Internal Revenue Bulletin 2026-2 (PDF rendition): IRS Revenue Rulings

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Bulletin No. 2026–2
January 5, 2026
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
ADMINISTRATIVE
Rev. Proc. 2026-7, page 316.
Areas in which rulings will not be issued, Associate Chief
Counsel (International).
ADMINISTRATIVE, INCOME TAX
Notice 2026-3, page 307.
Notice 2026-3 provides relief from the additions to tax under
sections 6654 and 6655 for underpayment of estimated
income tax, and assists in implementing section 70437 of
the One, Big, Beautiful Bill Act, which added a new limited
payment deferral election in section 1062(a) applicable in
the case of a sale or exchange of qualified farmland prop-
erty to a qualified farmer (qualified sale or exchange). In
the interest of sound tax administration, the IRS will waive
a portion of the addition to tax under sections 6654 and
6655 attributable to a qualified sale or exchange for which
an election under section 1062(a) (section 1062 election)
is properly made. The amount of the relief depends on the
amount of tax the payment of which is deferred by the sec-
tion 1062 election.
EMPLOYEE PLANS
Notice 2026-2, page 304.
This notice sets forth updates on the corporate bond
monthly yield curve, the corresponding spot segment rates
for November 2025 used under § 417(e)(3)(D), the 24-month
average segment rates applicable for December 2025, and
the 30-year Treasury rates, as reflected by the application of
§ 430(h)(2)(C)(iv).
Rev. Rul. 2026-1, page 299.
This revenue ruling provides tables of covered compensation
under § 401(l)(5)(E) of the Internal Revenue Code and the
Treasury Regulations thereunder, effective January 1, 2026.
EMPLOYEE PLANS, INCOME TAX
Notice 2026-5, page 309.
This notice provides guidance on changes relating to health
savings accounts (HSAs) enacted by Pub. L. 119-21, 139
Stat. 72 (July 4, 2025), commonly known as the One, Big,
Beautiful Bill Act (OBBBA). These changes generally expand
the availability of HSAs under section 223 of the Internal Rev-
enue Code (the Code). This notice provides answers to com-
mon questions related to these changes.
EMPLOYMENT TAX
Notice 2026-6, page 313.
Notice 2026-6 extends the transition period provided in Rev-
enue Ruling 2025-4 for an additional year to calendar year
2026 for States administering paid family and medical leave
(PFML) programs and employers participating in such pro-
grams. The Notice provides States and employers additional
time to make the necessary changes to their systems to
comply with the tax and information reporting responsibilities
set forth in Revenue Ruling 2025-4.
INCOME TAX
Rev. Proc. 2026-6, page 314.
Rev. Proc. 2026-6 provides the exclusive procedure for a State
to make an election to be a “covered state” prior to identifying
scholarship granting organizations (SGOs) in the State in accor-
dance with § 25F(g) of the Internal Revenue Code, as added by §
70411 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), com-
monly known as the One, Big, Beautiful Bill Act (Advance Elec-
tion). Pursuant to this revenue procedure, if a State chooses to
make an Advance Election, the State must submit Form 15714,
Advance Election to Participate Under Section 25F for 2027, in
accordance with section 4 and the Form 15714 instructions, on
or after January 1, 2026, and before the final date on which the
State is permitted to submit the list identifying SGOs (as will be
specified in future guidance).
Finding Lists begin on page ii.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of inter-
nal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rul-
ings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
January 5, 2026 Bulletin No. 2026–2

Part I
Section 401.—Qualified
Pension, Profit-Sharing,
and Stock Bonus Plans
26 CFR 1.401(l)-1: Permitted disparity in employ-
er-provided contributions or benefits
Rev. Rul. 2026-1
This revenue ruling provides tables
of covered compensation under sec-
tion 401(l)(5)(E) of the Internal Revenue
Code for the 2026 plan year.
Section 401(l)(5)(E)(i) defines covered
compensation with respect to an employee
as the average of the contribution and ben-
efit bases in effect under section 230 of
the Social Security Act (“Act”) for each
year in the 35‑year period ending with the
year in which the employee attains Social
Security retirement age.
Section 401(l)(5)(E)(ii) of the Code
states that the determination for any year
preceding the year in which the employee
attains Social Security retirement age
shall be made by assuming that there is
no increase in covered compensation after
the determination year and before the
employee attains Social Security retire-
ment age.
Section 1.401(l)‑1(c)(34) of the Trea-
sury Regulations (“Regulations”) defines
the taxable wage base as the contribution
and benefit base under section 230 of the
Act.
Section 1.401(l)-1(c)(7)(i) of the Reg-
ulations defines covered compensation
for an employee as the average (without
indexing) of the taxable wage bases in
effect for each calendar year during the
35‑year period ending with the last day of
the calendar year in which the employee
attains (or will attain) Social Security
retirement age. A 35‑year period is used
for all individuals regardless of the year
of birth of the individual. In determining
an employee’s covered compensation for
a plan year, the taxable wage base for all
calendar years beginning after the first
day of the plan year is assumed to be the
same as the taxable wage base in effect
as of the beginning of the plan year. An
employee’s covered compensation for
a plan year beginning after the 35‑year
period applicable under § 1.401(l)-1(c)
(7)(i) is the employee’s covered compen-
sation for a plan year during which the
35‑year period ends. An employee’s cov-
ered compensation for a plan year begin-
ning before the 35‑year period applicable
under § 1.401(l)-1(c)(7)(i) is the taxable
wage base in effect as of the beginning of
the plan year.
Section 1.401(l)-1(c)(7)(ii) provides
that, for purposes of determining the
amount of an employee’s covered com-
pensation under § 1.401(l)-1(c)(7)(i), a
plan may use tables, provided by the Com-
missioner, that are developed by rounding
the actual amounts of covered compensa-
tion for different years of birth.
For purposes of determining covered
compensation for the 2026 year, the tax-
able wage base is $184,500.
The following tables provide covered
compensation for 2026.
ATTACHMENT I
2026 UNROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2026 COVERED
COMPENSATION
UNROUNDED
19071972$ 4,488
190819734,704
190919745,004
191019755,316
191119765,664
191219776,060
19131978 6,480
191419797,044
191519807,692
191619818,460
191719829,300
1918198310,236
1919198411,232
1920198512,276
Bulletin No. 2026–2 299 January 5, 2026

January 5, 2026 300 Bulletin No. 2026–2
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2026 COVERED
COMPENSATION
UNROUNDED
1921198613,368
1922198714,520
1923198815,708
1924198916,968
1925199018,312
1926199119,728
1927199221,192
1928199322,716
1929199424,312
1930199525,920
1931199627,576
1932199729,304
1933199831,128
1934199933,060
1935200035,100
1936200137,212
1937200239,444
1938200443,992
1939200546,344
1940200648,816
1941200751,348
1942200853,952
1943200956,628
1944201059,268
1945201161,884
1946201264,560
1947201367,308
1948201469,996
1949201572,636
1950201675,180
1951201777,880
1952201880,532
1953201983,244
1954202086,052
1955202291,884
1956202395,172
1957202498,616
19582025102,180
19592026105,924
19602027109,620
19612028113,244
19622029116,784
19632030120,300

Bulletin No. 2026–2 301 January 5, 2026
CALENDAR
YEAR OF
BIRTH
CALENDAR YEAR OF
SOCIAL SECURITY
RETIREMENT AGE
2026 COVERED
COMPENSATION
UNROUNDED
19642031123,780
19652032127,188
19662033130,500
19672034133,704
19682035136,800
19692036139,764
19702037142,620
19712038145,404
19722039148,164
19732040150,864
19742041153,444
19752042155,928
19762043158,280
19772044160,500
19782045162,720
1979 2046164,940
19802047167,064
19812048169,092
19822049171,024
19832050172,908
19842051174,792
19852052176,424
19862053178,032
19872054179,508
19882055180,840
19892056182,040
19902057183,108
19912058183,804
19922059184,260
1993 and later2060 and later184,500

January 5, 2026 302 Bulletin No. 2026–2
ATTACHMENT II
2026 ROUNDED COVERED COMPENSATION TABLE
CALENDAR
YEAR OF
BIRTH
2026 COVERED
COMPENSATION
ROUNDED
1937$ 39,000
1938 – 193945,000
194048,000
194151,000
194254,000
194357,000
194460,000
194563,000
1946 – 194766,000
194869,000
194972,000
195075,000
195178,000
195281,000
195384,000
195487,000
195593,000
195696,000
195799,000
1958102,000
1959105,000
1960111,000
1961114,000
1962117,000
1963120,000
1964123,000
1965126,000
1966132,000
1967135,000
1968138,000
1969141,000
1970 – 1971144,000
1972147,000
1973150,000
1974153,000
1975156,000
1976159,000
1977 – 1978162,000
1979165,000

Bulletin No. 2026–2 303 January 5, 2026
CALENDAR
YEAR OF
BIRTH
2026 COVERED
COMPENSATION
ROUNDED
1980 – 1981168,000
1982171,000
1983 – 1984174,000
1985 – 1986177,000
1987 – 1988180,000
1989 – 1990183,000
1991 and later184,500
DRAFTING INFORMATION
The principal author of this revenue
ruling is Tom Morgan of the Office of
Associate Chief Counsel (Employee Ben-
efits, Exempt Organizations, and Employ-
ment Taxes). However, other personnel
from the Internal Revenue Service partici-
pated in the development of this guidance.
For further information regarding this rev-
enue ruling, contact Mr. Morgan at (202)
317‑6700 (not a toll‑free number).

January 5, 2026 304 Bulletin No. 2026–2
Part III
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2026-2
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used
under § 417(e)(3), and the 24‑month aver-
age segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the inter-
est rate on 30‑year Treasury securities
under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the
30‑year Treasury weighted average rate
under § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to sin-
gle-employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under
this provision, present value is generally
determined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
1
However, an elec-
tion may be made under § 430(h)(2)(D)
(ii) to use the monthly yield curve in place
of the segment rates.
Section 1.430(h)(2)‑1(d) provides
rules for determining the monthly cor-
porate bond yield curve,
2
and § 1.430(h)
(2)-1(c) provides rules for determining
the 24-month average corporate bond
segment rates used to compute the target
normal cost and the funding target. Con-
sistent with the methodology specified in
§ 1.430(h)(2)‑1(d), the monthly corporate
bond yield curve derived from Novem-
ber 2025 data is in Table 2025-11 at the
end of this notice. The spot first, second,
and third segment rates for the month of
November 2025 are, respectively, 4.07,
5.15, and 6.01.
The 24-month average segment rates
determined under § 430(h)(2)(C)(i)
through (iii) must be adjusted pursuant to
§ 430(h)(2)(C)(iv) to be within the appli-
cable minimum and maximum percent-
ages of the corresponding 25-year aver-
age segment rates. Those percentages are
95% and 105% for plan years beginning
in 2024, 2025 and 2026. For this purpose,
any 25-year average segment rate that is
less than 5% is deemed to be 5%. The
25-year average segment rates for plan
years beginning in 2024, 2025 and 2026
were published in Notice 2023‑66, 2023‑
40 I.R.B. 992, Notice 2024-67, 2024-41
I.R.B. 726 and Notice 2025-47, 2025-40
I.R.B. 441, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corpo-
rate bond segment rates applicable for
December 2025 without adjustment for
the 25-year average segment rate limits
are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable Month First Segment Second Segment Third Segment
December 2025 4.61 5.26 5.70
The adjusted 24-month average seg-
ment rates set forth in the chart below
reflect § 430(h)(2)(C)(iv) of the Code. The
24-month averages applicable for Decem-
ber 2025, adjusted to be within the appli-
cable minimum and maximum percent-
ages of the corresponding 25-year average
segment rates in accordance with § 430(h)
(2)(C)(iv), are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable MonthFirst SegmentSecond SegmentThird Segment
2024December 20254.755.265.70
2025December 20254.755.265.70
2026December 20254.755.255.70
1
Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
2
For months before February 2024, the monthly corporate bond yield curve was determined in accordance with Notice 2007‑81, 2007‑44 I.R.B. 899. Section 1.430(h)(2)‑1(d) generally adopts
the methodology for determining the monthly corporate bond yield curve under Notice 2007-81 but includes two enhancements to take into account subsequent changes in the bond market.
Those enhancements are described in the preamble to TD 9986 (89 FR 2127).

