Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices.
In this joint Tax Section Odyssey and Journal of Accountancy (JofA) podcast episode, host Neil Amato is joined by Melanie Lauridsen, AICPA VP of Tax Policy & Advocacy and Todd Sloves, AICPA Director of Congressional & Political Affairs, to discuss why paid tax preparer oversight is back in the spotlight. The conversation looks at key findings from a recent Government Accounting Office (GAO) report, what "minimum professional standards" could mean for the largely unregulated preparer market, and how the Senate's Taxpayer Assistance and Service (TAS) Act would implement guardrails and enforcement tools. The episode also explains a practical proposal from the SAFE Act that could simplify filing extensions and reduce penalty risk for taxpayers. Questions answered in this episode: What did the GAO find in its latest report on paid tax return preparers, and why does it matter to taxpayers and the IRS? Why are so many paid tax preparers considered "unregulated," and what risks can that create for taxpayers? What are "minimum professional standards" for paid preparers, and what role does the AICPA support for establishing them? How would the TAS Act change IRS authority and guardrails around PTINs (including the ability to revoke and restore a PTIN)? How would the SAFE Act's extension safe harbor simplify filing an extension and help reduce underpayment penalty exposure? AICPA resources AICPA Advocacy news and resources AICPA Tax Section Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/18/26 • 17:16
Filing season is here — and so is confusion. In this episode, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, is joined by Mark Gallegos, CPA, MST, Partner — Porte Brown, to break down the most common questions around the new H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA) provisions, from Trump accounts to the senior deduction as well as discussion around electronic payments and refunds. Practical guidance is here to help you cut through the noise and get it right. What you'll learn from this episode: How new Trump accounts are prompting new client questions while key issues remain unresolve How to clear up confusion around the senior deduction and social security taxation What additional information may be needed from clients for the new deductions for tips, overtime and auto loan interest Why practitioners might need to ask more questions related to energy credit expenditures That managing client misinformation and expectations is a core busy-season skill, especially as guidance continues to evolve. AICPA resources Planning after tax changes FAQs on qualified tip and overtime deductions IRS Payment Modernization: Sending and Receiving Funds Electronically IRS Practice & Procedures Trump accounts under Sec. 530A — FAQs and insights Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/13/26 • 25:05
In this episode, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, is joined by Kasey Pittman, Managing Director of Tax Policy — Cherry Bekaert. A recent Supreme Court decision invalidated key tariffs issued under the International Emergency Economic Powers Act (IEEPA) — raising major questions about refunds, executive authority and what comes next. We discuss the ruling itself, explain what tariffs are impacted and outline practical steps tax practitioners should consider right now for importer clients. What you'll learn from this episode: · Why the Supreme Court invalidated the IEEPA tariffs · Which tariffs are affected and which remain in place · What we know (and don't know) about potential refunds · How tax practitioners with importer clients can add value right now · What to watch next in tariff policy AICPA resources Supreme Court decisions: Implications for the tax and accounting profession Tariff Resource Center Tax implications of tariffs Other resources Global Business Alliance (GBA) Tariff Tracker Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/6/26 • 20:17
In this joint episode with the Personal Financial Planning (PFP) podcast, hosts Cary Sinnett, CPF, CAP, CFT-1, CExP, and April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, are joined by is joined by Sebrina Ivey, CPA/PFS to explore Trump accounts, also known as Sec. 530A accounts. These accounts are a new tax-advantaged savings vehicle for children created under H.R 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA). The episode focuses on what CPAs need to know now to advise families on coordinating these accounts with broader tax, estate and financial plans. NOTE: Gift tax return/GST tax return requirements for contributions to a Trump Account: At this time, Treasury and the IRS have not provided guidance under Sec. 530A clarifying that contributions to Trump Accounts are considered a completed gift of a present interest in property eligible for the annual gift tax exclusion ($19,000 per recipient for 2026 gifts). Without further guidance, it appears any contribution to a Trump Account will be considered a taxable gift of a future interest and therefore subject to both gift and GST tax — effectively reducing a taxpayers' federal estate tax lifetime exclusion ($15M for deaths occurring in 2026). What you'll learn from this episode: What Trump Accounts are and how they fit alongside 529s, Roth IRAs and custodial accounts Understand who can contribute and how much to Trump Accounts Key contribution, investment and compliance rules for these accounts How to plan ahead for key transition points Resources Trump Accounts under Sec. 530A — Timeline and insights IRS Trump Accounts IRS Notice 2025-68 Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
2/6/26 • 20:01
In this episode, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, is joined by Edward Jenkins, CPA, CGMA, Professor of Practice in Accounting — Penn State University, to discuss name, image and likeness (NIL) taxation issues for student athletes. Together they unpack common misconceptions, emerging revenue streams, unresolved classification issues and the growing complexity of state taxation. Highlights include key considerations — and opportunities — for CPAs advising clients in this rapidly changing area. What you'll learn from this episode: Understand how NIL income is taxed — and why student athletes are often surprised at filing time Learn where the biggest compliance risks and reporting pitfalls are for student athletes Explore the unresolved questions around worker classification and self‑employment (SE) tax Hear why state tax, dependency and multi‑state issues make NIL especially complex Resources · State and Local Tax (SALT) Resource Center · Student Athlete Income Recognition: State and Federal Tax Care Required Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
1/30/26 • 27:27
Align your compass to the year ahead. In this episode, April Walker brings tax leaders together to share intentional, practical ways to run a better practice, focusing on advisory-first mindsets, using artificial intelligence (AI) with a purpose, collaboration around new legislation and sustainable operating rhythms. What you'll learn from this episode: How to prioritize client outcomes and reinvest tech-enabled time into higher-value conversations Using AI with purpose — concrete use cases, role-based workflows and "AI stacking" for research, communication and tools Why we need to be ready for digital asset taxation with Form 1099-DA on the way How to be intentional with your operations — creating boundaries, systems and prioritizing consistency over intensity AICPA resources - Tax Section landing page - Tax Section news and member FAQs
1/9/26 • 19:20
In this Tax Section Odyssey podcast episode, the final in a three-part miniseries on reimagining firm ownership, April Walker, CPA, CGMA, is again joined by Adam Shay, CPA, a former firm owner turned business coach for accounting firm owners. This episode explores the personal and professional journeys that can follow selling a firm. This candid conversation offers practical advice for firm owners and professionals navigating major transitions in their careers. What you'll learn from this episode: The importance of prioritizing self-care Why it is normal to expect identity shifts Ways to rediscover your purpose How connecting with others who have experienced similar transitions can ease the journey AICPA resources Reimagining firm ownership — Building and growing a modern practice | Tax Section Odyssey (episode 1 in the reimagining miniseries) Reimagining firm ownership - Selling smart in a changing environment | Tax Section Odyssey (episode 2 in the reimagining miniseries) Engage365 Key considerations when selling a CPA practice PCPS Transforming Your Business Model Reimagining Your Tax Practice
12/19/25 • 20:38
In this Tax Section Odyssey podcast episode, the second in a three-part miniseries on reimagining firm ownership, April Walker, CPA, CGMA, is again joined by Adam Shay, CPA, a former firm owner turned business coach for accounting firm owners. This conversation explores how accounting firm owners can successfully navigate the process of selling their firm in today's competitive market. Gather actional insights for firm owners considering a sale, emphasizing strategic preparation, objective valuation and thoughtful communication throughout the process. What you'll learn from this episode: Key qualities buyers look for, including strong people, pricing, processes and technology Common mistakes sellers make, such as accepting the first offer or neglecting competition The important role of due diligence, transparency and cultural fit in successful transactions AICPA resources Reimagining firm ownership — Building and growing a modern practice | Tax Section Odyssey (episode 1 in the reimagining miniseries) Engage365 Reimagining Your Tax Practice PCPS Transforming Your Business Model
12/11/25 • 17:27
