If you dread calling the IRS, you can meet with them instead at one of their Taxpayer Assistance Centers (TACs) in more than 360 locations. However, the inspector general for the IRS, Treasury Inspector General for Tax Administration (TIGTA), recently warned that TACs may mislead taxpayers with incorrect information. Yet it is an accomplishment to progress that far. Scheduled appointments are recommended, but TACs accommodate visitors without an appointment as resources allow. Standard procedure requires TACs to close an appointment if the taxpayer is 15 minutes late to help taxpayers who walk in without an appointment. This was done only 4% of the time. Instead, TACs routinely kept those appointment times closed to other taxpayers. TIGTA made 91 unannounced visits to 82 TACs. Two visits were preempted due to sudden TAC closure, and 9 were prevented because the security guard refused them entry. For 17 visits, TIGTA was told to make an appointment. For 10 of these incidents, the TACs did not even give a phone number to make an appointment. Two of the 17 visitors were told that an appointment was needed 3 to 5 weeks in advance.

An appointment was available for all 17 visitors within an hour of arrival, but they were still turned away. TACs periodically issue satisfaction survey cards on certain days through statistical sampling, but they failed to do so 86% of the time. Of the visits in which the inspectors received full assistance, the TACs were incorrect nearly half the time (46%). The report did not reveal the full details of this assessment, but TIGTA asked three general commonplace questions.

TACs were particularly deficient in their answers regarding injured spouse relief. Unfortunately, information from a Taxpayer Assistance Center must be verified. To double-check the guidance you received from the IRS, please contact (916) 822-8700 for assistance.

The IRS has administered “First Time Abate” since 2001.[1] This is an administrative waiver of certain penalties if there is at least three years of prior tax compliance. However, the taxpayer (or their representative) needed to request its application. Now, the IRS has made First Time Abate automatic. Effective beginning with the 2025 tax year and the 2026 quarterly returns (so a Form 941 for a quarter in 2025 would not apply), the newly renamed “Automatic Exemption from Penalty” will operate under the same rules as First Time Abate, except that a penalty eligible for automatic exemption would simply not be assessed at all, and without the taxpayer’s intervention.

The waiver is available for individual tax returns, partnership tax returns, S corporation tax returns, C corporation tax returns, and payroll tax returns. To qualify, the taxpayer must have timely filed the return for the prior 3 tax years without a penalty. If so, the failure to file, failure to pay, and the failure to deposit penalty will be waived, as applicable, regardless of penalty amounts. Although the waiver should occur automatically, the IRS makes mistakes and might not always do so. As seen, the Automatic Exemption from Penalty (AEP) is limited to one waiver for every three years. In contrast, a waiver for reasonable cause (generally for extenuating circumstances such as illness) can be made any number of times. So, if both the AEP and the reasonable cause waiver apply, it is better to preserve the AEP and use the reasonable cause waiver instead (which is not automatic). Reasonable cause can generally be used as a defense to far more forms than AEP can as well. AEP notably does not include information returns, regardless of their obscurity. If you received a penalty but had reasonable cause, please contact (916) 822-8700 for assistance.

[1] IRM 20.1.1.3.3.2.1.

The FTB issues its own equivalent of IRS Revenue Rulings, known as Legal Rulings. Unlike Revenue Rulings, Legal Rulings are rare, with only four Legal Rulings since 2022, including the latest one issued on July 7, 2026, Legal Ruling 2026-01.

A trust is taxable by the FTB if it has a resident fiduciary, California-source income, or a resident noncontingent beneficiary. Legal Ruling 2026-01 discusses when a resident is a contingent beneficiary. The regulations provide that “[a] noncontingent beneficiary is one whose interest is not subject to a condition precedent.”[1] The regulations do not define “condition precedent” for these purposes, but the FTB supplied a definition derived from the Bouvier Law Dictionary: “An event or condition that must occur before the ripening of an interest, right, or claim. If the event or condition does not occur, the interest does not vest.” In turn, the FTC defines “vested” from the same dictionary as: “Having become an unconditional and immediate interest or right.”

It would appear that a beneficiary with an interest of less than an unconditional and immediate right to trust income or corpus is a contingent beneficiary. Yet the Legal Ruling attempted to counter that conclusion, asserting that complete trustee discretion results in a contingency and that “[i]n each case, the trust document should be reviewed to determine any limitations on the trustee’s discretion to accumulate income rather than to distribute it to the beneficiary.” This comment was spurred by the Supreme Court’s 2019 narrow ruling in N.C. Dep’t of Revenue v. Kimberley Rice Kaestner 1992 Family Trust that “the presence of in-state beneficiaries alone does not empower a State to tax trust income that has not been distributed to the beneficiaries where the beneficiaries have no right to demand that income and are uncertain ever to receive it.” The three situations reviewed in this Legal Ruling all had a trustee with complete discretion. Consequently, the result was the same regardless of whether there was a potential right to either income or corpus. The contingent beneficiary becomes a noncontingent beneficiary, and therefore taxed, only on the amount actually distributed to them and not on the undistributed trust income or corpus.

