collection due process/CDP Archives

IRS roundup: May 18 – May 26, 2026

by Kai M. Fenty and Edward L. Froelich | Jun 3, 2026 | Court Procedure Matters, IRS Appeals, IRS Guidance, Significant Court Decision, Tax Reform, Tax Refunds, Trial Courts

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for May 18, 2026 – May 26, 2026.

May 19, 2026: A Treasury Inspector General for Tax Administration (TIGTA) report warned that the IRS’s efforts to transition to a “zero-paper” processing system faces significant obstacles related to funding, staffing shortages, and contractor readiness. The report noted that the IRS relied heavily on contractors for paper-processing modernization efforts, spending approximately $9 million between May 2025 and December 2025, but the contractors were not fully prepared to handle filing-season return volumes, requiring the IRS to shift additional processing work back in-house.

TIGTA further highlighted that the IRS workforce remains substantially reduced (approximately 17% smaller than in 2021) while previously authorized modernization funding under the Inflation Reduction Act of 2022 has been significantly reduced via subsequent legislative rescissions. According to TIGTA, these resource constraints could undermine the IRS’s ability to achieve its paperless processing and modernization objectives.

May 19, 2026: The US Department of the Treasury and the IRS finalized regulations (T.D. 10048) modifying the reporting requirements for certain sales or exchanges of partnership interests involving inventory items or unrealized receivables under Internal Revenue Code § 751. The regulations removed a prior rule that effectively required partnerships to provide transferor partners with information by January 31 of the following year and instead permit partnerships to furnish the information within 30 days after receiving notice of the transfer, if later than January 31.

The final regulations adopt proposed regulations issued in 2025 without substantive change and are intended to address concerns that partnerships often lack sufficient information to comply with the earlier deadline. The IRS also updated the instructions to Form 8308 to clarify the revised reporting requirements for transfers of partnership interests.

May 19, 2026: The US House of Representatives passed bipartisan legislation (H.R. 6506) expanding taxpayer protections in refund and collection disputes with the IRS by suspending the statute of limitations for refund claims during certain levy disputes and broadening the US Tax Court’s jurisdiction in those cases. The bill responds to the Supreme Court of the Unites States’ 2025 decision in Commissioner v. Zuch, which held that the Tax Court lost jurisdiction after the IRS applied a taxpayer’s refund to an outstanding liability.

Supporters of the legislation argue that the measure prevents the IRS from effectively mooting Tax Court challenges by offsetting refunds against disputed liabilities while litigation is pending. The bill, which has bipartisan support and backing from several taxpayer advocacy and practitioner groups, is intended to preserve taxpayers’ ability to obtain meaningful judicial review of disputed assessments and collections.

May 21, 2026: The IRS issued Notice 2026-32 concerning certain carrying broker-dealers (i.e., a broker-dealer that carries customer accounts and receives or holds funds or securities for those customers). Such broker-dealers may satisfy the Individual Retirement Account nonbank trustee “adequacy of net worth” requirement under Treas. Reg. § 1.408-2(e)(5)(ii) by demonstrating compliance with [...]

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Tax Court Holds That Deficiency Petition 90-Day Time Limit Is Jurisdictional

by Kevin Spencer, Sarah M. Raben and McDermott Will & Schulte | Dec 1, 2022 | Appellate Courts, Court Procedure Matters, Trial Courts

Last summer, the Supreme Court of the United States held that the 30-day time limit to file a Collection Due Process (CDP) petition is a non-jurisdictional deadline subject to equitable tolling (Boechler, P.C. v. Commissioner). (Our prior discussion of Boechler can be found here.) The natural follow-up issue was whether this holding extended to the 90-day limit for deficiency petitions.

On November 29, 2022, in a unanimous 17-0 opinion in Hallmark Research Collective v. Commissioner, the US Tax Court held that the 90-day time limit is jurisdictional not subject to equitable tolling. The taxpayer in that case filed its deficiency petition one day late but argued that the 90-day limit is non-jurisdictional under Boechler and that it should be allowed to show cause for equitable tolling of the limitations period.