In this Tax Section Odyssey podcast episode, April Walker, CPA, CGMA, is joined by Adam Shay, CPA, a former firm owner turned business coach for accounting firm owners, to kick off a three-part series on reimagining firm ownership. The conversation explores the lifecycle of a modern accounting firm, focusing on building a sellable practice, developing future leaders and overcoming common challenges such as owner dependency and process bottlenecks. Hear insights on leveraging people, processes, pricing and technology to create a sustainable, scalable firm. What you'll learn from this episode: Practical strategies for delegation, leadership development and embracing innovation. Actionable advice for navigating growth, preparing for transition and fostering a culture of continuous improvement in today's rapidly evolving tax profession. How process documentation and technology adoption drive consistency in a firm. How to use a pricing model to reflect value provided to your clients. AICPA resources Engage365 Reimagining Your Tax Practice PCPS Transforming Your Business Model
11/26/25 • 26:15
In this episode, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, sits down with Mark Gallegos, CPA, MST, Partner — Porte Brown, to unpack key year-end tax planning strategies. They dive into new opportunities for individuals and businesses under the H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA), including the increased state and local tax (SALT) cap, expanded deductions and the return of immediate expensing for domestic research and development (R&D) costs. Tune in for practical insights on proactive planning and multi-year modeling to help clients maximize benefits under the new law. What you'll learn from this episode: The impact of H.R. 1 on income tax planning Learn more about new and expanded deductions Hear about year-end actions that might be beneficial for taxpayers Why entity choice conversations might be necessary given the current law AICPA resources Planning after tax changes Tax Section Tax Section news and member FAQs Year-End Tax and Financial Planning Toolkit Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
11/14/25 • 20:18
In this joint Tax Section Odyssey and Journal of Accountancy (JofA) podcast episode, host Neil Amato discusses the impact of the recent and ongoing federal government shutdown on IRS operations and tax practitioners with Melanie Lauridsen, VP of Tax Policy & Advocacy at the AICPA. The conversation covers the history and mechanics of government shutdowns, what we know about IRS contingency plans and the practical effects on taxpayers and professionals. Listeners can also gain timely insights into recent developments such as the transition away from paper refund checks and implementation of guidance and updates to forms related to the new tax legislation. What you'll learn from this episode: Government shutdown impacts on IRS operations Important information from the IRS on electronic refunds and payments Updates on guidance received from Treasury and the IRS on H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA) implementation Concerns about IRS service levels in a government shutdown AICPA resources · Navigating the government shutdown · Client letter and FAQ for a government shutdown during tax season · Planning after tax changes IRS resources · FY2026 IRS Lapse in Appropriations Contingency Plan Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
10/9/25 • 21:22
In this joint Tax Section Odyssey and Journal of Accountancy (JofA) podcast episode, host Neil Amato sits down with tax expert Annette Nellen, Esq., CPA/CGMA, to discuss the latest developments in tax legislation, specifically H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA). Annette shares her insights on the new tax provisions, effective dates and the importance of accurate information and research in the tax field. This episode also serves as a preview of the upcoming National Tax Conference in Washington, D.C., where Annette will be speaking on key tax updates for individuals and businesses. What you'll learn from this episode: · What tax provisions from H.R. 1 are permanent vs. temporary · Where guidance and technical corrections are needed related to H.R. 1 · Learn more about recent IRS rules and significant court cases · The importance of accurate information and thorough research in the tax area AICPA resources Register here for the AICPA National Tax Conference – Nov. 17 – 18, Washington, DC Planning after tax changes Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
9/19/25 • 23:06
In this episode, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, delves into the recently issued IRS Rev. Proc. 2025-28 with Mark Gallegos, CPA, MST, Partner — Porte Brown. Tune in to discover the implications of this IRS guidance and hear about the strategic decisions businesses can make to take advantage of presented opportunities. What you'll learn from this episode: Details of Rev. Proc. 2025-28 Changes made by H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA) to Sec. 174 research & experimental (R&E) expenditures Options for small businesses to be able to retroactively take advantage of the changes Decision criteria for evaluating how to advise affected businesses How to navigate R&E expenditures going forward for 2025 returns AICPA resources Planning after tax changes Practical Insights from IRS Rev. Proc. 2025-28 Summary of IRS released R&E expense guidance under H.R. 1 and Rev. Proc. 2025-28 Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
9/10/25 • 24:31
In this episode, Benjamin Alarie, CEO and co-founder of Blue J, and Ashley Francis, CPA/PFS, owner of The Francis Group, PLLC, discuss the integration of artificial intelligence (AI) in tax research. They sift through the best practices for using AI tools, the importance of asking the right questions and the future of AI in the tax profession. The conversation also touches on the potential risks and cautions associated with using AI, emphasizing the need for professional judgment and client confidentiality. What you'll learn from this episode: How to integrate AI tools into your tax research workflow Ways to evaluate AI output to determine accuracy The top cautions and risks associated with using AI for tax research The future of AI in tax research AICPA and CPA.com resources Artificial Intelligence (AI) Tax Resource Center — Explore the AI Tax Resource Center for insights, tools and guidance on leveraging artificial intelligence to optimize tax practices and enhance compliance. The future of tax research: Frameworks, use cases, and best practices for AI research — A practical framework to evaluate, adopt and scale AI-powered research tools Bartlett, Pringle, and Wolf (BPW) Case Study: Learn how BPW turned to Blue J to confidently embrace generative AI — gaining instant, verifiable tax answers and high-quality drafts without compromising accuracy or authority Blue J AI Tax Research — Sign up today to access preferred pricing through the CPA.com partner program. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
8/21/25 • 36:07
On this episode, Chris Wittich, MBT, CPA, Partner — Boyum Barenscheer, joins again to discuss the latest updates on the employee retention credit (ERC) from H.R. 1, P.L. 119-21, the law known as the One Big Beautiful Bill Act (OBBBA). Chris discusses how the legislation affects ERC claims and the implications for businesses with pending claims. He also delves into the extension of the statute of limitations for examination. What you'll learn from this episode: What H.R. 1 changes about ERC claims processing An update on ERC claims processing What the extension of the statute for examination from H.R. 1 means for ERC claims Reminder about the IRS FAQs about income tax returns and ERC claims AICPA resources Employee retention credit guidance and resources — A library for comprehensive guidance, essential tools and the latest news on the ERC. Planning after tax changes — The tax landscape has shifted. Now's the time for CPAs to turn insights into action with proactive financial planning. Access FAQs, guides, summaries and learning solutions in one central hub. IRS FAQs about the Employee Retention Credit — On March 20, the IRS provided updated FAQs on income tax and ERC. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
8/8/25 • 24:04
In this joint episode with the Personal Financial Planning (PFP) Section podcast, host Cary Sinnett, Senior Manager, Personal Financial Planning — AICPA & CIMA, further discusses the latest tax legislation with guests Mark Gallegos, CPA, MST, Partner — Porte Brown and Robert Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA. Hear insights on the recently passed tax legislation, implications for clients and important considerations for tax professionals now that the bill has been passed signed into law on July 4, 2025. What you'll learn from this episode: Discussion of what the permanent TCJA tax brackets and QBI deduction mean for tax planning Details on the new income exclusions for tips and overtime Topics important to discuss with clients, including Roth conversions, entity structure decisions, as well as estate and gifting strategies AICPA resources 2025 Reconciliation Charts: Key Tax Provisions and PFP Considerations — Tax and PFP downloadable charts provide clear, side-by-side comparisons of current tax law, the original H.R. 1 provisions and the Senate's reconciliation version — highlighting where they align or diverge — and outline the final legislation Planning after tax changes — CPAs need to not only brace for tax law changes but also be proactive in planning for them. Find more resources here to learn more about the latest updates. 2025 Tax Reform Advocacy — The AICPA tax advocacy library on current tax reform developments that Congress is considering in 2025. FAQs on Tax Reform via Budget Reconciliation — Tax reform FAQs that explain the budget reconciliation process, legislative timing, key issues and practical tips for CPAs. Tax Section news and member FAQ — Get the latest tax news, a digest of key tax topics and commonly asked questions about resources and benefits.
