by Daniel Kittell | Accounting News, IRS, News, Newsletter, Tax Planning - Individual
Key Takeaways:
- AEP replaces First Time Abate, automatically checking your compliance history at filing instead of requiring you to request relief.
- The program applies to eligible returns starting with tax year 2025, and certain quarterly returns beginning in 2026.
- A clean three-year track record (12 consecutive quarters for quarterly filers) generally qualifies you for relief on failure to file, pay, or deposit penalties.
- Estate tax returns (Form 706), gift tax returns (Form 709), and certain other filings are excluded from AEP entirely.
- If a penalty notice arrives during the transition, contact the IRS about First Time Abate — and remember any underlying tax and interest is still owed.
How the IRS’s New Penalty Relief Program Actually Works
It is not uncommon to receive an IRS penalty. Even taxpayers who have a long history of staying organized with tax obligations miss deadlines and make late payments. It can happen to the best of us.
This past July, the IRS announced a new program called the Automatic Exemption from Penalty (AEP), which automatically provides relief to qualifying taxpayers with a strong compliance tax record. Here’s what to know about this new program.
What is Automatic Exemption from Penalty?
AEP is replacing a long-time IRS program called First Time Abate (FTA). Under FTA, taxpayers had to call or write to the IRS to get a penalty removed. That was assuming taxpayers even knew about the program.
Now, under AEP, the IRS automatically checks your compliance history when processing your tax returns. Specifically, it looks at whether you filed on time and paid what you owed for the three years before the return you’re filing now. There’s no need to submit an application or make a separate request.
The program applies to eligible returns beginning with tax year 2025, certain quarterly returns beginning in 2026, and future tax periods.
Who Qualifies for AEP?
Generally, you need to have a history of filing your returns and paying taxes on time for the previous three years. If you file quarterly, that means 12 straight quarters of on-time filing and payment.
Which Penalties are Covered?
AEP applies to three common penalties: failure to file, failure to pay, and failure to deposit. These cover situations like turning in your return late, missing a payment deadline, or missing a required deposit.
It doesn’t cover every IRS penalty, though. And certain returns are excluded entirely from AEP, including, for example, estate tax returns (Form 706) and gift tax returns (Form 709). These penalties may still require a proactive approach for relief.
How Does the AEP Process Work?
When the IRS processes your return, its system automatically checks your history. If you meet the requirements, the penalty won’t be added to your account. The IRS will then send you a letter explaining that you received AEP relief.
What to Do If You Receive a Penalty Notice
Never ignore a notice from the IRS, but don’t assume that the notice is correct. The IRS is still transitioning from First Time Abate to AEP, so some taxpayers who should qualify for relief may still get penalty notices. Contact the IRS and ask if you qualify for First Time Abate, which is still available during the transition. And remember that regardless of what penalties may be removed, you are still liable for any tax and interest due on the underlying bill.
Other Relief Options May Be Available
If you don’t qualify for AEP, you may not be out of options. The IRS could grant reasonable cause relief when circumstances beyond your control, like serious illness or natural disaster, prevent you from meeting your tax obligations. You can also request relief for specific situations the IRS announces, such as after major storms or emergencies.
The goal of implementing AEP is to streamline the relief process for eligible taxpayers. It doesn’t completely eliminate IRS penalties, but it gives honest and compliant taxpayers more breathing room.
by Daniel Kittell | Accounting News, Business Growth, Industry - Professional Services, News, Newsletter, Professional Services, Small Business
Key Takeaways:
- Winning new clients matters, but firms that can’t retain them must keep replacing lost revenue before growth is possible.
- Reliability and follow-through, not just expertise, are what build or break client trust over time.
- Proactive, consistent communication (even brief updates with no news) prevents the frustration that drives clients away.
- Retaining existing clients is often more profitable than acquiring new ones, since new clients require significant time and cost before they generate revenue.
- Delegating routine work and introducing clients to the broader team creates reliability that doesn’t depend on one person.
Growth doesn’t always come in the form of new clients, new leads, and newly signed contracts. New business brings great momentum, but it’s only part of the growth equation. After all, if you can’t retain new clients, your firm needs to keep replacing lost revenue before it has a chance to grow.
That’s why retaining clients is just as important as signing new ones. The key is to create a client experience that gives them plenty of reasons to stay.
Build Trust
Clients turn to professional service providers when they need expertise, but your expertise isn’t enough to keep them coming back. Clients want reliability. They want to know that your firm will respond when they reach out, follow through on commitments, and handle their questions and difficult situations with steady-handed guidance.
These moments build or break trust. Even when a solution isn’t immediately clear, clients should rest assured that your firm is paying attention and working toward a fix.
Communicate Proactively
Few things trigger client frustration more than poor communication. Clients shouldn’t have to wonder if their request was received or repeatedly email your firm for an update. They want to know what’s happening, even if there’s nothing significant to report. A brief update assures them that they’re not forgotten.
Set expectations from the beginning. Let clients know who their main contact is, how often they’ll hear from their contact, and how quickly your team typically responds.
