The IRS released its September 10 edition of e-News for Tax Professionals (Issue 2026-36) with four items that affect small business owners and their employees: a permanent expansion of the paid family and medical leave employer credit, a payroll withholding reminder tied to National Payroll Week, updated identity theft defenses for taxpayers and tax prep firms, and new accounting method change procedures for businesses with research expenditures.
Paid Family and Medical Leave Credit Is Now Permanent and Broader
If you provide paid family and medical leave to your employees, a federal employer tax credit may be available. The Working Families Tax Cuts made several significant changes to that credit, and they’re worth understanding before year-end planning.
The credit is now permanent. It no longer depends on periodic congressional renewal.
Eligibility expanded in two ways. You can now claim the credit for employees who have six months of service, not just long-tenured workers. Part-time employees working 20 or more hours per week also qualify now.
Coverage also got broader. Employers can claim the credit for insurance premiums paid to provide leave, in addition to wages paid while an employee is actually out on leave. If you pay for a paid leave insurance policy rather than self-funding leave, that premium cost now counts.
One important nuance for employers in states with paid leave mandates: you can count leave provided under a state or local mandate toward the eligibility threshold for this federal credit. But that mandated leave does not count toward the credit calculation itself. The two calculations stay separate.
There are two methods for claiming the credit this year. The premium-based method calculates the credit from qualifying premiums you paid for paid family and medical leave insurance policies. The wage-based method calculates it from wages paid while the employee is on leave. IRS Notice 2026-28 compares both methods, addresses how to allocate qualifying premiums, and explains how to elect between them. Your tax advisor can help you run the numbers on both to see which produces the better result for your payroll structure.
National Payroll Week: Now Is a Good Time for a Withholding Review
National Payroll Week runs September 7 through 11. The IRS uses it each year to push employers and employees to check payroll and withholding, and 2026 is a reasonable year to take that seriously given the tax law activity over the past 12 months.
For individuals, the IRS recommends reviewing withholding after any major life change, income change, or tax law change. The IRS Tax Withholding Estimator can help check whether federal income tax withholding is roughly on target. If it isn’t, submitting a new Form W-4 to your employer adjusts it going forward.
For employers and payroll professionals, the IRS points to two core publications: Publication 15 (Circular E), the Employer’s Tax Guide, covers federal employment tax responsibilities. Publication 15-T covers federal income tax withholding methods and tables. Make sure you’re using current versions of both.
The IRS also notes that the Saver’s Match starts in 2027. If you have employees or clients who contribute to retirement accounts, that’s worth a planning conversation now rather than scrambling next year.
Tax Identity Theft Defenses: MFA Is Required, Not Optional
This item from the IRS “Protect Your Clients; Protect Yourself” summer series is written for tax professionals, but it directly affects small business owners and anyone who files through a tax prep firm.
All tax preparation firms are required to use multifactor authentication (MFA) to protect access to client data. The only exception is if a qualified individual approves in writing an equivalent secure access control. MFA requires at least two independent factors to verify a user’s identity. It protects against phishing, social engineering, and attacks that exploit stolen passwords. If your tax preparer hasn’t mentioned MFA protocols, it’s worth asking.
The IRS highlighted two tools for individual taxpayers. An IP PIN (Identity Protection PIN) is a six-digit number shared only between the taxpayer and the IRS. It helps the IRS confirm your identity when a tax professional files your return. Taxpayers must get their own IP PIN through IRS Online Account; tax professionals cannot apply for one on a client’s behalf.
IRS Online Account lets individuals view their own tax records and helps block fraudsters from creating accounts in their name. Tax professionals have a parallel tool, Tax Pro Account, for submitting powers of attorney and managing client authorizations.
Research Expense Accounting: New Automatic Consent Procedures Under Rev. Proc. 2026-32
This item is narrower, but it matters for businesses with research or experimental (R&E) expenditures that are sorting out the transition from TCJA rules to the newer One, Big, Beautiful Bill Act (OBBBA) rules.
Revenue Procedure 2026-32 provides procedures for getting automatic consent from the IRS Commissioner to change your accounting method for R&E costs. It covers two scenarios: changing methods to comply with Section 174 as amended by the TCJA (before the OBBBA amendments), and changing methods to comply with Sections 174 and 174A as amended or enacted by the OBBBA (Public Law 119-21, enacted July 4, 2025). It also addresses accounting method changes for long-term contracts in taxable years beginning after July 4, 2025, under the OBBBA’s amendments to Section 460(e).
If your business has been capitalizing R&E costs and needs to align with the post-OBBBA rules, this procedure is the path to do that without seeking a private letter ruling. Talk to your tax advisor about whether an accounting method change applies to your situation.
What to Do Now
- If you provide paid family and medical leave, review your leave policy and any leave insurance arrangements against the new credit rules before filing your 2026 return. Read IRS Notice 2026-28 and work with your tax advisor to choose the method that fits your payroll structure.
- Run a payroll and withholding review before year-end. Use current versions of Publication 15 and Publication 15-T. Remind employees who’ve had a life or income change this year to submit a new Form W-4.
- Confirm that your tax preparation firm uses MFA. If you haven’t obtained an IP PIN, consider doing so through IRS Online Account.
- If your business has R&E expenditures and you’re navigating the TCJA-to-OBBBA transition, ask your tax advisor whether Rev. Proc. 2026-32 opens an automatic consent path for an accounting method change.
BCA works with small businesses, owner-operators, and gaming and compliance-sector clients on employment credits, payroll compliance, and tax strategy. If the paid leave credit expansion or the R&E accounting changes raise questions for your business, reach out.
This article is for general educational purposes only and does not constitute legal, tax, or accounting advice. Tax rules are complex and fact-specific. Consult a qualified tax advisor before taking action based on this information.
Educational information only, not licensed legal, tax, or financial advice. We refer to and partner with licensed professionals when personalized advice is needed. Laws change; no warranty of accuracy or timeliness.
Sources
IRS e-News for Tax Professionals, Issue 2026-36, September 10, 2026: https://content.govdelivery.com/accounts/USIRS/bulletins/42980b1