USPS’s New Postmark Rules Set an
Ugly Trap for Taxpayers
For decades, taxpayers trusted a simple rule: If you mailed
a tax return or payment by the deadline, the IRS treated it as timely filed.
Recent U.S. Postal Service (USPS) practices have changed that reality and
created a serious trap for anyone who relies on last-minute mailing.
Today, the USPS often applies postmarks at regional
processing centers instead of at your local post office. Those centers may be
many miles away, and reduced truck schedules can delay transport.
As a result, a return you drop off on April 15 may receive a
postmark dated April 16 or later. The IRS will then treat your filing as late,
even though you acted responsibly. Being one day late can trigger penalties and
interest equal to 5 percent of the tax due.
Sometimes, USPS postmark machines don’t even apply a
postmark.
You also cannot rely on postage labels printed at home or at
self-service kiosks. Those labels only show when you bought postage, not when
the USPS accepted your mail.
You can protect yourself by taking control of the mailing
process. Present your return at a post office
retail counter and ask the clerk to apply a manual postmark.
For stronger protection, use certified mail.
Certified mail provides a postmarked receipt that serves as
legal proof of mailing and delivery.
You also have legal proof by filing and paying
electronically or by using an IRS-approved private delivery service. Electronic
filing provides an electronic postmark and removes uncertainty.
If you plan to file by mail, choose your method
carefully. A small decision can prevent an expensive and frustrating surprise.
Husband-and-Wife LLC—Do They Have to File a
Partnership Return?
Many married couples form an LLC
to own rental property to obtain liability protection. After they create the
LLC, they often ask an important tax question: Does the LLC force them to file
a partnership return?
The answer depends largely on where they live and how
they own the property.
Federal tax rules treat any unincorporated business with
two owners as a partnership by default. When a husband and wife form a
two-member LLC, the IRS normally requires a partnership return on Form 1065.
Some exceptions exist, but most couples do not qualify for them.
Tax law allows “mere co-ownership” of real estate
without creating a partnership. This rule applies only when individuals own
property directly as tenants in common and simply maintain and rent it. Once
spouses place the property inside a multi-member LLC, they move beyond
co-ownership and create a separate tax entity. At that point, the partnership
rules apply.
Spouses sometimes ask about the qualified joint venture
election. That option lets qualifying couples file a single Schedule E instead
of a partnership return. Unfortunately, the election does not apply when
spouses operate a rental through an LLC or any other state-law entity.
Spouses who live in community property states have more
flexibility. In those nine states, married couples may treat an LLC-owned
rental as a single disregarded entity and file one Schedule E. The other 41
states do not offer this option.
In those 41 states, the husband-and-wife LLC result stays clear: they must
file a partnership return and issue Schedule K-1s.
Before forming an LLC, couples should weigh the liability protection against
the added tax filing complexity.
OBBBA Supercharges the Employer Childcare Credit
for 2026
The One Big Beautiful Bill Act (OBBBA) dramatically expanded
the employer childcare credit starting in 2026, turning a modest tax break into
a significant planning opportunity for many businesses.
The employer childcare credit allows businesses to claim a
general business tax credit for qualified childcare expenses paid for
employees. Qualifying costs include
- building, expanding, or
operating an on-site childcare facility;contracting with licensed
off-site childcare providers such as day care centers or preschools;
- working with third-party
childcare platforms or “intermediate entities”; and
- paying for childcare
referral services.
Businesses do not need to own or operate a childcare facility to qualify.
Beginning in 2026, small businesses with average annual
gross receipts under $32 million may claim a 50 percent credit on qualified
childcare expenses, up to a maximum annual credit of $600,000.
Large businesses may claim a 40 percent credit, capped at
$500,000 per year.
By comparison, the credit for 2025 and earlier years maxed
out at $150,000, making the new credit up to four times larger. Congress will
adjust these limits for inflation starting in 2027.
OBBBA also makes the credit far more accessible for small
employers. Businesses may now pool resources to contract jointly with licensed
childcare providers or to jointly own or operate a childcare facility. Each
business may claim its share of the credit, helping reduce both costs and
administrative complexity.
Any business with W-2 employees can qualify, including sole
proprietors, partnerships, LLCs, and S corporations. Owners generally cannot
claim the credit for their own childcare costs, but they can claim it for
qualified expenses paid on behalf of employees, including spouse-employees.
Even when childcare benefits remain taxable to the employee
or owner-employee, the credit often produces significant net tax savings.
Employers must include the value of employer-provided
childcare in employee income unless the benefits qualify under a dependent care
assistance program (DCAP). DCAPs allow limited tax-free benefits but impose
strict non-discrimination rules that eliminate many small-business owners.
If you pay for employee childcare in any form, this expanded
credit deserves immediate close attention.
