Tax Breaks: The Penalties, Postage And Paperwork Edition

If you noticed that lines at the post office were a little longer than normal this week, it wasn’t just because folks were hoping to stock up on Forever stamps before postage rates go up this weekend. Beginning Sunday, July 12, the U.S. Postal Service is raising the price of a Forever stamp from 78 cents to 82 cents—the eighth increase in five years. Some of those customers may also have been taxpayers hoping to meet the July 10 deadline for protective refund claims related to Kwong v. United States.

In Kwong v. United States, the Court of Federal Claims ruled that the tax code automatically extended certain federal tax deadlines throughout the COVID-19 disaster period, potentially opening the door for some taxpayers to seek refunds of penalties and interest they previously paid. The deadline for most taxpayers was July 10, 2026.

Just before the deadline, the IRS added an electronic filing option for certain Forms 843, Claim for Refund and Request for Abatement, allowing individual taxpayers to submit protective refund claims related to Kwong v. United States online rather than by mail. But the option didn’t work for everyone—business taxpayers still had to file Form 843 on paper, and taxpayers seeking abatement of unpaid penalties or interest were also limited to the traditional paper process.

There was a lot of grumbling about the late notice, which is why a more taxpayer-friendly penalty announcement was met with greater appreciation. The IRS announced that it was replacing First Time Abate with a new Automatic Exemption from Penalty process that will grant qualifying relief during return processing, without requiring taxpayers to know about the program or ask for it. Beginning with eligible 2025 returns and 2026 quarterly filings, taxpayers with a strong three-year compliance history may automatically avoid certain failure-to-file, failure-to-pay, and failure-to-deposit penalties, although the underlying tax and interest will still be due.

The change matters because an estimated one million taxpayers each year qualify for First Time Abate but never receive it, often because they do not know to request it. AEP is intended to make relief more consistent and accessible, while taxpayers who do not qualify may still seek reasonable-cause relief based on their specific circumstances.

Taxpayers should still file and pay on time whenever possible. But for taxpayers with a solid compliance history who slip up once, automatically applying relief—instead of reserving it for those who know to ask—is a welcome change.

And speaking of grumbling, you, like me, could still be smarting from the U.S. men’s national soccer team’s less-than-stellar exit from the tourney (in case you missed it, they lost to Belgium, 4-1). There have been lots of theories as to why it happened that way—we had been on an impressive roll—but most agree that Folarin Balogun’s red card had to play a part.

Balogun, who plays as a striker for the U.S. men’s national team, was sent off during the World Cup match against Bosnia and Herzegovina for serious foul play. FIFA later suspended the automatic one-match ban, which allowed Balogun to face Belgium. Why that happened—and whether it was influenced by a call to FIFA from President Trump—raised questions about political interference and the integrity of FIFA’s disciplinary process and angered soccer fans.


It also raised an interesting tax question: If a player is fined for conduct connected to a match, can the payment be deducted? My answer was potentially, but only if it qualifies as an ordinary and necessary business expense and is not treated as a government-imposed penalty.

For most professional athletes, however, being treated as an employee may be enough to eliminate any potential deduction. Because unreimbursed employee business expenses are no longer deductible, a player generally cannot write off an out-of-pocket fine tied to employment, even if it arose directly from the job. A different result may be possible, however, if the payment is properly connected to a separate self-employed business tied to, say, image rights, but a red-card fine from national-team play would not automatically qualify as an expense of an endorsement or licensing business.

(As it turns out, after I first published my story, the FIFA Disciplinary Committee announced that Balogun would be fined $40,000. The U.S. Soccer Federation is jointly liable for payment of the fine.)

In American football news, the Kansas City Chiefs were in the news again—and not just because of Travis Kelce’s headline-making wedding to Taylor Swift. The team’s move from Missouri to a $3 billion domed stadium in Kansas in 2031 may improve its facilities and generate new entertainment revenue, but it could also change the tax picture for players, employees, and the franchise itself.

