Sunday June 7, 2026
Washington News
Free File Still Available for Non-Filers
On June 2, 2026, the Internal Revenue Service (IRS) announced that taxpayers who missed the April 15 tax filing deadline may still use the IRS Free File program.
IRS Chief Executive Officer Frank J. Bisignano stated, "IRS Free File makes it easy for taxpayers to meet their filing obligations and claim valuable tax credits at no cost. As we continue to transform the IRS into a digital-first agency, tools like IRS Free File help provide a secure, convenient, and reliable filing experience for taxpayers."
Many taxpayers who do not usually file a tax return may still qualify for tax credits or refunds. An estimated 109 million taxpayers are eligible to use the IRS Free File program. The IRS will maintain the availability of Free File until October 15, 2026.
The IRS Free File program can be accessed on IRS.gov. The program allows individuals to use tax software available through trusted partners. The free commercial software enables safe, secure and user-friendly options for filing taxes.
- No-Cost Filing — Taxpayers may use the Free File software if their adjusted gross income is $89,000 or less. In many cases, these individuals may also file a state tax return at no cost.
- Trusted Partners — The IRS reviews and analyzes the tax software provided by each commercial vendor. Among the participating providers, one provides software in Spanish while several offer free state tax returns with the use of their software. In addition, the software providers are required to provide customer support.
- Easy and Secure — The commercial software programs have been used by millions of taxpayers and provide convenient step-by-step guidance. Each software program also checks for math errors and identifies potential taxpayer filing errors, helping taxpayers ensure a more accurate tax return is filed compared to those completing a return manually.
- Fast Refunds — Many individuals who do not typically file may qualify for a refundable credit or a refund of taxes that have been withheld. By using the Free File program, you may be able to receive a prompt cash refund to your bank account through direct deposit.
Former MLB Coach Strikes Out on Conservation Easement Deduction
In Rising Rock Partners LLC v. Commissioner; No. 23614-21; No. 33677-21; T.C. Memo. 2026-45, a Georgia partnership and taxpayers Edgar and Deborah Yost created conservation easements in 2017. Rising Rock Partners, LLC (RRP) claimed a $12,765,000 deduction and the Yosts reported a charitable conservation easement deduction of $12,715,000. The Tax Court determined that each charitable deduction was valued at $649,955 and a 40% gross misstatement penalty applied.
Meriwether County is in western Georgia. There are granite deposits in the area, but the main granite quarry in the county serves local customers rather than the Atlanta market. The residents of Meriwether County have been opposed to the development of a new granite quarry. Commercial real estate developer Jerry Fitzgerald attempted to obtain rezoning to permit development of a granite quarry through litigation. Both a Georgia court and the Meriwether County Planning Commission denied the rezoning.
Edgar Yost was a major league baseball player and coach. In 2015, he coached an MLB team to a World Series championship. The Yosts resided in Georgia and acquired approximately 670 acres in Meriwether County between 2011 and 2013. They subsequently sold a parcel of property to Rising Rock Partner Investments, LLC.
In 2017, Rising Rock Partner Investments, LLC offered partnership interests to investors. It projected a 4.5-to-1 deduction ratio. The investors expected to claim $4.50 in charitable contribution deductions for every dollar invested. The deduction was based on an appraisal by Dale W. Hayter, Jr. and Clayton Weibel. Based on the claim that the property would become a commercially viable granite quarry, the Rising Rock conservation easement deduction was valued at $12,765,000. The Yosts also donated a similar conservation easement to Oconee River Land Trust, Inc. and it was valued at $12,715,000. The IRS audited both parties and denied the deductions.
At trial, attorney F. Adam Nelson claimed experience in Georgia zoning law and stated that it was reasonably probable there could be a granite quarry. Douglas R. Kenny is a Georgia real estate appraiser and claimed development of a quarry could result in an easement value of $12,080,000.