And if a deadline changes or a problem crops up, communicate early. A client will likely be understanding about a delay, but less so when it’s last minute.
Consistent communication protects your firm and creates confidence in clients. If a problem arises, but you’ve been upfront and communicated throughout the whole process, clients will handle it better. It’s the surprise that turns clients off, more than the setback.
Retention Can Improve Profitability
Keeping existing clients is one of the most direct paths to higher profit. Think about what it takes to win a new client. Marketing, networking, sales time, and proposals take your time and money before a prospective client ever becomes a paying client.
On the other hand, your firm already understands existing clients’ businesses, preferences, and needs. Long-term clients may also purchase additional services as their needs change. And satisfied clients become valuable sources of referrals.
Even a small improvement in client retention can increase profit margins more than a push in new client acquisition. So, while attracting new clients is always part of the game, sometimes growth is most visible in holding onto loyal clients.
Learn to Delegate
Give employees clear responsibilities and enough authority to handle routine work and appropriate client needs. Introduce clients to the team they’ll be working with so they don’t expect one person to do the heavy lifting.
Strong internal systems are crucial, too. Clear processes for project tracking and communication, client onboarding, and consistent workflows make it easier for employees to provide the reliable experience clients expect without constant oversight.
When clients know they can rely on your firm, they’re more likely to stay. And client retention creates the foundation for sustainable growth.
by Daniel Kittell | Accounting News, News, Newsletter, Retirement, Retirement Savings, Tax Planning
Key Takeaways:
- RMDs become mandatory at age 73, and missing one can trigger a penalty of up to 25% of the required amount.
- A new temporary $6,000 deduction ($12,000 for joint filers) is available for taxpayers 65+ through 2028.
- Investment gains, pension income, and annuity payments are all still taxable in retirement and can push you into a higher bracket.
- Where you retire matters — states tax retirement income differently, so location can affect how long your savings last.
The Hidden Tax Traps That Could Cost You in Retirement
Saving for retirement usually takes years of planning. But focusing on savings goals with tunnel vision can lead you to miss some tax rules that can quietly eat into your nest egg if you don’t see them coming. Here’s what to watch for.
Required Minimum Distributions Can Increase Your Tax Bill
If you have money in a traditional IRA or most employer-sponsored retirement plans, you’ll have to start taking required minimum distributions (RMDs) when you hit age 73. That withdrawal counts as taxable income. And if you miss an RMD or take the wrong amount, the penalty can be up to 25% of the amount you should have withdrawn.
The trap here is in the timing. If you wait too long to start taking RMDs, or if you have several accounts and miscalculate the total, you can end up with a bigger tax bill than expected. It helps to plan withdrawals early and strategically so you’re not forced into a higher tax bracket all at once. And if you miss an RMD, try to fix it as soon as possible to reduce the risk of IRS penalties.
Social Security and the Temporary Senior Deduction
Your Social Security benefits can be taxed. Depending on your income, up to 85% of your benefits can be taxable. But the 2025 Trump tax bill created a temporary $6,000 deduction for taxpayers 65 and older ($12,000 for joint filers). This is on top of the usual extra deduction for seniors, and you can claim it whether you itemize or take the standard deduction. This deduction is available through 2028, phases out at higher income levels ($75,000 for single filers and $150,000 for joint filers), and reduces taxable income, which could reduce your overall tax bill.
Investment Gains and Dividends in Retirement
Your investments can still generate taxable income in retirement. Dividends and capital gains from outside your 401(k) or IRA are still taxed each year. Long-term capital gains get a lower rate than ordinary income, which helps. But if you sell a lot of investments in one year, or your dividend income is high, you can accidentally push yourself into a higher tax bracket, or even trigger taxes on your Social Security that you could have avoided with better timing.
Pensions and Annuities
If you have a pension or an annuity, the IRS treats most of that income like a paycheck. Most pension payments are fully taxable if your employer funded the plan with pre-tax dollars. Annuity payments can be more complicated. Think of each annuity payment as having two parts. One part is simply giving you back the money you originally put in, which usually isn’t taxed again. The other part is the investment growth, and that’s generally taxable.
Don’t Forget About State Taxes
Where you live can also affect how much retirement income you keep. Some states don’t tax retirement income at all. Others exempt Social Security benefits but tax pensions or retirement account withdrawals.
Indiana is a good example of how mixed these rules can be. The state doesn’t tax Social Security benefits, but pensions, 401(k) withdrawals, and IRA distributions are taxed as ordinary income. You could also owe county income taxes depending on where you live.
Before relocating in retirement, compare state tax rules along with housing costs and overall cost of living. A state with lower taxes on retirement income could help your savings last longer.
None of the traps above are secret, but they’re easy to miss until you’re already in them. A little planning and a thoughtful withdrawal strategy can help sidestep surprises.
by Daniel Kittell | Industry - Veterinary Medicine, News, Newsletter
Every veterinary practice deals with the client who shows up unannounced with a sick or injured pet, with no appointment and no call-ahead notice. You’ve already got a full schedule for the day. What now?
