Policy updates

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IRS Simplifies Penalty Relief with Automatic Exemption from Penalty (AEP)

The IRS is replacing First Time Abate administrative relief with AEP, which will automatically exempt eligible taxpayers from certain penalties (failure to file, pay, or deposit) if they have a timely compliance history. AEP begins in summer 2026, applies to tax-year 2025 original returns and 2026 quarterly returns, and will fully replace FTA for returns with due dates on or after January 1, 2027. Taxpayers must still pay taxes and interest; not all penalties or returns are eligible.

Editorial impact label: High

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Jul 8, 2026

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Final regulations naming certain charitable remainder annuity trust transactions as listed transactions

Treasury and IRS issued final regs that identify certain arrangements purporting to be Charitable Remainder Annuity Trusts (CRATs) as "listed transactions." Material advisors and participants must file disclosures; penalties may apply. The rule targets abusive transactions where taxpayers try to eliminate ordinary income or capital gains via transferring assets to a CRAT, then selling property, buying a single premium immediate annuity (SPIA), and misapplying rules under sections 72 and 664.

Editorial impact label: Medium

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Jul 8, 2026

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IRS Begins Automatic Exemption from Penalty (AEP) replacing First Time Abate

The IRS announced it will implement an **Automatic Exemption from Penalty (AEP)** program, effective summer 2026, replacing the First Time Abate relief. Taxpayers with 3 prior years (or 12 prior quarters for quarterly filings) of timely filing and payment history will automatically qualify for relief from failure-to-file, failure-to-pay, and failure-to-deposit penalties. No request needed; IRS will issue notices confirming relief when applied.

Editorial impact label: Medium

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Jul 8, 2026

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IRS simplifies penalty relief, introduces automatic process for eligible taxpayers

The IRS has enacted the Automatic Exemption from Penalty (AEP), which will replace the First Time Abate (FTA) relief for eligible taxpayers. AEP will automatically waive penalties for failure to file, pay or deposit for tax year 2025, 2026 quarterly returns, and future periods if the taxpayer has a history of timely filing and payment over the prior 3 years (or 12 consecutive quarters for quarterly filers). FTA will be phased out completely by January 1, 2027 for returns due on or after that date. Taxpayers who don’t qualify may still request relief under reasonable cause.

Editorial impact label: High

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Jul 8, 2026

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IRS will begin phasing in Automatic Penalty Relief (AEP) for 2025 returns and 2026 quarterly returns

IRS announced on July 8, 2026 a new automatic process (AEP) to waive certain failure-to-file and failure-to-pay penalties for taxpayers with a history of timely filings and payments, phased in starting with the 2025 tax year and 2026 quarterly returns. It will gradually replace First Time Abate.

Editorial impact label: Medium

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Jul 8, 2026

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Automatic Exemption from Penalty (AEP) replaces First Time Abate

New automatic penalty relief program replacing First Time Abate starting summer 2026. Applies to failure to file, failure to pay, and failure to deposit penalties for eligible original returns (tax year 2025 and 2026 quarterly returns) for taxpayers with a history of timely filing and payment. Not all penalties or return types qualify. FTA will be phased out for returns with due dates on or after January 1, 2027.

Editorial impact label: High

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Jul 8, 2026

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IRS simplifies penalty relief, introduces automatic process for eligible taxpayers (IR-2026-83)

The IRS announced the new **Automatic Exemption from Penalty (AEP)** to replace the First Time Abate process. Under the AEP, taxpayers with a three-year history of filing and paying on time (or 12 consecutive compliant quarters for quarterly filers) will automatically receive relief from penalties for failure to file, pay, or deposit—so long as the returns are original returns for tax years 2025, 2026 or later. The First Time Abate relief will be phased out, and AEP becomes fully the standard for returns with original due dates on or after January 1, 2027. Not all returns are eligible (e.g. information returns, estate/gift returns).

Editorial impact label: High

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Jul 8, 2026

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Department of the Treasury and IRS issue final regulations naming certain charitable remainder annuity trust transactions as listed transactions

Treasury and IRS finalized regulations that certain arrangements involving Charitable Remainder Annuity Trusts (CRATs) where property is transferred to a CRAT and then sold, with proceeds used to purchase a Single Premium Immediate Annuity to improperly shift income/capital gains, are designated as “listed transactions.” Material advisors and participants in such transactions must file disclosures and may face penalties for failure to do so.

Editorial impact label: Medium

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Jul 8, 2026

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July Infringements Package: Letters of Formal Notice to Germany, France & Italy over Parent-Subsidiary Directive Violations

On 8 July 2026, the European Commission sent letters of formal notice to Germany, France and Italy for failing to align their national legislation with the Parent-Subsidiary Directive regarding taxation of dividends received from subsidiaries in other Member States. If not corrected, they may face reasoned opinions or Court proceedings. ([malta.representation.ec.europa.eu](https://malta.representation.ec.europa.eu/news/july-infringements-package-key-decisions-2026-07-08_en?prefLang=de&utm_source=openai))

Editorial impact label: Medium

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Jul 8, 2026

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国家税务总局关于企业重组业务所得税处理有关征管问题的公告 (公告2026年第13号)

将适用企业重组特殊性税务处理的居民企业股东持股比例由100%下调至50%，扩大当事方主体范围，并规范一致意见及持股维持的期限；重组日自2026年1月1日起生效

Editorial impact label: High

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Jul 8, 2026

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Treasury, IRS issue final regulations naming certain charitable remainder annuity trust transactions as listed transactions (IR-2026-82)

IRS released final regulations that designate certain CRAT transactions (notably those transferring high value property into CRATs, selling it, and moving proceeds into single-premium immediate annuities) as **listed transactions**. Material advisors and participants must now file disclosure and are subject to penalties for non-disclosure—close to being classified under abusive tax shelter rules.

