Weekly Legal Update: September 4, 2026.

The Sixth Circuit affirmed a judgment piercing the corporate veil of a closely held mining company and voiding transfers under Kentucky's Uniform Voidable Transactions Act. The court concluded that the shareholder directors dominated the corporation through gross undercapitalization, failure to observe corporate formalities, and diversion of assets, and that multiple badges of fraud attached to the challenged transfers. The court reversed the award entered under Kentucky's unlawful distribution statute, holding that the statute imposes liability "to the corporation" and does not give an outside creditor a direct cause of action. Writing for the panel, Judge Nalbandian reasoned that the court would not read a common law cause of action into a statute that exists alongside that cause of action rather than replacing or embodying it. The damages judgment survived because veil piercing supports joint and several liability. The decision applies Kentucky corporate law and is not recommended for publication.

The Sixth Circuit reversed a dismissal that had been granted on claim preclusion grounds, holding that a parent corporation and its wholly owned subsidiary are not privies for that purpose. Applying Taylor v. Sturgell, 553 U.S. 880 (2008), the court explained that Taylor "avoided the term privity altogether and focused instead on whether one of the six common-law exceptions" applied, and that none of them reached this corporate relationship. In the panel's words, "Parent companies and their wholly owned subsidiaries do not fit this bill. Each owns separate property, claims, liabilities, and contracts." The practical result is that a plaintiff who sued the parent and lost may bring the same claims against the subsidiary. Judge Bush wrote the published opinion for the panel, which arose from the Eastern District of Michigan.

The section 7520 rate for September 2026 is 5.40 percent. The annual applicable federal rates for the month are 4.18 percent short term, 4.49 percent mid term, and 5.12 percent long term. The applicable federal rate sets the minimum interest a loan must carry before the Internal Revenue Service treats the difference as imputed interest or as a disguised gift or distribution. The section 7520 rate is used to value the separate interests in split interest transfers, including annuity, life, and remainder interests.

The Internal Revenue Service left its quarterly interest rates unchanged for the calendar quarter beginning October 1, 2026. Overpayments carry 7 percent for taxpayers other than corporations and 6 percent for corporations, with 4.5 percent applied to the portion of a corporate overpayment exceeding 10,000 dollars. Underpayments carry 7 percent, and large corporate underpayments carry 9 percent. Interest is compounded daily. The Service determined the rates from the federal short term rate for July 2026, and Rev. Rul. 2026-15 was published in the Internal Revenue Bulletin on August 31, 2026.

Treasury and the Internal Revenue Service proposed a new section 1.501(c)(3)-2 that would deny exemption under section 501(c)(3) to a private school that discriminates on the basis of race, color, or national or ethnic origin in the administration of any educational policy, admissions policy, scholarship or loan program, athletic program, or other school administered or school supported program. The proposal applies the principle that racial discrimination in education violates a fundamental public policy of the United States to all such discrimination, without regard to intent or asserted remedial purpose. Treasury and the Service estimate that approximately 18,000 private schools and 750,000 students could be affected. The proposal would modify Revenue Procedure 75-50 by removing provisions that had permitted race conscious scholarships designed to promote nondiscriminatory policies. The rules would apply to taxable years of private schools beginning after May 31, 2027, and written comments are due November 3, 2026.

The Service issued its National Preparedness Month reminder, with specific guidance for business owners. It recommends keeping returns, insurance policies, property titles, and other key records in waterproof and fireproof containers, maintaining electronic backups on secure devices or cloud storage, and photographing or recording valuable property to support a later casualty loss claim. For employers, the Service recommends confirming whether a payroll service provider carries a fiduciary bond, using the Business Tax Account to monitor balances and payment history, and maintaining access to the Electronic Federal Tax Payment System. The release points to Publication 547, Publication 584-B for business casualty losses, and Publication 3067, and it lists the Special Services Hotline at 866-562-5227.

Vice Chancellor Will rejected the defendants' unclean hands defense but granted their motion for spoliation sanctions in part. On unclean hands, the court held that although the plaintiff's coordination with a third party was furtive, the doctrine reaches only conduct "so offensive to the integrity of the court that claims should be denied, regardless of their merit," and exists to protect a court of equity rather than to shield fiduciaries from their own inequitable behavior. On spoliation, the court found that the duty to preserve had attached and that leaving automatic deletion enabled on Signal and WhatsApp, particularly after receipt of a litigation hold, was at a minimum reckless. The court declined to impose adverse inferences as moot, and instead awarded the defendants their reasonable attorney fees and expenses incurred in prosecuting the spoliation motion and in pursuing supplemental discovery.

The Commission and 22 state attorneys general allege that Amazon concealed surcharges in its digital advertising auctions over a period of roughly seven years. According to the complaint, Amazon represented that it ran a generalized second price auction in which a winning advertiser would pay only slightly more than the next highest bid, while in practice charging Sponsored Products advertisers "their own winning bid close to 80% of the time." The complaint describes internal mechanisms including what Amazon called a soft reserve price surcharge and an invented auction participant, and alleges that the practice was intensified during high volume shopping events. The Commission alleges the conduct affected more than one million brands, including 500,000 small and medium sized businesses, and extracted tens of billions of dollars from advertisers.

The Commission extended by seven days the comment period on its proposed enforcement policy statement addressing personalized pricing, moving the deadline from September 18, 2026 to September 25, 2026. The underlying request for comment issued on August 19, 2026. The release defines the subject as "the use of personal data to set prices according to the amount that a company believes an individual consumer is willing to spend." Comments are submitted through the federal rulemaking portal under docket FTC-2026-1057.

Customs and Border Protection is considering amendments to 19 CFR parts 141, 142, 143 and 163 that would substantially expand what importers must disclose about their supply chains. The agency describes three initiatives: enhanced identification data for the parties involved in manufacturing, producing, moving, or exporting goods; technical solutions for tracing supply chains; and collection of the export documentation that foreign exporters must file with their own customs authority before shipping to the United States. The agency states that the objective is to detect and interdict illicit importations, particularly goods illegally transshipped to evade United States customs and trade laws, and it connects the effort to enforcement of forced labor requirements, rules of origin, intellectual property, and product safety. The notice poses 64 questions on scope, feasibility, cost, technology, and possible exemptions for small entities and critical medical products. Comments are due December 1, 2026.

The Commission proposed to rescind Advisers Act Rule 206(4)-5, which prohibits an investment adviser from providing compensated advisory services to a government client for two years after the adviser or a covered associate makes a political contribution to certain elected officials or candidates. The Commission stated that the rule "is operationally challenging to implement, and creates a de facto strict liability standard" that has produced penalties for minor contributions. The proposal would also amend the Advisers Act recordkeeping rule to remove the corresponding provisions. All other requirements under the Advisers Act would remain in place, including the antifraud provisions, fiduciary duties, the compliance rule, and codes of ethics. The comment period runs 60 days after publication in the Federal Register.

The Commission proposed a set of changes to the rules governing registered transfer agents, the firms that maintain shareholder records and process transfers of securities. According to the announcement, the proposal "would amend existing rules and forms, would rescind a rule, and would introduce new rules that apply to registered transfer agents and their activities." The Commission states that the changes reflect the technological environment in which transfer agents now operate, including widespread electronic recordkeeping and communications, and the services transfer agents provide to issuers, investors, and other market intermediaries. The proposal addresses transfer agent activity involving electronic communications and distributed ledger technology. The comment period runs 60 days after publication in the Federal Register.