Legal Ruling 2026-01’s conclusions seem unremarkable in a comparatively settled area of tax law. Both its point that “[w]here a trustee has absolute discretion to allocate net trust income to the beneficiary, the beneficiary has a contingent interest in the distribution,” and its emphasis on the trustee’s limitations are directly from a prior case, Steuer v. Franchise Tax Board.[2] Legal Ruling 2026-01 is substantially similar, if not fully the same, as TAM 2006-0002, which Steuer drew upon in its opinion. The purpose of Legal Ruling 2026-01 appears to be to restate TAM 2006-002 as a Legal Ruling, because a Superior Court accused the FTB of generating “underground” regulations through Technical Advice Memorandums (TAMs).[3] Seemingly in response, the FTB omitted all TAMs from public view on its website.

Regardless of the reasons for Legal Ruling 2026-01’s issuance, the FTB’s ready reliance on secondary sources for definitions in its analysis undermined the ruling’s implicit message. Instead of a contingent beneficiary primarily occurring only when the trustee has unfettered discretion (which was not explicitly stated), the FTB seemingly and unwittingly provided the premises for the syllogism that a beneficiary is a contingent one whenever the beneficiary lacks limits. Legal Ruling 2026-01 instructs the reader to examine the trustee’s powers when the definitions it endorsed shift the analysis from the trustee’s limits to the beneficiary’s limits. A beneficiary is noncontingent because they have an absolute right to receive the distribution, not because the trustee has absolute power to make the distribution.

[1][1] 18 CCR § 17742(b).

[2] “[W]e review the trust document to determine whether there are any limitations on a trustee’s discretion to distribute income to a beneficiary.” Steuer v. Franchise Tax Bd., 51 Cal. App. 5th 417, 431-32 (2020).

[3] American Catalog Mailers Association v. Franchise Tax Board, San Francisco Superior Court No. CGC-22-601363 (2023).

The IRS normally imposes late filing and late payment penalties. However, the Court of Federal Claims held that tax returns and payments that would ordinarily be due from January 20, 2020, to July 10, 2023, were postponed to July 11, 2023, by operation of 7508A of the Internal Revenue Code. This applies to income taxes, gift taxes, estate taxes, excise taxes, and employment taxes, together with associated returns. According to the National Taxpayer Advocate, this means that the IRS unlawfully imposed penalties on tens of millions of taxpayers during this period. For example, if you paid taxes owed for the 2020 tax year on July 10, 2023, instead of April 15, 2021, the IRS probably assessed a penalty against you. That penalty would be unlawful. However, these penalties will not be automatically refunded. Instead, Form 843 must be filed by July 10, 2026, to claim that amount plus interest compounded daily. This is a new development that most IRS employees are likely unaware of and may dispute. Consequently, a qualified tax practitioner is needed to properly file Form 843 and explain the legal position to the IRS. If you are interested in filing such a refund claim, please contact (916) 822-8700.

On September 19, 2025, President Trump imposed a $100,000 fee for H-1B visa applications. Twenty states filed suit in California v. Mullin,and the U.S. District Court, District of Massachusetts, ruled in their favor on June 8, 2026. The H-1B program was created in 1990 and “allows a U.S. employer to petition the government to hire a nonimmigrant worker in a specialty occupation for a maximum duration of six years.”[1] There is a general limit of 85,000 H-1B visas per year, but “the cap does not apply to (1) an institution of higher education or a related or affiliated nonprofit entity, or (2) a nonprofit research organization or governmental research organization,” which also enjoy other benefits such as the ability to bypass the H-1B lottery.[2]

The administration relied on three provisions of the Immigration and Nationality Act of 1952 (INA) for the fee increase. Section 212(f) of the INA provides that the President may “suspend the entry of all aliens or any class of aliens” as well as impose “any restrictions he may deem to be appropriate.”[3]  Furthermore, Section 215(a) of the INA declares: “Unless otherwise ordered by the President, it shall be unlawful—for any alien to depart from or enter or attempt to depart from or enter the United States except under such reasonable rules, regulations, and orders, and subject to such limitations and exceptions as the President may prescribe.”[4] The President may also set fees “at a level that will ensure recovery of the full costs of providing all such services” regarding visas.[5] Nevertheless, it would appear that the government expended most of its energy in this case arguing against the possibility of judicial review for the fee increase.