Walk-ins don’t have to throw your whole day off. With systems in place to handle these situations, you can manage them efficiently without disrupting your planned schedule.
Start With the Front Desk
Triage is the key to handling walk-ins, and it starts the moment an unannounced client walks through the door. Your front-end staff should know the correct questions to ask. What symptoms is the pet experiencing? When did the problem start? Is the pet having trouble breathing? Is the pet bleeding? Has the pet eaten something toxic?
These questions help gather enough information to flag a true emergency. And if a receptionist is unsure how serious the situation is, they should consult a technician or veterinarian.
A Technician Can Perform a Quick Assessment
Once the initial questions are answered, a technician should do a brief evaluation. Not a full workup, just enough to determine what you’re dealing with.
If the pet is experiencing a life-threatening emergency, start treatment immediately. But if it’s less urgent, you have options on next steps.
If the situation is urgent but not critical, it might be better handled at a nearby emergency hospital, which is equipped with additional staff, equipment, and specialty services. This way, you’re not disrupting your schedule, and the pet is getting care from a team that’s ready for it.
When a Small Issue Becomes a Big Problem
Sometimes the situation seems minor, so you decide to work the client into your schedule. Soon, something that first appeared minor is beginning to reveal a more serious problem. Additional testing is needed. Treatment takes longer than anticipated. A procedure becomes necessary. Suddenly, you need to pull a technician from another room, your next appointment is waiting, and you’re running 30 minutes behind schedule.
Not every quick walk-in stays quick, but you can get ahead of it.
Give Clients the Option to Wait
If the walk-in isn’t urgent, let the client know that you can see them, but they’ll have to wait until you can fit them into the schedule.
Some clients might be willing to wait. Others might reschedule. Either way, you’re not squeezing a non-emergency into an already packed day.
Clear communication is important here. Let clients know what the wait time looks like so they can make the call that’s right for them.
Build Time Into the Schedule
This is a practical long-term fix. If you block out one or two short windows during the day, you’ll have room in the schedule to absorb unexpected walk-ins. These openings may not be used every day, but they can provide breathing room when an emergency does arise.
Most clinics can’t avoid walk-ins, but with a plan and some built-in flexibility, you can handle them without derailing your schedule.
by Daniel Kittell | Construction, Industry - Construction, News, Newsletter, Small Business
The construction industry needs to bring 349,000 new workers in 2026 just to keep labor supply and demand in balance. That’s according to the Associated Builders and Contractors (ABC). And most of that demand is coming from the need to replace retiring workers.
Experienced workers are aging out of the construction industry faster than new ones are entering. And while 349,000 is a big number, it’s actually lower than in recent years. ABC projected a need for 439,000 workers in 2025 and over 500,000 the year before. The 2026 dip reflects modest construction spending forecasts through 2027. But ABC cautions that those forecasts could be too conservative, and any policy changes or drops in financing costs could cause demand to outpace projections.
Where the Shortage Hits Hardest
Electricians are in especially high demand right now. The accelerated growth of AI data centers has led to an increase in large-scale projects requiring highly specialized electrical work.
Labor shortages are also critical near large industrial projects like semiconductor manufacturing facilities. These massive projects draw from a limited pool of workers in the region, which can leave local contractors scrambling to staff workers for their own projects.
The Forces Driving Workforce Challenges
Several things are at play here, with the aging workforce being one of the most significant factors. These workers are taking years of knowledge and skill with them, while the industry plays catch-up to replace them.
Another factor at play is immigration enforcement. The construction industry has historically included undocumented immigrants. But border crossings fell sharply in 2025, and deportation efforts have ramped up, causing a stall in that labor pipeline.
Add to this high labor costs and tariffs that are squeezing budgets, which can have the domino effect of discouraging investment in workforce development.
Technology is also changing the industry. Project management software, robotics, automation, and drones are swiftly integrating into the construction landscape. These tools create demand for workers who can adapt and learn new skills quickly.
What’s the Solution?
This is a complex issue with no clear answer.
Some groups are advocating for a more flexible visa framework to bring in skilled workers from other countries. This would give the industry a faster path to filling workforce gaps.
Training programs that can help workers with transferable skills transition into the construction industry could be another piece of the puzzle.
And apprenticeship programs that allow workers to earn while they build skills could help close the gap.
Labor Shortages Affect More than Job Sites
Labor shortages can affect more than the construction industry. When there aren’t enough workers, projects get delayed, and some stall indefinitely. Roads, bridges, and other infrastructure upgrades can take longer to complete. Housing construction can slow as well, creating a tighter supply and potentially pushing prices higher for buyers and renters.
The impact can spread into the broader economy, too. Large projects that support industries like AI and semiconductor manufacturing may take longer to build, which can slow expansion and investment.
The labor shortage isn’t a quick fix, but it’s manageable. Invest in recruiting, training, retention, and competitive pay to stay ahead of the competition and keep your projects moving.
