Monthly US Tax Bulletin - July 2026

Key highlights:

Federal taxes

• Proposed legislation (H.R. 6506) would enhance taxpayer protections in IRS collection disputes through expanded Tax Court review authority and stronger refund claim safeguards.
• Congress has introduced H.R. 9174, establishing a voluntary disclosure pathway for taxpayers to correct historical cryptocurrency tax reporting failures with reduced penalties for eligible non-wilful noncompliance.
• Proposed legislation (H.R. 9173) would simplify charitable donations of qualifying digital assets by easing appraisal requirements and permitting market-based valuations.
• The IRS has launched the Automatic Exemption from Penalty (AEP) programme, providing automatic penalty relief to eligible taxpayers with strong compliance histories while streamlining the penalty relief process.

State taxes

• California proposes extending sales tax to SaaS and digital software offerings while permanently limiting business tax credit utilisation, significantly broadening the state's tax base.
• Colorado has enacted worldwide combined reporting as the default corporate filing method beginning in 2027, with an optional long-term water’s-edge election for eligible taxpayers.
• Illinois has introduced a tax on targeted digital advertising services and revised NOL and tax credit utilisation rules, increasing compliance and tax planning considerations.
• New York has further decoupled from select federal tax provisions while implementing new sales tax registration and relief programs to strengthen compliance oversight.
• Tennessee will impose a new tax on certain international money transmission services beginning in 2027, expanding compliance obligations for cross-border remittance providers.

Monthly US Tax Bulletin - July 2026

The tax and regulatory environment continues to evolve rapidly, with significant developments on both federal and state fronts. To keep you ahead of these developments, we present the July 2026 edition of the Grant Thornton Bharat Monthly US Tax Bulletin.

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