount (even if that number is not ultimately accepted by the Service) and the taxpayer can show good faith in entering that number on the applicable form.” And where an item is being reported does not have a preprinted description (e.g., an item in the “Other Expense” category), taxpayers include a description on that line identifying the item.
Section 4.02 of Revenue Procedure 2026-12 set forth standards for adequately disclosing certain items, including:
- Form 1040, Schedule A, Itemized Deductions (Medical and dental expenses, taxes, interest expenses, charitable contributions, and casualty and theft losses)
- Certain trade or business expenses (casualty and theft losses, legal expenses, specific bad debt charge-off, officer’s compensation, repair expenses, and taxes (other than foreign taxes))
- Differences in book and income tax reporting
- Foreign tax items (International Boycott Transactions: Transactions disclosed on Form 5713, International Boycott Report, treaty-based return positions, etc.)
- Other categories (moving expenses, employee business expenses, and fuel credits)
However, even if a taxpayer meets the disclosure standards set forth in Section 4.02, the disclosure will have no effect for purposes of a Section 6662 accuracy-related penalty if the item or position on a return:
- Has no reasonable basis under Treas. Reg. Section 1.6662-3(b)(3)
- Is attributable to a tax shelter item under Section 6662(d)(2)(C)(ii)
- Is not substantiated or the taxpayer did not keep adequate books and records to support the item or position.
Moreover, Revenue Procedure 2026-12 provides that a disclosure of an item listed in Section 4.02 is not adequate when the understatement arises from a transaction between parties who are related within the meaning of Section 267(b). If an item presents a potential legal issue or controversy because of a transaction with a related party within the meaning of Section 267, then the taxpayer must disclose that transaction and relationship on Form 8275 or Form 8275-R.
Revenue Procedure 2026-12 applies to income tax returns filed on a 2025 tax form for a taxable year beginning in 2025, as well as to income tax returns filed on a 2025 tax form in 2026 for a short taxable year beginning in 2026.