Bulletin No. 2026–2 305 January 5, 2026
30‑YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to mul-
tiemployer plans pursuant to § 412. Sec-
tion 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation
described in § 431(c)(6)(A), based on the
plan’s current liability. Section 431(c)
(6)(E)(ii)(I) provides that the interest
rate used to calculate current liability for
this purpose must be no more than 5 per-
cent above and no more than 10 percent
below the weighted average of the rates
of interest on 30‑year Treasury securities
during the four-year period ending on the
last day before the beginning of the plan
year. Notice 88‑73, 1988‑2 C.B. 383,
provides guidelines for determining the
weighted average interest rate. The rate
of interest on 30‑year Treasury securities
for November 2025 is 4.70 percent. The
Service determined this rate as the aver-
age of the daily determinations of yield
on the 30‑year Treasury bond matur-
ing in August 2055 determined each
day through November 12, 2025 and
the yield on the 30‑year Treasury bond
maturing in November 2055 determined
each day for the balance of the month.
For plan years beginning in December
2025, the weighted average of the rates
of interest on 30‑year Treasury securities
and the permissible range of rates used to
calculate current liability are as follows:
Treasury Weighted Average Rates
For Plan Years Beginning In30-Year Treasury Weighted AveragePermissible Range 90% to 105%
December 20254.323.89 to 4.54
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Section 1.417(e)‑1(d)(3) provides
guidelines for determining the minimum
present value segment rates. Pursuant to
that section, the minimum present value
segment rates determined for November
2025 are as follows:
Minimum Present Value Segment Rates
Month First Segment Second Segment Third Segment
November 2025 4.07 5.15 6.01
DRAFTING INFORMATION
The principal author of this notice
is Tom Morgan of the Office of Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development
of this guidance. For further information
regarding this notice, contact Mr. Morgan
at 202‑317‑6700 or Tony Montanaro at
626-927-1475 (not toll-free calls).

January 5, 2026 306 Bulletin No. 2026–2
Table 2025-11
Monthly Yield Curve for November 2025
Derived from November 2025 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.53.9820.55.6940.56.0560.56.1880.56.24
1.03.9821.05.7141.06.0561.06.1881.06.24
1.53.9821.55.7341.56.0661.56.1881.56.24
2.03.9922.05.7442.06.0662.06.1882.06.24
2.54.0222.55.7642.56.0662.56.1882.56.24
3.04.0523.05.7743.06.0763.06.1983.06.25
3.54.1023.55.7843.56.0763.56.1983.56.25
4.04.1524.05.7944.06.0864.06.1984.06.25
4.54.2124.55.8144.56.0864.56.1984.56.25
5.04.2725.05.8245.06.0965.06.1985.06.25
5.54.3425.55.8345.56.0965.56.2085.56.25
6.04.4126.05.8446.06.0966.06.2086.06.25
6.54.4826.55.8546.56.1066.56.2086.56.25
7.04.5527.05.8647.06.1067.06.2087.06.25
7.54.6227.55.8747.56.1067.56.2087.56.26
8.04.6928.05.8848.06.1168.06.2088.06.26
8.54.7628.55.8848.56.1168.56.2188.56.26
9.04.8229.05.8949.06.1169.06.2189.06.26
9.54.8929.55.9049.56.1269.56.2189.56.26
10.04.9530.05.9150.06.1270.06.2190.06.26
10.55.0030.55.9250.56.1270.56.2190.56.26
11.05.0631.05.9351.06.1371.06.2191.06.26
11.55.1131.55.9451.56.1371.56.2291.56.26
12.05.1632.05.9452.06.1372.06.2292.06.26
12.55.2132.55.9552.56.1472.56.2292.56.27
13.05.2533.05.9653.06.1473.06.2293.06.27
13.55.3033.55.9653.56.1473.56.2293.56.27
14.05.3434.05.9754.06.1474.06.2294.06.27
14.55.3734.55.9854.56.1574.56.2294.56.27
15.05.4135.05.9955.06.1575.06.2395.06.27
15.55.4435.55.9955.56.1575.56.2395.56.27
16.05.4736.06.0056.06.1576.06.2396.06.27
16.55.5036.56.0056.56.1676.56.2396.56.27
17.05.5337.06.0157.06.1677.06.2397.06.27
17.55.5637.56.0257.56.1677.56.2397.56.27
18.05.5838.06.0258.06.1678.06.2398.06.28
18.55.6138.56.0358.56.1778.56.2498.56.28
19.05.6339.06.0359.06.1779.06.2499.06.28
19.55.6539.56.0459.56.1779.56.2499.56.28
20.05.6740.06.0460.06.1780.06.24100.06.28

Bulletin No. 2026–2 307 January 5, 2026
Relief from Additions to Tax
under Sections 6654 and
6655 for Underpayment
of Estimated Income Tax
by Taxpayers Making an
Election under Section
1062
Notice 2026-3
SECTION 1. OVERVIEW
This notice provides relief from the
additions to tax under sections 6654
and 6655 of the Internal Revenue Code
(Code)
1
for underpayment of estimated
income tax by a taxpayer that makes a
valid election under section 1062(a) (sec-
tion 1062 election).
SECTION 2. SCOPE
The relief provided in this notice
applies for the purpose of calculating any
installment of estimated income tax of a
taxpayer that makes a valid section 1062
election, with respect to the taxable year
of the sale or exchange of qualified farm-
land property that is the subject of the
section 1062 election. The amount of the
relief depends on the amount of income
tax for which payment is deferred by the
section 1062 election.
SECTION 3. BACKGROUND
.01 Section 1062.
(1) Generally. Section 70437 of Pub-
lic Law 119‑21, 139 Stat. 72 (2025),
commonly known as the One, Big, Beau-
tiful Bill Act (OBBBA), redesignated
pre-OBBBA section 1062 as section
1063 and inserted a new section 1062.
Section 1062(a) now allows a taxpayer
who has gain from the sale or exchange
of qualified farmland property to a qual-
ified farmer (qualified sale or exchange)
to elect (by making a section 1062 elec-
tion) to pay the applicable net tax liabil-
ity determined under section 1062(d)(1)
(A) in four equal installments. Section
1062(b)(1) provides that, if a section
1062 election is made, the first install-
ment must be paid on the due date (deter-
mined without regard to any extension of
time for filing the return) for the return
of tax for the taxable year in which the
qualified sale or exchange occurs, and
each succeeding installment must be
paid on the due date (determined with-
out regard to any extension of time for
filing the return) for the return of tax for
the taxable year following the taxable
year with respect to which the preceding
installment was made.
(2) Applicable net tax liability. Section
1062(d)(1)(A) defines “applicable net tax
liability” with respect to a qualified sale or
exchange as the excess (if any) of (i) such
taxpayer’s net income tax for the taxable
year, over (ii) such taxpayer’s net income
tax for such taxable year determined with-
out regard to any gain recognized from
the qualified sale or exchange. Section
1062(d)(1)(A) defines “net income tax”
for these purposes to mean the regular
tax liability (as defined in section 26(b))
reduced by the credits allowed under sub-
parts A, B, and D of part IV of subchapter
A of chapter 1 of the Code.
(3) Qualified farmland property. Sec-
tion 1062(d)(2)(A) defines the term “qual-
ified farmland property” as real property
located in the United States that (i) during
substantially all of the 10-year period
ending on the date of the qualified sale or
exchange has been used by the taxpayer
either as a farm for farming purposes
or leased by the taxpayer to a qualified
farmer for farming purposes, and (ii) is
subject to a covenant or other legally
enforceable restriction which prohibits the
use of such property other than as a farm
for farming purposes for 10 years after
the date of the qualified sale or exchange.
Section 1062(d)(2)(A) further provides
that property that is used or leased by a
partnership or S corporation is treated as
used or leased by each person who holds
a direct or indirect interest in such entity.
Section 1062(d)(2)(B) provides that the
terms “farm” and “farming purposes”
have the respective meanings given such
terms under section 2032A(e). See section
2032A(e)(4) and (5).
(4) Qualified farmer. Section 1062(d)
(3) defines the term “qualified farmer” as
any individual who is actively engaged in
farming (within the meaning of 7 U.S.C.
§§ 1308‑1(b) and (c)).
(5) Acceleration of payment. Sec-
tion 1062(b)(2)(A) provides that if there
is an addition to tax for failure to timely
pay any installment required under sec-
tion 1062, then the unpaid portion of all
remaining installments is due on the date
of such failure. Additional circumstances,
described in section 1062(b)(2)(B) and
(C), may also accelerate the due date of
unpaid installments.
(6) Election procedures. Section
1062(e) requires that a taxpayer making
a section 1062 election include with the
return for the taxable year of the qualified
sale or exchange a copy of the covenant
or other legally enforceable restriction
described in section 1062(d)(2)(A)(ii).
Forthcoming guidance will provide fur-
ther instructions on how a taxpayer may
properly make a section 1062 election.
.02 Section 6654.
(1) Estimated income tax and liability
for addition to tax. Generally, the Code
requires taxpayers to pay Federal income
taxes as they earn income. To the extent
these taxes are not withheld from wages
or other income, a taxpayer normally
must pay estimated income tax. Individ-
ual taxpayers who fail to make a sufficient
or timely payment of estimated income
tax are liable for an addition to tax under
section 6654(a). With some exceptions,
section 6654(l)(2) provides that the provi-
sions of section 6654 generally apply to
certain estates and trusts.
(2) Quarterly payments of estimated
income tax for most individual taxpayers.
Section 6654 provides that, in the case of
an individual, estimated income tax is gen-
erally required to be paid in four install-
ments, each in the amount of 25 percent of
the required annual payment. Generally,
under section 6654(d)(1)(B), the required
annual payment is the lesser of (i) 90 per-
cent of the tax shown on the return for the
taxable year; or (ii) 100 percent of the tax
shown on the return of the individual for
the preceding taxable year (110 percent
if the individual’s adjusted gross income
1
Unless otherwise specified, all “section” references are to sections of the Code.