7/4/25 • 29:27
In this joint episode with the Personal Financial Planning (PFP) podcast, host April Walker, CPA, CGMA, Senior Manager — AICPA & CIMA, discusses the latest tax legislation with guests Mark Gallegos, CPA, MST, Partner — Porte Brown and Robert Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA. Hear insights on current tax legislation, implications for clients and important considerations for tax professionals. What you'll learn from this episode: The next steps for this pending legislation Key points about state and local tax (SALT) cap, pass-through entity tax (PTET) and Sec. 199A, Qualified Business Income (QBI) provisions Legislative take on Sec. 174 R&E expenditures Other important conversations that may be necessary in the coming months AICPA resources 2025 Reconciliation Charts: Key Tax Provisions and PFP Considerations — Tax and PFP downloadable charts provide clear, side-by-side comparisons of current tax law, the proposed changes in H.R. 1 and how the Senate Finance Committee's proposal aligns or diverges with H.R. 1. Planning for tax changes and tax reform — CPAs need to not only brace for tax law changes such as the Tax Cuts and Jobs Act (TCJA) and expiring provisions but also be proactive in planning for them. Find more resources here to learn more about the latest updates. AICPA submits recommendations to Senate Finance Committee on reconciliation bill — The AICPA submitted a letter to Senate Finance Committee leadership outlining its endorsements, concerns about the PTET SALT deduction and a request for clarification and two additional recommendations. 2025 Tax Reform Advocacy — The AICPA tax advocacy library on current tax reform developments that Congress is considering in 2025, including the expiring provisions of the TCJA. FAQs on Tax Reform via Budget Reconciliation — Tax reform FAQs that explain the budget reconciliation process, legislative timing, key issues and practical tips for CPAs. Tax Section news and member FAQ — Get the latest tax news, a digest of key tax topics and commonly asked questions about resources and benefits.
6/24/25 • 31:17
This discussion with Katie Thomas, CPA, Founder and Owner of Leaders Online, covers three key phases related to making the most of attending professional conferences: pre-conference preparation, strategies for networking and attending sessions during the conference and post-conference activities to reinforce learning and capitalize on connections. The conversation includes practical tips for setting clear goals, engaging with vendors, navigating networking events and balancing various activities to ensure a productive and enjoyable conference experience. What you'll learn from this episode: How to plan your schedule in advance and the benefits of doing so Tips for navigating networking events and making meaningful connections Strategies for maintaining momentum after you leave the conference AICPA resources ENGAGE 25 — Registration and information page for the upcoming conference AICPA Tax Practitioners LinkedIn group — This specialized group keeps members up to date on tax legislation and regulatory developments and fosters peer discussions on technical tax issues and practice management. Tax Division Committees and Technical Resource Panels — Volunteering is an excellent way to build a network of professionals to help you with tax matters. Visit Volunteer Central or contact the AICPA Tax Section at taxsection@aicpa-cima.com to find out how you can get involved
5/29/25 • 24:33
Note: This episode was recorded on Wednesday, May 21, 2025, prior to the House of Representatives vote early Thursday morning May 22, 2025 — 215 in favor, 214 opposed, 1 voting present. See this Journal of Accountancy (JofA) article for updates on the bill that occurred overnight prior to the vote. In this joint episode with the JofA podcast, host Neil Amato discusses with Melanie Lauridsen, Vice President of Tax Policy & Advocacy for the AICPA, the AICPA's perspective on several aspects of the budget bill that was voted and approve by the House of Representatives in the early morning hours of May 22, 2025. What you'll learn from this episode: · An explanation of the pass-through entity tax (PTET) state and local tax (SALT) deduction · Some of the AICPA "wins" in the legislation · The top concern from a survey of members just after tax filing season · The definition of "fractures" AICPA resources 2025 Tax Reform Advocacy — AICPA tax advocacy efforts on current developments on the tax changes that Congress is considering in 2025, including the expiring provisions of the Tax Cuts and Jobs Act of 2017 (TCJA). Planning for tax changes and tax reform — CPAs need to not only brace for tax law changes such as the Tax Cuts and Jobs Act (TCJA) and expiring provisions but also be proactive in planning for them. FAQs on Tax Reform via Budget Reconciliation — Tax reform FAQs that explain the budget reconciliation process, legislative timing, key issues and practical tips for CPAs. Tax Section news and member FAQ — Get the latest tax news, a digest of key tax topics and commonly asked questions about resources and benefits.
5/22/25 • 16:17
This discussion with Nik Fahrer, Director and Digital Assets practice leader at Forvis Mazars, and Shehan Chandrasekera, Head of Tax Strategy at CoinTracker, centers around the complexities of digital asset tax reporting. The conversation highlights the importance of accurate tracking and reporting of digital asset transactions, the nuances of the new regulations and the need for tax practitioners to stay informed and seek expert assistance. What you'll learn from this episode: Current tax reporting regime for Form-DA, Digital Asset Proceeds From Broker Transactions. The distinctions between custodial and non-custodial brokers Anticipated compliance challenges due to the complexity of digital asset transactions. The importance of accurate tracking of digital asset transactions and cost basis, including why using software is a good idea. AICPA resources Digital assets and virtual currency tax guidance and resources — Sharpen your tax knowledge on digital asset and understand the tax complexities and strategies involved with virtual currency and cryptocurrency. Demystifying IRS guidance on digital assets | Tax Section Odyssey — This podcast episode from October 2024 discusses the details of IRS Rev. Proc. 2024-28. Other resources Final Regulations 2024-07-09 — Guidance on gross proceeds and basis reporting by brokers and determination of amount realized and basis for digital asset transactions. Rev. Proc. 2024-28 — Guidance to allocate basis in digital assets to wallets or accounts as of Jan. 1, 2025.
5/15/25 • 24:19
On this episode, Steve Wrappe, a National Technical Leader of transfer pricing at Grant Thorton and Reema Patel, a Senior Manager on the AICPA's Tax Policy & Advocacy team, discuss the intersection of tariffs and tax. The conversation covers the basics of tariffs, their implications for US-based businesses and how tariffs interact with transfer pricing and inventory valuation. The guests also share practical advice for mitigating costs associated with tariffs and discuss the importance of careful planning and strategic decision-making in the current landscape. What you'll learn from this episode: Basics of tariffs, including how they apply and are collected The interaction between tariffs and transfer pricing The impact of tariffs on inventory valuation methods Practical advice for mitigating costs related to tariffs AICPA resources International Taxation Resource Hub — Stay current on international taxation with the latest advocacy efforts, guidance and tools available in this AICPA & CIMA reference library. Five actions finance teams can take on tariffs, AICPA & CIMA, April 11, 2025 Breaking down the reasons for a decline in economic sentiment, Journal of Accountancy podcast, March 11, 2025 Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
4/24/25 • 20:30
On this episode uncover the latest updates related to disaster tax relief with the "Master of Disaster" Jerry Schreiber, CPA, and Brandon Nishnick, Manager, Tax Practice & Ethics — AICPA & CIMA. Hear valuable insights and practical advice for tax practitioners who are dealing with disaster-related tax issues. What you'll learn from this episode: • The latest legislation related to tax disaster relief • What's considered a "qualified disaster" for tax purposes • Practical considerations around filing extensions for tax returns postponed due to disasters • State disaster tax relief resources available • How to obtain disaster relief when records are located in a disaster area AICPA resources Disaster Relief Resource Center — Preparing for disasters beforehand, deciphering tax relief opportunities and accessing resources during the recovery process help to protect personal and business assets. In the event of a disaster, AICPA & CIMA are here to help and provide resources to help you get on the road to personal and financial recovery. State Disaster Tax Relief Guide — There is inconsistency in the tax relief states offer following federally declared disasters. This resource serves as a guide to reduce confusion. IRS resources IR-2025-41 — IRS reminder: Disaster victims in twelve states have automatic extensions to file and pay their 2024 taxes. Publication 547, Casualties, Disasters, and Thefts — This IRS publication explains the tax treatment of casualties, thefts and losses on deposits. Other resources Federal Emergency Management Agency (FEMA) — Bookmark the FEMA website for FEMA responses to all declared domestic disasters and emergencies, whether natural or man-made. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
4/10/25 • 25:00
On this episode (an updated version of the previous episode ERC updates & deadlines) Chris Wittich, MBT, CPA, Partner — Boyum Barenscheer, discusses the latest updates on the employee retention credit (ERC) as the five-year anniversary of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, approaches. He emphasizes the upcoming deadline for submitting 2021 ERC claims by April 15, 2025. Also covered is the latest guidance from the IRS on how to handle income tax returns for ERC claims, the challenges faced by clients related to slow IRS ERC claim processing and tips for addressing claim denial letters. What you'll learn from this episode: Reminder of the upcoming April 15 deadline to submit ERC claims What the updated IRS FAQs say about reflecting salary deductions for claims and denials What to tell your clients about processing times for current ERC claims Different types of IRS correspondence that are being received related to ERC claims AICPA resources Employee retention credit guidance and resources — A library for comprehensive guidance, essential tools and the latest news on the ERC. IRS FAQs about the Employee Retention Credit — On March 20, the IRS provided updated FAQs on income tax and ERC. Traction with the Tiger — Hosted by Chris Wittich, Traction with the Tiger is a podcast series for staying ahead in accounting, business and beyond. Chris covers hot topics, shares key business tips and welcomes engaging guests to provide expert insights, inspiration and actionable advice. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/24/25 • 25:48
