Issue Number:  2026-40

Inside This Issue

1. Simple steps to protect tax data during Cybersecurity Awareness Month

2. Upcoming IRS webinar about refundable tax credits

3. IRS partners with UK tax authority’s new whistleblower program

4. New relief for eligible clients affected by ongoing events in Israel

5. Did you know? Guidance for student athletes receiving NIL income

6. Technical guidance

1.  Simple steps to protect tax data during Cybersecurity Awareness Month

During Cybersecurity Awareness Month, the IRS joins the Cybersecurity and Infrastructure Security Agency and Security Summit partners in encouraging tax professionals to make cybersecurity part of their daily routine. The Cybersecurity and Infrastructure Security Agency (CISA) offers cybersecurity resources that individuals, families, businesses, and organizations can use to strengthen their online security.

Cybersecurity Awareness Month highlights the role everyone can play in protecting personal, financial, and tax information from identity thieves and scammers.

Tax professionals should watch for phishing emails and other schemes designed to steal sensitive taxpayer data. Scammers may pose as a prospective client or use a compromised email account to persuade tax professionals to open malicious links or attachments.

The recent IRS news release includes steps tax professionals and their clients should take along with various resources.

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2.  Upcoming IRS webinar about refundable tax credits

The IRS is hosting a webinar for tax professionals on Wednesday, Oct. 21:

• Title and registration link: How Much Do You Know About Refundable Credits?

• Date: Wednesday, October 21, 2026

• Time: Noon Eastern, 11 a.m. Central, 10 a.m. Mountain, 9 a.m. Arizona & Pacific, 8 a.m. Alaska, 6 a.m. Hawaii

• Length: 90 minutes including a live Q&A session

• CE credits: One (1) Federal Tax CE credit

• Topics: After completing this session, participants will be able to:

  • Identify the 2026 eligibility rules for tax returns claiming:

    • Earned Income Tax Credit

    • Child Tax Credit

    • Additional Child Tax Credit

    • Credit for Other Dependents

    • American Opportunity Tax Credit

    • Adoption Credit

    • Head of Household filing status

  • Recognize the responsibilities tax professionals must follow when preparing returns that claim these benefits.

  • Differentiate how refundable credits may be affected when first-time filers claim them.

  • Apply the IRS Tax Return Preparer Toolkit and other useful online resources on IRS.gov.

• Closed captioning: Offered in English

• Questions? Send an email to cl.sl.web.conference.team@irs.gov.

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3.  IRS partners with UK tax authority’s new whistleblower program

The IRS highlighted its partnership with the United Kingdom’s whistleblower program, which drew upon the IRS Whistleblower Office’s expertise. This collaboration reinforces efforts to identify global tax evasion and strengthen cross-border compliance.

His Majesty’s Revenue and Customs program, known as the Strengthened Reward Scheme, launched in November 2025 to encourage the reporting of serious tax avoidance and evasion involving the wealthiest individuals and largest businesses.

More than ever, tax avoiders are using sophisticated methods to conceal their wrongdoings. Modern tax evasion relies on complex webs of offshore accounts, shell companies, and fraudulent transfers that are incredibly difficult for external investigators to trace. Fraudsters seek to dodge tax enforcement by creating mechanisms that are split across jurisdictions.

Whistleblowers are critical to helping tax authorities pierce this veil of secrecy. Accountants and other tax professionals who blow the whistle and provide specific, credible intelligence, allow tax authorities to identify bad actors and ensure they fulfill their tax obligations.

The IRS and HMRC are committed to working with and rewarding whistleblowers for their vital contributions to global financial security and tax compliance. Tax professionals with specific, timely, significant, and credible information about suspected violations of tax laws should submit a report at IRS.gov/SubmitATip. Whistleblowers may qualify for a monetary award when their information leads to the collection of taxes or other proceeds.

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4.  New relief for eligible clients affected by ongoing events in Israel

Due to the ongoing conflict in Israel, the IRS is providing additional tax relief to affected individual and business clients. The IRS postponed a wide range of deadlines until Sept. 30, 2027.

The new guidance, Notice 2026-63, follows on prior guidance:

• Notice 2023-71 which originally provided relief to taxpayers affected by the Oct. 7, 2023, attacks in Israel.

• Notice 2024-72 provided relief to taxpayers affected by terroristic action in Israel throughout 2023 and 2024.

• Notice 2025-53 provided relief for taxpayers affected by terroristic action in the State of Israel throughout 2024 and 2025 by providing relief until Sept. 30, 2026.

The guidance applies to affected individuals and businesses in Israel, the West Bank, and Gaza. The IRS automatically identifies clients whose principal residence or principal place of business is located in the covered area based on previously filed returns and applies relief. Other eligible taxpayers, or their representatives, whose filing address is outside the covered area can obtain relief by calling the IRS disaster hotline at 866-562-5227 and identify the date they qualified for relief. Alternatively, international callers may call 267-941-1000.

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5.  Did you know? Guidance for student athletes receiving NIL income

If a client – or the child of a client – receives income for their name, image and likeness (NIL), there are important tax considerations.

Whether the NIL income is in cash, property, or services, the student athlete must pay federal income tax. The income is generally also subject to Social Security and Medicare taxes, or Self-Employed Contributions Act taxes. If the student is being paid as an employee of the school or a company, federal income taxes and FICA and Medicare taxes will generally be withheld from the pay and the student will receive a Form W-2 from the employer. If they’re considered an independent contractor, the student should receive a Form 1099-NEC from the school or company.

Students should accurately complete Form W-9. Request for Taxpayer Identification Number and Certification or Form W-4, Employee’s Withholding Certificate and provide it to the company paying them. They must report all NIL income even if the payer does not issue a Form 1099 or Form W-2.

See IRS.gov/NIL for more information.

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6.  Technical guidance

The Department of the Treasury and the IRS recently:

• Proposed regulations for a school choice program and

• Issued guidance for fixed investment trust staking.

Proposed regulations for a school choice program

The proposed regulations are for the new Federal Scholarship Tax Credit under section 25F, commonly known as the Education Freedom Tax Credit, the first federal tax credit supporting private contributions for K-12 scholarships. Under the proposed regulations, eligible clients may claim an annual credit of up to $1,700 for qualifying contributions, or up to $3,400 for married couples filing jointly. Treasury and the IRS also issued companion temporary regulations to establish key procedures for states and Scholarship Granting Organizations to prepare for the launch of the tax credit on Jan. 1, 2027.

By 2030, Treasury and the IRS estimate that the program could support 600 to 700 SGOs, with more than 11 million taxpayers making nearly $26 billion in qualified contributions annually and funding as many as 2.2 million scholarships each year.

Guidance for fixed investment trust staking

Revenue Procedure 2026-20 describes a safe harbor for trusts that otherwise qualify as investment trusts under Section 301.7701-4(c) and as grantor trusts to stake their digital assets without jeopardizing their tax status as investment trusts and grantor trusts for federal income tax purposes. This revenue procedure also provides a limited time period for an existing trust to conform its governing instrument (trust agreement) and procedures to the requirements of the safe harbor. This revenue procedure clarifies, modifies, and supersedes Rev. Proc. 2025-31, 2025-48 IRB 743.

Note: Revenue Procedure 2026-20 will be in Internal Revenue Bulletin 2026-43, dated Oct. 26, 2026.

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