January 5, 2026 308 Bulletin No. 2026–2
on the previous year’s return exceeded
$150,000), provided that the preceding
taxable year was 12 months in duration and
the individual filed a return for that year.
An individual taxpayer whose income
varies during the taxable year may be able
to use the annualized income installment
method described in section 6654(d)(2) to
determine estimated income tax liability
as their income accumulates, rather than
dividing the required annual payment by
four as if the income were earned equally
throughout the year. Generally, section
6654(d)(2)(B) allows an individual tax-
payer to reduce the amount of estimated
income tax installments that are due ear-
lier in the year and increase the amount of
estimated income tax installments that are
due later in the year.
(3) Due dates for installments of
estimated income tax. Pursuant to sec-
tion 6654(c)(2), estimated income tax
installments for an individual calen-
dar-year taxpayer generally are due on
April 15, June 15, and September 15 of the
taxable year, and on January 15 of the fol-
lowing year. Pursuant to section 6654(k)
(1), for an individual fiscal‑year taxpayer,
the due dates of installments of estimated
income tax are determined by substituting
corresponding months. Section 6654(h),
(i), and (j) provides special rules regard-
ing installment amounts and due dates for
taxpayers described therein.
(4) One annual payment of estimated
income tax for qualifying farmers or fish-
ermen. Special rules apply in the case of
an individual taxpayer who is a farmer
or fisherman and satisfies the require-
ments of section 6654(i) for a taxable year
(qualifying farmer or fisherman). Under
section 6654(i)(1), a qualifying farmer or
fisherman has only one required install-
ment payment (instead of four quarterly
payments) due on January 15 of the year
following the taxable year if at least two-
thirds of the taxpayer’s total gross income
was from farming or fishing in either that
taxable year or the preceding taxable year.
For a qualifying farmer or fisherman who
does not make the required estimated
income tax installment payment by Janu-
ary 15 of the year following the taxable
year, section 6654(i)(1)(D) provides that
the taxpayer is not subject to an addition
to tax for failing to pay estimated income
tax if the taxpayer files the return for the
taxable year and pays the full amount of
tax reported on the return by March 1 of
the year following the taxable year. The
definition of “qualified farmer” under
section 1062(d)(3) differs from the defi-
nition of “farmer or fisherman” under
section 6654(i)(2). For purposes of sec-
tion 6654, section 6654(i)(2) provides
that an individual is a farmer or fisherman
for any taxable year if (A) the individu-
al’s gross income from farming or fishing
(including oyster farming) for the taxable
year is at least 66 and 2/3 percent of the
total gross income from all sources for the
taxable year, or (B) the individual’s gross
income from farming or fishing (including
oyster farming) shown on the return of the
individual for the preceding taxable year
is at least 66 and 2/3 percent of the total
gross income from all sources shown on
such return.
(5) Exceptions to the addition to tax. An
individual taxpayer will not be subject to
the addition to tax under section 6654(a)
if an exception applies. Under sec-
tion 6654(e)(1), no addition to tax will be
imposed on an individual taxpayer if the
taxpayer owes less than $1,000 in tax,
after subtracting tax withheld on wages.
Under section 6654(e)(2), an individual
will not be subject to an addition to tax
if (i) the individual did not have any tax
liability for the previous taxable year, (ii)
the preceding taxable year was 12 months,
and (iii) the individual was a citizen or
resident of the United States throughout
the preceding taxable year. Under sec-
tion 6654(e)(3)(A), the addition to tax
will not be imposed with respect to any
underpayment to the extent the Secretary
of the Treasury or the Secretary’s delegate
(Secretary) “determines that by reason of
casualty, disaster, or other unusual cir-
cumstances the imposition of such addi-
tion to tax would be against equity and
good conscience.”
.03 Section 6655.
(1) Estimated income tax and liabil-
ity for addition to tax. Section 6655(a)
imposes an addition to tax for failure by
a corporation to make a sufficient and
timely payment of estimated income tax.
Section 6655(c) and (d)(1)(A) generally
provides that, in the case of a corporation,
estimated income tax is required to be
paid in four installments and the amount
of any required installment is 25 percent
of the required annual payment. Gen-
erally, under section 6655(d)(1)(B), the
required annual payment is the lesser of
two amounts described in section 6655(d)
(1)(B)(i) and (ii). The amount described in
section 6655(d)(1)(B)(i) is 100 percent of
the tax shown on the return for the tax-
able year. The amount described in sec-
tion 6655(d)(1)(B)(ii) is 100 percent of
the tax shown on the taxpayer’s return
for the preceding taxable year, so long
as the preceding taxable year was twelve
months long and the return for such year
showed a liability for tax. However, pur-
suant to section 6655(d)(2), in the case of
a large corporation (as defined under sec-
tion 6655(g)(2)), the amount described in
section 6655(d)(1)(B)(ii) may not be used
to reduce the amount of an installment
payment other than the first installment
payment for the taxable year. A taxpayer
that is a corporation with income that var-
ies during the taxable year may be able
to use the annualized income installment
method or the adjusted seasonal install-
ment method described in section 6655(e)
to lower the amount of one or more
required estimated income tax install-
ments.
(2) Due dates for installments of
estimated income tax. Pursuant to sec-
tion 6655(c)(2), estimated income tax
installments of a corporation that uses the
calendar-year for its taxable year gener-
ally are due on April 15, June 15, Septem-
ber 15, and December 15 of the taxable
year. Pursuant to section 6655(i), for a
corporation that uses a fiscal year for its
taxable year, the due dates of installments
of estimated income tax are determined
by substituting corresponding months. In
special circumstances, other rules speci-
fied in section 6655 or elsewhere may also
apply.
SECTION 4. LIMITED WAIVER OF
ADDITION TO TAX
.01 Reasons for waiver. The Depart-
ment of the Treasury (Treasury Depart-
ment) and the Internal Revenue Service
(IRS) are aware that taxpayers may be
concerned that, in order to avoid the addi-
tion to tax under section 6654 or 6655 for
failure to make a sufficient and timely pay-
ment of estimated income tax, they must
pay the full amount of applicable net tax

Bulletin No. 2026–2 309 January 5, 2026
liability, or a substantial portion of it, as
estimated income tax for the taxable year
of the qualified sale or exchange. Doing
so would be contrary to the purpose of the
section 1062 election, which is to allow
payment of the liability in installments
over four years. Without a limited waiver
of the addition to tax, a taxpayer making
a section 1062 election might be deprived
of the full benefit of the provision.
.02 Limited Waiver.
In the interest of sound tax administra-
tion, the IRS will waive a portion of the
addition to tax under sections 6654 and
6655 attributable to the qualified sale or
exchange for which the section 1062 elec-
tion is made for taxpayers who both qual-
ify to make a section 1062 election and
properly make a section 1062 election.
The limited waiver applies with respect to
the applicable net tax liability the payment
of which is deferred by the section 1062
election. Accordingly, a taxpayer may
exclude 75 percent of the applicable net
tax liability (with respect to the qualified
sale or exchange as to which the taxpayer
has properly made the section 1062 elec-
tion) from the calculation of the required
annual payment for purposes of deter-
mining estimated income tax installment
amounts for the taxable year of the quali-
fied sale or exchange for which the section
1062 election is made. In determining the
required annual payment for the taxable
year of the qualified sale or exchange, the
taxpayer must include the portion of the
applicable net tax liability that is required
to be paid on the due date of the income
tax return for the taxable year of the qual-
ified sale or exchange (25 percent of the
applicable net tax liability with respect to
the qualified sale or exchange as to which
the taxpayer has properly made the sec-
tion 1062 election).
A proper section 1062 election is a
prerequisite to receiving the relief pro-
vided in this notice, but an accelera-
tion of installment due dates under sec-
tion 1062(b)(2) will not affect this waiver.
The waiver will apply automatically to
any taxpayer who qualifies for the waiver
and does not self-report an addition to
tax under section 6654 or 6655 on their
income tax return for the taxable year
of the qualified sale or exchange. A tax-
payer who otherwise satisfies the criteria
for relief under this notice, but who has
already filed an income tax return report-
ing an addition to tax under section 6654
or 6655, may request an abatement of the
addition to tax by filing Form 843, Claim
for Refund and Request for Abatement
and noting “Abatement requested pursu-
ant to Notice 2026‑3” at the top of the
claim. A taxpayer that satisfies the criteria
for relief under this notice but receives a
penalty notice from the IRS should also
request an abatement of the addition to
tax by filing Form 843.
.03 Form instructions to be modified.
The instructions to forms relevant to esti-
mated income tax requirements, includ-
ing Form 1040-ES, Estimated Tax for
Individuals, Form 1041-ES, Estimated
Income Tax for Estates and Trusts, Form
2210, Underpayment of Estimated Tax
by Individuals, Estates, and Trusts, Form
2210-F, Underpayment of Estimated Tax
by Farmers and Fishermen, Form 2220,
Underpayment of Estimated Tax by Cor-
porations, will be modified, as necessary,
to reflect the relief granted by this notice.
If necessary, the modified instructions will
be posted on https://www.irs.gov.
SECTION 5. DRAFTING AND
CONTACT INFORMATION
The principal author of this notice is
Alexander Wu of the Office of the Associ-
ate Chief Counsel (Procedure and Admin-
istration). Other personnel from the Trea-
sury Department and the IRS participated
in its development. For further informa-
tion, please contact Alexander Wu at (202)
317‑6845 (not a toll‑free number).
Expanded Availability of
Health Savings Accounts
under the One, Big,
Beautiful Bill Act (OBBBA)
Notice 2026-5
I. PURPOSE
This notice provides guidance on
changes relating to health savings
accounts (HSAs) enacted by Pub. L. 119-
21, 139 Stat. 72 (July 4, 2025), commonly
known as the One, Big, Beautiful Bill
Act (OBBBA). These changes generally
expand the availability of HSAs under
section 223 of the Internal Revenue Code
(the Code). This notice provides answers
to common questions related to these
changes.
II. BACKGROUND
A. Section 223 in general
Section 223 of the Code permits eligi-
ble individuals to establish an HSA. HSAs
are accounts that can receive tax-favored
contributions by or on behalf of eligible
individuals. Amounts in an HSA may be
used on a tax-free basis to pay or reim-
burse medical expenses. Among the
requirements to qualify as an eligible
individual under section 223(c)(1) is that
the individual be covered under a high
deductible health plan (HDHP) and have
no disqualifying health coverage. As
defined in section 223(c)(2), an HDHP
is a health plan that satisfies certain
requirements, including requirements
with respect to minimum deductibles and
maximum out-of-pocket expenses. Only
eligible individuals under section 223(c)
(1) are allowed to make contributions to
an HSA or to receive contributions from
an employer to their HSA.
Generally, under section 223(c)(2)(A),
an HDHP is not permitted to provide bene-
fits for any year until the minimum annual
deductible for that year is satisfied and is
not permitted to require a payment of an
annual deductible plus other annual out-
of-pocket expenses (other than premiums)
above the out-of-pocket maximum for the
year. However, section 223(c)(2)(C) pro-
vides a safe harbor for the absence of a
deductible for preventive care. Under sec-
tion 223(c)(2)(C), “[a] plan shall not fail
to be treated as a high deductible health
plan by reason of failing to have a deduct-
ible for preventive care (within the mean-
ing of section 1861 of the Social Security
Act (SSA), except as otherwise provided
by the Secretary).”
The statutory minimum annual deduct-
ible and out-of-pocket maximum are
adjusted annually for inflation. The mini-
mum annual deductible for 2025 is $1,650
for self‑only coverage and $3,300 for fam-
ily coverage, and the out-of-pocket maxi-

