Tax Relief & Deadline Extensions for Wisconsin Storm Victims
The IRS has announced federal tax relief for individuals and businesses in Wisconsin affected by severe storms and tornadoes that began on July 27, 2026. Eligible taxpayers residing or operating businesses in Forest, Outagamie, Vilas, and Winnebago counties, along with any additional counties subsequently included in the disaster area, now have until February 1, 2027 to file various federal tax returns and make qualifying tax payments that were originally due on or after July 27, 2026. The extended deadline also applies to affected quarterly payroll and certain excise tax returns originally due July 31 and November 2, 2026. Additionally, penalties on certain payroll and excise tax deposits due between July 27 and August 10, 2026, will be waived if the deposits were made by August 11, 2026.
Affected taxpayers who receive late filing or payment penalty notices for deadlines covered by the relief period may contact the IRS using the phone number listed on the notice to request penalty abatement. The recently enacted Disaster Related Extension of Deadlines Act (P.L. 119-64) also provides additional time for affected taxpayers to claim refunds or credits. The IRS will also waive fees for affected taxpayers requesting copies of previously filed returns or transcripts by submitting Form 4506 or Form 4506-T and prominently noting disaster declaration number 4949-DR. Taxpayers outside the designated disaster area who believe they qualify for relief may contact the IRS Special Services line at 866-562-5227 for assistance.
IRS Expands Retirement Plan Self-Correction, Updates Compliance Program
The IRS has issued Revenue Procedure 2026-34, significantly expanding opportunities for retirement plan sponsors to correct compliance errors through the Employee Plans Compliance Resolution System (EPCRS) without paying fees or submitting applications to the IRS. The updated guidance incorporates changes made by the SECURE 2.0 Act of 2022 and supersedes Revenue Procedure 2021-30. Under the expanded Self-Correction Program (SCP), plan sponsors may correct eligible inadvertent failures without IRS approval, provided the plan has established compliance practices and procedures and the errors are corrected within a reasonable timeframe. Generally, corrections must be completed by the later of the last day of the third plan year following the year the failure occurred or 18 months after the failure is identified. The revised rules also eliminate the requirement for a favorable IRS determination letter and expand self-correction opportunities to certain participant loan and safe harbor elective deferral failures. However, additional restrictions apply when a plan is under IRS examination.
The updated guidance also provides greater flexibility for correcting retirement plan overpayments, generally eliminating the requirement for plan sponsors to recover excess payments from participants or make corrective contributions to preserve the plan’s tax-qualified status. Certain exceptions apply, including overpayments that violate statutory limits or involve disqualified individuals or owner-employees. The IRS also clarified procedures under the Voluntary Correction Program (VCP), which allows plan sponsors to obtain IRS approval for corrections by submitting Form 8950 through bit.ly/4eDY2BN and paying the applicable user fee.
IRS Hits Record in Tax Collections for FY 2026
The IRS reported record tax collections of approximately $5.6 trillion for fiscal year 2026, representing an increase of nearly 5% over the prior year. Despite the increase in total collections, the agency reported that the average federal income tax rate across all income categories declined to 12.6% for tax year 2025, based on returns filed through mid-July 2026. Tax refunds also increased significantly, with the total dollar amount of refunds claimed rising 17% and the average refund increasing 11% compared to the previous year. Approximately 90% of taxpayers filing electronically received their refunds within 21 days, while total refund distributions increased by more than 20%.
The IRS also reported substantial growth in the use of its digital services, including Individual Online Accounts, Tax Professional Accounts, and Business Tax Accounts. bit.ly/2qDnQsI received more than 954 million visits, and the agency’s newly launched mobile app surpassed 140,000 downloads within its first five days. The IRS continued expanding electronic processing of employment tax returns, with more than 90% of Form 940 and 80% of Form 941 returns processed electronically. Additionally, the agency reported protecting approximately $38 billion in tax revenue from identity theft refund fraud through its collaboration with state tax agencies and private-sector partners. The IRS also highlighted the implementation of Trump Accounts, noting that nearly 70 million accounts have been opened. These accounts are designed to provide long-term investment savings for children under age 18, with the federal government contributing $1,000 for eligible children born between January 1, 2025, and December 31, 2028.
Form 8027 for 2026 Released with New Tip-Reporting Question
The IRS has released the 2026 version of Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, along with updated instructions. The revised form includes a new Line B, requiring employers to indicate whether their establishment participated in a voluntary tip reporting program during the 2026 calendar year. The updated instructions also reflect the retirement of the Filing Information Returns Electronically (FIRE) system, making the Information Returns Intake System (IRIS) the sole electronic filing option for Form 8027.
Large food or beverage establishments subject to these reporting requirements must submit paper returns by March 1, 2027, or electronically file through IRIS by March 31, 2027. Employers required to file 10 or more information returns during the calendar year must file electronically. Employers should review the revised form and instructions to ensure they meet the updated reporting requirements and applicable filing deadlines.
