Minnesota’s New Tax Bill and Extension of PTE Officially Signed into Law
Minnesota Governor Tim Walz signed HF 2438, the state’s omnibus tax bill, into law on May 27, 2026. One of the key provisions for business owners is the inclusion of an extension of Minnesota’s pass-through entity (PTE) tax election, which had been the subject of significant advocacy efforts by tax professionals and business groups across the state.
While the extension provides welcome short-term certainty for qualifying pass-through entities, the legislation only extends the election through Dec. 31, 2027. Taxpayers utilizing the PTE election should continue to monitor future legislative developments, as additional action will be needed to preserve the election beyond the current extension period. For business owners impacted, we will be working with you on any questions that you may have and to compute your business’s PTE estimated payments for Q1 and Q2 2026 for your business by June 15th.
A Deep Dive into Trump Accounts and Where to Sign Up
Trump Accounts, created under IRC Section 530A, are new child-focused, IRA-style savings accounts intended to help families begin building long-term savings for eligible children. In general, an account may be opened for a U.S. citizen child who is under age 18 at the end of the year and has a valid Social Security number, with contributions generally permitted beginning July 4, 2026. These accounts are designed to receive tax-favored growth during the child’s early years, often referred to as the account’s “growth period.”
Once the program is fully available, families will generally sign up by having an authorized individual elect to open the account for the child. Depending on the circumstances, that authorized individual may be a legal guardian, parent, adult sibling, or grandparent. The election is made by filing Form 4547 or through the IRS’s online Trump account portal, generally no later than December 31 of the year the child turns 17, after which the Treasury will send instructions to activate the account, which is via email. Importantly, eligibility to open a Trump account—or to receive the separate $1,000 federal pilot contribution for certain children born in 2025 through 2028 under IRC Section 6434—depends on the statutory eligibility rules for the child, such as age, citizenship, Social Security number, and qualifying-child status.
The annual contribution limit is $5,000 per child. With investing, the design and rules for Trump accounts are straightforward to promote long-term, broad market exposure with low costs and minimal complexity:
1. The contributions are only to be made to mutual funds or ETF’s that track the S&P 500 or another equity index, with at least 90% invested in U.S. companies
2. No leverage is allowed in the investments, meaning borrowed funds cannot be used to purchase securities
3. The Expense Ratio cap on the mutual funds or ETF’s must be 0.10% (10 basis points) or less
4. Trustees may offer multiple options and must designate a default investment
No distributions or withdrawals can be made from the child/beneficiary’s account before they turn 18. Once they turn 18, the child can either withdraw the funds (tax on withdrawals follow traditional IRA rules), keep the account as a Trump account and let it grow, or initiate a Roth conversion with the account where the child will pay tax now on the transfer of funds, but won’t have to pay tax later when making eligible withdrawals from their Roth IRA.
Separately, Michael and Susan Dell have announced a $6.25 billion qualified general contribution that provides an additional $250 contribution for certain children who fall within the program’s stated ZIP code and income parameters (median annual household income is $150,000 or less). This $250 amount is a separate layer of possible funding and does not change the underlying rules for opening a Trump account or qualifying for the federal $1,000 pilot contribution.
For more information on the account and signing up: https://bit.ly/49ZCz3C
IRS Identity Verification Notices Increasing Nationwide
This year, taxpayers across the country have experienced a noticeable increase in IRS identity verification notices. In many cases, these notices are being issued automatically as part of the IRS’s expanded fraud prevention and identity theft detection efforts. As the IRS continues implementing enhanced security measures and automated screening systems, a growing number of legitimate tax returns are being flagged for additional identity verification before processing can continue.
Common notices, including IRS Letter 5071C and similar correspondence, generally request that taxpayers confirm their identity through the IRS website or the ID.me verification system. Receiving one of these notices does not necessarily indicate that there is an issue with your tax return, nor does it mean that anything was filed incorrectly. Many taxpayers are simply being selected as part of the IRS’s broader security protocols designed to combat identity theft and fraudulent refund claims.
If you receive an IRS identity verification notice, we recommend reviewing the correspondence carefully and following the instructions exactly as provided. In most cases, the verification process must be completed directly by the taxpayer and cannot be completed by our office on your behalf. After verification is successfully completed, the IRS may still require several additional weeks to finalize return processing or issue any applicable refunds. If you are uncertain whether a notice is legitimate, please contact our office before responding so we can help confirm its authenticity.
IRS Releases Guidance on Qualified Long-Term Care Distributions
The IRS recently issued new guidance regarding qualified long-term care (LTC) distributions from defined contribution retirement plans, a provision established under the SECURE 2.0 Act. Effective for distributions made after December 29, 2025, eligible taxpayers may be able to withdraw funds from certain retirement plans to pay qualified long-term care insurance premiums without incurring the standard 10% early withdrawal penalty. The allowable distribution is limited to the lesser of the actual long-term care insurance premium paid, 10% of the employee’s vested account balance, or $2,600 annually, with future inflation adjustments expected.
Under the new rules, employees seeking a qualified LTC distribution must obtain a “long-term care premium statement” from their insurance provider, which must also be filed with the retirement plan. Insurance issuers will additionally be required to submit a one-time “Issuer Disclosure” with the IRS before participating in the program. The IRS clarified that offering these distributions will remain optional for retirement plans, and plan administrators may generally rely on the information provided by insurance issuers when processing requests.
The guidance also introduces new reporting requirements, including Form 1099-LPS for insurance issuers and continued reporting on Form 1099-R for plan payors. In addition, the IRS extended the deadline for retirement plans to formally adopt amendments permitting these distributions until December 31, 2027.
SEC Proposes Optional Semiannual Reporting for Public Companies
The Securities and Exchange Commission (SEC) recently proposed a rule that would allow public companies to elect semiannual reporting in place of the current quarterly reporting requirements. Under the proposal, eligible companies could file a new Form 10-S covering the first six months of the fiscal year rather than submitting quarterly Form 10-Q filings. Companies choosing this option could still provide first- and third-quarter financial updates through earnings releases furnished on Form 8-K. The SEC stated that the proposed changes are intended to provide companies with greater flexibility in determining the reporting frequency that best fits their operational and financial reporting needs.
The proposal would apply broadly to companies currently required to file quarterly reports under the Securities Exchange Act, regardless of company size or filer status. The SEC is also considering whether certain registrants, such as emerging growth companies or smaller reporting companies, should receive additional flexibility under the rule. In addition to modifying interim reporting requirements, the proposal includes updates to financial statement “staleness” rules and related SEC regulations intended to simplify compliance and modernize disclosure timelines. Companies that elect semiannual reporting would still be required to provide condensed interim financial statements, maintain disclosure controls, and comply with applicable reporting requirements. If adopted, the proposed rule would represent one of the most significant changes to public company reporting requirements in decades.
