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Legal
Legal considerations for business finance and accounting compliance
Novak v. Commissioner: Yes, the IRS Can File a Tax Lien While Your Installment Agreement Is Pending
In Novak v. Commissioner (T.C. Memo. 2026-52), the Tax Court held the IRS may file a Notice of Federal Tax Lien while an installment agreement request is still pending — liens generally follow once a balance tops $10,000, streamlined plans end at $50,000, and taxpayers have 30 days to request a CDP hearing under IRC §6320.
Sirius Solutions v. Commissioner: The Fifth Circuit Just Rewrote Self-Employment Tax for Limited Partners
On January 16, 2026, the Fifth Circuit held in Sirius Solutions v. Commissioner that "limited partner" under IRC Section 1402(a)(13) means state-law limited partner status — rejecting the IRS's functional test and exempting limited partners' distributive shares from the 15.3% SECA tax. The ruling excludes LLC members and binds only Texas, Louisiana, and Mississippi, so refund claims and clean bookkeeping both hinge on the details.
United States v. Castro: What a Tax Preparer's 188-Month Sentence Means If Someone Else Signs Your Return
The Fifth Circuit affirmed a 188-month sentence for tax preparer John Anthony Castro, whose fabricated Schedule C and Schedule A deductions caused an estimated $15.2 million tax loss across 200-plus clients. Clients remain legally liable for falsified returns — here are six checks to vet a preparer, plus how Forms 14157 and 14157-A report misconduct.
Young America's Foundation v. IRS: What the Schedule B Donor-Disclosure Lawsuit Means for 501(c)(3)s
On July 13, 2026, Young America's Foundation sued the IRS to stop mandatory Schedule B donor disclosure for 501(c)(3)s, citing the Littlejohn data breach and the Supreme Court's exacting-scrutiny standard from Americans for Prosperity Foundation v. Bonta. Here is what the case argues, why the IRS's 2020 exemption for 501(c)(4)s matters, and how nonprofit bookkeepers should tighten donor records now.
California's 2026 Privacy Rules Now Cover Employee Payroll, Biometric, and Health Data
California's CPRA now covers employee, applicant, and contractor data, and regulations effective January 1, 2026 require risk assessments before high-risk HR uses like biometric time clocks and AI resume screening, with automated-decision-making notice and opt-out rules phasing in by 2027.
California's SB 440 Prompt Payment Law: 30-Day Deadlines and 24% Interest on Unpaid Change Orders
California's SB 440, effective January 1, 2026, gives private-project owners 30 days to respond to a change order claim and 60 days to pay the undisputed portion — or owe 2% monthly interest (24% a year). Here's how the law works, how it compares to other states, and how contractors should track the deadlines in their books.
Clinco v. Commissioner: A Tax Court Judge Flags AI-Hallucinated Case Law — What It Means for Business Owners Using AI
In Clinco v. Commissioner (T.C. Memo. 2026-16), Judge Mark Holmes flagged three nonexistent case citations that "suggest something cooked up by AI" — the first such warning from the U.S. Tax Court. With 1,598 documented AI-hallucination court cases by June 2026 and sanctions topping $145,000 in Q1 2026 alone, here is what business owners using AI for tax and financial paperwork need to verify.
Employee Monitoring Disclosure Laws in 2026: What Small Businesses Must Tell Their Teams
Five states — Maine, Connecticut, Delaware, New York, and Colorado — now require written notice before monitoring employees. Maine's 2026 law adds annual re-notice, disclosure during hiring, and $100–$500 fines per violation, while Connecticut's expanded rules take effect October 1, 2026. Here is how to write one monitoring policy that satisfies every state.
EPA's PFAS Reporting Rule (TSCA 8(a)(7)): What Small Manufacturers and Importers Must Report Back to 2011
EPA's TSCA Section 8(a)(7) rule requires manufacturers and importers of roughly 770 PFAS chemicals to report production, use, and disposal data back to January 1, 2011. The submission window now opens January 31, 2027 (or 60 days after a final scope rule), with proposed exemptions for articles and concentrations at or below 0.1% — here's what small businesses should document now.
The FTC's Fake-Review Crackdown: What the Consumer Review Rule Means for Your Small Business
The FTC's Consumer Review Rule (16 C.F.R. Part 465) took effect October 21, 2024, and in December 2025 the agency sent its first warning letters — with civil penalties of up to $53,088 per violation and no small-business exemption. A practical guide to the six prohibited practices, from rating-conditioned rewards to review gating, and a five-step compliance checklist owners can finish in a week.
The FTC Junk Fees Rule: A Compliance Guide for Ticket Sellers and Short-Term Rental Hosts
The FTC's Junk Fees Rule, in effect since May 2025, requires live-event ticket sellers and short-term lodging hosts to display all-in total prices upfront, with violations carrying civil penalties of up to $51,744 each and a $10 million StubHub settlement already on the books.
Bookkeeping for Legal Document Assistants: Bonds, Trust Funds, and Flat-Fee Revenue
California requires Legal Document Assistants to register with a county clerk, post a $25,000 surety bond, and pass one of four education-or-experience tests before charging clients — a licensing and revenue-recognition setup that trips up most first-time LDA owners' books.