The Tax Court analyzed the relevant statute (Internal Revenue Code (IRC) Section 6213(a)) and found that the statutory text, context and relevant historical treatment all confirmed that the 90-day time limit clearly provided that the deadline was jurisdictional. Its analysis started with the US Constitution and tracked the deficiency procedures from the days of its predecessor (the Board of Tax Appeals) through various statutory changes and the overall framework of the procedures. Based on its analysis of almost 100 years of statutory and judicial precedent, the Tax Court concluded that it and the US Courts of Appeals have expressly and uniformly treated the 90-day time limit as jurisdictional, and the US Congress was presumptively aware of this treatment and had acquiesced in it.

The Tax Court rejected the taxpayer’s arguments to the contrary. It noted that the Supreme Court in Boechler rejected the analogy of the statutory 30-day limit for a CDP petition to the statutory 90-day limit for a deficiency petition. The Court also provided separate reasons why the statutory 30-day time limit was different, both in its text and in prior judicial constructions from the 90-day time limit.

Practice Point: The Tax Court’s opinion in Hallmark will not be the last word on the issue, and we expect further developments in this area. Additionally, there are other types of petitions that can be filed in the Tax Court (e.g., so-called “innocent spouse” petitions filed in non-deficiency cases) that contain language different from the statutes addressed in Boechler and Hallmark. We will continue to follow this area and provide relevant updates as they develop.

Late CDP Petitions May Still Be Entitled to Tax Court Review

by Sarah M. Raben and McDermott Will & Schulte | Apr 22, 2022 | Appellate Courts, Court Procedure Matters, IRS Appeals, Trial Courts

In a unanimous decision in Boechler, P.C. v. Commissioner issued on April 21, 2022, the Supreme Court of the United States reversed the US Court of Appeals for the Eighth Circuit’s ruling (which affirmed the US Tax Court) and held that the 30-day time limit to file a petition with the Tax Court in a collection due process (CDP) case is a non-jurisdictional deadline subject to equitable tolling. The Supreme Court remanded the case to determine whether the taxpayer is entitled to equitable tolling.

The one-day-late showdown started in 2015, when the Internal Revenue Service (IRS) notified Boechler, P.C. (Boechler), a North Dakota law firm, of a tax discrepancy. Boechler did not respond, which triggered the assessment of an “intentional disregard” penalty along with a notice that the IRS intended to seize Boechler’s property to satisfy the penalty. Boechler requested a CDP hearing before the IRS Independent Office of Appeals (IRS Appeals), arguing that: (1) there was no discrepancy in its tax filings and (2) the penalty was excessive. IRS Appeals rejected these arguments and sustained the proposed levy. Boechler then had 30 days to file its Tax Court petition but missed the deadline by one day. The Tax Court dismissed the petition for lack of jurisdiction, holding that the 30-day filing deadline is jurisdictional and cannot be equitably tolled. The Eighth Circuit affirmed.

The Supreme Court granted certiorari. The US government argued that the deadline was jurisdictional and the Tax Court lacks the power to accept a tardy filing by applying the doctrine of equitable tolling. Boechler argued that equitable tolling applied, and the Tax Court had jurisdiction over its case. The Supreme Court, continuing a trend of distinguishing between claim processing rules and jurisdictional rules, agreed with Boechler.

Internal Revenue Code (Code) Section 6330(d)(1) states, “[t]he person may, within 30 days of a determination under this section, petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter).” The Supreme Court explained that a procedural requirement is treated as jurisdictional “only if Congress ‘clearly states’ that it is” Arbaugh v. Y & H Corp., 546 U. S. 500, 515 (2006), although US Congress need not “incant magic words.” Sebelius v. Auburn Regional Medical Center, 568 U. S. 145, 153 (2013).

The Supreme Court clarified that the question was whether the statutory language limits the Tax Court’s jurisdiction to petitions filed within that timeframe. That answer turned on the meaning of the phrase “such matters.” The first independent clause explains what a taxpayer may do, (“The person may, within 30 days of a determination under this section, petition the Tax Court for review of such determination.”) However, the phrase “such matters” does not clearly mandate the jurisdictional reading and lacks clear antecedent. In addition, the Supreme Court also explained that Code Section 6330(d)(1) lacked in comparable clarity as to other tax provisions enacted around the same time. Finally, the Supreme [...]

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