US Treasury threatens crackdown on Wall Street tax-avoidance strategies
The US Treasury Department and the Internal Revenue Service issued new guidance targeting aggressive ETF conversion structures and security transfer methods used by wealthy investors to avoid capital gains taxes. The regulatory sweep focuses on Wall Street tax-avoidance strategies and popular investment mechanisms, including a tax-slashing approach popularized by AQR. Officials released Revenue Ruling 2026-20 and Notice 2026-62 to address these transactions, prompting questions regarding dividend safety and potential exposure for crypto exchange-traded funds.
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- ✓ The US Department of the Treasury and the Internal Revenue Service issued a sweeping notice on Monday, September 28, 2026.
- ✓ New IRS guidance targets aggressive ETF conversions that wealthy investors use to avoid capital gains taxes on portfolios.
What changed
The US Department of the Treasury and the Internal Revenue Service issued a sweeping notice on Monday, September 28, 2026, targeting Wall Street tax-avoidance strategies.
Live updates
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US Treasury Targets Wall Street ETF Tax Strategies
The US Treasury Department and the Internal Revenue Service issued new guidance targeting aggressive ETF conversion structures and security transfer methods used by wealthy investors to avoid capital gains taxes. The regulatory sweep focuses on Wall Street tax-avoidance strategies and popular investment mechanisms, including a tax-slashing approach popularized by AQR. Officials released Revenue Ruling 2026-20 and Notice 2026-62 to address these transactions, prompting questions regarding dividend safety and potential exposure for crypto exchange-traded funds.
Why it matters
These tax-avoidance practices have served as mechanisms for wealthy clients to bypass capital gains taxes on extensive portfolios. Regulators are examining whether these structures function as capital gains tax black holes. The intervention signals an aggressive federal pushback against complex tax alpha strategies deployed across the financial sector.
What is confirmed
- The US Department of the Treasury and the Internal Revenue Service issued a sweeping notice on Monday, September 28, 2026.
- New IRS guidance targets aggressive ETF conversions that wealthy investors use to avoid capital gains taxes on portfolios.
Still unconfirmed
- Crypto exchange-traded funds may be next in line to face IRS scrutiny over similar tax strategies.
What to watch next
- Further regulatory guidance regarding crypto exchange-traded funds and potential enforcement actions by the Internal Revenue Service.
confidence 100%Sources used for this update (10)
- WSJ — Treasury Takes Aim at Tax-Avoiding Investment Strategies
- Current Federal Tax Developments — Tax Treatment of ETF Security Transfers: An Analysis of Revenue Ruling 2026-20 and Notice 2026-62
- GuruFocus — IRS Revenue Ruling on ETF Taxation Raises Dividend Safety Questi
- Bloomberg.com — Treasury Takes Aim at Wall Street Tax Trades in New Notice
- Financial Times — US Treasury threatens crackdown on Wall Street tax-avoidance strategies
- Bloomberg.com — Tax-Slashing ‘Holy Grail’ Popularized by AQR Dealt IRS Warning
- news.bloombergtax.com — Tax-Dodging Strategy Used by ETFs on IRS Watchlist, Agency Says
- Yahoo Finance — The IRS May Be Coming for Crypto ETFs Next: Which Funds Are at Risk?
- www.wealthmanagement.com — IRS Targets ETF Tax Strategies Used by Wealthy Clients
- www2.stockmarketwatch.com — US Treasury Targets Wall Street "Tax Alpha" Strategies in ...
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