The IRS and its Security Summit partners have announced a new framework designed to better protect taxpayers and federal tax revenue from identity theft and refund fraud. The announcement is not just a cybersecurity update. It reflects a broader shift in how tax fraud is occurring and how the IRS, states, tax software companies, payroll providers, and tax professionals are trying to respond.

For taxpayers, businesses, and professional advisors, the practical message is direct: tax identity theft is no longer limited to obviously fake returns or crude phishing emails. Fraudsters increasingly seek real taxpayer, payroll, wage, withholding, and financial data so they can file returns that look legitimate enough to bypass ordinary filters.

That makes prevention, documentation, and rapid response more important than ever.

The Treasury Department and IRS have finalized regulations modifying information-reporting obligations for certain sales or exchanges of partnership interests. The final regulations are effective May 20, 2026, and remove Treasury Regulation section 1.6050K-1(c)(2), a rule that had required partnerships to furnish certain computational information to transferor partners in connection with sales or exchanges involving section 751 property.

Although the change is procedural, it matters. Partnership interest sales are often described casually as capital gain transactions, but that description can be incomplete. If the partnership owns certain “hot assets,” including unrealized receivables or inventory items, part of the selling partner’s gain may be treated as ordinary income rather than capital gain. That ordinary-income component can affect tax reporting, tax liability, return preparation, transaction diligence, withholding considerations, and downstream IRS correspondence.

For partnerships, sellers, buyers, and tax professionals, the new rules are a reminder that a partnership interest sale is not always a simple sale of a capital asset. Before a transaction closes, and before a return is filed, taxpayers should consider whether section 751 applies and whether the reporting is properly coordinated.

Form 843, Claim for Refund and Request for Abatement, is one of the principal tools taxpayers use to request a refund or abatement of certain penalties, additions to tax, interest, fees, or other amounts. But Form 843 is not just a form. The form itself is only the cover page. The substance of the request is usually the narrative: the factual chronology, legal basis, supporting documents, and explanation of why the IRS should remove or refund the amount at issue.

IRS penalties can turn a tax dispute into a much larger problem. A taxpayer may already owe additional tax and interest, only to find that the IRS has also asserted penalties for late filing, late payment, negligence, substantial understatement, failure to deposit, or another compliance failure.

For California tax purposes, moving out of the state is important, but it is not always enough. The Franchise Tax Board may examine whether the taxpayer truly changed domicile, whether the taxpayer remained a California resident, whether the taxpayer’s absence from California was temporary or transitory, and whether any income remains California-source even after the move.

From a tax perspective, options are not simple. The tax result can turn on the type of option, the exercise price, the fair market value of the stock, the timing of exercise, the holding period, the employee’s alternative minimum tax exposure, and whether the company complied with technical plan and valuation rules.

Receiving a tax notice can create an immediate practical problem: should you pay the amount the IRS or state tax agency says is due, or should you wait while you dispute it?

When a lawsuit settles, the parties often focus on the settlement amount, the release, confidentiality, payment timing, and dismissal. Tax reporting is sometimes treated as a secondary issue. That can be a mistake. In many cases, the timing, structure, and destination of settlement payments can materially affect tax reporting, plaintiff planning, attorney-fee issues, lien resolution, structured settlement decisions, and the defendant’s ability to close the matter.

Lawsuit settlements often end with a signed agreement, a release, and a payment. For tax purposes, however, the matter may not be over when the settlement funds are disbursed. Months later, the plaintiff, counsel, or both may receive one or more IRS Forms 1099 reporting some or all of the settlement proceeds. That reporting can be confusing, and in some cases it can create a mismatch between how the parties viewed the settlement and how the payment is later reported to the IRS.