If you’ve been reading my work for a while, you know that I’ve written newsletters before. A lot of them, actually. But this is the first time in a long time that when I sat down to write one, there wasn’t an editor or somebody else’s platform waiting on the other side.

Just me. And you.

I’ll admit, that feels a little strange. But mostly, it feels good.

The idea here is pretty simple: once a week, I’m going to show up in your inbox with the tax stories I think you should know about, answers to your questions, a little tax trivia, and probably at least one thing that makes you wonder why the tax law works that way.

So, welcome. I’m glad you’re here. Let’s talk tax.

For starters, the IRS is changing how it handles disputes over conservation easements, which have been a major enforcement issue for years. 

A conservation easement is a legal agreement that limits how land can be developed or used to protect its conservation value. You often see it in the context of open space, farmland, or historic properties. As part of the agreement, the landowner generally retains title to the property but gives up certain development rights, typically to a qualified conservation organization or government entity. 

For tax purposes, a taxpayer who donates a qualifying conservation easement may be able to claim a charitable deduction based on the value of those rights. That valuation—and transactions designed to generate very large deductions—has fueled years of disputes between taxpayers and the IRS. 

The IRS is creating a dedicated Office of Conservation Easements to bring together IRS expertise on conservation easements, coordinate enforcement and case strategy, and work on future policy. The agency is also ending a recent program (from May) that sent taxpayers standardized settlement offers with fixed deadlines, now saying the cases vary too much for a one-size-fits-all approach.

The IRS says the new approach doesn’t mean taxpayers will get more favorable settlement terms. And because interest can continue to accrue while a tax dispute remains unresolved, that brings us to another recent IRS announcement: interest rates will remain unchanged for the quarter beginning October 1, 2026. For individuals, both underpayments and overpayments will carry a 7% annual rate, compounded daily.

Speaking of owing the IRS, you have several ways to pay, including directly from a bank account through your IRS Online Account or Direct Pay (you can find directions here). If you can’t afford to pay the full balance, file your return anyway—the failure-to-file penalty is generally much steeper than the failure-to-pay penalty.

And now for something a little more fun. I’m bringing back an old Taxgirl favorite: Getting to Know You. The series is a chance to meet the people behind the tax world—tax professionals, lawyers, academics, government folks, and others doing interesting things in and around tax. I’ve always believed that some of the best stories in tax are really stories about people, and I’m looking forward to telling more of them again.

There’s more good tax stuff below—keep reading.

Q: I’ve been seeing a lot of references to capital gains rates, and I know that they’re supposed to be better than normal tax rates. But what is the difference between income tax and capital gains tax? 

A: Capital gains are generally the profits you make from selling a capital asset. A capital asset is generally property you own for personal or investment purposes, such as stocks, bonds, real estate, or other investments.

Your capital gain is generally the difference between what you receive when you sell the asset and your adjusted basis. Adjusted basis is generally what you paid for an asset, adjusted for improvements, depreciation, and other items.

How much tax you pay on a capital gain depends largely on how long you owned the asset. Short-term capital gains generally result from assets held for one year or less. They’re taxed at the same rates as ordinary income.

Long-term capital gains generally result from assets held for more than one year. Most are taxed at preferential federal rates of 0%, 15%, or 20%, depending on your taxable income. (Certain gains, including collectibles and unrecaptured §1250 gain, have different maximum rates.)

Ordinary income generally includes income that isn’t taxed as a capital gain, such as wages, interest, and business income. For 2026, ordinary income tax rates range from 10% to 37%, depending on your taxable income.

For tax purposes, abatement is the reduction or removal of an amount assessed by the IRS. You’ll most often hear the term in connection with penalties—if the IRS assesses a penalty for filing or paying late, for example, you may be able to get that penalty abated. 

(Interest is different. Because interest is generally required by law, the IRS can abate it only in limited circumstances, such as when an unreasonable IRS error or delay caused the interest to accrue.)

There are several ways to qualify for penalty relief. One is reasonable cause—generally, showing that you exercised ordinary business care and prudence but circumstances kept you from meeting your tax obligations.  Historically, taxpayers with a good compliance history could also qualify for First-Time Abatement (FTA), which provided relief from certain penalties without requiring them to establish reasonable cause.