On this episode Chris Wittich, MBT, CPA, Partner — Boyum Barenscheer, discusses the latest updates on the Employee Retention Credit (ERC) as the five-year anniversary of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, approaches. He emphasizes the upcoming deadline of submitting 2021 ERC claims by April 15, 2025 and addresses the complexities surrounding the statute of limitations for ERC claims and income tax returns. The episode also highlights the challenges faced by clients in managing tax liabilities, the slow IRS ERC claims processing and tips for addressing claim denial letters. What you'll learn from this episode: Reminder of the upcoming April 15 deadline to submit ERC claims Complexities surrounding the statute of limitations for income tax returns where an ERC claim was filed What to tell your clients about the processing times for current ERC claims Different types of IRS correspondence that are being received related to ERC claims AICPA resources Employee retention credit guidance and resources — A library for comprehensive guidance, essential tools and the latest news on the ERC. Traction with the Tiger — Hosted by Chris Wittich, Traction with the Tiger is a podcast series for staying ahead in accounting, business and beyond. Chris covers hot topics, shares key business tips and welcomes engaging guests to provide expert insights, inspiration and actionable advice. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/20/25 • 27:56
On this episode, Mark Gallegos, CPA, MST, Partner — Porte Brown, discusses strategies for thriving during tax season. Mark highlights his current challenges but reiterates the importance of staying educated and focused in order to foster a spirit of collaboration and support to get through busy season. What you'll learn from this episode: Practical tips on supporting staff during busy season How to stay focused and avoid getting distracted with all the noise The importance of providing support and guidance to your colleagues Tips on managing workflow and deadlines AICPA resources Reimaging your tax practice — Tackle today's top practice management issues with insights and tips from pioneers in the tax community. Join the upcoming session on March 19 at 3pm ET to hear about Tax Season Triage: Your questions answered. Beneficial ownership information (BOI) reporting — Access resources to learn about the BOI reporting requirement under FinCEN's Corporate Transparency Act (CTA). Transforming Your Business Model: Talent — Tap into the Private Company Practice Section (PCPS) toolkit for resources around attracting, retaining and developing talent to ensure the growth of the profession and position your firm for success. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
3/6/25 • 21:32
In this episode, Jamie Lopiccolo, CPA, CGMA, Founder and Managing Member of Capocore Professional Advisors, and Will Hill, Owner of Will Hill Consults, discuss marketing and pricing tax advisory services. They explore the importance of identifying client needs through effective listening and highlight the significance of understanding clients' pain points and gaps to move beyond traditional tax. What you'll learn from this episode: How to use effective listening techniques to identify client needs and help uncover pain points and gaps The importance of moving beyond traditional tax services to offer comprehensive advisory solutions. How to potentially classify tax advisory opportunities into different pricing buckets and the importance of adjusting pricing based on scope changes. The importance of involving team members in advisory services early on, even if they feel unprepared, as this helps them learn and grow in their roles. AICPA resources Broadridge Advisor Spotlight for Tax Section Members — Tax Section members can access sample resources from Broadridge Advisor which provides client education and communication tools on personal financial planning. 2025 Tax and Financial Planner — This digital, month-by-month planner is designed for Tax and PFP Section members and serves as a field guide to summarize key due dates, action items, client engagement ideas and financial planning tips. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
2/28/25 • 22:10
On this episode, Nicole Graham, Risk Consultant — Aon, and Stan Sterna, Vice President — Aon, the national administrator and broker for the AICPA Member Insurance Programs, discuss identifying high-risk clients and managing conflicts of interest. They share their experiences and insights on professional liability risks, client acceptance and continuance protocols and the importance of maintaining objectivity and ethical standards in the accounting profession. What you'll learn from this episode: Why it's critical to have and follow client acceptance and continuance protocols. How to properly manage a conflict-of-interest situation within a firm. Best practices on termination of client relationships. The importance of having an engagement letter in place particularly when dealing with high-risk clients. AICPA resources Client Termination Practitioner Checklist and Notification Letter Terminate a client relationship by following these helpful practice management reminders and then formally communicate the termination to your client. Say "I do" to engagement letters This podcast centers around the importance of engagement letters for tax practitioners. Client Continuance Evaluation Tool Tool designed to help CPA firms determine whether or not they should continue working with a client or terminate the relationship. Transcript April Walker: Hello, everyone, and welcome to the AICPA's Tax Section Odyssey podcast, where we offer thought leadership on all things tax-facing the profession. I'm April Walker, a lead manager for the Tax Section, and I'm here today with Nicole Graham and Stan Sterna. They are both with Aon, and I'm going to let them tell you a little bit about what they do. We're here together recording, which is always exciting to be able to do that in person at Digital CPA in Denver, and they are doing a session called identifying conflicts of interest and high-risk clients. I thought, that sounds really interesting and something our listeners might want to learn more about. Stan, we'll start with you. Tell us a little bit about your background and where you're coming at this session. Stan Sterna: Sure, thank you, April. I have a legal background. I started off practicing law, about 34 years ago, I'm dating myself. My entire career has been defending professional service firms and then an opportunity to take a position with Aon, who is the national administrator and broker for the AICPA Insurance Program, of which CNA is the underwriting partner, the carrier and had worked with Aon for a long time and they wanted me to come over and serve as a risk control consultant for not only the program but also for some of the larger firms as well. I came over about 2016 and I currently advise firms on professional liability risks, cyber risk. I'm also involved in doing presentations like I am here today at Digital CPA and other industry events, writing articles for the Journal of Accountancy, as well as other publications. I like to look at ourselves as risk advisors as not somebody that puts a stop sign up and says, don't do anything or don't do something. It's giving folks in the accounting profession the tools in order to manage the risk while providing services and expanding and growing their practice. April Walker: Nicole, what's your perspective on this topic today? Nicole Graham: Well, I am here to scare everyone just a little bit. April Walker: That's okay. Nicole Graham: But I'm Nicole Graham. I am like Stan, a recovering attorney. I was in litigation practice for almost 18 years. For the majority of that time, I represented professional service firms in professional liability litigation and also disciplinary actions. I did that for a long time and decided to take off the boxing gloves, stop fighting every day, and instead take all those lessons learned and now try to work with firms proactively to avoid some of those pitfalls. April Walker: Let's talk about identifying high risk. High risk could mean different things to different people. Stan Sterna: I think the first thing you need to do, April, is you have to have client acceptance and continuance protocols in place. That's vital to identifying, is this client a right fit? You have to have that process, but as part of that process, you have to identify initially what is the risk appetite of the firm. What is your ideal client? It could be by industry, it can be by size. It could be by geographical location. It could be by the amount of revenue they make if it's a company or income. Identifying what is your ideal client, I think, is the first step. Then you have to not only, and I think this is important, evaluate a client when they're coming through the door to see if it fits the risk appetite at a firm, but also you have to continually and regularly monitor the client and whether or not the client is still a member or still fits within your risk appetite. That's what we call client continuance. Sometimes client acceptance, everybody does client acceptance and might not be in one shape or the other, might not be the best client acceptance. April Walker: It's not formal maybe. Stan Sterna: Everybody's evaluating even folks that don't have written criteria or developed any concrete parameters. In some subconscious level, you're thinking, is this somebody that I want to work with or have as a client? But on the other hand, continuance seems to get short changed, especially in the tax area. One of the things that we've seen when we've dealt with a tax claim is situations where you have a client who maybe doesn't pay on time, or the client is constantly providing information at the last minute, and you're scrambling and you have to get extensions. But yet, when the client came in the door, it seemed like a perfect fit for the firm. You're not re evaluating the situation, whether it's the demeanor of the client, the way they cooperate or maybe just circumstances change with the client that at least should be the impetus for looking at the client and rethinking is this client a good fit for our particular firm? Unfortunately, we've seen a lot of claims in the past, both Nicole and I, where continuance was the issue and not monitoring, is this a potentially high risk client? I think, in the tax area, one of the biggest risk flags or red flags is not paying fees and/or not giving information on time. Unfortunately, when people don't pay fees and they're constantly either slow paying or they want to pay a fraction of it, if you pursue those fees, a