This One Mistake Can Make Your QCD Fully Taxable
Many charitably minded individual retirement account (IRA)
owners use qualified charitable distributions (QCDs) to satisfy required
minimum distributions (RMDs) while avoiding income tax. One simple mistake,
however, can turn an otherwise tax-free QCD into fully taxable income.
After age 70 1/2, you may direct up to $111,000 in 2026 from
your traditional IRA to a qualified charity; for married couples, each spouse
may give that amount from their own IRA.
The QCD can count toward your RMD once you reach age 73, and
the QCD stays out of your adjusted gross income. Lower adjusted gross income
can help you avoid higher tax brackets, higher Medicare premiums, and taxation
of Social Security benefits.
The trouble arises under the strict no-benefit rule.
You must send a QCD directly to a Section 501(c)(3) charity,
not to a donor-advised fund. More important, you must not receive anything of
value in return. If you do, the IRS treats the entire distribution as taxable.
Even a small benefit can spoil the result. For example, a $250 ticket to a
charity dinner will cause a $5,000 QCD to become fully taxable.
Charities must provide written acknowledgments for QCDs of
$250 or more. If that acknowledgment lists goods or services received, the
tax-free treatment disappears.
The IRS allows limited exceptions. You may receive
insubstantial benefits without harming a QCD, such as low-value items or token
merchandise, generally capped at $139 in 2026 ($136 in 2025) and subject to
percentage limits. Intangible religious benefits from churches also remain
acceptable.
Before you authorize a QCD, confirm that you will receive
nothing of value beyond these exceptions. Careful planning protects the tax
advantages QCDs can provide.
When Family Ties Cause Tax Trouble
Family relationships and overlapping ownership can quietly
sabotage well-intentioned tax planning. Internal Revenue Code Section 267 often
causes the damage.
This rule does not announce itself with penalties or
warnings. Instead, it erases deductions, disallows losses, and delays expenses
after the transaction feels complete.
Section 267 targets transactions between related parties.
The law focuses on who the parties are, not on whether the deal looks fair.
When you sell property to a related person or entity at a loss, the IRS
disallows the loss even if you used fair market value and arm’s-length terms.
For example, if you sell stock to a sibling at a loss, you
lose the deduction simply because of the family connection.
Section 267 also disrupts expense deductions. If you use the
accrual method and owe expenses or interest to a related party who uses the
cash method, you cannot deduct the expense until the other party reports the
income. This timing mismatch often surprises taxpayers after year-end.
The real trap lies in the attribution rules. These rules
treat you as owning interests held by family members, trusts, partnerships, or
corporations. As a result, transactions that appear unrelated on paper can
suddenly cross the 50 percent ownership threshold, triggering related-party
treatment.
Good planning avoids these outcomes. Identify related
parties before you act. Review family ownership, trust interests, and entity
structures together. Sell loss assets to unrelated buyers. Structure ownership
to stay below control thresholds. Coordinate expense deductions with the other
party’s income recognition.
Section 267 rewards foresight and punishes assumptions.
OBBBA Drives Final Nail into Bicycle Commuting
Deduction
Congress has officially pulled the plug on the federal tax
break for bicycle commuting. The OBBBA permanently eliminated the qualified
bicycle commuting reimbursement, ending a small but symbolic incentive for
employees who bike to work.
Congress created the benefit in 2009 to encourage bicycle
commuting. Employers could reimburse employees for bicycle purchases, repairs,
improvements, and storage when employees regularly rode a bicycle between home
and work.
The benefit applied only to personal, pedal-powered
bicycles. It excluded e-bikes and bike-share programs. Employees also had to
rely on biking for a substantial portion of their commute, a standard the law
never clearly defined.
The rules limited the benefit’s reach. Employers could not
offer bicycle reimbursement alongside other transportation fringe benefits,
such as transit passes or parking. The reimbursement capped out at $20 per
month, or $240 per year, and Congress never adjusted that amount for inflation.
Despite its small size, the benefit delivered meaningful tax
savings. Employees excluded the reimbursement from income and payroll taxes.
Employers deducted the cost. That combination made the benefit attractive, even
if it mainly appealed to committed cyclists only.
The Tax Cuts and Jobs Act disrupted the arrangement in 2017.
From 2018 through 2025, employers could still reimburse bicycle commuting
costs, but employees had to treat the payments as taxable income. Employers,
however, could still deduct the reimbursements. Congress flirted with
reinstating the tax-free treatment in 2020 and 2021, but those efforts went
nowhere.
OBBBA finished the job. Starting in 2026, bicycle commuting
reimbursements are taxable wages for employees, and employers lose the
deduction entirely. Employers cannot even treat the payments as deductible
compensation, which creates a rare double-tax hit.
Meanwhile, Congress left
larger transportation benefits untouched. Employers may still provide tax-free
transit passes and parking benefits of up to $340 per month in 2026, although
they cannot deduct those costs.