January 5, 2026 310 Bulletin No. 2026–2
mum for 2025 is $8,300 for self‑only cov-
erage and $16,600 for family coverage.
1

B. OBBBA changes to section 223
1. Telehealth and Other Remote Care
Services.
Section 71306 of the OBBBA makes
permanent a safe harbor for the absence
of a deductible for telehealth and other
remote care services that was initially
enacted on a temporary basis as part of
the Coronavirus Aid, Relief, and Eco-
nomic Security Act, Pub. L. 116‑136, 134
Stat. 281 (Mar. 27, 2020) (CARES Act).
The CARES Act provision was effective
March 27, 2020, and applied for plan
years beginning on or before December
31, 2021. Subsequent legislation extended
the application through taxable years
beginning before January 1, 2025. The
OBBBA permanent extension applies ret-
roactively for plan years beginning after
December 31, 2024.
2. Bronze and Catastrophic Plans
Treated as HDHPs
Section 71307 of the OBBBA amended
section 223(c)(2) of the Code to provide
that the term “high deductible health
plan” includes any plan described in sub-
section (d)(1)(A) or (e) of section 1302 of
the Patient Protection and Affordable Care
Act (ACA) that is available as individ-
ual coverage through an Exchange. Sec-
tion 1302(d)(1)(A) of the ACA describes
a bronze level plan, which is required to
provide a level of coverage that is designed
to provide benefits that are actuarially
equivalent to 60 percent of the full actu-
arial value of the benefits provided under
the plan. Section 1302(e) of the ACA
describes a catastrophic plan, which is a
health plan solely offered in the individ-
ual market that does not provide bronze or
higher levels of coverage and that gener-
ally provides essential health benefits only
after an individual has incurred the max-
imum cost sharing under section 1302(c)
(1) of the ACA (other than required pre-
ventive health care and coverage for at
least three primary care visits). In addi-
tion, to be a catastrophic plan, enrollment
must be restricted to individuals who
have not attained the age of 30 before the
beginning of the plan year or individuals
who are exempt from the requirements of
section 5000A because they do not have
access to affordable coverage or are other-
wise experiencing a hardship with respect
to the capability to obtain coverage under
a qualified health plan (QHP).
Before the OBBBA was enacted, many
bronze plans did not qualify as HDHPs
because the plans’ out-of-pocket max-
imum exceeded the statutory limits for
HDHPs or because they provided bene-
fits that were not preventive care with-
out a deductible. Similarly, catastrophic
plans could not be HDHPs because they
were required to provide three primary
care visits before the minimum deductible
was satisfied and to have an out‑of‑pocket
maximum that exceeded the statutory lim-
its for HDHPs.
This provision amending the definition
of an HDHP applies for months beginning
after December 31, 2025.
3. Direct Primary Care Service
Arrangements
An individual who is covered under
an HDHP is eligible to contribute to an
HSA, provided that the individual is not
covered under any disqualifying coverage
while the individual is covered under the
HDHP. An HSA may be used to pay for
medical care under section 213(d) of the
Code; however, an HSA generally may
not be used to pay for insurance, with cer-
tain exceptions.
The Treasury Department and the
Internal Revenue Service (IRS) under-
stand that direct primary care service
arrangements (DPCSAs) typically charge
a fixed periodic fee and provide for an
array of primary care services and items,
such as physical examinations, vacci-
nations, urgent care, laboratory testing,
and the diagnosis and treatment of some
sicknesses and injuries. For the purposes
of eligibility to contribute to an HSA, this
type of DPCSA generally would consti-
tute a health plan that provides coverage
before the minimum annual deductible is
satisfied and that is not disregarded cov-
erage or preventive care. Therefore, prior
to the effective date of section 223(c)(1)
(E) (as added by OBBBA), an individual
generally was not eligible to contribute to
an HSA if the individual was enrolled in
a DPCSA.
Section 71308(a) of the OBBBA
amended section 223(c)(1) of the Code
to provide that a DPCSA as defined in
section 223(c)(1)(E)(ii) is not “treated
as a health plan for purposes of [sec-
tion 223(c)(1)](A)(ii)”, which generally
limits eligible individuals to individ-
uals who are enrolled in an HDHP and
are not covered under any other health
plan. Thus, enrollment in such a DPCSA
will not cause an individual to fail to
be an eligible individual for that rea-
son. For purposes of this rule, the term
“direct primary care service arrange-
ment” means, with respect to any indi-
vidual, an arrangement under which such
individual is provided medical care (as
defined in section 213(d)) consisting
solely of primary care services provided
by primary care practitioners (as defined
in section 1833(x)(2)(A) of the SSA,
determined without regard to clause (ii)
thereof), if the sole compensation for
such care is a fixed periodic fee. “Pri-
mary care practitioner” is defined in sec-
tion 1833(x)(2)(A) of the SSA to mean
an individual who is a physician who has
a primary specialty designation of fam-
ily medicine, internal medicine, geriatric
medicine, or pediatric medicine, or who
is a nurse practitioner, clinical nurse
specialist, or physician assistant. For
purposes of section 223(c)(1)(E) of the
Code, the term “primary care services”
does not include (1) procedures that
require the use of general anesthesia, (2)
prescription drugs other than vaccines
(therefore, vaccines are permitted pri-
mary care services), and (3) laboratory
services not typically administered in an
ambulatory primary care setting.
1
For calendar year 2026, the annual deduction limit for contributions to HSAs under section 223(b)(2)(A) for an individual with self‑only coverage is $4,400 and $8,750 for family coverage.
For calendar year 2026, an HDHP is defined under section 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,700 for self‑only coverage and $3,400 for family
coverage, and for which the annual out‑of‑pocket expenses (excluding premiums) do not exceed $8,500 for self‑only coverage and $17,000 for family coverage (other than bronze and cata-
strophic plans). Rev. Proc. 2025‑19, 2025‑18 IRB 1430.

Bulletin No. 2026–2 311 January 5, 2026
The term “direct primary care ser-
vice arrangement” does not include any
arrangement if, with respect to an indi-
vidual for a month, the aggregate fees
for all DPCSAs for the individual for
a month exceed $150 (or $300 for any
such arrangement that covers more than
one individual). The aggregate limit is
adjusted annually for inflation for taxable
years after 2026.
Section 71308 of the OBBBA also
amended section 223(d)(2)(C) of the Code
to provide that any expense for coverage
under “any direct primary care service
arrangement” is not subject to the general
restriction that prohibits an HSA from
being used to pay for insurance.
The provision relating to DPCSAs
applies to months beginning after Decem-
ber 31, 2025.
III. QUESTIONS AND ANSWERS
A. Telehealth and Remote Care
Services
Q‑1. May an otherwise eligible indi-
vidual contribute to an HSA for 2025 if,
before the OBBBA was enacted on July
4, 2025, the individual was enrolled in
a health plan that provided coverage for
telehealth or other remote care services
before the minimum deductible was sat-
isfied, but the health plan otherwise sat-
isfied the requirements to be treated as an
HDHP?
A-1. Yes, an otherwise eligible individ-
ual may contribute to an HSA for 2025 if,
before the OBBBA was enacted on July 4,
2025, the individual was enrolled in a health
plan that provided coverage for telehealth or
other remote care services before the mini-
mum deductible was satisfied, if the health
plan otherwise satisfied the requirements to
be treated as an HDHP. This is true regard-
less of whether the contribution is made
before or after July 4, 2025.
Q‑2. Which benefits will the IRS treat
as telehealth and other remote care ser-
vices that may be offered by an HDHP
without a deductible?
A-2. A plan will not fail to be an
HDHP solely because it offers telehealth
benefits without a deductible for a ser-
vice that is included on the list of tele-
health services payable by Medicare that
is published annually by the Department
of Health and Human Services (HHS)
under section 1834(m)(4)(F) of the
SSA.
2
For services that are not included
on the HHS list, taxpayers should apply
the principles of section 1834(m) of the
SSA, its implementing regulations at 42
CFR 410.78, and other guidance issued
by HHS defining “telehealth services”
and related terms.
Q‑3. If in‑person services, medical
equipment, or drugs are furnished in con-
nection with a telehealth or other remote
care service, may they be provided by an
HDHP without a deductible under section
223(c)(2)(E) of the Code?
A‑3. No, telehealth or other remote
care services do not extend to in-person
services, medical equipment, or drugs fur-
nished in connection with those services
unless they would otherwise be treated as
telehealth services under guidance pro-
vided in Q&A‑2.
B. Bronze and Catastrophic Plans
Treated as HDHPs
Q‑4. Will a bronze or catastrophic plan
that does not satisfy the minimum annual
deductible requirement or maximum out-
of-pocket expenses requirement under
section 223(c)(2)(A)(i) and (ii) be treated
as an HDHP?
A-4. Yes, for months beginning after
December 31, 2025, a bronze or cata-
strophic plan will be treated as an HDHP
if the plan is available as individual cov-
erage through an Exchange established
under section 1311 or 1321 of the ACA
even if the plan does not satisfy the min-
imum annual deductible requirement
or maximum out-of-pocket expenses
requirement for an HDHP under section
223(c)(2)(A)(i) and (ii) of the Code.
Q‑5. Will a bronze or catastrophic plan
that is available as individual coverage
fail to be treated as an HDHP because an
employer-sponsored health reimburse-
ment arrangement (HRA) such as an
individual coverage HRA (ICHRA) or a
qualified small employer HRA is used to
purchase the coverage?
A‑5. No, a bronze or catastrophic plan
that is available as individual coverage
will not fail to be an HDHP because an
employer-sponsored ICHRA is used to
purchase the coverage.
3
However, gen-
erally, an HRA (including an ICHRA) is
permitted to reimburse only premiums for
the HRA to be a health plan that would
not disqualify an employee from being an
eligible individual. See Notice 2008-59,
2008‑29 IRB 123, Q&A‑1.
Q‑6. Will a bronze plan or catastrophic
plan purchased off‑Exchange on the indi-
vidual market be treated as an HDHP if
the same plan is available as individual
coverage through an Exchange?
A‑6. Yes. A bronze plan or catastrophic
plan purchased off‑Exchange on the indi-
vidual market will be treated as an HDHP
if the same plan is available as individ-
ual coverage through an Exchange. This
includes plans sold exclusively off‑Ex-
change without a cost-sharing reduction
load that are otherwise identical to plans
sold on-Exchange with a cost sharing
reduction load.
4
Q‑7. If the individual enrolls in a
bronze or catastrophic plan that is avail-
able as individual coverage on the individ-
ual market but not on an Exchange, and
the individual has no reason to believe the
coverage is not available on an Exchange,
may the individual contribute to an HSA?
A-7. Yes. In the interest of sound tax
administration, because the ability of an
individual to determine whether a partic-
ular plan is available on an Exchange is
limited, the IRS will treat an individual
as an eligible individual if the individual
enrolls in a bronze or catastrophic plan that
is available as individual coverage on the
individual market but not on an Exchange,
and the individual has no reason to believe
that the bronze or catastrophic plan is not
available on an Exchange.
2
See https://www.cms.gov/medicare/coverage/telehealth/list‑services; see 90 Fed. Reg. 49266, 49317 (Nov. 5, 2025), https://www.federalregister.gov/documents/2025/11/05/2025‑19787/
medicare‑and‑medicaid‑programs‑cy‑2026‑payment‑policies‑under‑the‑physician‑fee‑schedule‑and‑other#p‑573.
3
See 29 CFR 2510.3‑1(l) (establishing safe harbor conditions for when an employer payment of premiums for individual health insurance will not cause the individual health insurance
coverage to become group health insurance coverage or coverage offered in connection with a group health plan under the Employee Retirement Income Security Act of 1974, Public Law
93‑406, 88 Stat. 829, as amended).
4
See https://www.cms.gov/files/document/offering‑exchange‑only‑plans‑without‑csr‑loading.pdf.