lot of clients will turn around and point the finger at the accountant and say, well, there was something that you did that I didn't like, and that's the reason why I'm withholding fees. A lot of them it's a ruse to be frank with you, a client ruse in order to avoid either paying the fees or have some leverage in negotiating the fees. April Walker: Sure. Stan Sterna: Folks people are dedicated to the profession and I'm sure there's a lot of folks out there that absolutely love what they do and they love their clients, but for the most part, people aren't doing tax work for free. This is not a hobby. April Walker: This is not nonprofit. Stan Sterna: You should get paid. We've seen plenty of circumstances in the past where you know it's a problem client. Every time you say, well, I'm in the midst of preparing your returns for this year, I need to get paid from last year, and they'll put it off because they don't necessarily want to get in a situation where they're going back and forth with the client. Some folks will look back and go, well, the founder of our firm brought that client and it's a legacy client, and yeah, they don't pay, or yes, they're always questioning what I'm doing. They always want to, and these are other red flags, take shortcuts when preparing their taxes or giving you incomplete information. Then you continue to say, look the other way and muddle through it and file a return with the best information available. Keep your fingers crossed. April Walker: That's not a good risk plan. Stan Sterna: That's not a good risk risk plan. In that situation, you should really look at that individual. It could be a friend. It could be a legacy client and decide, do we really continue together on this path in a tax preparer client relationship? Is it in my best interest to do that? April Walker: These are good things. I'd like to pivot a little bit now and we'll talk about with Nicole, and certainly a high risk client could be, or another way of looking at it would be a conflict of interest. Talk to me Nicole a little bit about what kind of conflict of interests do you see that are problematic and how practitioners can recognize that, and also, take the next step as far as what do they do if they identify something as conflict of interest? Nicole Graham: A conflict of interest is really just being able to identify and manage situations where there are competing interests or relationships. CPAs are required to maintain and protect their objectivity when they're providing client services. That is paramount to their duties to their client under the code of conduct, and something that we have to protect. Nicole Graham: The way that the conflict of interest comes up is you have clients that could be adverse to one another. April Walker: A divorce situation? Nicole Graham: Correct. Or you have business partners who are going through a business dispute and you represent both of the business partners. We see that a lot. When you look at these relationships and competing interests, you have to ask yourself questions. Am I able to remain objective while providing service to both affected clients, you also need to make sure that you are not putting your personal interest before client interest because there are your own self-interest or the interest of interests that your firm has or that close family members or close friends have that could affect your objectivity in providing client services. This is something that you need to look at when you're evaluating a potential conflict. You should be asking yourself, who are the stakeholders, do I have any personal issues that I need to address or any personal interests? Yes, no. Does this affect a client? For example, do I already represent a competitor in that industry, and would providing strategic insights to these competitors be a conflict? Could it be to the detriment of my other client? These are things you need to look at. If you have a conflict, it doesn't necessarily mean you have to turn away the business, but it is something that you need to evaluate and you need to evaluate it from the beginning. If however, you identify the conflict, you can then proceed with a representation, but you have to meet a little test. If you look at Section, I think it's 10.29 of circular 230, it identifies the ways that you can manage the conflict and still represent the client. You have to have a reasonable belief that you can provide the affected clients with proper objectivity and diligence in the representation. You have to make sure that you're not violating any laws by representing them both and you have to have informed consent and waiver by the client and it must be in writing, and it must be done sooner rather than later. Don't wait till the end of the representation to address it. In identifying how you go about this, we usually refer to it as the ACE framework. Awareness, communication, and exit, awareness, identifying the conflict, and once you identify it through asking yourself these various questions, then you have to communicate the conflict to the client. When you do that, you have to be specific about the potential conflict. You want to make them aware of it, you want to make them aware of the potential implications. You want to tell them your idea for how you plan to manage what guardrails you're going to put in place during the provision of services to protect them. You want to get their consent. You want to get it in writing. You want to document it, and then you also need to keep that documentation. Then if you decide through your analysis though, that the conflict can't be properly managed, that despite all the guardrails you can put in place, you still feel that there is exposure to you or your firm in going forward with the representation, then you should consider not taking on that client or disengaging, you have to eliminate the conflict. April Walker: Very helpful, Nicole. In your ACE framework, E is for exit. We've got exit and terminating the relationship. Nicole Graham: It's really when you're evaluating how to put in different guardrails, for example, can you have separate engagement teams to help both clients who might have competing interests and form an ethical wall? Then you realize, actually, I don't have enough people with the requisite expertise to form two engagement teams. Well, then that means you cannot take on both representations, you're going to have to eliminate the conflict, so you'll have to figure out which of the clients to move forward with and which one to let go. That's one of the most basic ways I've seen firms have to exit from a situation where they didn't have the resources to put in the proper guardrails, like having separate engagement teams. April Walker: That makes sense. Stan, where do you see termination in this risk area, and how do you help your clients with that? Stan Sterna: It's an important part. Like I said, not every client is a good fit for a firm. There's going to be clients that you really shouldn't touch with a 10 foot pole. There is a method to terminating that if you do it effectively, can help mitigate your risk. This is in the context of not only conflicts of interest, but high-risk clients that you don't want to take on. Most claim scenarios involving client termination involve terminating in such a way that the client feels you left them in a lurch, and that there was some deadline that is going to be missed because you left him in a lurch and maybe you didn't tell him about that deadline. That is really, I think, the core focus of claim scenarios involving termination. How do you terminate? Is there a good or is there a bad way? I think there is a good way. Once you make the decision, we need to terminate this client. I'll say April, more and more firms, and I'm encouraged by this, are culling their clients. The way to do that is once you identify this as a client that maybe for whatever reason is one that the firm is no longer going to continue with, what you should do it should be in writing definitely. Claim scenarios involving accountants' liability situations are document intensive. This is not a car accident type of case where there are eyewitnesses, it is going to fall back on documentation. Documenting a letter by a traceable delivery method, whether it's certified, whether it's traceable electronic communication, registered mail, whatever, a traceable delivery system or delivery method that says we are terminating. The ABC CPA firm is terminating the engagement effective immediately returning all original documents to them and then saying in the letter, you have important deadline and it's coming up here. You have to file your returns by this date or you have to file an extension by the state. We'll gladly connect with your successor tax preparer when you identify them and provide them whatever information they need so that they can I'm not going to do any work. But if they need some documents that we have or just want to converse, we'll make ourselves available. Then one thing we always hear from clients is that they want to get into a tit-for-tat with the client. I want to put in the letter everything that I felt they did that made my life miserable. We always advise, don't do that. The termination letter is not an opportunity to go through a give and take, a back and forth with my client. It's not productive. You don't have to do that. You should have a termination clause and your engagement letter says, we can terminate at any time. If you want to put in there because the fees aren't being paid, I would say each side should be allowed to terminate. That's not the point to do it. Plus, when you start arguing facts, facts they're subjective. People have their own ideas and their own version. Another important thing is, I think you should always say there's unpaid fees and that you owe me the outstanding fees because I don't want to give the disgruntled client the opportunity to say, well, obviously you terminated because you did something wrong and you didn't ask for your fees. That's why you didn't really pursue your fees. Saying, hey, it's legitimate work we did. This is the work that's finished. You owe us X amount. I think further buttresses the strength of the termination letter. There is a mitigating way to mitigate risk. Nicole Graham: I just wanted to add a point on when you in your termination letter advised that there are outstanding fees, I would always characterize enclosing your final bill. You don't want a situation where they think paying the bill means that they get to stay on as a client or that they get to argue that. Definitely characterize it as the final bill for services and that making it clear that there will be no further services. April Walker: Thank you so much. Nicole and Stan. This has been a lot of good information for our listeners to think about. Nicole, is there anything else you would like to leave us with as we're thinking about conflict of interest? Nicole Graham: Sure. I think it's really