2026 Tax Filing Season is Fast Approaching
Published November 28, 2025
The Internal Revenue Service (IRS) reminded taxpayers that the 2026 filing season is rapidly approaching. The IRS encourages taxpayers to take steps to ensure they can file promptly and accurately for the upcoming season.
The IRS maintains the IRS.gov/GetReady webpage with helpful information. The webpage has many practical tips and resources for taxpayers. Preparing for the filing season can be simplified into two main steps.
- Gather and Organize –– Taxpayers should gather all their tax documents. The most common documents are IRS Form W-2, Form 1099, records of digital asset transactions and other information forms. There may be specific paperwork to support your income tax deductions, education credits or mortgage payments. You will need the adjusted gross income (AGI) from your prior year’s tax return if you want to file electronically. Taxpayers must wait until all forms are received to file an accurate tax return.
- IRS Online Account –– You may create an IRS Online Account and enjoy multiple benefits. With the Online Account, you can review your most recent tax return and AGI. You can obtain an Identity Protection PIN (IP PIN) or sign a power of attorney for your tax preparer. The Online Account allows you to authorize a tax professional to access your tax records electronically. You can review and cancel payments and set up a payment plan.
Setting up direct deposit remains the quickest option for receiving a tax refund. Per an executive order, the IRS has started to phase out paper checks for tax refunds. Taxpayers without a bank account may want to explore opening an account or looking into alternative methods to receive a direct deposit.
You should gather your tax information and have an organized system for maintaining your records. The required forms are generally issued by the end of January and would be expected to be received by early February.
Older adults and military members also may benefit from the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs.
IRS Requests Comments on Scholarship Granting Organization Provisions
On November 25, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2025-70 (IR-2025-115), formally requesting public comment on the implementation of a newly enacted federal tax credit for individuals who make cash contributions to eligible Scholarship Granting Organizations (SGOs).
Under the One Big Beautiful Bill Act (OBBBA), this nonrefundable credit will become available for qualified contributions made on or after January 1, 2027. The credit is capped at $1,700 per taxpayer annually and is available only for donations to SGOs that provide scholarships for elementary and secondary school students from low and middle-income families, in states that elect to participate.
For a contribution to qualify, the taxpayer’s state must submit a list of SGOs that meet statutory requirements for certification. The Treasury and IRS stated their intention to issue proposed regulations and requested public input on several critical implementation issues.
The IRS is specifically requesting comments on several areas including how states should annually certify SGOs, how to ensure the accuracy and completeness of those certifications, how to treat organizations that operate across multiple states or fall outside of standard fact patterns and the reporting and recordkeeping that SGOs should follow. The IRS intends to address the comments in the proposed regulations.
Comments will be accepted via the Federal e-Rulemaking portal at Regulations.gov (search “IRS-2025-0466”) or by mail, with a submission deadline of December 26, 2025. Paper submissions should be sent to: Internal Revenue Service, CC:PA:01:PR (Notice 2025-70), Room 5503, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
This notice represents the first regulatory step toward launching the federal scholarship-donation credit program. The comment period offers donors, scholarship organizations, state education officials and tax professionals an opportunity to shape how the credit will be administered, how compliance will be enforced, and how contributions and scholarships will be documented.
Tax Court Rules on Conservation Easement Overvaluation
In Lake Jordan Holdings, LLC v. Commissioner; No. 16532-21, T.C. Memo. 2025-123, the Tax Court held that the value of a charitable easement was reduced from $12.74 million to $1.09 million. The gross valuation misstatement penalty of 40% also applied. The Court did not impose a civil fraud penalty.
Lake Jordan Holdings, LLC (Lake Jordan) claimed a charitable contribution deduction of $12,740,000 for a 2017 gift of a conservation easement.
On December 29, 2017, a partnership purchased the Lake Jordan easement property comprising approximately 165 acres of land in Elmore County, Alabama, for $583,000. The partnership immediately thereafter donated a conservation easement of part of the property to Foothills Land Conservancy.
The transaction was promoted by Nancy Zak and Paul Thomas. Ms. Zak and Mr. Thomas worked together to acquire the Lake Jordan property and promote a syndicated conservation easement opportunity.
Ms. Zak worked in the conservation easement industry since 2002 and began working with syndicated conservation easements in 2009. Mr. Thomas was a real estate developer who specifically focused on conservation easement projects. The two developed a business relationship centered on a syndicated conservation easement.
Wilmot Greene and his assistant Cynthia Milner were retained to appraise the Lake Jordan property. Ms. Zak seemingly worked very closely with the appraisers to create the “highest and best use” scenario and highlight the uniqueness of the property to combat comparative sale approaches to valuation. The appraisal was highly speculative and unsupported when tested against objective market data.
Taxpayer contended the Lake Jordan property was valued using a discounted cashflow analysis based on a purely hypothetical highest and best use at $13,049,376 before the easement and $308,097 after the grant of the easement. The appraisal of the conservation easement assigned a value of $12,741,279, which was rounded down to $12,740,000 when claimed on the tax return.
The claimed value was based on the appraisal of the property using a “before and after” method. In Taxpayer’s opinion, the Lake Jordan property’s highest and best use would be a lakeside residential community, possibly an active adult community. The appraisal highlighted the “unicorn status” of the property to rule out comparable sales as an option for valuation.
The IRS audited the charitable deduction and determined that Taxpayer failed to establish a noncash charitable contribution was made in the 2017 tax year. The IRS determined a 40% accuracy penalty under Sec. 6662(h), 20% reportable transaction understatement penalty under Sec. 6662A and the 20% accuracy-related penalties under Sec. 6662(c), (d) and (e) were also applicable.
Among other things, the IRS attacked the appraiser and the qualified appraisal. The Court found that Mr. Greene held a designation from a generally recognized professional appraiser organization, the appraisal complied with generally accepted appraisal standards and did not violate Reg. 1.170A-13(c)(5)(iii).
A battle of the appraisers was undertaken. Since comparable sales data was limited, the experts from both sides relied on the highest and best use analysis and the before and after valuation method. The experts disagreed as to what the highest and best use should be. Taxpayer contended that a “lakeside residential development” was the highest and best use.
The IRS argued that mixed use, with low-density residential development, with some recreational use was the highest and best use for the property. The IRS expert stated there was no market demand for residential subdivision where the Lake Jordan property was located. The Lake Jordan property is in a very rural, hard-to-access part of the county, a significant distance from commercial conveniences.
The Court found the IRS’ experts to be compelling based on the location of the property. Additionally, the recent purchase price of $583,000 by a local real estate veteran to the partnership was also dispositive of the property’s value. The Court found the conservation easement was properly valued at $1,091,760.
The Court held the before value was $1,376,760, with an after value of $285,000, leaving a conservation easement value of $1,091,760 and the 40% gross valuation misstatement penalty under Sec. 6662(h) was applicable. The Court found that the partners were sophisticated and well-versed in conservation easements, but fraud was not present in this transaction.
Applicable Federal Rate of 4.6% for December: Rev. Rul. 2025-24; 2025-50 IRB 1 (17 November 2025)
The IRS has announced the Applicable Federal Rate (AFR) for December of 2025. The AFR under Sec. 7520 for the month of December is 4.6%. The rates for November of 4.6% and October of 4.6% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”
