IRS Extended Tax Relief for Dividend Payments

The Internal Revenue Service has delayed certain dividend withholding requirements for non-U.S. taxpayers through 2028.

Updated on Sept. 21, 2026 in Taxes

Bold flat-color editorial illustration featuring a geometric vault locking mechanism in navy and cream, representing institutional regulatory control. — The IRS has extended the current relief period for Section 871(m) dividend withholding requirements, delaying further tax enforcement until 2028. AI Illustration. Upload story photo >

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Should the IRS continue to delay the enforcement of international tax withholding rules?

The IRS issued Notice 2026-61, which extends the transition relief period for dividend equivalent payments until 2028. This move maintains current enforcement standards for withholding taxes under Section 871(m) of the tax code.

Why it matters

This extension provides continued clarity for taxpayers managing dividend equivalent payments by delaying upcoming changes to withholding enforcement. It helps maintain the current tax compliance framework while the agency prepares to propose new regulations later this year.

The IRS issued Notice 2026-61 to push the transition relief expiration for Section 871(m) enforcement from 2026 to 2028. This update governs how withholding taxes are applied to dividend equivalent payments for non-U.S. taxpayers.

The players

Internal Revenue Service

The federal agency responsible for tax administration, collecting revenue, and enforcing compliance with the U.S. tax code.

The details

Section 871(m) is designed to prevent non-U.S. taxpayers from avoiding withholding taxes on dividends. The current relief period simplifies compliance by limiting the scope of payments subject to these specific withholding rules. By extending this through 2028, the IRS maintains the existing threshold until it introduces new regulatory language later this year.

September 21, 2026: The IRS released Notice 2026-61.
2026: The transition relief was previously set to expire.
2028: The new expiration date for the transition relief.

Money Landscape

This extension marks a continuation of the administrative transition period for Section 871(m) of the Internal Revenue Code. It allows taxpayers to operate under the current withholding framework while the IRS updates its regulatory approach.

Non-U.S. taxpayers or entities managing these dividend equivalent payments should review their tax documentation to ensure compliance with current withholding standards. Please consult with a qualified tax professional to understand how these administrative timelines impact your specific accounts.

The takeaway

The IRS has provided additional time for taxpayers to adjust to dividend withholding rules by extending transition relief through 2028. Watch for the forthcoming proposed regulations expected later this year to see how future requirements may change.