January 5, 2026 312 Bulletin No. 2026–2
Q‑8. Will bronze plans offered as Small
Business Health Options Program (SHOP)
coverage be treated as HDHPs?
A-8. Generally, no. SHOP coverage
that may be offered by a small employer is
not individual coverage and therefore does
not meet the criteria to be treated as an
HDHP under section 223(c)(2)(H). How-
ever, such a plan can still be an HDHP if it
otherwise satisfies the applicable require-
ments, including the minimum annual
deductible requirement and maximum
out-of-pocket expenses requirement under
sections 223(c)(2)(A)(i) and (ii). Note,
however, that an employer-sponsored
ICHRA may be used to purchase a bronze
plan or catastrophic plan that is available
as individual coverage. See Q&A‑5.
Q‑9. If a bronze plan available as indi-
vidual coverage on an Exchange provides
benefits that are greater than the actuarial
equivalent to 60 percent of the full actuar-
ial value of the benefits provided under the
plan, may it be treated as an HDHP?
A‑9. Yes. Bronze plans described under
section 1302(d)(1)(A) of the ACA (that is,
a plan providing a level of coverage that
is designed to provide benefits that are
actuarially equivalent of 60 percent of
the full actuarial value of the benefits that
are provided under the plan) are treated
as HDHPs under section 223(c)(2)(H)
of the Code. However, compliance with
other provisions of the ACA may affect
the real actuarial value of a bronze plan.
The Treasury Department and the IRS
have consulted with HHS and are aware
that some bronze plan variants may have
an actuarial value that exceeds 60 percent
because of factors such as the de mini-
mis variance provided for under section
1302(d)(3) of the ACA or cost‑sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA. These plans are still consid-
ered bronze plans under section 1302(d)
(1)(A) of the ACA by HHS and are treated
as HDHPs under section 223(c)(2)(H) of
the Code.
Q‑10. An individual generally is not
an eligible individual who may contribute
to an HSA if the individual has received
medical services at an Indian Health Ser-
vices (IHS) facility at any time during the
previous three months. See Notice 2012-
14, 2012-8 IRB 41. Does Notice 2012-14
apply to individuals who receive medical
services at an IHS facility and enroll in
a bronze plan variant with cost‑sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA, which may have special cov-
erage requirements related to IHS facili-
ties?
A-10. No. Notice 2012-14 does not
apply to individuals who receive medi-
cal services at an IHS facility and enroll
in a bronze plan variant with cost‑sharing
reductions offered to American Indians
and Alaska Natives under section 1402(d)
of the ACA. Thus, such individuals may
be eligible individuals even if they have
received medical services at an IHS facil-
ity during the previous three months.
C. Direct Primary Care Service
Arrangements
DPCSA not treated as a health plan
Q‑11. Does a DPCSA under section
223(c)(1)(E) of the Code include an
arrangement that provides certain health-
care items and services to individuals on
the condition that they are members in
the arrangement and have paid a fixed
periodic fee, but bills separately for those
items and services (through insurance or
otherwise)?
A-11. No, the sole compensation for
care provided under a DPCSA must be the
fixed periodic fee. Thus, a DPCSA under
section 223(c)(1)(E) does not include an
arrangement that provides certain health-
care items and services to individuals on
the condition that they are members in
the arrangement and have paid a fixed
periodic fee, but bills separately for those
items and services (through insurance or
otherwise).
Q‑12. Does a DPCSA under section
223(c)(1)(E) of the Code include an
arrangement in which providers partic-
ipating in the arrangement, which other-
wise qualifies as a DPCSA, offer certain
healthcare items and services outside of
the arrangement to individuals regard-
less of membership in the arrangement
and separately bill both members and
non-members for those items and services
(through insurance or otherwise)?
A-12. Yes.
Q‑13. May a DPCSA under section
223(c)(1)(E) include an arrangement that
has fees that are billed for periods of more
than a month but no more than a year?
A‑13. Yes, a DPCSA under section
223(c)(1)(E) may include an arrange-
ment that has fees that are billed for peri-
ods of more than a month, but no more
than a year provided the aggregate fees
are fixed, periodic, and do not exceed the
monthly limit (on an annualized basis).
For example, for 2026, the fee for a sin-
gle individual could be $1,800 for a year;
$900 for six months; or $450 for three
months.
Q‑14. If an arrangement provides ser-
vices other than the primary care services
described in section 223(c)(1)(E), may
an individual who is a member in the
arrangement decline to use such services
and treat the arrangement as a DPCSA
under section 223(c)(1)(E)?
A-14. No. Whether an arrange-
ment qualifies as a DPCSA under sec-
tion 223(c)(1)(E) depends on the terms of
the arrangement, not the services used by
an individual.
Q‑15. May an HDHP offer primary care
benefits other than those allowed under
section 223(c)(2)(C)‑(G) (for example,
telehealth and preventive care) by paying
fees for, or providing membership in, a
DPCSA without a deductible or before the
minimum deductible has been satisfied?
A-15. No. Certain DPCSAs are not
treated as a health plan for purposes of
section 223(c)(1)(A)(ii), which generally
defines eligible individuals who may con-
tribute to an HSA as individuals who are
enrolled in an HDHP and are not covered
under any other health plan. However, sec-
tion 223 does not provide that an HDHP
may offer a benefit that consists of paying
fees for, or providing membership in, a
DPCSA without a deductible or before the
deductible has been satisfied.
5

Q‑16. If an individual is enrolled in
both a DPCSA and an HDHP, may the
HDHP count fees paid by the individual
for the individual’s membership in the
5
Bronze plans are treated as HDHPs under section 223 regardless of which services they cover before the deductible. It is the Treasury Department’s and IRS’s understanding that ACA
section 1301(a)(3) allows QHPs to provide coverage through a direct primary care medical home plan. Nothing in this notice is intended to provide any interpretive guidance with respect to
ACA section 1301(a)(3).

Bulletin No. 2026–2 313 January 5, 2026
DPCSA toward the annual deductible and
out-of-pocket maximum for the HDHP?
A-16. No. In this situation, the fees for
membership in a DPCSA paid by the indi-
vidual would not be amounts paid out-of-
pocket for items and services that are cov-
ered by the HDHP and therefore would
not count toward the minimum annual
deductible and out-of-pocket maximum
for the HDHP.
Q‑17. Section 223(c)(1)(E) defines
“primary care practitioners” by reference
to section 1833(x)(2)(A) of the SSA. Does
section 223(c)(1)(E) of the Code define
“primary care services” by reference to
the services identified by the Health Care
Procedure Coding System (HCPCS) codes
under section 1833(x)(2)(B) of the SSA?
A‑17. No. Although section 223(c)(1)
(E)(ii)(I) of the Code defines “primary
care practitioners” by reference to sec-
tion 1833(x)(2)(A) of the SSA, it does not
define “primary care services” by refer-
ence to the definition at section 1833(x)
(2)(B) of the SSA. In addition, section
223(c)(1)(E)(iii) of the Code specifically
excludes from “primary care services” (1)
procedures that require the use of general
anesthesia, (2) prescription drugs other
than vaccines, and (3) laboratory services
not typically administered in an ambula-
tory primary care setting.
HSA distributions for the reimbursement
of fees for a DPCSA
Q‑18. Are DPCSA fees treated as
amounts paid for qualified medical
expenses under section 223(d)(2) that
may be reimbursed by an HSA if they
were paid by an individual’s employer,
including by salary reduction through a
section 125 cafeteria plan?
A-18. No. These payments by the
employer are not expenses of the HSA
beneficiary. The payments are compen-
sation excluded from employees’ gross
income under section 106.
Q‑19. May DPCSA fees be reimbursed
from an HSA before the coverage period
for the arrangement?
A-19. Generally, yes. An HSA is per-
mitted to treat an expense for a DPCSA as
incurred on (1) the first day of each month
of coverage on a pro rata basis, (2) the first
day of the period of coverage, or (3) the
date the fees are paid. Thus, for example,
an HSA may immediately reimburse a
substantiated fee for a DPCSA that begins
on January 1 of that enrollment year, even
if the enrolled individuals paid the fee
prior to the first day of the enrollment year.
Q‑20. What requirements must an
arrangement meet in order to qualify as a
DPCSA whose fees are treated as amounts
paid for qualified medical expenses under
section 223(d)(2) that may be reimbursed
by an HSA?
A‑20. For purposes of section 223(d)
(2), a DPCSA is an arrangement under
which an individual is provided medical
care (as defined in section 213(d)) con-
sisting solely of primary care services
provided by primary care practitioners (as
defined in section 1833(x)(2)(A) of the
SSA, determined without regard to clause
(ii) thereof), if the sole compensation for
such care is a fixed periodic fee, and such
care does not include (1) procedures that
require the use of general anesthesia, (2)
prescription drugs other than vaccines,
or (3) laboratory services not typically
administered in an ambulatory primary
care setting. For purposes of section
223(d)(2), there is no specific limit on the
amount of the fixed periodic fee as there
is for purposes of determining whether
a DPCSA is a health plan under section
223(c)(1)(E). Thus, fees for a DPCSA that
do not satisfy the monthly dollar limit in
section 223(c)(1)(E)(ii)(II) will be treated
as medical expenses reimbursable from an
HSA in accordance with section 223(d)
(2)(C)(v) but will disqualify the covered
individual from eligibility for making
HSA contributions while the individual is
enrolled.
IV. REQUEST FOR COMMENTS
The Treasury Department and the
IRS request comments on all aspects of
this notice. Written comments should be
submitted on or before March 6, 2026.
Consideration will be given, however, to
any written comment submitted after that
date, if such consideration will not delay
the issuance of guidance. The subject line
for the comments should include a refer-
ence to Notice 2026-5. Comments may
be submitted electronically via the Fed-
eral eRulemaking Portal at https://www.
regulations.gov (type IRS‑2025‑0335 in
the search field on the regulations.gov
homepage to find this notice and submit
comments). Alternatively, comments may
be submitted by mail to: Internal Revenue
Service, CC:PA:01:PR (Notice 2026-5),
Room 5503, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044. All com-
menters are strongly encouraged to submit
comments electronically. The Treasury
Department and the IRS will publish for
public availability any comment submit-
ted electronically, or on paper, to the IRS’s
public docket on https://www.regulations.
gov.
V. EFFECT ON OTHER
DOCUMENTS
Notice 2012‑14 is modified with
respect to the guidance regarding eligibil-
ity to contribute to an HSA within three
months of receiving medical care from the
Indian Health Services.
VI. DRAFTING INFORMATION
The principal author of this notice is
Alexander Krupnick of the Office of Asso-
ciate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes), though other Treasury Depart-
ment and IRS officials participated in its
development. For further information on
the provisions of this notice, contact Mr.
Krupnick at (202) 317‑5500 (not a toll‑
free number).
Extension of Transition
Period to Calendar
Year 2026 for Certain
Requirements in Revenue
Ruling 2025-4
Notice 2026-6
SECTION 1. PURPOSE
This notice extends for an additional
year the transition period provided in Rev-
enue Ruling 2025-4 for States administer-
ing paid family and medical leave (PFML)
programs and employers participating in
such programs with respect to the portion
of medical leave benefits a State pays to an

