| Good Monday morning from Chattanooga — |
| Early September around here usually signals the shift from summer scramble to fall planning. Q4 is closer than it looks, and a few things that landed in the news this week deserve your attention before year-end sneaks up. Let's get into it. |
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By the numbers
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9.25%
Chattanooga combined sales tax rate
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30%
Drop in IRS individual audit starts, fiscal 2025
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30 days
Average IRS processing time for paper returns in 2026
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IN THIS ISSUE
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The IRS is stepping up pressure on people who haven't filed |
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Donating property instead of cash? There's a trap hiding in the paperwork. |
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Chattanooga's combined sales tax rate sits at 9.25% — here's why that number matters for your books |
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4
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Mailing a paper return this year? Expect to wait twice as long for IRS processing. |
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The lead · FILING ALERT
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The IRS is stepping up pressure on people who haven't filed
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| The IRS has announced a new push to pursue taxpayers who haven't filed returns — and this round, they mean it more than last time. |
| A recent IRS report says earlier nonfiler outreach didn't move the needle enough, so the agency is escalating. If you or someone in your family has a year with an unfiled return sitting out there — 2022, 2023, whenever — now is the right time to get it in voluntarily rather than wait for IRS correspondence to force your hand. Voluntary filing almost always results in better outcomes than responding to a notice, and it puts you in control of the conversation. |
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Why it matters: An unfiled return doesn't disappear — it accumulates penalties and interest, and the IRS can file a substitute return on your behalf that almost never works in your favor.
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Read at Accounting Today →
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CHARITABLE GIVING
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Donating property instead of cash? There's a trap hiding in the paperwork.
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| Giving appreciated property — real estate, art, equipment — to charity can be a genuinely smart tax move, but one missing document can erase the entire deduction. |
| When you donate non-cash property worth more than $5,000, the IRS requires a qualified appraisal from a credentialed appraiser before you can claim it. Skip that step, or use the wrong type of appraiser, and the deduction gets disallowed — even if the gift itself was legitimate and the charity accepted it. Donated stock to a public charity is simpler and sidesteps this entirely, which is why it usually gets recommended first. But if property is what you have and want to give, the appraisal has to happen before the donation, not after. |
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Why it matters: If you're planning a significant year-end charitable gift that isn't publicly traded stock, let's talk through the appraisal requirement before you transfer anything.
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Read the full story →
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LOCAL RULES
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Chattanooga's combined sales tax rate sits at 9.25% — here's why that number matters for your books
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| If your business collects sales tax in Chattanooga, the correct rate to charge customers in 2026 is 9.25% — 7.0% state plus 2.25% Hamilton County. |
| It sounds simple, but using the wrong rate — even off by a fraction — creates a mess at remittance time, either leaving you short or overcharging customers. This is especially relevant for businesses that sell across multiple Tennessee counties, where the local portion changes by jurisdiction. Getting this right in your point-of-sale or invoicing system now prevents a reconciliation headache at year-end. |
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Why it matters: A misconfigured sales tax rate is one of the most common and easily preventable bookkeeping errors we see — check your system against the 9.25% figure if you haven't recently.
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Read at Galvix →
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PAPER RETURNS
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Mailing a paper return this year? Expect to wait twice as long for IRS processing.
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| The Government Accountability Office reports that paper returns took an average of 30 calendar days to process during the 2026 filing season — up from 16 days in 2025. |
| That delay matters most if you're waiting on a refund, a transcript, or IRS confirmation before you make a financial move. The fix is boring but effective: e-file whenever you can. If you're on extension and still have a balance due, mailing a check with a paper return this fall means a longer wait to see that payment confirmed on your account. |
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Why it matters: If you have an outstanding extension return to file before October 15, let's make sure it goes in electronically so your records update without the backlog delay.
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Read at CPA Practice Advisor →
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Quick hits
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• IRS audit starts dropped 30% in fiscal 2025 — including a 27% drop for taxpayers earning above $400,000 — largely due to staffing declines, according to the Treasury Inspector General for Tax Administration; lower audit odds aren't a reason to get sloppy, but it's useful context. https://www.journalofaccountancy.com/news/2026/aug/irs-enforcement-activity-fell-despite-record-tax-collections-tigta-says/ →
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• Congress passed a stopgap funding bill that keeps the IRS budget at $11.2 billion through December 11 and blocks a planned $11.6 billion rescission — meaning IRS operations stay funded through at least the fall, with no immediate disruption to processing or refunds. https://www.journalofaccountancy.com/news/2026/sep/congress-approves-funding-bill-that-maintains-irs-budget/ →
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Tip of the week
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Get your Q3 estimated tax payment on the calendar now
The third-quarter estimated tax payment for 2026 is due September 15 — that's one week away. If you're a freelancer, self-employed, or have significant investment income, check that your payment is scheduled and covers what you owe. Underpaying by that date triggers a penalty even if you pay the full balance by April. If you're not sure whether your year-to-date payments are on track, pull your last paystub or your 2025 tax return and compare — or send us a note and we'll take a look before the deadline.
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How was this issue?
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Until next week,
Marcus, CPA & founder
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| P.S. If you have a family member or friend with an unfiled year sitting in a drawer somewhere, feel free to pass this along — we're happy to help them get current without the stress. |