Judicial Review

Generally, “the federal courts cannot review an executive officer’s denial of a visa,” according to a judicial rule known as “the doctrine of consular nonreviewability.”[6] Contrary to the federal government’s assertions, this is inapplicable here. “Here, Plaintiffs do not seek retrospective review of an executive officer’s decision to exclude a noncitizen but rather advance a forward-looking challenge regarding the lawfulness of the Policy carrying out the Proclamation.”[7]

“To act ultra vires a government official is either acting in a way that is impermissible under the Constitution or acting outside of the confines of his statutory authority.”[8] The Administrative Procedures Act (APA) is the primary vehicle for challenges to the federal government. Yet “even after the passage of the APA, some residuum of power remains with the district court to review agency action that is ultra vires.”[9] Yet to the administration, “[i]t is doubtful that ultra vires review is available to challenge presidential actions at all.”[10] The court conceded that it might lack the authority to enjoin the President, but it certainly can “enjoin the officers who attempt to enforce the President’s directive.”[11]

Judicial review of the President is either constitutional or statutory, and not “every action by the President, or by another executive official, in excess of his statutory authority is ipso facto in violation of the Constitution.”[12] Where the alleged violation is simply of the statute without any other constitutional concerns, any judicial review is statutory in nature. Sometimes, that characterization precludes judicial review. When a statute “commits decisionmaking to the discretion of the President, judicial review of the President’s decision is not available.”[13] Here, however, “Plaintiffs do not simply claim that the Executive Branch failed to comply with the terms of the INA. Their allegations implicate weighty constitutional concerns regarding the balance of power between the executive and legislative branches.”[14] The government’s repetitive assertions that the fee increase was authorized through Article II of the Constitution fortified the court’s conclusion. Nevertheless, an ultra vires review will not lie “if a statutory review scheme provides aggrieved persons with a meaningful and adequate opportunity for judicial review.”[15] The court suggested that would preclude ultra vires review here, due to the APA, but the government failed to raise that argument and therefore waived it.

APA jurisprudence is in a curious predicament. It applies to final agency actions, yet it does not apply to the President, according to the Supreme Court. “At what point does an agency’s implementation of a presidential directive amount to an exercise of the President’s power (which is unreviewable under the APA) rather than an exercise of agency action (which is subject to APA review)?”[16] The court did not cite any appellate cases to answer this question. However, there have been a string of district court cases relying on a law review article by Justice Kagan written nine years before she became a Supreme Court Justice wherein she reasoned that “[w]hen the challenge is to an action delegated to an agency head but directed by the President,” the President’s actions can be challenged as an agency’s actions.[17] This applied here, and the court found that there was final agency action for this matter.

Ruling on the Merits

The court moved on to the merits, beginning with whether the fee increase usurped the congressional taxing power. A monetary exaction is a penalty if it is a “punishment for an unlawful act or omission.”[18] There must be a negative legal consequence for the conduct incurring the payment beyond the actual payment. Otherwise, it is a tax for constitutional purposes. Here, “[h]iring workers pursuant to the H-1B program is plainly lawful,” and therefore the fee is a tax.[19] The government averred that the fee is not a tax because it was not collected by the IRS, and because the fee (somehow) does not increase total revenue. Both positions were wholly unsupported. Furthermore, the administration offered the “mere ipse dixit” that the fee is “a regulatory payment” and therefore “not the same as a tax.”[20] No authority was proffered for this proclamation, and the court found plenty against it. Claims that the President has the independent constitutional power to condition immigration on fees of any amount also appeared to discredit the government’s position.

The court easily ruled that the “restrictions” permitted by Section 212(f) do not encompass taxes, just as that term (and many synonyms) did not permit tariffs under the International Emergency Economic Powers Act, as Learning Resources determined. A statute delegating the power to tax must be explicit, which also disqualified Section 215(a)’s “limitations.” This was a straightforward application of Learning Resources. However, the court noted that “Defendants’ contrary interpretation regarding the scope of the President’s power under INA § 212(f) offers no perceivable limits. Their position that § 212(f) allows the President to impose any tax so long as it connects to a ‘restriction’ on the ‘entry of aliens’ deviates from the text of the statute. Congress authorized the President to ‘impose on the entry of aliens any restrictions he may deem to be appropriate’ when he finds that the entry ‘would be detrimental to the interests of the United States.’”[21] The court reserved its analysis of the statutory provision that does address fees for the APA portion of its opinion.