important to have your conflict management practices and protocols in place. You want to make sure that you have your framework really built out and you want everyone in your firm to know what these practices and procedures are and explain to them why they're needed. These are not just for your intake people to go through because during the course of an engagement, these conflicts can change and if you have a conflict that changes, you need to address that with the client because you no longer have informed consent if they don't know that there was a change. That's good. That's why it's imperative that not just your intake people know, but the whole firm knows and understands why you do that. It's important to create a culture where people are aware of their ethical obligations, they feel comfortable raising these questions and concerns to the appropriate channels within the firm. You want to make sure that your tone of the top is really stressing your ethical responsibilities, that there are clear reporting channels for your people to address their concerns with. Really, as Stan said, documentation is so key in these engagements, you want to make sure that your conflict management process is properly documented. You want to have everything documented from when you identified the conflict to however it was managed and resolved, whether it was exiting the engagement with the client and having your disengagement letter or having your informed consent and putting your guardrails in place. That should all be properly documented. Consistency is key because if you have the practices and procedures in place, you need to follow them. Because if you have a deviation from your practices and procedures, that will be exploited by a plaintiff's attorney and you're going to have to answer that in a lawsuit. A good way to have consistency is training and education with your people. Make sure that they are aware you have continuous training and workshops to stress their ethical responsibilities in managing these conflicts. April Walker: I know that when I was in practice, we had a yearly review of the client list and we had to sign and say that there were no conflicts or if there were, we had to address them. I don't know if yearly was sufficient, but that was the message that I heard that it was important. Nicole Graham: I think that's a great idea. I will say, to make it where that exercise doesn't become a check the box exercise for your practitioners, have that statement that they have to sign go out at the same time you're doing the training. So all of the things you're telling them to consider about ethics and conflicts are top of mind when they're reviewing that. April Walker: Makes sense. Nicole Graham: Stan, what's some closing thoughts you'd like to leave us with today? Stan Sterna: Well, I think the first thing I'd like to note is that tax claim severity has been increasing in recent years. I've been doing this a long time and for years, tax claim frequency was and still is the highest. We receive more claims involving tax services than any other service offering and that's not surprising. It's the bread and butter of what CPAs do and accountants do. But we've seen an increase and it's driven mainly by FBAR and syndicated conservation easements, promoting them, lack of due diligence with regard to it and IRS disallowing the deduction and then the accountant gets sued. Those are some substantial damages involved. The other thing is tax is always the lowest service line in terms of use of engagement letters. Obviously, as an auditor, our attest engagements are required to have engagement letters. But a lot of folks and we get a lot of questions from folks or a lot of comments that are tax preparer only and saying something along the lines of, well, I've never used engagement letters or my clients there's no expectation. I've had these clients for years and years. It's monotonous. It makes it look like I'm trying to hide something or cover my bases and all that. It's really not true. You got to look at it this way, and it's an analogy that Nicole and I use a lot when we're talking to folks is you certainly wouldn't have somebody come into your home and do work on your house without a contract, without an engagement agreement, without knowing what they're going to do, what's the limitations of what they're going to do, what is the scope of what they're going to do, how much they're going to get paid, all those things. Why would the expectation be that the client is going to get their tax returns prepared or have tax work done without an engagement agreement? Just doesn't make make sense. They shouldn't be offended by it. It should just be something that is just as beneficial for them as it is for the CPA is Number 1. Number 2 is that when you're dealing with a high-risk client, one of the first things that we go to high-risk client or not, Nicole can tell you this when we would deal with defending CPAs in a professional liability claim, first thing we would ask for is the engagement letter. Let me see what you're doing, what you agreed to do and with certain clients or with any client? What are your liability limitations that you have in engagement agreement? A lot of folks use and we recommend highly and we have templates of terms and conditions where you can limit the liability. You can have damage caps if the other side agrees to it. You can shorten the statute of limitations. You can pinpoint what venue and what law will apply. A lot of different things to help limit your exposure. It's going to ultimately be the court's decision if you end up unfortunately in litigation as to whether or not they're going to uphold these provisions. Well, I know some will if it's clear and concise, and it's not otherwise boilerplate in the engagement agreement. They'll look at two sophisticated parties, both going back and forth negotiating an engagement agreement. It was pretty clear what the expectation was and everybody knew what was intended. But even if it's not used or the court does not uphold it, we use it claims in defending the claim. In settlement negotiation, you can use it as leverage to say to the other party, you're asking for exorbitant damages. You really need to discount them considerably because I have this cap, let's say, a damage cap in a provision limiting your damages to $10,000. Even in situations where maybe the court didn't uphold the cap, maybe it's subject to appeal, maybe a court just denied a summary judgment motion to limit the damages and said, you know what, we'll let the jury decide later. You can use that as leverage. It's always an argument unless it's dead in the water, unless they dismiss it with prejudice, it's something that you can use if it's subject to appeal or if it's just going to be something they're going to argue at trial as an issue of fact and the court didn't dismiss it. I think those are two critical things that I'd like to tell your audience since we had the opportunity today. April Walker: Those are good. I appreciate you giving us information and I know our listeners will appreciate it. Again, sometimes it's not the most fun topic to talk about or to hear about, but important nonetheless. Stan Sterna: You're right. It's not fun, but it's fun when you avoid a bad situation because you remember something that either you read or maybe something Nicole and I said today, that makes it where you feel like it's well worth it. April Walker: Very good. Thank you so much, Nicole and Stan. The name of our podcast is Tax Section Odyssey, so I like to think about our journeying together, we're journeying together as an odyssey towards a better profession. Just for a little bit of fun, I like to hear from our guests on what their journeys outside of tax are. Just quickly give me if you have a travel, something planned maybe for the holidays or something coming up that you're excited about. Nicole Graham: Well, I'm very excited for the holiday season, but not for traveling, but I'm excited for traveling this winter for the ski season. I will be traveling up to Vermont to go skiing, I'll be traveling locally in Pennsylvania to go skiing, and I'm hoping to make it back out to these parts since we're in Denver to do a little skiing. Unfortunately, I can't tack on any days to this conference. But I'm very excited for the ski season. April Walker: Wonderful. What about you, Stan? Stan Sterna: Well, I'm almost hesitant to say this as a risk advisor, but I'm hoping to have a casualty-free holiday season. I ended up three stitches in my index finger at Thanksgiving carving the turkey, so I'm just going to watch someone else carve it and just eat and enjoy my holidays hopefully casualty-free. I love it. That sounds good. April Walker: Just enjoying without a trip to the urgent care or the emergency room. That's perfect. Thank you again so much. Again, this is April Walker from the AICPA Tax Section. This community is your go-to source for technical guidance and resources designed especially for CPA tax practitioners like you in mind. This is a podcast from AICPA & CIMA together as the Association of International Certified Professional Accountants. You can find us wherever you listen to your podcast and we encourage you to follow us so you don't miss an episode. If you already follow us, thank you so much and please feel free to share with a like-minded friend. You can also find us at aicpa-cima.com/tax and find our other episodes. One of which is an episode specifically about engagement letters with our CNA friends. You can find that and get access to other resources mentioned. Thank you so much and thank you for listening. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscrip
1/30/25 • 33:42