TurboTax Negativity: What’s Driving the Backlash (2021–2026)
Over the last several filing seasons, many taxpayers have grown more frustrated with the end-to-end tax experience—often directing that frustration at consumer tax software (including TurboTax) when things go wrong. The negativity typically clusters around three themes: (1) delays and errors when the IRS must handle paper or manual processes, (2) “black box” customer-service experiences (especially bots), and (3) heightened fear of fraud and identity theft that can derail refunds and create long cleanup timelines.
In 2025-2026, lawsuits against Intuit’s TurboTax involve allegations of fraudulent tax returns filed using stolen consumer data, and deceptive “free” filing marketing. Key actions include investigations into security lapses that allowed unauthorized users to access accounts and file fake returns, as well as ongoing scrutiny regarding data sharing practices and misrepresentations of free filing services.
- Data Breach & Fraud Allegations (2025-2026): A proposed class action lawsuit filed in July 2025 alleges TurboTax ignored security lapses, allowing hackers to file fraudulent returns using customer data. This follows a 2024 breach where personal information (names, SSNs, financial details) was accessed between Dec 2023 and Feb 2024.
- “Free” Filing Settlement & Marketing Lawsuits: A $141 million settlement was reached with state Attorneys General regarding deceptive, paid-service advertising for low-income taxpayers.
While this case focused on 2016-2018, FTC litigation against Intuit regarding misleading ads continued into 2024, with similar, related claims in 2025
- Data Privacy Claims: Lawsuits have alleged that TurboTax shared sensitive data with third parties like Facebook without user consent, alongside investigations into data tracking tools.
- Arbitration & Class Actions: Some disputes are moving through private arbitration regarding data breaches.
1) Service friction is rising—especially when anything goes “non-standard”
Even when e-filing works smoothly, the moment a return gets kicked into manual handling (original paper returns, amended returns, or correspondence), the system slows down—and taxpayers often blame the tools they used to file, even if the delay sits downstream at the IRS.
The National Taxpayer Advocate has warned that paper processing and outdated technology increase refund delays and correspondence wait times, and can also create transcription errors that trigger additional back-and-forth to fix. The IRS is pushing a “Zero Paper” approach, but modernization remains a longstanding challenge.
2) Customer support complaints (including “bots”) add fuel to the narrative
A major driver of negativity is that taxpayers feel trapped between software support and the IRS—especially when they can’t reach a human quickly or get a clear resolution.
The Taxpayer Advocate report notes taxpayers were generally not satisfied with IRS voicebots, with only about half finding the “Where’s My Refund?” bot helpful and 40% finding the “Where’s My Amended Return?” bot helpful and recommends measuring “first contact resolution” across phone lines.
Why this matters for TurboTax perception: when a taxpayer files with TurboTax and then can’t get clear answers from IRS channels, the overall experience is often remembered as “TurboTax messed up,” even when the root cause is a downstream IRS processing or communication bottleneck.
3) The Dave Ramsey YouTube video (from ~3 years ago)
About three years ago, a Dave Ramsey YouTube segment circulated criticizing tax preparation quality and return errors—feeding the broader online narrative that consumer filing can go off the rails and that taxpayers may be better served with more support or review. (Referenced in our files as a YouTube video text script.)
4) “Court issues” and legal-process pain points (last ~5 years)
While the public often talks about “lawsuits” and “court battles” in the tax space, one of the most concrete, taxpayer-impacting legal frictions highlighted recently is where taxpayers are allowed to litigate—particularly refund disputes.
The National Taxpayer Advocate has repeatedly emphasized that taxpayers who seek a refund after paying the tax generally must sue in U.S. district court or the Court of Federal Claims, which is typically more burdensome than Tax Court (higher filing costs, more complex procedure, judges not always tax-specialized). TAS recommends expanding Tax Court jurisdiction to hear refund cases, noting that the current structure can effectively deprive many taxpayers of meaningful judicial review.
5) Fraud risk: how a data breach can turn into a fraudulent tax return
A separate but increasingly loud source of negativity is fear of identity-based tax fraud—especially as data breaches proliferate.
The IRS explains that a data breach can expose personally identifiable information, and that tax-related identity theft occurs when someone uses a victim’s Social Security number to file a false return claiming a fraudulent refund.
The broader security landscape makes this feel “easy” to victims because:
· Stolen data can be used for multiple crimes, including filing fraudulent tax returns, costing victims time and money to resolve.
· Identity thieves are adaptive and organized; the ecosystem impact includes direct harm to victims and erosion of trust.
· For businesses, the IRS lists practical “red flags,” such as being unable to e-file because a return was already filed under the same EIN/SSN, or receiving unexpected IRS transcripts/notices.
How easy is it to commit IRS fraud with your data? 60 Minutes Explained it over a decade ago on National TV, and the tactics can still work today! https://taxsaversllc.box.com/shared/static/rwqzq1rg0ume4hkr0i127s04ongjpny9.mp4