Here is a look at recent tax-related happenings on the Hill, including tariff relief announced on ground beef.
Lately on the Hill
U.S. & Canada Tariff Truce Ends as 50% Duties Take Effect
After President Donald Trump previously delayed higher tariffs on certain Canadian imports by proclamation to allow additional time for negotiations, those talks have now halted.1 The administration has imposed a 50% tariff on a host of Canadian products, including alcoholic beverages, dairy, and motor vehicles under Section 338 of the Tariff Act of 1930. In return, Canada has announced retaliatory tariffs on approximately $20 billion of U.S. goods, including steel, dairy, and appliances, beginning September 8. Prime Minister Mark Carney acknowledged the dispute is likely to weigh on the Canadian economy and could mark the beginning of a prolonged trade conflict between the two countries.
Trump Announces Tariff Relief on Ground Beef
Trump announced2 that, for the next 90 days, the U.S. will allow up to 300,000 metric tons of imported ground beef to enter without the out-of-quota tariff, stating that the measure is intended to lower consumer prices while the domestic cattle herd rebuilds.
From the Courts
Government Cites Fifth Circuit Limited Partner Opinion in Pending Appeals
The government notified the First and Second Circuits that the Fifth Circuit’s revised opinion in K. Alain, LLLP v. Commissioner withdrew its earlier limited liability-based interpretation of a “limited partner” under Internal Revenue Code (IRC) Section 1402(a)(13) and instead held that a limited partner is one who does not play a significant role in managing or running the business. In the pending Denham3 and Soroban4 appeals, which present the same core question regarding whether actively involved partners qualify for the limited partner exception, the government argued that the Fifth Circuit’s revised standard supports affirming the U.S. Tax Court because the partners at issue exercised substantial control over their respective firms’ operations.
From Treasury & the IRS
IRS Creates Conservation Easement Office
The IRS announced the creation of an Office of Conservation Easements to serve as a centralized unit focused on conservation easement cases, providing technical expertise and a coordinated case-resolution strategy. The agency also ended its uniform settlement initiative for syndicated conservation easement cases, although taxpayers with pending cases may still seek settlement consideration through their IRS examination of Chief Counsel representative.
Proposed IRS School Policy Guidance Advances
The Office of Information and Regulatory Affairs has completed its review of proposed IRS regulations clarifying that certain schools that discriminate on the basis of race are not operated exclusively for charitable purposes. The guidance is being closely watched by private colleges and universities because it could affect what programs can be offered while maintaining tax-exempt status.5
Draft Section 987 Forms Released
The IRS released draft Forms 8964 and Schedule A for reporting IRC §987 foreign currency gains and losses and indicated the forms are expected to apply to tax years beginning in 2027.
Released Guidance
FDDEI Property Dispositions: Proposed regulations (REG-117130-25) under IRC §250 would provide guidance on the One Big Beautiful Bill Act (OB3) changes excluding certain income and gain from sales or other dispositions of intangible property and depreciable, amortizable, or depletable property from deduction eligible income for purposes of calculating foreign-derived deduction eligible income (FDDEI). The proposed regulations are consistent with Notice 2025-78 and may be relied upon pending finalization if applied in their entirety and consistently. See our FORsights™ article, “IRS Proposes FDDEI Limits for Asset Dispositions,” for additional information.
CFC Pro Rata Share: Proposed regulations (REG-115646-25) under IRC §§951 and 951A address how U.S. shareholders determine their pro rata share of a controlled foreign corporation’s subpart F income, tested income, and tested loss, including guidance related to transition rules enacted as part of the OB3. Watch for our forthcoming FORsights for additional details.
Defined Benefit Plan Funding: Proposed regulations (REG-107855-25) would update the minimum funding rules for single-employer defined benefit plans, including guidance on determining target normal cost and funding targets; reflecting statutory changes made by the Worker, Retiree, and Employer Recovery Act of 2008, the SECURE Act, and SECURE 2.0; and facilitating the adoption of certain retroactive benefit increases and plan amendments. Taxpayers may rely on the proposed regulations for plan years before the final regulations become applicable.
Trump Account Investment Rules: Proposed regulations (CC-00349938-26) provide guidance on eligible investments for Trump accounts, including rules requiring investments to be low-cost mutual funds or exchange-traded funds (ETFs) that track qualifying U.S. equity indexes; prohibiting leveraged funds and environmental, social, and governance (ESG)-focused index funds; and establishing trustee monitoring and compliance procedures. Taxpayers and trustees may rely on the proposed regulations before finalization if they apply the rules consistently and in their entirety.
Immigrant Tax Credit Limits: Proposed regulations (REG-119882-25) would treat the refunded portion of the adoption tax credit, child tax credit, American opportunity tax credit, and earned income tax credit as “Federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, making those amounts unavailable to taxpayers who are not U.S. citizens, U.S. nationals, or qualified aliens. If finalized, the rules would apply to taxable years ending on or after the date the final regulations are published.
Q4 2026 IRS Interest Rates: Revenue Ruling 2026-15 announces that the interest rate for both tax overpayments and underpayments will remain 7% for the quarter beginning October 1, 2026, with a 6% overpayment rate for corporations and a 4.5% rate on the portion of a corporate overpayment exceeding $10,000. The ruling also sets the interest rate for large corporate underpayments at 9%; applies the 7% rate to estimate tax underpayments, and under IRC §§6654 and 6655; and sets the interest rate on IRC §6603 deposits at 4% for the fourth quarter of 2026.
September 2026 AFR: Revenue Ruling 2026-17 provides the September 2026 applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate and long-term tax-exempt rate, percentages for determining the low-income housing credit, and the federal rate for determining the present value of an annuity, and interest for life or for a term of years, or a remainder or reversionary interest.
Update to Rates and Yield Curves: Notice 2026-51 provides the corporate bond monthly yield curve and corresponding spot segment rates derived from July 2026 data, the 24‑month average corporate bond segment rates applicable for August 2026, and the 30‑year Treasury securities interest rates and weighted average rates.
Business Interest Deduction Limitation: The IRS has updated FAQs (FS-2026-14) regarding the business interest expense limitation under IRC §163(j) to reflect changes made by the updated gross receipts thresholds for determining small business exemption eligibility, and procedures for making real property trade or business and farming business elections. The FAQs also clarify that IRC §163(j) generally applies to all business interest expense without regard to mandatory or elective capitalization provisions, with exceptions, and explain the depreciation consequences of electing excepted trade or business status.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1“Canadians Brace for Economic Pain as 50% US Tariffs Take Effect,” news.bloombergtax.com, August 24, 2026.
- 2Donald J. Trump, truthsocial.com, August 21, 2026.
- 3Denham Capital Management, LP v. Commissioner, 1st Cir., No. 25-1349.
- 4Soroban Capital Partners, LP v. Commissioner, 2nd Cir., No. 25-2079.
- 5“IRS Proposal on Race and Admissions Passes White House Review,” news.bloombergtax.com, August 18, 2026.