In this episode, Brian Davis, owner of One Stop CPA, discusses how technology has transformed the way his CPA firm operates and interacts with clients. Brian highlights the importance of using technology to provide a top-notch, virtual client experience. He shares insights on tools that have enhanced client engagement and streamlined his firms' operations. What you'll learn from this episode: Examples of ways to use technology to enhance a client's experience How remote work and serving clients virtually has worked for his firm The benefits of offering subscription model billing The importance of investing in client education as you introduce new tools and processes AICPA resources Tech stack wars in 2024 | Reimagining Your Tax Practice — With the amount of technology products out in the market, how do they perform in reality? Hear from Jason Staats on the latest products available for practice management and more on this archived Reimagining Your Tax Practice session. Transitioning to a tax-focused CPA financial planner | Reimagining Your Tax Practice — Tax return compliance is continuing to become more of a commodity. Your clients see you as their trusted adviser and ask about a range of topics that affect their financial well-being. In this Reimagining Your Tax Practice archived session, learn more about practitioners who offer financial planning services and how that has impacted their practices. Transforming Your Business Model…Technology — The Private Companies Practice Section (PCPS) is developing tools around technology designed to help firms not only identify elements of their current business model that may be holding them back but also offering solutions to help them adapt in this changing environment. Transcript April Walker: Hello, everyone, and welcome to the AICPA Tax Section Odyssey podcast, where we offer thought leadership on all things tax, facing the profession. I'm April Walker, Lead Manager for the Tax section, and I'm today with Brian Davis. Brian is the CEO of One Stop CPA, which is a firm that focuses on tax, tax planning, and advisory. We're going to hear more about that. Brian, let's start off with telling me a little bit about your firm and how you got started and what you think, are your distinguishing characteristics. Brian Davis: Definitely. Well, excited to be here. Thanks for having me. Definitely, so my firm is One Stop CPA. It's a traditional small firm. We do compliance. I'm a CPA. We do tax compliance, tax planning, we do accounting services. It's a team of five, including myself, some onshore, some offshore. And the thing that I think distinguishes our product in our service that we deliver to our clients is how we deliver it. We use technology and pair it with insights. We pair it with traditional advisory things that we're giving the clients, and we try to give them that feel as if they're getting in person, top-notch experience because all of the clients that we work with are all virtual. So that gives us the ability to work with a remote team. It gives us the ability to deliver the clients nationwide. I think it's a little, I think it's definitely helped me grow business, get me a little bit more work-life balance, all the above. April Walker: All positive things. So for those who are listening, I mean, I think COVID taught us a lot of things - that we don't always have to be in person, although it's lovely to be in person. I love being next to people. But we don't have to be in person with our staff, with our clients. Maybe talk a little bit about that, how you still get that really great relationship with your clients and your staff, even being remote. Brian Davis: Sure, yeah. Definitely. COVID changed a lot within my firm. I went out on my own in 2017. This was pre-COVID. I went out for a lot of the reasons that are popular now, but back then it was not as popular as it's becoming. The commute to work, having to meet in person just to get a tax return signed, mailing off things. All these different things, I saw them as, these are not the values that customers appreciate. They're looking for me to help them do so many other things, save them, strategize on how to lower their tax bill, how to help them grow their business, how to go for an exit one day. I want to sell this, we can have that on a phone call. I could actually deliver even better results to you. I just started to think, before COVID, it was a little bit tougher to sell clients on this service. It was a lot of teaching. You have to tell your client, hey, well, you have to e-sign your returns, so go to your email. And it's like, I'm not used to this. This is not how we do things with our last accountant. After COVID, of course, that exploded. A lot of clients would reach out to us and say, yeah, if you could get this done for us remotely, that'd be great. So from there, I also switched over to the subscription model around March 2020. When we made that switch because it's hey, well, we want to serve you guys, and we want to give you all the things that you now need to do remotely. So technology is a big part of that. The way you educate your clients, the way they feel. Because you're losing a little bit of the touch when they're not in person. I can't offer you a drink when you come to the office, but there's even things now where you could send a client a gift card. Here's a five dollar Starbucks gift card, so we could out grab a coffee. There's all these cool little ways where you can just make that customer feel so good, even though we're doing it all the time. April Walker: We're going to talk a little bit about while we're here together, talk about technology. So maybe talk a little bit about where you see those biggest friction points with your clients and how you think technology or how you've explored technology helping some of those friction points. Brian Davis: Definitely. I made all the mistakes when I started my firm. I would do compliance-only work. I would do tax prep only, and I would have different segments of clients that I would deal with in different ways. Well, this person likes to sign in person. This person likes to drop off a package in the mail. When you look into this technology, when we look at things as a firm, it's always well, these clients wouldn't adopt it. These clients wouldn't like it. I wouldn't be able to attract these style of clients. But when you meet a client, and you say, hey, this is our portal. This is how we do business. Take a good look at it, give them a free trial, maybe if you're seriously considering them, and then try to do a test. Did you see this message that I just sent you there? Here's a template. Did you get it? Cool. So that's how we communicate. Believe it or not, nowadays, more and more people, no matter their level of skill and technology, if you could simplify it for them, they appreciate that. Whenever I'm looking at new technology, I'm looking for, I love the new features and how I could make all this money using it and save time. But it's also, will the client feel a disconnect or will they feel like I'm throwing them into the tech dark hole? You could lose a good client because they don't feel that personal touch. Even though we're investing in different technologies and moving to greater things that help us on the back end, we also want to at the same time, if not even more important, when you're making sales, when you're delivering, you want to make them feel comfortable with your tools. If your tool is so hard for them to navigate, it's going to create that for them. April Walker: That's right. What are some exciting things that you have implemented lately around technology? Brian Davis: Definitely. Well, I'll highlight two of my favorites. They know that they're my favorites. TaxDome is my client portal that I use. Before TaxDome, I was doing the spreadsheet and notepad method of workflow management, which is not the right way. April Walker: Maybe in Excel spreadsheets. Brian Davis: Excel spreadsheets. Before that and then implementing TaxDome, it helped me map out how I want to grow the team, how I see myself. Like, which task within this job that we're doing, do I want to, one day off load to somebody, so that I could free up more time for myself to do sales, do client services, help people do like advisory one on one because that's where the value is to the client. They don't care if you're in the back turning out bookkeeping and entering in numbers on your 10 key. They want to know the results, and it's the client experience. So TaxDome is great because when I started it, I was slow to implement. I would pick a few clients, test out on myself. I'm a client, too. I would test out my firm's tax return process and say, Hey, what went smoothly? What can we tweak and make better before we go live with this with everyone? But the feedback I would get from clients is this is so great. I love how easy that was. It's on the app. I can download an app. Everybody knows how to download an app. April Walker: Most everybody, yeah. Brian Davis: Most people. If you're going to work with us, you got to be able to e-sign your return. That's one of the things TaxDome makes. I was getting the feedback that clients really like the experience, and I like the back office side of it, which there are other options out there. I just know that doing TaxDome, clients loved it. Another one is spotlight reporting. A lot of clients are used to seeing their QuickBooks reports black and white, ledger. What's more fun than watching that with the client and just going through a list of fixed assets? Here's your security department. They don't want to see that. You got to make these numbers kind of come alive for the clients have a discussion. Spotlight Reporting connects directly to your QuickBooks file, your Zero files, and you can create your own advisory dashboards. A lot of clients I have will ask, well, how I'm I on pace compared to last year? I would say, well, let me run that report on QuickBooks. Let me do the prior year comparison. Now, I have a custom bar chart, and it shows month by month, how you're doing this year, how you're doing versus last year. Another one that I made was a EBITA monitor. It looks like an EKG machine. When I'm showing doctors, hey, this is your EBITA monitor, I say, this is like a heart rate monitor. When you're having these conversations, it's better to have a nice report that you can get them to collaborate with you because there's nothing more boring than reading a report and everybody's just staring at you, and that comes across. Spotlight's another one. When I show people the reports, it's like, this is great. It really answers my questions, and now we could move forward to the future planning conversation where I could make the big bucks with advisory. April Walker: Sure. I want to talk about advisory. Let's lean into advisory. Did you start doing advisory right away, or how did you implement that and what have you seen, the changes and maybe the client satisfaction? I don't want to lead the witness. Brian Davis: Like I said, I made all the mistakes when I started our firm. I was doing advisory, but I wasn't charging for it. I was doing tax compliance. I was charging by the form. This is your form. You need some bookkeeping write-up work. But clients would reach out. Hey, we have some questions surrounding the tax, not necessarily doing the tax return. We have some year-round support questions. We want to go buy a car. What's the best way to do it. I got to come up with a way where I could not just be quick with them in five seconds, get them off the phone. No, I want to actually help you walk through this process. Clients would rely on us for those things. It's not just for the compliance. That's part of why I branded my company one stop, because I want them to feel like it's not just that we're coming to do your tax return and bill you by the form. We're adding that other piece, the advisory, to take advantage of different things. That's under the umbrella of your subscription. Now taking on clients, that's part of the package. You have to sign up for some piece of the advisory and the taxes will come along with it, but you can't do this tax prep. The advisory journey, it's been a journey for me, for