The court stressed that 8 U.S.C. § 1356(m)’s fees are limited to administrative cost recovery. Helpfully to the court, the government conceded that the disputed fees do not recover costs. Thus, the court found that the government acted in excess of its statutory authority, one of the grounds for setting aside a final agency action under the APA. The government similarly admitted that there was not any attempt to follow the notice-and-comment procedures. Yet it claimed that it was unnecessary because the executive order bypassed that requirement. Since the executive order was ultra vires, it did not have the force of law, the agency’s actions did. These required compliance with notice-and-comment procedures. The foreign-affairs exception to this requirement was inapplicable because the government did “not offered any evidence of the undesirable international consequences that would have flowed from complying with the APA’s procedural requirements. Nor have they explained any need for the immediate implementation of the $100,000 payment requirement.”[22] Similarly, the government did not articulate any emergency for the purposes of the good-cause exception. Any purported emergency would have been scrutinized by the court and applicable only when publishing that explanation alongside the rule. The government did not do so. APA jurisprudence focuses on whether there was adequate consideration of the costs and benefits in order for a rule to avoid the stigma of being arbitrary and capricious. Again, the government confessed that there was not any consideration, but it did not need to because the directive was a lawful order. Yet the court held that the order was unlawful and “the mere fact that Defendants followed a presidential directive does not grant them free rein to ignore the requirements of the APA.”[23]

Conclusion

            The court vacated the fee increase for the whole nation, finding that Trump v. CASA does not apply to the APA. California v. Mullin is a template for how a government fee can be challenged and how it cannot be defended. It further confirmed that even if there were delegated authority, an executive order does not function as a shortcut excluding the APA.

[1] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *8 (D. Mass. June 8, 2026).

[2] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *8-9 (D. Mass. June 8, 2026)(omitting internal quotation marks).

[3] In full:

Whenever the President finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate. 8 U.S.C. § 1182(f).

[4] 8 U.S.C. § 1185(a)(1).

[5] In full:

Notwithstanding any other provisions of law, all adjudication fees as are designated by the Attorney General in regulations shall be deposited as offsetting receipts into a separate account entitled “Immigration Examinations Fee Account” in the Treasury of the United States, whether collected directly by the Attorney General or through clerks of courts: Provided, however, That all fees received by the Attorney General from applicants residing in the Virgin Islands of the United States, and in Guam, under this subsection shall be paid over to the treasury of the Virgin Islands and to the treasury of Guam: Provided further, That fees for providing adjudication and naturalization services may be set at a level that will ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants. Such fees may also be set at a level that will recover any additional costs associated with the administration of the fees collected.

8 U.S.C. § 1356(m).

[6] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *20 (D. Mass. June 8, 2026)(omitting internal quotation marks).

[7] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *22 (D. Mass. June 8, 2026).

[8] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *23 (D. Mass. June 8, 2026).

[9] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *23 (D. Mass. June 8, 2026)(quoting R.I. Dep’t of Env’t Mgmt. v. United States, 304 F.3d 31, 42 (1st Cir. 2002)).

[10] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *23 (D. Mass. June 8, 2026)

[11] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *24 (D. Mass. June 8, 2026).

[12] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *25 (D. Mass. June 8, 2026)(quoting Dalton v. Specter, 511 U.S. 462, 472 (1994)).

[13] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *27 (D. Mass. June 8, 2026)(quoting Dalton v. Specter, 511 U.S. 462, 477 (1994)).

[14] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *27 (D. Mass. June 8, 2026).

[15] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *29 fn.6 (D. Mass. June 8, 2026)(quoting NRC v. Texas, 605 U.S. 665, 681 (2025)).

[16] California v. Mullin, 2026 U.S. Dist. LEXIS 126030, *43.

[17] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *44 (D. Mass. June 8, 2026)(quoting Elena Kagan, Presidential Administration, 114 Harv. L. Rev. 2245, 2351 (2001).

[18] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *31 (D. Mass. June 8, 2026)(quoting Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 567 (2012)).

[19] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *31 (D. Mass. June 8, 2026).

[20] California v. Mullin, 2026 U.S. Dist. LEXIS 126030, *34.

[21] California v. Mullin, No. 25-13829-LTS, 2026 U.S. Dist. LEXIS 126030, at *42 fn.9 (D. Mass. June 8, 2026).

[22] California v. Mullin, 2026 U.S. Dist. LEXIS 126030, *51(emphasis in original).

[23] California v. Mullin, 2026 U.S. Dist. LEXIS 126030, *55-56.