🤖 You’ll never see this score. It still matters.

Good morning! If you spent yesterday horizontal in a lawn chair and today you’re somehow expected to function, you have our sympathy. Coffee in hand, sunscreen still faintly clinging to your forearms, let’s get into it.

This week’s lineup:

IRS Survival Guide

🤖 The IRS has an algorithm with an opinion of you

Somewhere in a federal data center, a computer is reading your tax return and forming a mathematical opinion about you. It’s called the Discriminant Information Function, or DIF, because the IRS has never once worried about branding. It’s been quietly grading returns since the 1960s.

Here’s how it works. The DIF compares your numbers — deductions, income, expenses — against statistical norms for people who look roughly like you on paper. Stay inside the lines and your return drifts through the system like a leaf on a calm river. Stray too far and a human classifier gets involved. You will never see your score. Not even your accountant can. The formula is confidential, specifically so nobody can engineer their way around it.

What raises the score is fairly well-documented after 60 years of pattern-watching:

Also worth knowing: the IRS lost about 31% of its revenue agents in early 2025. The humans are fewer. The algorithm is not.

Business & Gigs

🧾 Business credit cards: The audit trail you’re not keeping

If you’re using a dedicated business credit card and logging your expenses, you’re already ahead of a lot of people. But there’s a gap between “I have records” and “I have records that would survive IRS scrutiny,” and most business owners don’t realize they’re living in that gap.

A credit card statement proves you spent money. It does not prove
the expense was ordinary, necessary, and business-related. That’s the test the
IRS actually cares about, and a line item that says “$84.50 — Restaurant” doesn’t answer it.

What the IRS wants to see for meals and travel expenses specifically:

That last two are where audits get uncomfortable. “I took a client to dinner” is not documentation. “Dinner with [name], [company], to discuss Q3 contract renewal,” written on the receipt or logged in your expense tracker the same day, is.

The fix isn’t complicated. It’s just a habit. Note the purpose and attendees at the time of the expense, not six months later when your accountant asks. Your future self will be very grateful.

📥 Steal our one-page Business Expense Documentation Cheat Sheet. Five things every receipt needs to survive an audit. Download free →

IRS Survival Guide

👻 Airbnb money is now “ghost money”

We’ve been whispering about it in the hallways, and the news is finally official: The “One Big Beautiful Bill Act” (OBBBA) just handed Airbnb hosts a massive victory for the 2026 filing season.

If you were panicking about the IRS tracking every $600 booking, you can breathe. Section 70432 of the OBBBA successfully nuked the lower reporting thresholds. We are back to the “De Minimis” era, which is fancy tax-speak for “if it’s small, we don’t want to see the paperwork.”

Airbnb will ONLY send you a Form 1099-K if you hit BOTH of these marks:

If you fall below either of those, your mailbox stays empty. But don’t get too comfortable. Just because the IRS isn’t getting an automated “snitch” form doesn’t mean the money isn’t taxable. If you rent your place for more than 14 days, you still technically owe Uncle Sam his cut of the profit.

However, the OBBBA also beefed up your defenses. If you do report that income, you now have a $40,000 SALT deduction cap to shield your earnings.

We’re essentially playing a game where the referee just looked away for a second. Use that time to get your records in order.

Wild Tax Tales

🚩 The One Thing Your Tax Preparer Must Do (Or Walk Away)

We’ve heard of “insider trading,” but Hector Cavazos just gave us a masterclass in “insider fraud.” We just got word that this former IRS employee was sentenced to 24 months in prison and slapped with a $150,000 fine for running a high-stakes tax scam in San Antonio, Texas.

Cavazos operated as what the IRS calls a “ghost preparer.” He aided in the preparation of 61 false tax returns, including one for an undercover IRS agent, but refused to sign any of them or provide a Preparer Tax Identification Number (PTIN).

Without his clients’ knowledge, Cavazos stuffed their returns with fake Schedule C business losses to trigger bigger refunds. His little scheme caused a tax loss of $579,682. Now, his 13 former clients are potentially on the hook for those unpaid taxes, plus interest and penalties.

This wasn’t Cavazos’ first time in the penalty box. He was actually fired from the IRS back in 1996 after being arrested in California for conspiracy to defraud the U.S.

Bottom line: If your tax preparer doesn’t sign the return, you shouldn’t file it. A real pro puts their name on their work; a ghost just leaves you haunted by the IRS Criminal Investigation team. Stay diligent, check for a PTIN, and keep your name off the “insider fraud” list.

The quick (and slightly prickly) stories we didn’t have time to get to:

If you made it this far, you’re our kind of nerd. Hit reply and tell us which story you want us to dive deeper into next week.