Tax Bytes: Week of February 16, 2026

Upcoming Eversheds Sutherland event

A two-day controversy seminar exclusively for tax executives in Washington, DC on March 4^th and 5^th covering several current topics, including IRS enforcement priorities, BBA audit considerations, transfer pricing trends, litigation updates, and practical strategies.

Email Kimberly Kuhn (kimberlykuhn@eversheds-sutherland.com) to reserve your spot.

Tax developments

Section 45Z clean fuel production credit: Proposed regulations issued

On February 3, 2026, the Treasury Department and the IRS published proposed regulations regarding the clean fuel production credit under section 45Z of the Internal Revenue Code (Proposed Regulations). The Proposed Regulations follow the announcement from January 2025 in Notice 2025-10, which provided a draft of potential regulations regarding the section 45Z credit. The Proposed Regulations follow Notice 2025-10, with some key changes based on comments from taxpayers. The proposal includes regulations pursuant to sections 45Z, 4101, 6417, and 6418.

Read our full alert here.

A Sirius shift: Fifth Circuit overrules the Tax Court in defining “limited partner” for self-employment tax purposes

The Fifth Circuit’s recent decision in Sirius Solutions, L.L.L.P. v. Commissioner overturns the Tax Court’s functional test for determining who qualifies as a “limited partner” for self employment tax purposes. The court held that a “limited partner” is simply a “partner in a limited partnership with limited liability.”

Under the definition of “limited partner” adopted by the Fifth Circuit, a partner in a state law limited partnership may benefit from the limited partner exception regardless of the function or role of the partner with respect to the partnership. However, the decision applies only within the Fifth Circuit, and other circuits may continue applying the functional test, setting up the possibility of a circuit split and eventual Supreme Court review.

Read our full alert here.

Recent Eversheds Sutherland Tax insights 

Key changes to the Luxembourg tax landscape in 2026

UK and India enter into a reciprocal double contributions convention

Qualified Offers to Resolve Tax Disputes: New Case Shows How “Settling” Could Cost Taxpayers

One of the most powerful tools for taxpayers entangled in tax disputes is the “Qualified Offer.”  It can lead to early resolution of cases on favorable terms, fee recoupment, or both. Unfortunately, many taxpayers and their advisors are unaware of this strategic instrument, or they are aware of it but fail to employ it properly. In this article, Partner Hale Sheppard explores the normal method for recovering administrative and litigation fees from the government, unique aspects of Qualified Offers, and the newest case, Greenwald v. United States, in which a Qualified Offer takes center stage.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.