The Risk Isn’t Always Obvious: 2026 Legal Shifts to Watch

Several recent developments—across federal contracting, tariff authority, payroll enforcement, and tax litigation—may not appear related at first glance.

They are.

Each turns on something technical: statutory interpretation, procedural scope, compliance mechanics. And in each case, the consequences flow not from dramatic misconduct, but from how authority is defined or how details are handled.

That pattern is worth paying attention to.

DOL Sets 2026 Federal Contractor Minimum Wage at $13.65 Per Hour

The U.S. Department of Labor announced its annual inflation adjustment for minimum wage rates on certain federal contracts, effective May 11, 2026:

• A minimum wage of $13.65 per hour for non-tipped employees; and

• A minimum cash wage of $9.55 per hour for tipped employees.

Federal contractors and subcontractors subject to this Executive Order (13658) may wish to review payroll systems, subcontract agreements, and compliance procedures to ensure timely implementation.

Why this matters: Federal contractors operate within certification and audit frameworks that assume strict wage compliance. Even incremental rate adjustments require system updates and contract awareness. Technical underpayments can trigger broader contractual or enforcement scrutiny.

Supreme Court Rejects Tariffs Imposed Under Emergency Authority

In Learning Resources, Inc. v. Trump, 607 U.S. ___ (2026) (consolidated with Trump v. V.O.S. Selections, Inc.), the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. The Court held that the statute did not authorize the executive branch to impose tariffs without congressional approval.

The mechanism for refunding tariffs already collected has yet to be addressed. Reported collections are in the billions, and it remains unclear whether refunds will be automatic, require formal claims, or be subject to additional litigation. As of this writing, FedEx has reportedly filed suit.

Why this matters: For affected businesses, the question may shift from legality to procedure. Companies that paid tariffs under the invalidated authority may need to evaluate whether formal claims or other protective steps are required to preserve refund rights as guidance develops.

Tax Court Denies Summary Judgment in CDP Case

In a recent Collection Due Process (CDP) case, the U.S. Tax Court denied cross-motions for summary judgment after finding genuine issues of material fact regarding the scope of a stipulated decision involving the application of late-filing penalties to periods referenced in a deficiency notice or prior assessments outside the court’s purview.

Precision in settlement drafting, particularly when multiple assessment procedures are involved, becomes paramount.

Why this matters: Settlement language in tax litigation can determine the scope of future exposure. When multiple periods or procedural tracks intersect, ambiguity can reopen disputes thought to be resolved.

President Signs Resolution Disapproving D.C. Tax Conformity Legislation

On February 18, 2026, President Trump signed House Joint Resolution 142 (P.L. 119-78), disapproving the District of Columbia’s “D.C. Income and Franchise Tax Conformity and Revision Temporary Amendment Act of 2025.” The resolution nullifies the District’s legislation amending conformity with various provisions of the Internal Revenue Code.

Businesses and individuals subject to D.C. tax may wish to review planning, estimated tax positions, or reporting strategies based on the now-disapproved amendments.

Why this matters: State and local conformity affects timing, deductions, and reporting positions. Legislative reversals may require reassessment of positions taken in reliance on prior law, particularly for multi-jurisdictional taxpayers.

Nevada Business Owner Pleads Guilty to Employment Tax Violations

A Nevada business owner pleaded guilty to failing to remit employment taxes on behalf of her cleaning company, with a tax loss exceeding $1.2 million. The case signals that payroll tax enforcement continues to be a priority for the Department of Justice and the IRS.

Why this matters: Employment taxes involve funds withheld on behalf of employees and are treated accordingly by enforcement authorities. Responsible parties may face personal liability, and in certain circumstances, criminal exposure.

Growing Creator Economy Raises New Tax and Payroll Compliance Considerations

The $205 billion creator economy continues to evolve, bringing increasing tax complexity and compliance challenges for digital entrepreneurs, including:

• Worker classification (independent contractor vs. employee);

• Payroll tax compliance for production teams and support staff;

• Multi-state income and sales tax exposure; and

• Compliance implications under new federal provisions taking effect in 2026 under the “One Big Beautiful Bill Act.”

Early compliance review may be critical to mitigating exposure.

Why this matters: Rapid business growth does not eliminate structural tax requirements. Worker classification and multi-state nexus issues can generate layered federal and state liability if not addressed proactively.

IRS–ICE Data Sharing Admission Sparks Congressional and Legal Scrutiny

The IRS has acknowledged deficiencies in its process for sharing certain taxpayer information with U.S. Immigration and Customs Enforcement (ICE). The admission has prompted congressional calls for investigation, centering on the scope of permissible disclosures under IRC § 6103.

Why this matters: Taxpayer confidentiality protections are foundational to federal tax administration. Questions regarding disclosure boundaries may lead to additional oversight, guidance, or litigation clarifying statutory limits.

IRS Issues Interim Guidance on Prohibited Foreign Entities and Energy Credits

The IRS issued interim guidance addressing when electricity-producing qualified facilities, energy storage technologies, or eligible components are considered to receive “material assistance” from a Prohibited Foreign Entity (PFE), potentially disqualifying them from certain federal energy tax credits.

Developers, manufacturers, and investors may wish to review supply chain arrangements, sourcing contracts, and ownership structures to ensure continued credit eligibility.

Why this matters: Eligibility for certain energy credits may turn on technical sourcing and ownership definitions. For projects relying on these incentives, qualification analysis can materially affect financial viability.

SEC Corporation Finance Director Outlines Rulemaking Priorities

Recent remarks from the Director of the SEC’s Division of Corporation Finance outline potential initiatives, including:

• Consideration of optional semiannual reporting;

• A materiality-focused rewrite of Regulation S-K; and

• Additional disclosure guidance relating to crypto assets.

Why this matters: Disclosure standards evolve incrementally. Even measured shifts in reporting frequency or materiality expectations can affect internal compliance processes and risk evaluation for public companies.

A Final Thought

Across these developments, the pattern is not sweeping reform but clarification—of authority, eligibility, procedure, and enforcement emphasis.

The risk is not always obvious at the outset. It often emerges later, when assumptions about compliance or statutory scope are tested. Careful evaluation before issues mature into disputes remains one of the most effective forms of risk management.

At Kundra & Associates, we advise individuals and businesses nationally and internationally from our offices in Maryland and Washington, D.C., frequently addressing complex tax and enforcement matters at an early stage. If any of these developments intersect with your operations or tax posture, thoughtful review may help mitigate unnecessary exposure.