January 5, 2026 314 Bulletin No. 2026–2
individual that is attributable to employer
contributions.
SECTION 2. BACKGROUND
On January 15, 2025, the Depart-
ment of Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
issued Revenue Ruling 2025-4, 2025-7
I.R.B. 758, providing guidance on the
income and employment tax treatment
of contributions and benefits paid in cer-
tain situations under a State paid family
and medical leave (PFML) statute. Rev-
enue Ruling 2025-4 includes seven sep-
arate holdings. Holding (4) concludes, in
part, that amounts paid to an employee
by a State as medical leave benefits that
are attributable to the employer’s contri-
bution pursuant to a State’s PFML stat-
ute are included in an employee’s gross
income under § 105
1
except as otherwise
provided in that section, are wages for
Federal employment tax purposes under
§§ 3121(a) and 3306(b), and are third‑
party payments of sick pay as defined in
§ 3402(o). Holding (4) also concludes that
States must comply with the employment
tax and reporting requirements that apply
to such payments under § 32.1 and other
guidance.
With respect to both the Federal
income and employment tax obligations
and related information reportion require-
ments discussed in holding (4), Revenue
Ruling 2025-4 provides that calendar year
2025 is a transition period for purposes
of IRS enforcement and administration,
intended to provide States and employers
time to configure their reporting and other
systems and to facilitate an orderly transi-
tion to compliance with those rules.
2

SECTION 3. DISCUSSION
A number of States with PFML stat-
utes requested that the transition period
in Revenue Ruling 2025-4 be extended
for an additional year or that the effective
date be amended because the required
changes cannot occur within the current
timeline.
The Treasury Department and the
IRS understand that States may need
additional time to make the neces-
sary changes to their systems and state
budgets to comply with their Federal
income tax and employment tax obli-
gations, as well as related information
reporting responsibilities under § 32.1.
For this reason, calendar year 2026 will
be regarded as an additional transition
period for purposes of IRS enforce-
ment and administration with respect
to components (1) and (2) of the transi-
tion period set forth in Revenue Ruling
2025-4. Accordingly:
(1) For medical leave benefits a State
pays to an individual in calendar year
2026, with respect to the portion of the
medical leave benefits attributable to
employer contributions, (a) a State or an
employer is not required to follow the
income tax withholding and reporting
requirements applicable to third-party
sick pay, and (b) consequently, a State or
employer will not be liable for any associ-
ated penalties under § 6721 for failure to
file a correct information return or under
§ 6722 for failure to furnish a correct
payee statement to the payee.
(2) For medical leave benefits a State
pays to an individual in calendar year
2026, with respect to the portion of the
medical leave benefits attributable to
employer contributions, (a) a State or an
employer is not required to comply with
§ 32.1 and related Code sections (as well
as similar requirements under § 3306)
during the calendar year; (b) a State or
an employer is not required to withhold
and pay associated taxes; and (c) conse-
quently, a State or employer will not be
liable for any associated penalties.
SECTION 4. EFFECTIVE DATE
This notice is effective for medical
leave benefits paid from States to individ-
uals during calendar year 2026.
SECTION 5. DRAFTING
INFORMATION
The principal author of this notice is
the Office of Associate Chief Counsel
(Employee Benefits, Exempt Organiza-
tions, and Employment Taxes). For fur-
ther information regarding this notice, call
(202) 317‑6798 (not a toll‑free call).
26 CFR 601.601: Rules and regulations.
(Also Part I, § 25F.)
Rev. Proc. 2026-6
SECTION 1. PURPOSE
This revenue procedure provides the
exclusive procedure for a State
1
to make
an election to be a “covered state”
2
prior
to identifying scholarship granting organi-
zations (SGOs) in the State in accordance
with § 25F(g) of the Internal Revenue
Code (Code)
3
(Advance Election). Mak-
ing an Advance Election allows a State to
inform potential SGOs of a State’s partic-
ipation under section 25F before submit-
ting its SGO list, giving SGOs additional
time to prepare for the commencement of
this new credit in 2027.
SECTION 2. BACKGROUND
.01 Overview of § 25F Credit. Section
25F provides a nonrefundable income
tax credit (§ 25F credit) allowable to a
taxpayer for qualified contributions to an
SGO made by an individual who is a citi-
zen or resident of the United States (within
1
Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Treasury Regulations.
2
Revenue Ruling 2025-4 also includes holding (5), and provides transition relief for calendar year 2025 to employers with respect to an amount an employer voluntarily pays of any part
of the employee’s otherwise required contribution to a State PFML program (i.e., employer pick-up). This notice does not extend the third component of the transition relief announced in
Revenue Ruling 2025-4 to an employer pick-up for calendar year 2026, and consequently, contemplates that employers will treat contribution amounts they voluntarily pay on behalf of their
employees to a State PFML program as wages for Federal employment tax purposes under §§ 3121(a), 3306(b), and 3401(a) and report such amounts on the employee’s Form W‑2, Wage
and Tax Statement, in accordance with § 6051.
1
For purposes of this notice, the term “State” means one of the 50 States or the District of Columbia.
2
Section 25F(c)(1), as added by § 70411 of Public Law 119‑21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, defines a “covered state” as one of the 50
States, or the District of Columbia, that, for a particular calendar year, both voluntarily elects to participate under § 25F and identifies the scholarship granting organizations in the State, in
accordance with § 25F(g).
3
Unless otherwise provided, all “section” or “§” references are to sections of the Code.

Bulletin No. 2026–2 315 January 5, 2026
the meaning of § 7701(a)(9)). Section
25F(c)(3) defines a “qualified contribu-
tion” as a charitable contribution of cash
to an SGO that uses the contribution to
fund scholarships for eligible students (as
defined in § 25F(c)(2)) solely within the
State in which the organization is listed
pursuant to § 25F(g). In order for a con-
tribution made by a taxpayer to an SGO in
a State to be a qualified contribution eli-
gible for a § 25F credit, a State must have
voluntarily made an election to participate
under § 25F and must have identified the
SGO as one that satisfies the requirements
of § 25F(c)(5) for the applicable calendar
year in accordance with § 25F(g).
.02 Statutory Requirements for Elec-
tions to Participate under § 25F. Section
25F(g)(1) provides that a State that vol-
untarily makes an election to participate
under § 25F must provide to the Secre-
tary of the Treasury or the Secretary’s
delegate a list of the SGOs that meet
the requirements described in § 25F(c)
(5) and are located in the State (State
SGO list). The State SGO list must be
submitted by January 1 of the calendar
year for which the election to partici-
pate under § 25F is being made (or, with
respect to calendar year 2027, as early as
practicable). Section 25F(g)(2) provides
that each State SGO list must include a
certification that the individual, agency,
or entity submitting such list on behalf
of the State has the authority to per-
form this function. See sections 2.04
and 3 of Notice 2025‑70, 2025‑50 I.R.B.
773 (December 8, 2025), for additional
information and a request for comments
regarding State SGO lists and the certifi-
cations necessary for elections to partic-
ipate under § 25F.
.03 Future guidance. The Department
of the Treasury (Treasury Department)
and the Internal Revenue Service (IRS)
intend to publish future guidance under
§ 25F(g) on how a State submits its State
SGO list with all required certifications.
The future guidance will provide that any
State making an Advance Election will be
required to perfect its election by submit-
ting its State SGO list in accordance with
such guidance. Future guidance also will
address how to make an election to partic-
ipate under § 25F for calendar year 2027
at the same time the State submits the
State SGO list, and how to make elections
(including Advance Elections) to partici-
pate under § 25F for subsequent calendar
years.
SECTION 3. SCOPE
.01 Advance Elections. This revenue
procedure applies to States that choose to
make an Advance Election for calendar
year 2027. Section 4 of this revenue pro-
cedure provides the exclusive procedure
for a State to make an Advance Election
for calendar year 2027.
.02 Perfection of Advance Election.
As the Treasury Department and the IRS
intend to specify in future guidance, each
State making an Advance Election for
calendar year 2027 will need to perfect
its election by submitting its State SGO
list, along with all required information
and certifications, before the final date
on which the State is permitted to submit
the State SGO list (as will be specified
in future guidance). Because a State that
makes an Advance Election is required
by § 25F(g) to provide its State SGO list
as part of its election, a failure to submit
the list by the deadline would not meet the
statutory requirements, and, as a result, no
organization in that State would qualify
as an SGO under § 25F for calendar year
2027.
SECTION 4. PROCEDURE FOR
MAKING ADVANCE ELECTION
FOR 2027
.01 Submission of Advance Election. If
a State chooses to make an Advance Elec-
tion for calendar year 2027, the State must
submit Form 15714, Advance Election to
Participate Under Section 25F for 2027,
in accordance with this section 4 and the
Form 15714 instructions, on or after Jan-
uary 1, 2026, and before the final date on
which the State is permitted to submit
the State SGO list (as will be specified in
future guidance). Form 15714, including
instructions for its submission, are avail-
able at www.irs.gov/pub/irs-pdf/f15714.
pdf. No alternative method of making an
Advance Election, and no alteration of
Form 15714, will be accepted for calen-
dar year 2027. The IRS will acknowledge
or otherwise confirm receipt of a State’s
Advance Election submitted in accor-
dance with this section 4.
.02 No Inclusion of Other Attachments
or SGO List. Any State SGO list (or other
information or attachments) submitted
with Form 15714 will not be processed
by the IRS and will need to be resubmit-
ted in accordance with the procedures for
submitting State SGO lists as specified in
future guidance.
.03 No Subsequent Advance Election
Submissions. Once a State’s Advance
Election for calendar year 2027 has been
made, the only subsequent submission that
will be processed by the Treasury Depart-
ment and the IRS is the submission of the
State SGO list (including all required cer-
tifications).
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective as
of January 1, 2026. No Advance Election
for calendar year 2027 may be submitted
to the IRS before January 1, 2026, or after
the day before the final date on which the
State is permitted to submit the State SGO
list (as will be specified in future guid-
ance).
SECTION 6. PAPERWORK
REDUCTION ACT
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501‑3520) (PRA) generally
requires that a Federal agency obtain the
approval of the Office of Management and
Budget (OMB) before collecting infor-
mation from the public, whether such
collection of information is mandatory,
voluntary, or required to obtain or retain
a benefit. An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a valid control number
assigned by the OMB.
Section 4 of this revenue procedure
sets forth collections of information to
be provided with Form 15714, includ-
ing information related to an Advance
Election. The collections will be used
by the IRS for tax administration pur-
poses. The respondents are States that
voluntarily elect, on or after January
1, 2026, to participate under § 25F for
the following calendar year in advance
of perfecting the election by providing
the State SGO list, as required under
§ 25F(g)(1).