Kansas currently has a higher top individual income tax rate than Missouri, although Chiefs personnel working in Kansas City, Missouri, also pay the city’s 1% earnings tax. Kansas also imposes a corporate surtax that Missouri does not. The stakes could grow if Missouri voters approve a pending constitutional amendment to phase out the state's individual income tax, because players earning millions could save substantial amounts by working in Missouri rather than Kansas.

And with that, I’m off to enjoy the rest of the weekend and squeeze in some more World Cup soccer. Until next time, may your deadlines be met, your penalties be waived, and your postage be properly paid.

I work from home. My job recently changed to include more responsibility. I am still remote, but I occasionally have to meet a client at their office, which means that I have to dress up. I saw on TikTok that I could deduct the cost of buying clothes for those meetings since it’s a work expense. Is that true?

So, this is an example of tax advice that is bad on multiple levels.

First, simply buying clothes you wear to the office—even if your employer requires a certain level of dress or you would never have purchased the items otherwise—generally isn't enough. For clothing to qualify as a business expense, it typically must be specifically required for the job and not suitable for everyday wear, such as uniforms, protective gear, or specialized safety equipment. Business attire, from suits and dresses to dress shoes, almost always fails that test because it can be worn outside the workplace (even if you, personally, wouldn’t wear it).

Even if this expense otherwise qualified as a tax deduction, it would still run into another hurdle for most employees. The One Big Beautiful Bill Act (OBBBA) made permanent the suspension of the federal deduction for most unreimbursed employee business expenses. That means W-2 employees generally can't deduct out-of-pocket costs they incur for work—whether it's travel, tools, supplies, or other job-related expenses—unless they fall within one of a few narrow exceptions.


And there's also a practical consideration. A tax deduction only reduces your taxable income—it isn't a dollar-for-dollar credit. And for many taxpayers, it won't reduce their tax bill at all. Before the 2017 tax law suspended most unreimbursed employee business expense deductions (and then OBBBA made that suspension permanent), those expenses were available only to taxpayers who itemized deductions, and only to the extent they exceeded certain limits. Today, the standard deduction is high enough that most taxpayers don't itemize. For tax year 2026, it’s $16,100 for single filers and $32,200 for married couples filing jointly. So even if an expense were otherwise deductible, for many people the numbers simply wouldn't work in their favor.

This discussion assumes you're a W-2 employee, which appears to be the case here since you referenced a change in your job. If you're self-employed, the analysis changes slightly because ordinary and necessary business expenses are generally deductible. But the rule for clothing is largely the same: Clothing that is suitable for everyday wear—even if you buy it solely for work—generally isn't deductible. Only items that are specifically required for the business and not adaptable to ordinary use, such as uniforms or protective gear, typically qualify.

The IRS received 311,332 gift tax returns in 2025, a figure that remains well below the extraordinary 516,991 returns filed in 2023. As the chart shows, the 2023 spike is not simply a continuation of the trend—it is a clear outlier. It’s hard to know the exact reason, but it could be attributable to taxpayers accelerating large lifetime gifts ahead of the anticipated expiration of the Tax Cuts and Jobs Act (TCJA), which would have significantly reduced the lifetime gift and estate tax exemption.

But the overall context helps explain a new IRS Revenue Procedure that establishes a new safe harbor, allowing taxpayers to avoid filing a gift tax return solely because they contributed to a Trump account. As of June 4, 2026, the agency had already received nearly six million elections to open child savings accounts. Without guidance, many otherwise routine contributions could have required donors to file Form 709 because the contributions might have been treated as gifts of future interests.

The guidance is less about reducing gift tax than reducing paperwork. Most taxpayers never owe federal gift tax because of the $15 million lifetime gift and estate tax exemption. But reporting requirements are a different matter. Without the safe harbor, the IRS could have faced millions of additional gift tax returns that would produce little or no tax—a significant administrative burden for both taxpayers and the agency.