Editorial impact label: Medium

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Jul 8, 2026

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IRS simplifies penalty relief, introduces automatic process for eligible taxpayers (AEP replacing First Time Abate)

Effective summer 2026, the IRS will automatically grant penalty relief (failure to file, pay, or deposit) to taxpayers with a history of timely filing and payment—three prior years (or 12 quarters) without late filings. This new Automatic Exemption from Penalty (AEP) will replace First Time Abate, eliminating the need for individual requests and simplifying compliance.

Editorial impact label: High

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Jul 8, 2026

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IRS issues final regulations identifying certain Charitable Remainder Annuity Trust transactions as listed transactions

The U.S. Treasury and IRS made final regulations under the Internal Revenue Code labeling certain charitable remainder annuity trust (CRAT) arrangements as "listed transactions." This means taxpayers using or advising on these trust structures must disclose them as reportable transaction arrangements under IRS rules, increasing transparency and penalties for non-compliance.

Editorial impact label: Medium

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Jul 8, 2026

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Automatic Exemption from Penalty replaces First Time Abate

The IRS has introduced the Automatic Exemption from Penalty (AEP), a new automatic penalty relief program for taxpayers with a history of timely filing and payment, starting summer 2026. AEP will automatically exempt eligible original returns (from tax years 2025 and 2026, quarterly returns, and future periods) from penalties for failure to file, pay, or deposit. First Time Abate is being phased out with AEP replacing it for eligible returns with due dates on or after January 1, 2027. Taxpayers who do not qualify under AEP can still request relief based on reasonable cause. [IR-2026-83]

Editorial impact label: High

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Jul 8, 2026

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IRS, Security Summit launch summer series to help tax pros protect clients from identity theft

A newly launched five-week campaign beginning July 7, 2026 aims to provide tax professionals with tools and steps for protecting client data against evolving threats. Emphasis includes recognizing scams, implementing core safeguards, and responding effectively to data breaches. Part of IRS efforts to strengthen the integrity of tax administration. ([irs.gov](https://www.irs.gov/newsroom/irs-security-summit-launch-summer-series-to-help-tax-pros-protect-clients-from-identity-theft?utm_source=openai))

Editorial impact label: Medium

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Jul 7, 2026

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Proposed

Government of Canada launches consultations ahead of Budget 2026

The Department of Finance has initiated pre-budget consultations as of July 6, 2026, inviting Canadians to share input by September 8, 2026 regarding priorities such as boosting investment, competition, trade diversification, and addressing cost-of-living pressures. These consultations may lead to legislative changes in the Fall Budget. While not yet policy, this signals the government’s focus areas and potential upcoming tax or regulatory measures.

Editorial impact label: Medium

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Jul 6, 2026

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IRS issues Internal Revenue Bulletin 2026-28: AFRs and proposed Qualified Opportunity Zones regulations

Notice 2026-38 and Revenue Ruling 2026-12 in IRB 2026-28 update the applicable federal rates (AFRs), adjusted AFRs, and other prescribed rates under sections 42, 382, 1274, 1288, 7520, etc., for **July 2026**, and Treasury/IRS announced intent to issue proposed regulations addressing the revised Qualified Opportunity Zone (QOZ) rules under the One, Big, Beautiful Bill Act, including transitional guidance.

Editorial impact label: Medium

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Jul 6, 2026

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Accreditation of Additional PERA UITFs Exempted from Income Tax

Via RMC No. 74-2026, the Philippines’ BIR added ATRAM PERA Global Dividend Accumulation Feeder Fund and ATRAM PERA Global Allocation Feeder Fund II to the list of accredited PERA UITFs whose income is exempt from income tax under the PERA Act, effective July 2026.

Editorial impact label: Low

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Jul 6, 2026

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Non-deduction of TDS on Ship Lease Rent to IFSC units under Section 147 of Income-tax Act, 2025

In India, Notification No. 75/2026 issued by CBDT states that **no tax deduction at source (TDS)** is to be made on ship lease rent paid to units in IFSC (International Financial Services Centre) under **section 147** of the Income-tax Act, 2025. This provides relief for IFSC units leasing ships, reducing withholding burdens on payments.

Editorial impact label: Low

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Jul 6, 2026

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Bangladesh

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Bangladesh Finance Act, 2026 – Corporate Rate Reforms and Green/Zone-based Exemptions

Budget 2026-27 in Bangladesh implements new reduced tax rates for publicly traded companies (22.5%), further rebates when IPO or bank-based transactions criteria met; elevated tax on tobacco (45% + surcharge); introduces exemptions for solar energy generation, edible oil processing using local seeds; and VAT exemptions for certain local manufacturing and economic zones.

Editorial impact label: High

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Jul 6, 2026

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