IRS appraiser Dr. Thomas Hamilton concluded the highest and best use of the property was recreational and low-density residential. Dr. Hamilton valued the conservation easement at $625,000.
A charitable deduction is based on fair market value. This is defined as "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts." Reg. 1.170A-1(c)(1).
The taxpayers claimed the highest and best use was the development of a granite quarry, though not currently zoned for that use. The assumption was based on an oral conversation with a county official and disregarded the "widespread resistance to quarry mining throughout the county." Therefore, the court determined that a quarry was not a reasonably probable use.
In addition, the demand for granite was limited because the county was declining in population in 2017. Based on the improbable likelihood of rezoning and the lack of market demand, a quarry was deemed unlikely to be created. Therefore, the property was valued for low-density residential and recreational use. Based on comparable sales in an analysis by Dr. Hamilton, the court determined that the property should be valued at $3,800 per acre. With this evaluation and a decision that an assumed income value was not appropriate, the value of the conservation easements for Rising Rock and the Yosts was $649,955.
The Tax Court observed the claimed contribution deduction was over 1,900% of the correct value. As a result, there was a 40% gross valuation misstatement penalty under Section 6662(h). Because the Yosts had stipulated that they would be bound by the decision in the Rising Rock Partners, LLC case, both parties are permitted to claim a charitable deduction of $649,955.
Scholarship Granting Organizations Guidance
In JCX-1-26, the Joint Committee on Taxation (JCT) published an explanation of the One Big Beautiful Bill Act (OBBBA) in its Bluebook. One of the provisions that will take effect in 2027 is a tax credit for gifts to a scholarship granting organization (SGO). The Bluebook explains in detail the operation of the credit.
- Explanation of the SGO Credit — There is a nonrefundable income tax credit for U.S. citizens or residents. The credit will be $1,700 for either a single or joint filer. It will apply only if a state elects to participate and designates the SGO as qualified. The gifts must be in cash to a recognized SGO and will be reduced by any similar state tax return credit. The amount transferred for the credit is not a charitable deduction under Section 170.
- Scholarship Granting Organization — An SGO must be a Section 501(c)(3) nonprofit organization. It may not be a private foundation, and it must maintain a separate account exclusively for the qualified contributions. The SGO must give scholarships to ten or more students who attend at least two or more schools. It must spend 90% of its income on scholarships. The expenses covered must be qualified elementary or secondary expenses. Students will have priority if they have previously received a scholarship or if a sibling has received a scholarship. The funds may not be earmarked by a donor for a particular student. The organization must also verify annual household income and family size to ensure that students are qualified. The organization must be designated by the state for the applicable year.
- Eligible Student — A student is qualified to receive a scholarship if the household annual income is less than 300% of the area median gross income. Household income is defined using the provisions in the tax code for the low-income housing credit. The student must also be eligible to enroll in a public elementary or secondary school.
- Qualified Elementary or Secondary Education Expense — Qualified expenses are similar to the provisions of Coverdell education savings account rules. Expenses generally include tuition, fees, academic tutoring, special-needs services for a special-needs beneficiary, books or supplies. Additional expenses may qualify in some circumstances for room and board, uniforms, transportation and computer technology.
- Nonrefundable Personal Tax Credit — The credit is allowable against both federal income tax and the alternative minimum tax. If there is a limitation of the credit under Section 26(a), the excess credit may be carried forward for up to five years. Credits will be used on a first-in, first-out basis.
- No Self-Dealing — The Section 4946 rules that define a disqualified person are applicable. A scholarship may not be given to a family member of a substantial contributor or founder.
Applicable Federal Rate of 5.0% for June: Rev. Rul. 2026-11; 2026-24 IRB 1 (15 May 2026)
The IRS has announced the Applicable Federal Rate (AFR) for June of 2026. The AFR under Sec. 7520 for the month of June is 5.0%. The rates for May of 5.0% or April 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 2026, 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.”
Previous Articles
IRS Reminds Homeowners of Tax Benefits