January 5, 2026 316 Bulletin No. 2026–2
Estimated number of respondents: 51
respondents.
Estimated number of responses: 51
responses.
Estimated frequency of responses:
Annually.
Estimated average time per response:
0.72 hours.
Estimated total annual burden: 37
hours.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law.
The collection of information con-
tained in this revenue procedure has been
submitted to the OMB under control num-
ber 1545‑2335.
SECTION 7. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Edward Waters of the Office
of the Associate Chief Counsel (Income
Tax & Accounting). However, other per-
sonnel from the Treasury Department and
the IRS participated in its development.
For further information regarding this rev-
enue procedure, please contact Mr. Waters
at (202) 317‑7009 (not a toll‑free call).
26 CFR § 601.201: Rulings and determination
letters
Rev. Proc. 2026-7
SECTION 1. PURPOSE
.01 Purpose
This revenue procedure updates Rev.
Proc. 2025‑7, 2025‑1 I.R.B. 301, by pro-
viding a current list of those areas of the
Internal Revenue Code under the juris-
diction of the Associate Chief Counsel
(International) (hereinafter “the Office”)
relating to matters on which the Internal
Revenue Service (hereinafter “the Ser-
vice”) will not issue letter rulings or deter-
mination letters.
.02 Changes
Old section 4.01(22), regarding rulings
under § 1059A, has been removed.
SECTION 2. BACKGROUND AND
SCOPE OF APPLICATION
.01 Background
In the interest of sound tax administra-
tion, the Service answers inquiries from
individuals and organizations regarding
their status for tax purposes and the tax
effects of their acts or transactions before
the filing of returns or reports that are
required by the Internal Revenue Code.
There are, however, areas where the Ser-
vice will not issue letter rulings or deter-
mination letters, either because the issues
are inherently factual or for other reasons.
These areas are set forth in sections 3 and
4 of this revenue procedure.
Section 3 lists areas in which letter rul-
ings and determination letters will not be
issued under any circumstances.
Section 4 lists areas in which letter rul-
ings and determination letters ordinarily
will not be issued; in these areas, unique
and compelling reasons may justify issu-
ing a letter ruling or determination letter.
A taxpayer who plans to request a letter
ruling or determination letter in an area
described in Section 4 should first con-
tact the Office by telephone ((202) 317‑
3800) or in writing to discuss the unique
and compelling reasons that the tax-
payer believes justify issuing the letter
ruling or determination letter. Although
not required, a written submission is
encouraged because it will enable Office
personnel to arrive more quickly at an
understanding of the unique facts of each
case. A taxpayer who contacts the Office
by telephone may be requested to provide
a written submission.
The Service may provide a general
information letter in response to inquiries
in areas on either the Section 3 or Section
4 list. These lists are not all-inclusive.
Future revenue procedures may add or
delete items. The Service may also decline
to rule on an individual case for reasons
peculiar to that case, and the decision will
not be announced in the Internal Reve-
nue Bulletin. See Section 6.02, Rev. Proc.
2026-1, 2026-1 I.R.B. 1.
.02 Scope of Application
This revenue procedure does not pre-
clude the submission of requests for
technical advice to the Office from other
offices of the Service.
SECTION 3. AREAS IN WHICH
LETTER RULINGS OR
DETERMINATION LETTERS WILL
NOT BE ISSUED
.01 Specific Questions and Problems
(1) Section 861.—Income from Sources
Within the United States.—A method for
determining the source of a pension pay-
ment to a nonresident alien individual
from a trust under a defined benefit plan
that is qualified under § 401(a) if the pro-
posed method is inconsistent with §§ 4.01,
4.02, and 4.03 of Rev. Proc. 2004‑37,
2004-1 C.B. 1099.
(2) Section 862.—Income from
Sources Without the United States.—A
method for determining the source of a
pension payment to a nonresident alien
individual from a trust under a defined
benefit plan that is qualified under
§ 401(a) if the proposed method is incon-
sistent with §§ 4.01, 4.02, and 4.03 of Rev.
Proc. 2004‑37, 2004‑1 C.B. 1099.
(3) Section 871(g).—Special Rules for
Original Issue Discount.—Whether a debt
instrument having original issue discount
within the meaning of § 1273 is not an
original issue discount obligation within
the meaning of § 871(g)(1)(B)(i) when
the instrument is payable 183 days or less
from the date of original issue (without
regard to the period held by the taxpayer).
(4) Section 894.—Income Affected by
Treaty.—Whether a person that is a res-
ident of a foreign country is entitled to
benefits under the United States income
tax treaty with that foreign country pur-
suant to the limitation on benefits article.
However, the Service may rule regarding
the legal interpretation of a provision of
an applicable objective test within the rel-
evant limitation on benefits article, includ-
ing, in appropriate cases, whether the per-
son satisfies an element of such objective
test.
(5) Section 954.—Foreign Base Com-
pany Income.—The effective rate of tax
that a foreign country will impose on
income.
(6) Section 954.—Foreign Base Com-
pany Income.—Whether the facts and cir-
cumstances show that a controlled foreign
corporation makes a substantial contribu-
tion through the activities of its employ-
ees to the manufacture, production, or

Bulletin No. 2026–2 317 January 5, 2026
construction of the personal property sold
within the meaning of § 1.954‑3(a)(4)(iv).
(7) Sections 7701(b) and 894.—Defi-
nition of Resident Alien and Nonresident
Alien.—Whether an alien individual,
whether or not a dual resident alien, is a
nonresident of the United States, includ-
ing whether the individual has met the
requirements of the substantial presence
test or exceptions thereto, or whether
the alien is solely a nonresident under a
United States income tax treaty. However,
the Service may rule regarding the legal
interpretation of a particular provision of
§ 7701(b) or the regulations thereunder.
.02 General Areas.
(1) The prospective application of the
estate tax to the property or the estate of a
living person, except that rulings may be
issued on any international issues in a rul-
ing request accepted pursuant to § 5.06 of
Rev. Proc. 2026-1.
(2) Whether reasonable cause exists
under Subtitle F (Procedure and Adminis-
tration) of the Code.
(3) Whether a proposed transaction
would subject a taxpayer to criminal pen-
alties.
(4) Any area where the ruling request
does not comply with the requirements of
Rev. Proc. 2026-1.
(5) Any area where the same issue is
the subject of the taxpayer’s pending
request for competent authority assistance
under a United States income tax treaty.
(6) A “comfort” ruling will not be issued
with respect to an issue that is clearly and
adequately addressed by statute, regu-
lations, decisions of a court, tax treaties,
revenue rulings, or revenue procedures
absent extraordinary circumstances (e.g.,
a request for a ruling required by a gov-
ernmental regulatory authority in order to
effectuate the transaction).
(7) Any frivolous issue, as that term is
defined in § 6.10 of Rev. Proc. 2026‑1.
SECTION 4. AREAS IN WHICH
LETTER RULINGS OR
DETERMINATION LETTERS WILL
NOT ORDINARILY BE ISSUED
.01 Specific Questions and Problems
(1) Section 367(a).—Transfers of Prop-
erty from the United States.—Whether
the transferee foreign corporation, or any
qualified subsidiary or any qualified part-
nership, is engaged in an active trade or
business outside the United States for pur-
poses of § 1.367(a)‑3(c)(3)(i)(A).
(2) Section 367(a).—Transfers of Prop-
erty from the United States.—Whether a
transferred corporation subject to a gain
recognition agreement under § 1.367(a)‑8
has disposed of substantially all of its
assets.
(3) Section 864.—Definitions and
Special Rules.—Whether a taxpayer is
engaged in a trade or business within
the United States, and whether income
is effectively connected with the con-
duct of a trade or business within the
United States; whether an instrument is
a security as defined in § 1.864‑2(c)(2);
whether a taxpayer effects transactions in
the United States in stocks or securities
under § 1.864-2(c)(2); whether an instru-
ment or item is a commodity for purposes
of § 1.864‑2(d)(3); and for purposes of
§ 1.864-2(d)(1) and (2), whether a com-
modity is of a kind customarily dealt in on
an organized commodity exchange, and
whether a transaction is of a kind custom-
arily consummated at such place.
(4) Section 871(h).—Repeal of Tax on
Interest of Nonresident Alien Individuals
Received from Certain Portfolio Debt
Investments.—Whether a payment con-
stitutes portfolio interest under § 871(h);
whether an obligation qualifies for any of
the components of portfolio interest such
as being in registered form; and whether
the income earned on contracts that do not
qualify as annuities or life insurance con-
tracts because of the limitations imposed
by §§ 72(s) and 7702(a) is portfolio inter-
est as defined in § 871(h).
(5) Section 881(c).—Repeal of Tax
on Interest of Foreign Corporations
Received from Certain Portfolio Debt
Investments.—Whether a payment con-
stitutes portfolio interest under § 881(c);
whether an obligation qualifies for any of
the components of portfolio interest such
as being in registered form; and whether
the income earned on contracts that do not
qualify as annuities or life insurance con-
tracts because of the limitations imposed
by §§ 72(s) and 7702(a) is portfolio inter-
est as defined in § 881(c).
(6) Section 892.—Conduct of Foreign
Governments.—Whether a foreign gov-
ernment or an entity in which a foreign
government holds any interest is treated
as conducting commercial activities for
purposes of section 892(a)(2).
(7) Section 893.—Compensation of
Employees of Foreign Governments and
International Organizations.—Whether
wages, fees, or salary of an employee of a
foreign government or of an international
organization received as compensation
for official services to such government
or international organization is excluded
from gross income and exempt from tax-
ation and any underlying issue related to
that determination.
(8) Section 894.—Income Affected by
Treaty.—Whether the income received
by an individual in respect of services
rendered to a foreign government or a
political subdivision or a local authority
thereof is exempt from federal income tax
or withholding under any of the United
States income tax treaties that contain
provisions applicable to such individuals.
(9) Section 894.—Income Affected by
Treaty.—Whether a taxpayer has a per-
manent establishment in the United States
for purposes of any United States income
tax treaty and whether income is attribut-
able to a permanent establishment in the
United States.
(10) Section 894.—Income Affected by
Treaty.—Whether certain persons will be
considered liable to tax under the laws of a
foreign country for purposes of determin-
ing if such persons are residents within
the meaning of any United States income
tax treaty, including pursuant to Rev. Rul.
2000‑59, 2000‑2 C.B. 593.
(11) Section 894.—Income Affected
by Treaty.—Whether the income received
by a nonresident alien student or trainee
for services performed for a university
or other educational institution is exempt
from federal income tax or withholding
under any of the United States income tax
treaties that contain provisions applicable
to such nonresident alien students or train-
ees.
(12) Section 894.—Income Affected by
Treaty.—Whether the income received by
a nonresident alien performing research
or teaching as personal services for a uni-
versity, hospital or other research institu-
tion is exempt from federal income tax
or withholding under any of the United
States income tax treaties that contain
provisions applicable to such nonresident
alien teachers or researchers.

