I am unable to insert a file in a PDF file. Acrobat DC reports that I cannot insert in an XML file, although the file is clearly a PDF file.

The only solution is to create a PDF Portfolio and add the XML forms into the portfolio.

What exactly are you trying to do when you get this message?

FYI, PDF forms that were created in LiveCycle Designer are actually XML files (although their extension is PDF), and they can't be merged with "normal" PDF files. Many governmental agencies use this technology, so it's not surprising if this IRS form is actually an XML file create in LCD.