The New York State Bar Association’s Tax Section has recently released three new reports concerning (1) the 2026-2027 New York State Executive Budget, (2) Section 355 Private Letter Ruling Policies, and (3) Proposed Updates to the Internal Revenue Service Voluntary Disclosure Practice:

• Report Number 1522 (Report on the 2026-2027 New York State Executive Budget):

Specifically, our Report offers comments and, in some cases, recommendations on the following parts of the [2026-2027 New York State Executive Budget (the Budget Bill)]:

• Part F – Decouple from Certain H.R. 1 Provisions
• Part G – Decouple NYC from Certain H.R. 1 Provisions
• Part H – Enact Pass-Through Entity Tax Flexibility.

We do not address any fundamental policy issues underlying these provisions of the Budget Bill. Instead, our Report focuses on certain technical, administrative, and conceptual issues raised by them and identifies aspects we think should be clarified or potentially revised prior to adoption by the legislature.

• Report Number 1523 (Report on Section 355 Private Letter Ruling Policies):

The Report focuses on both procedural and substantive issues affecting the section 355 PLR program. The Report (i) recommends reinstating the availability of “significant issue” rulings for spin-offs and other corporate reorganizations, and (ii) summarizes certain guiding principles and general rules that we believe should inform the Internal Revenue Service’s administration of the section 355 PLR program. In the Report, we stress the importance of applying clear, well-understood PLR standards that are grounded in statutory language and tax policy, generally in accordance with the prior ruling practice developed between 2018 and 2024, and responsive to the practical realities of planning and executing complex spin-off transactions. We believe that consistent application of these guiding principles and general rules can reinvigorate the PLR program, to the benefit of taxpayers and the government alike, without the need for the publication of additional substantive guidance at this time.

• Report Number 1524 (Report on Proposed Updates to the Internal Revenue Service Voluntary Disclosure Practice):

The Report provides comments and recommendations regarding several aspects of the proposed updates that, in our view, would ensure that the [Voluntary Disclosure Practice (VDP)] continues to serve as an effective and accessible pathway for taxpayers seeking to come into compliance. In particular, the Report addresses (i) the proposed requirement that participating taxpayers make full payment of tax, penalties, and interest within a short period following conditional acceptance into the VDP, (ii) the shortened timeline for submitting original or amended returns and related filings, and (iii) elements of the revised penalty framework, including penalties relating to income taxes, FBARs, international information returns, and estate and gift taxes.

As discussed in the Report, we believe that the proposed updates represent a meaningful step toward improving the efficiency and predictability of the VDP. At the same time, the Report emphasizes the importance of preserving sufficiently reasonable and balanced terms to encourage participation by taxpayers who might otherwise remain noncompliant. Drawing on the IRS’s historical voluntary disclosure practices and more recent experience, the Report offers targeted recommendations intended to promote participation, enhance fairness and administrability, and advance the shared objectives of voluntary compliance, efficient revenue collection, and effective tax enforcement.