Senator Ted Cruz and Treasury Secretary Scott Bessent have both described Trump accounts as a pathway to Social Security personal accounts. Whether that happens is up for debate, but it may nonetheless influence how future generations think about retirement security in the United States. Virginia La Torre Jeker writes that if the U.S. is moving toward a model where financial security depends on private market participation, the question of who is included and who is excluded becomes increasingly significant.

A zapper is software used to alter a business’s point-of-sale records after transactions have occurred. It typically deletes or reduces cash sales, then recalculates totals so the books appear consistent. More sophisticated versions may also renumber receipts, adjust inventory, or generate false reports. The goal is to conceal revenue and reduce the amount of income, sales, or payroll tax owed.

Tax authorities often refer to this behavior as electronic sales suppression. Zappers can be difficult to detect because they are designed to preserve the appearance of a normal audit trail, yet they may still leave discrepancies across reported sales, inventory, credit card receipts, payroll, delivery platform records, or cash deposits.

Some states have enacted laws specifically targeting zappers. For example, Washington makes it a felony to knowingly sell, buy, install, manufacture, use, or even possess sales-suppression software, commonly known as a "zapper." The law also allows the state to seize the software—and even the point-of-sale systems used with it—as contraband.

Treasury and the IRS have finalized regulations treating certain abusive charitable remainder annuity trust (CRAT) arrangements as listed transactions. The targeted schemes use a purported charitable remainder annuity trust and an annuity purchase to try to eliminate tax on gains from appreciated property, triggering disclosure requirements for participants and material advisers.

The IRS says it does not believe any CP53E notices, those asking taxpayers to update or provide bank account information so a refund can be issued, were sent in error, even though some notice recipients were not expecting refunds. The American Institute of Certified Public Accountants (AICPA) is asking taxpayers who received a notice without any net positive account adjustment—or whose bank rejected the deposit—to report it at [email protected].

That’s the check amount that Bobby Bonilla collects every year from the New York Mets. He has done so every July 1 since 2011 and will continue to do so through 2035. The date is so well known that baseball fans simply call it Bobby Bonilla Day.

The payments stem from a 2000 agreement in which the Mets bought out the remaining $5.9 million on his contract but deferred payment until 2011, agreeing to pay it out in annual installments with interest through 2035. For Mets fans, it's an annual reminder of a contract gone wrong. For taxpayers, it's a reminder that when you receive income can be just as important as how much you receive.

Deferred compensation doesn’t eliminate tax—it generally changes when the tax is due. A valid deferral ordinarily requires that the employee not have unrestricted access to the money before the scheduled payment date. Bonilla’s agreement predates section 409A, but comparable nonqualified deferred compensation arrangements established today generally must comply with its strict rules. Failure to comply can cause the income to become taxable sooner than expected and trigger an additional 20% tax.

The lesson isn't that everyone should negotiate a Bobby Bonilla-style contract. Rather, it's that the timing of compensation can have significant tax consequences. Whether you're negotiating severance, a bonus, or an executive compensation package, understanding the rules before you sign can make all the difference.

It might have been tempting to say Norway because of the “Viking Row” made so popular during the 2026 World Cup, but that’s not the right answer. One of England's most famous taxes wasn't imposed by the Vikings—it was imposed because of them. Known as the Danegeld, it was collected to pay Viking raiders to leave England alone. Unsurprisingly, once the Vikings realized they could be paid to go away, they kept coming back for more. History has generally not been kind to the strategy.

📅 September 15, 2026. Due date for your 2026 Q3 estimated tax payment.

📅 October 15, 2026. Due date for individual taxpayers filing on extension (payment was still due April 15).

📅 July 13-15, 2026. NATP Taxposium. Huntington Convention Center, Cleveland, Ohio.

📅 August 4-7, 2026. IRS Nationwide Tax Forum. New Orleans, Louisiana.

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