That is changing. The IRS is replacing FTA with a new Automatic Exemption from Penalty (AEP). Under AEP, eligible taxpayers with three prior years of timely compliance (or 12 consecutive quarters for quarterly filers) can automatically receive relief from certain failure-to-file and failure-to-pay penalties. Business taxpayers may also receive relief from certain failure-to-deposit penalties.

Not all returns or penalties qualify for AEP. For example, returns filed for specific transactions or infrequent events, such as estate and gift tax returns, are not generally eligible.

And AEP only provides relief from eligible penalties. It does not eliminate your obligation to pay the underlying tax, or the interest or penalties not eligible for AEP.

The best part? Unlike with an FTA, you generally don't have to request relief. If you qualify, the IRS won't assess the penalty when processing the original return and will send a notice explaining what happened. If you don't qualify for AEP, you may still be eligible for penalty relief based on reasonable cause.

Which tax credit has the IRS repeatedly singled out as the subject of misleading social media advice?

A. Adoption credit

B. Foreign tax credit

C. Fuel tax credit

D. Retirement savings credit

Find the answer at the bottom of this newsletter.

Check your estimated tax payments. The third estimated tax payment for 2026 is due September 15. If you earn income that isn’t subject to withholding—like freelance or gig income—take a few minutes now to make sure you’re on track. If your income has changed significantly this year, don’t simply assume the amount you paid last quarter is still right. 

September 15, 2026 — Estimated tax payments due. Individuals who make estimated payments generally must make their third 2026 payment by this date. The fourth and final 2026 estimated payment will be due January 15, 2027. 

September 15, 2026 — Extended partnership and S corporation returns. Calendar-year partnerships and S corporations that received six-month extensions generally must file their 2025 Forms 1065 and 1120-S by this date. 

October 15, 2026 — Extended individual income tax returns. This is the big one for individuals who requested a timely extension to file their 2025 Form 1040. Remember, it’s an extension to file, not to pay. Tax was due April 15. 

October 15, 2026 — Extended C corporation returns. Calendar-year corporations that timely requested an extension generally must file Form 1120. 

September 1–3 — IRS Nationwide Tax Forum, Orlando, FL
IRS speakers, federal tax updates, practitioner issues, TAS, expo, and up to 18 CE credits.

September 15–17 — IRS Nationwide Tax Forum, San Diego, CA
The final IRS Nationwide Tax Forum of 2026, with the same broad practitioner and IRS focus.

September 21–22 — NATP Tax Forum, Minneapolis, MN
Practitioner-focused federal tax education covering S corporations, rentals, planning, compliance, and more.

September 30–October 1 — NATP Tax Forum, Philadelphia, PA
The same NATP program—and obviously in a great city!

September 29 — Advisory Amplified, Minneapolis, MN
As for me? I’m headed to Advisory Amplified in Minneapolis à la Mary Tyler Moore. As someone who runs my own firm, I totally get that conferences can be expensive. So if you’re a solo, too, register using this code for 20% off: Taxgirl-roadie

A taxpayer who filed a Tax Court petition late after an IRS notice was sent to an old address is out of luck.  In Kyick Holdings, the First Circuit held that the 90-day deadline to challenge a deficiency is mandatory, not jurisdictional, and not subject to equitable tolling. The ruling deepens a circuit split.

AICPA wants the IRS to automate taxpayer name and address changes. AICPA says the current six-to-eight-week-or-longer processing time can cause notices and other IRS correspondence to go to the wrong address, creating avoidable compliance problems. 

Proposed Trump Account rules would restrict eligible investments. Proposed regs would generally limit investments during the growth period to certain low-fee stock index mutual funds and ETFs.

Being an influencer doesn't turn hanging out with celebrities into a tax deduction. The Tax Court rejected a social media influencer's attempt to deduct nearly $100,000 spent on the Grammys, Emmys, celebrity meet-and-greets, and other experiences as marketing expenses, finding the spending was primarily personal—even if the resulting posts boosted his audience.

The answer is C. Fuel tax credit.

The IRS has warned about social media posts encouraging taxpayers to claim the credit, even though it's generally limited to certain off-highway business and farming uses.

That’s a wrap! But really, I’m just getting started. I have lots of ideas for what Taxgirl can be in this new chapter—more explainers, more people to meet, more resources, and, of course, more tax news. Thanks for being here at the beginning. There’s a lot more good stuff to come.

Have thoughts about the newsletter? I’d love to hear what you liked, what you didn’t, and what you’d like to see more of. You can email me here.