Sellers CPA Tax Newsletter – August 2026: Back to School, Back to Planning

From the Desk of Carol Sellers, CPA Sellers CPA LLC https://sellerscpa.net 108 W Cusseta St, Dadeville, AL 36853 (256) 825-8259

Dear Valued Clients and Friends,

The dog days of summer are upon us here in Dadeville — the lake is warm, the school supply aisles are buzzing, and Friday night lights are just around the corner. August is a month of transition across Alabama: students head back to class, businesses close the books on summer, and smart taxpayers start looking toward the final stretch of 2026. After celebrating America's 250th birthday last month, it's time to trade fireworks for focus, because the decisions you make between now and December will shape the return you file next spring.

This August edition covers welcome news from the IRS on penalty relief, the return of Alabama's grocery tax, the fall deadlines now coming into view, and a back-to-school planning checklist for families and business owners alike.

Quote to ponder: "An investment in knowledge pays the best interest." – Benjamin Franklin.

That's true for the students heading back to class this month — and for taxpayers who take time to understand the rules before year-end.

Federal Update: Automatic Penalty Relief and Data Security Season

Two developments from the IRS deserve your attention this month:

• Automatic first-time penalty relief: In July, the IRS announced a new automatic process to provide penalty relief for taxpayers with a history of filing and paying on time — reducing the need to call, write, or formally request abatement. If you've historically been compliant but got dinged with a penalty, relief may now arrive without you lifting a finger. We're monitoring how this rolls out and can review any penalty notices you receive.

• "Protect Your Clients; Protect Yourself" campaign: The IRS and its Security Summit partners launched their summer campaign against tax-related identity theft. The reminder applies to everyone: the IRS does not initiate contact by email, text, or social media asking for personal or financial information. Guard your Social Security numbers, use multi-factor authentication, and be suspicious of "urgent" tax messages — scammers know fall deadlines are approaching too.

Meanwhile, the One Big Beautiful Bill Act provisions remain fully in effect for 2026 — the higher standard deductions, $2,200 Child Tax Credit, senior bonus deduction, and tips and overtime deductions all continue to work in your favor. August is an ideal month for a projection to confirm you're capturing each one.

Key Deadlines: The Fall Gauntlet Begins

• August 10 – Payroll: Extended due date for Q2 Form 941 if all deposits were made on time; tip income reporting for July (Form 4070).

• August 17 – Monthly depositors: July payroll tax deposits due.

• September 15, 2026 – Q3 estimated taxes: The next quarterly payment is now less than seven weeks away. If your income shifted this summer, get a projection done in August — not on September 14.

• October 15, 2026 – Extension deadline: If you extended your 2025 return, this is your final due date. Bring us your documents in August and skip the October scramble entirely.

Quote to ponder: "You must pay taxes. But there's no law that says you gotta leave a tip." – Morgan Stanley advertisement.

Careful planning between now and December is how you avoid tipping.

Alabama Updates: Grocery Tax Returns, Local Rates Shift

• Grocery tax holiday is over: As of July 1, the state's 2% sales tax on food is back in effect, following the two-month suspension under Act 2026-604. City and county grocery taxes were never suspended, so your total register rate is back to normal. Budget accordingly for the back-to-school grocery runs.

• Local rate changes: Several municipalities have adjusted local sales, use, and excise tax rates this summer — for example, Priceville's new ordinance took effect July 1, with first payments due August 20. If your business sells into multiple Alabama jurisdictions, August is the time to verify your rate tables are current.

• Overtime deduction reminder: Alabama's individual income tax deduction of up to $1,000 for qualified overtime compensation (2026–2028) remains available. Hourly workers picking up extra shifts this fall — keep those pay stubs.

• Small business TPP exemption: The $100,000 tangible personal property exemption continues to benefit equipment-heavy operations, with no filing required for qualifying businesses.

Quote to ponder: "The best time to plant a tree was twenty years ago. The second best time is now." – Proverb.

The same goes for year-end tax planning — August beats December every time.

Back-to-School Planning Checklist

As the new school year begins, put these on your own homework list:

• 529 plans: Contributions grow tax-free for qualified education expenses — and back-to-school season is a natural time to start or increase contributions for children and grandchildren.

• Q3 estimate check: Run a mid-year-plus projection now so your September 15 payment is right-sized — no penalties, no overpayment.

• Extension filers: Gather your 2025 documents this month and file well before October 15.

• Business owners: Verify local Alabama sales tax rates, confirm payroll deposits are on schedule, and evaluate equipment purchases while 100% bonus depreciation remains available.

• Records and security: Review who has your financial data, enable multi-factor authentication, and shred what you no longer need — identity thieves love the fall.

• Charitable giving: Non-itemizers can use the new above-the-line deduction ($1,000 single / $2,000 joint) — plan your giving now rather than in a December rush.

Whether you need a mid-year projection, help with a penalty notice, or a strategy session before the fall deadlines, our team is here for you. Contact Carol Sellers at (256) 825-8259 or carol@sellerscpa.net to schedule a paid consultation.

Thank you for trusting Sellers CPA with your financial journey. Here's to a smooth start to the school year and a strong finish to 2026!

Warm regards,

Carol Sellers, CPA Owner, Sellers CPA LLC Dadeville, Alabama

This newsletter is for informational purposes only and does not constitute tax or legal advice. Consult your CPA or tax professional for advice specific to your situation. Tax laws are complex and subject to change.