January 5, 2026 318 Bulletin No. 2026–2
(13) Section 894.—Income Affected
by Treaty.—Whether a recipient of a pay-
ment is the beneficial owner for purposes
of any United States income tax treaty.
(14) Section 894.—Income Affected
by Treaty.—Whether an entity is treated
as fiscally transparent by a foreign juris-
diction for purposes of § 894(c) and the
regulations thereunder or pursuant to any
United States income tax treaty.
(15) Section 895.—Conduct of a For-
eign Central Bank of Issue.—Whether a
foreign central bank of issue is treated as
conducting a commercial banking func-
tion or other commercial activity.
(16) Section 901.—Taxes of Foreign
Countries and of Possessions of United
States.—Whether a foreign levy meets
the requirements of a creditable tax under
§ 901.
(17) Section 901.—Taxes of Foreign
Countries and of Possessions of United
States.—Whether a person claiming a
credit has established, based on all of
the relevant facts and circumstances,
the amount (if any) paid by a dual
capacity taxpayer under a qualifying
levy that is not paid in exchange for a
specific economic benefit. See § 1.901-
2A(c)(2).
(18) Section 903.—Credit for Taxes in
Lieu of Income, Etc., Taxes.—Whether a
foreign levy meets the requirements of a
creditable tax under § 903.
(19) Section 937.—Definition of Bona
Fide Resident.—Whether an individual is
a bona fide resident of American Samoa,
Guam, the Northern Mariana Islands,
Puerto Rico, or the U.S. Virgin Islands.
However, the Service may rule regarding
the legal interpretation of a particular pro-
vision of § 937(a) or the regulations there-
under.
(20) Sections 954(d), 993(c).—Manu-
factured Product.—Whether a product is
manufactured or produced for purposes of
§§ 954(d) and 993(c).
(21) Section 989(a).—Qualified Busi-
ness Unit.—Whether a unit of the taxpay-
er’s trade or business is a qualified busi-
ness unit.
(22) Sections 1471, 1472, 1473, and
1474.—Taxes to Enforce Reporting on
Certain Foreign Accounts.—Whether a
taxpayer, withholding agent, or interme-
diary has properly applied the require-
ments of chapter 4 of the Internal Revenue
Code (§§ 1471 through 1474, also known
as “FATCA”) or of an applicable inter-
governmental agreement to implement
FATCA.
(23) Section 1503(d).—Dual Consol-
idated Loss.—Whether the income tax
laws of a foreign country would deny any
opportunity for the foreign use of a dual
consolidated loss in the year in which
the dual consolidated loss is incurred
under § 1.1503(d)‑3(e)(1); whether no
possibility of foreign use exists under
§ 1.1503(d)‑6(c)(1); whether an event pre-
sumptively constitutes a triggering event
under § 1.1503(d)‑6(e)(1)(i); whether
the presumption of a triggering event is
rebutted under § 1.1503(d)‑6(e)(2); and
whether a domestic use agreement termi-
nates under § 1.1503(d)‑6(j)(1).
(24) Section 2501.—Imposition of
Tax.—Whether a partnership interest
is intangible property for purposes of
§ 2501(a)(2) (dealing with transfers of
intangible property by a nonresident not a
citizen of the United States).
(25) Section 7701.—Definitions.—
Whether an estate or trust is a foreign
estate or trust for federal income tax pur-
poses.
(26) Section 7701.—Definitions.—
Whether an intermediate entity is a con-
duit entity under § 1.881‑3(a)(4); whether
a transaction is a financing arrangement
under § 1.881‑3(a)(4)(ii); whether the
participation of an intermediate entity in
a financing arrangement is pursuant to a
tax avoidance plan under § 1.881‑3(b);
whether an intermediate entity performs
significant financing activities under
§ 1.881‑3(b)(3)(ii); whether an unrelated
intermediate entity would not have partic-
ipated in a financing arrangement on sub-
stantially the same terms under § 1.881-
3(c).
(27) Section 7874.—Expatriated Enti-
ties and Their Foreign Parents.—Whether,
after the acquisition, the expanded affili-
ated group has substantial business activ-
ities in the foreign country in which, or
under the law of which, the foreign entity
is created or organized, when compared
to the total business activities of the
expanded affiliated group.
(28) Section 7874.—Expatriated Enti-
ties and Their Foreign Parents.—Whether
a foreign corporation completes the direct
or indirect acquisition of substantially all
of the properties held directly or indirectly
by a domestic corporation or substantially
all of the properties constituting a trade or
business of a domestic partnership.
.02 General Areas
(1) Whether a taxpayer has a business
purpose for a transaction or arrangement.
(2) Whether a taxpayer uses a correct
North American Industry Classification
System (NAICS) code or Standard Indus-
trial Classification (SIC) code.
(3) Any transaction, or series of trans-
actions, that is designed to achieve a dif-
ferent tax consequence or classification
under U.S. tax law (including tax treaties)
and the tax law of a foreign jurisdiction,
where the results of that different tax con-
sequence or classification are inconsistent
with the purposes of U.S. tax law (includ-
ing tax treaties).
(4)(a) Situations where a taxpayer or
a related party is domiciled or organized
in a foreign jurisdiction with which the
United States does not have an effective
mechanism for obtaining tax information
with respect to civil tax examinations and
criminal tax investigations, which would
preclude the Service from obtaining infor-
mation located in such jurisdiction that
is relevant to the analysis or examination
of the tax issues involved in the ruling
request.
(b) The provisions of subsection
4.02(4)(a) above shall not apply if the
taxpayer or affected related party (i)
consents to the disclosure of all relevant
information requested by the Service in
processing the ruling request or in the
course of an examination to verify the
accuracy of the representations made
and to otherwise analyze or examine the
tax issues involved in the ruling request,
and (ii) waives all claims to protection
of bank or commercial secrecy laws in
the foreign jurisdiction with respect to
the information requested by the Ser-
vice. If the taxpayer’s or related party’s
consent to disclose relevant information
or to waive protection of bank or com-
mercial secrecy is determined by the Ser-
vice to be ineffective or of no force and
effect, then the Service may retroactively
rescind any ruling rendered in reliance on
such consent.
(5) The federal tax consequences of
proposed federal, state, local, municipal,
or foreign legislation.

Bulletin No. 2026–2 319 January 5, 2026
(6)(a) Situations involving the inter-
pretation of foreign law or foreign doc-
uments. The interpretation of a foreign
law or foreign document means making a
judgment about the import or effect of the
foreign law or document that goes beyond
its plain meaning.
(b) The Service, at its discretion, may
consider ruling requests that involve
the interpretation of foreign laws or
foreign documents. In these cases,
the Service may request information
in addition to that listed in § 7.01(2)
and (6) of Rev. Proc. 2026-1, includ-
ing a discussion of the implications of
any authority believed to interpret the
foreign law or foreign document, such
as pending legislation, treaties, court
decisions, notices, or administrative
decisions.
(7) The treatment or effects of hook
equity, as described in section 4.02(11) of
Rev. Proc. 2026‑3, 2026‑1 I.R.B. 143.
SECTION 5. EFFECT ON OTHER
REVENUE PROCEDURES
Rev. Proc. 2025-7 is superseded.
SECTION 6. EFFECTIVE DATE
This revenue procedure is effective
January 5, 2026.
SECTION 7. DRAFTING
INFORMATION
This revenue procedure was compiled
by James Kostura of the Office of Asso-
ciate Chief Counsel (International). For
further information regarding this revenue
procedure contact Mr. Kostura at (202)
317‑3800 (not a toll‑free number).

Bulletin No. 2026–2 i January 5, 2026
Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguished describes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modified is used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
with amplified and clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transactions.
This term is most commonly used in a ruling
that lists previously published rulings that
are obsoleted because of changes in laws or
regulations. A ruling may also be obsoleted
because the substance has been included in
regulations subsequently adopted.
Revoked describes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a
period of time in separate rulings. If the
new ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example, modified and
superseded describes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspended is used in rare situations
to show that the previous published rul-
ings will not be applied pending some
future action such as the issuance of new
or amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in
material published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.
—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.

January 5, 2026 ii Bulletin No. 2026–2
Numerical Finding List
1
Bulletin 2026–2
Notices:
2026-2, 2026-02 I.R.B. 304
2026‑3, 2026‑02 I.R.B. 307
2026-5, 2026-02 I.R.B. 309
2026-6, 2026-02 I.R.B. 313
Revenue Procedures:
2026-1, 2026-01 I.R.B. 1
2026-2, 2026-01 I.R.B. 119
2026‑3, 2026‑01 I.R.B. 143
2026-4, 2026-01 I.R.B. 160
2026-5, 2026-01 I.R.B. 258
2026-6, 2026-02 I.R.B. 314
2026-7, 2026-02 I.R.B. 316
Revenue Rulings:
2026-1, 2026-02 I.R.B. 299
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2024–52, dated December 22, 2024.

Bulletin No. 2026–2 iii January 5, 2026
Finding List of Current Actions on
Previously Published Items
1
Bulletin 2026–2
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2025–27 through 2025–52 is in Internal Revenue Bulletin
2024–52, dated December 22, 2024.

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