Compliance
Compliance Essentials: What’s New in IRS Policy Mid-2026
Major policy shifts from the IRS are reshaping audit risks, tax reporting, and how taxpayers must respond. Here's an up-to-date compliance road map mid-2026.
By NomadicTax Research Team • 5-8 min read • July 29, 2026
## Recent IRS Policy Changes & Their Compliance Implications
### 1. Executive Compensation in Tax-Exempt Organizations
Notice 2026-36 announces proposed regulations expanding the **definition of “covered employee”** under IRC §4960, aimed at tax-exempt organizations, per the One Big Beautiful Bill Act. Affected execs should review comp in anticipation of being in scope. ([irs.gov](https://www.irs.gov/irb/2026-26_irb?utm_source=openai))
### 2. Renewable Electricity Production Credit Adjustments
Notice 2026-37 sets **2026 inflation-adjusted reference prices and factors** under IRC §45, impacting incentives for qualified renewable producers. Those planning to claim production credits must use these values when filing. ([irs.gov](https://www.irs.gov/irb/2026-26_irb?utm_source=openai))
### 3. When Forms, Instructions & Publications Are Changing
Recent IRS updates include several changes to tax forms and instructions as of **late June / early July 2026**. Notables:
- Altered instructions for **Form 2848** (power of attorney) ([irs.gov](https://www.irs.gov/forms-pubs/changes-to-current-forms-publications?utm_source=openai))
- Clarifications on **New Markets Credit** permanence ([irs.gov](https://www.irs.gov/forms-pubs/changes-to-current-forms-publications?utm_source=openai))
- Updates affecting **Form 4547** for state, tribal child welfare agencies ([irs.gov](https://www.irs.gov/forms-pubs/changes-to-current-forms-publications?utm_source=openai))
## What You Should Be Doing Now: A Compliance Checklist
- If you’re a nonprofit or exempt organization with high-earning staff, **re-audit your executive compensation structures**. Ensure any thresholds or payments that may now fall under expanded definitions are documented and potentially adjusted.
- For renewable energy projects, begin coordinating with tax advisors to apply the 2026 reference prices before filing; sales and contracts should consider these rates.
- Ensure your power of attorney documentation (Form 2848) is accurate, updated, and reconciled to any new instruction changes.
- If you deal with federal credits like New Markets or process forms for child welfare agencies, coordinate with accounting and legal teams to assess the impacts of updated form instructions.
## Example: A Nonprofit Re-Evaluation
Imagine a nonprofit paying its CFO a compensation package that includes stock options, housing allowances, and retirement contributions. Previously under age or salary thresholds, it didn’t meet the “covered employee” cap in §4960. With new proposed regulation, the definition may expand:
- CFO may become a **covered employee** if additional payments or compensations are included
- Nonprofit could owe excise tax on “excess compensation” unless adjusted or structured differently
- The organization must review bonus timing, deferred compensation, and treatment of related entities and partners
## Best Practices for Safeguarding Compliance
- Maintain centralized, structured records for all compensation components—written job descriptions, contracts, fringe benefit statements.
- Set up **internal audits** ahead of implementation dates to determine exposure.
- Monitor the IRS Bulletin and Proposed Regulations for final versions of Notice 2026-36 (expected soon) and for upcoming guidance under schedule changes.
- Work with professionals to ensure digital or physical updates to forms are consistent with the new instructions (for example, Form 2848 or related agency forms).
***Key Takeaway***: It’s a dynamic tax landscape mid-2026—expanding oversight, shifting definitions, and new parameters for deductions and credits. Staying proactive is the best way to avoid surprises.
*(NomadicTax Research Team)*