August 2026 Tax News Roundup — Key Updates for NYC Businesses & High-Net-Worth Individuals
August 2026 Tax News: Two Fraud Rulings and a Season of OBBBA Guidance
The month split neatly in two. On the enforcement side, courts made an expensive point twice: the civil fraud penalty is 75% on top of the tax, and the thing that triggers it is concealment, not an aggressive position. On the legislative side, the IRS shipped guidance putting real mechanics behind the Working Families Tax Cuts and the rest of last year’s law, from a permanent paid-leave credit to a reporting rule that decides whether your employees keep the overtime deduction. Property owners in Florida and Cook County got their own deadlines.
Key takeaway. Two items don’t wait. If you self-file 1099s, the IRS set November 19 as the last day the old FIRE system accepts them, so moving to IRIS is a fourth-quarter project, not a January one. And if you run payroll, the overtime deduction your employees are expecting now hinges on a single W-2 box being filled in correctly, which makes it your filing problem, not theirs.
A Ferrari, 400 Checks, and the Line Between Aggressive and Fraudulent
The Tax Court sustained a civil fraud penalty against a California machine-shop owner who ran more than 400 personal checks through his company, from home renovations to a boat to a Ferrari lease, and reported none of it as income. Prezioso v. Commissioner (T.C. Memo 2026-63, decided July 28) is worth ten minutes for anyone who owns the business they run. The penalty didn’t turn on the size of the deductions. It turned on the concealment.
The IRS Auditor Who Lost a Fraud Case Because He Knew Better
A week later the Tax Court decided Janangelo v. Commissioner (T.C. Summary Opinion 2026-8, released August 27) and sustained the same 75% fraud penalty across four years against a taxpayer who is himself an IRS auditor, a CPA, and a member of the bar. The spreadsheets he built to back up his deductions weren’t proof, and his own expertise became a badge of fraud rather than a shield. Read the two cases together: expertise cuts against you when the numbers don’t hold.
The Paid-Leave Credit Is Permanent Now, and It Finally Reaches Smaller Employers
Notice 2026-28, released August 5, makes the Section 45S employer credit for paid family and medical leave a permanent fixture and widens the gate. Eligibility drops to six months of service, part-timers who customarily work at least 20 hours a week now count, and an employer can build the credit on the insurance premiums it pays rather than only on wages handed to someone actually out on leave. If you decided the old version wasn’t worth the paperwork, the math is different now.
No Tax on Overtime Became a Payroll Filing Job, Not a Talking Point
Fact Sheet 2026-13, posted August 6, rewrote the overtime-deduction FAQs, and the 2026 rule has teeth: an employee can only deduct the overtime the employer separately reports on the W-2. The deduction runs for 2026 through 2028, caps at $12,500 per return ($25,000 on a joint return), and fades out once income passes $150,000 ($300,000 joint). Miss the box on the W-2 and the deduction is gone, no matter how many Saturdays somebody worked.
Companies Can Now Seed Trump Accounts, Up to $2,500 Tax-Free
Proposed rules issued August 11 (IR-2026-90) let an employer put up to $2,500 a year, tax free, into a Trump Account for an employee or that employee’s child. The interesting half is who has to be included: the guidance draws nondiscrimination lines that keep the benefit from tilting toward the people who own the place. These are proposed, not final, with comments due September 25 and a hearing October 15, so it’s a program to design now and fund once the rules settle.
The IRS Standardized Rollover Paperwork, Then Made It Optional
Notice 2026-49, out August 12, delivers the sample forms and procedures SECURE 2.0 asked for, meant to make a direct rollover between two plans, or between a plan and an IRA, run the same way every time. It deliberately skips IRA-to-IRA transfers. The fix is genuine, but the forms are optional, so whether your plan or custodian actually adopts them is the question worth asking before you move money on your next job change.
A Trust Filing Trap the IRS Proposes to Remove
Proposed regulations published August 17 (REG-109082-25) would let a class of trusts stop filing Form 1041-A entirely. The target is trusts whose only charitable deduction for the year flows through a partnership or S corporation they hold an interest in, rather than something the trust set aside itself. For a trustee who has been filing that form, or one who never knew they owed it, this is the rare piece of IRS news that removes work instead of adding it.
If You E-File Your Own 1099s, Your Filing System Is Being Retired
IR-2026-99, issued August 24, put a date on it: the IRS FIRE platform stops accepting information returns for good on November 19, 2026, and filers have to move to the newer IRIS system before the 2027 filing season. Any 1099s, 1098s, or 5498s you file for tax year 2026 go through IRIS instead. If you transmit your own returns, the switch comes with homework: a new application and new credentials, both of which take time to clear.
A Court Turned the 90-Day Tax Court Clock Into a Hard Wall
In Kyick Holdings v. Commissioner, decided August 17, the First Circuit held that the 90-day window to petition the Tax Court under Section 6213(a) is mandatory and not subject to equitable tolling, with no exception for a lost letter or a notice that arrived late. It binds only that circuit and splits with four others, so the Supreme Court may eventually settle it. The practical lesson travels anyway: whenever a client is fighting a proposed deficiency, treat the 90 days as immovable.
Florida’s Bigger Homestead Break Comes With a Residency Catch
Florida’s Attorney General rewrote the Amendment 3 ballot language on August 14, under a court order, putting the biggest Florida property tax question in years back in front of voters for November 3. It would raise the homestead exemption on non-school taxes to $150,000 in 2027 and $250,000 in 2028. For a New York client who keeps a place in Florida, the fine print is the point: the benefit rewards actual Florida residency, and the measure still needs 60% approval to pass.
Cook County Opened a Storm-Damage Appeal Aimed at Next Year’s Bill
On August 19 the Cook County Board of Review opened prefiling appeals for the 2027 tax year, letting owners of storm-damaged property document the damage now to trim next year’s bill. It won’t touch the bill arriving this fall, and the first-wave townships carried early-September deadlines. Chicago-area owners whose buildings took damage this summer should start the paperwork rather than wait for the assessment to arrive.
Cook County’s Second-Installment Bills Land September 1, Due October 1
Cook County mails 1.8 million second-installment property tax bills for the 2025 tax year on September 1, with an October 1 due date, which leaves roughly a month between the envelope and the deadline. The amounts are viewable online now, so there’s no reason to wait for the mail. For a cash-basis owner, the date you actually pay decides which tax year the deduction lands in, so it’s worth choosing deliberately if you’re managing the SALT cap.
What to Watch in September 2026
The near-term dates stack up fast. Third-quarter estimated payments come due September 15, the first real checkpoint since spring for anyone earning income without withholding. The comment window on the employer Trump Account rules closes September 25, with a hearing October 15. And the Cook County second-installment bills are due October 1.
Past those, the FIRE-to-IRIS switch starts pressing on every business that files its own information returns, since November 19 ends the old system for good. Expect more Working Families Tax Cuts guidance through the fall as the IRS works through the pieces it hasn’t finished. More on all of it at Helpful Guides. September is a planning month disguised as a quiet one, and the clients who treat it that way are the ones not scrambling in December.
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