sure. It's still, always working on ways to make it better. But things like TaxDome puts them at ease with the compliance part. All your stuff's there. You get audited. You have your forms and your backup. We saved it in a portal. If you want to look at some reporting, we can, support an advisory conversation with these nice cool. People like pretty colors. It's the colors and the pictures. April Walker: Hundred percent that's what I like, too. On that, with this subscription advisory and learning how to charge for that, how has that evolved? Where are you now now with that? Because I feel like that a lot of firms that I talked to just cannot figure it out- cannot figure out value pricing, cannot get away from time and billing, you know, everyone has a different answer, and there's not one right thing. Brian Davis: I mean, the subscription model, of course, it has its little pieces where you, it has to make sense for what you're offering. Just because you subscribe doesn't mean I'm going to go back and do your five years of catch up filings and year to date books. There's also those one time services. Usually when we meet a new client, there's going to be some advisory diagnostic assessment fee. That's just we try to be as upfront about the pricing that we're going to charge them going forward, so we can see do even want to take this client on for this one time service. It's been a journey to get there. As you get more revenue, you can make these decisions. April Walker: A little more picky. Brian Davis: You could be a little bit more picky, but that's been the journey. The price I advertise and go for now is probably 10X what I was thinking in the beginning. Because I was going off of what I think the customers are ready to pay. But if I explain it to them, so you can't just go straight into the pricing conversation. I heard it from the conference before one of the speakers, it's malpractice to just price without a diagnosis. That's one of the medical rules, the medical oaths. We have to diagnose what you're looking for, to put you in the right package. But I do the three tiers of package thing, but the way I do it is I show the big package, the good one. First all the cool features. Sounds great, right? Well, these are the other options, but once I've showed you this one, you're sold. I showed you all the tech that comes with it, and now I start to piece away some of the reporting. Hey, you can't get those cool pretty colors, you want to have that. April Walker: You get the simple quickbooks report. Brian Davis: How can I give you support for those big questions? If you're going through, when I got my start, I got lucky. I got a couple of clients that were in the medical profession that were doing deals where they were getting ready to sell their practices. I got a first hand experience of what a private equity investor would come in and say, Here's our due diligence questions. I said, "Well, you know, half of these are financial statements." I could pull those out. But there's some other things they're asking you that the customer wasn't even tracking. It's these cool reports bring that alive. It shows them, okay? We can support you in more than just getting your taxes and having the financials for the bank and the IRS. We have it so that you can make better decisions and if you're going to add or remove shareholders, this supports that, as well. That's part of the part of the pricing well, as far as pricing, it's all based on what we're including so you got to have your packages premade and a lot goes into that. But one thing I would do is try to not my prices and packages have one name. The name explains what [it is]. Advanced, starter and small. And there's limited seats on small. We're probably already booked. That's how you propose it to the clients. So you are either going to get one of the two. I'm not going to give them all the options. I'm going to recommend one and if they decide they want the smaller one, well, hey, we'll take them on maybe, and you could grow into the big package. But a lot of times, what I'm seeing, is sometimes I meet with good clients and go through this process, the intake proposal, the discovery assessment, and they realize, no, you don't get this advanced. You're not going to get the results you're asking me for. April Walker: What they really need. Brian Davis: Because it's not a solution that everybody explains and a lot of times when I meet clients, they don't have this. All virtual - nobody's using the same tech stack as me. It's a little bit of training and education that you're doing. So what I do like about some of these software vendors now, they're working with us accountants to help us sell in. Here's how you can grow your advisory practice and just the idea of it. Well, being that we're talking to just smaller firms, smaller firm practitioners and owners, we undervalue how agile we are. We can implement something, and that could be the start of something great. It's just, you got to do it one software tool at a time, one employee at a time, one customer. April Walker: That brings up another thought I had is, is there a magic time to add a new software or do you not limit that? Brian Davis: I mean, you got to keep an open mind so you're definitely not going to you don't want to keep moving your clients from portal to portal software to software that's a big no no because then they'll look at you like, am I an on the job training client or you know what you're doing. You know, would you move me from this one to this one? Definitely demoing the like I said, if you're doing your own taxes, test your firm out. You could do your own and say, Hey, how do I feel as a customer, or pick a couple of friends or those friend clients and say, Hey, I'm going to send you down this pipeline. How did you feel about the experience? Then I mean, we're small firms. We can implement. Like that spotlight reporting is something I implemented. Immediately, I started to see that customers were reacting well to it, so I put it in my offer in a way. Hey, well, my new customers get this. My old customers, well, I'm trying to tell them hey, this is where we're going. Maybe we'll keep you for this year, but we'll have this conversation and revisit. Hopefully your business grows and you need this. You can't you're not a one even though I have the name one stop CPA, we're not one size fits all. That's the thing you have to educate. It's a lot of proposals and presentations. That's why I like to use YouTube and Loom. They help with I don't have to do a presentation to everyone and lose my voice. I could make a nice intro. Give you the presentation that applies to yours, what I'm trying to talk to you about. Then I jump in on the back end of I mean, big companies do it. April Walker: Absolutely. I'm sure we're going to talk about it a decent amount. We're just getting started at this conference today, but AI. What's your take on it? How are you using it? How has it made your life better or your firm's life better? Brian Davis: Oh, it's made my life better, everything. I mean, we learn how to do recipes on there, everything. You could almost use it for anything outside of that. April Walker: Absolutely. Brian Davis: But AI, I mean, it's great and you have to know it's just like another tool. You have to know how it applies to your firm and how you're using it. Of course, we have to be careful with security and making sure you're not uploading personal data. What I talked about in the session is think about who the customer is. If you're on a free version of ChatGPT, you're the customer. They're using your input to build the model. But if you pay for the workspace, the app it costs a little bit more money, you can control those settings, and now you can get even more advanced with, endless opportunities. I mean, I have when I'm doing video deliveries that, now sometimes I'll do a tax return and I'll send you a Loom video that will kind of answer the questions I know you're going to have so that that way, when you look at it, you're not hey, I got questions, and I'm busy because I'm at digital CPA. Let me show the video, send it to you. I have a script writer that will help me write the script. There's so much different ways you can play around. I mean, I feel like AI is just getting better and better, so I can't say that I'm an expert on it because it's who it is. It's it's such an early stage but it's great. I'm definitely impressed with it. I try to do as much improvement as I can because it's kind of an assistant. We used to go to Google, research different articles, different people's opinions on tax. Now, you could kind of use it as a research assistant. April Walker: To get you started, at least. Brian Davis: Hey, I'm researching these tax things and I have these questions. This is the idea that I want to present to the client. How would you approach that? Of course, I'm not going to just forward that, but it's definitely better to have that with you kind of just to help you out. I see it as another team member. It's like another team member. April Walker: Yeah, we use Copilot. Brian Davis: Well, one way that I'll be using it now, and I got to give a shout out to Automation Town, it's a community that I'm part of with Chad Davis. One thing I even expressed him, I said, well, the Zoom AI summary after I have my discovery call, Zoom gives a pretty decent, recap of the meeting. But I can't just forward that to the client because there's sometimes there's little, I want to put all that. It's kind of look at it before you send anything to a client. Before I start running off tasks to people, I want to put a little bit of, that would be me, something I would go and manually do. I said, well, he kind of laid out a way where you can combine Zoom's AI summary that comes to you by email with a zappier integration that can create a new Google document with action plan, potential action task for the team, a potential agenda recap that you can send to the client. Then pair that with you tell it stuff about your firm. Well, hey, we talked about this, we want offer this afterwards, and now it already knows what you mean. It can get very customized. You just got to play around with it. It's so cool. There's so many different ways people are using it, and you don't have to be any kind of super tech-forward. You can play around with it. April Walker: I think that's right. I mean, just keep in mind the security aspects, and don't put personal information in there, and then just have fun. Brian Davis: Yeah, get those settings right where you're not uploading your life to the cloud. You know, it's analyzing everything, but, once you're in there, I mean, it's helped me design chat messages that I send to clients just enhancing, hey, I want to come across this way because when we're accounting, you wouldn't even want to see some of the emails I used to send to people just to summarize our meeting. April Walker: Oh my gosh I know. Brian Davis: You got to be an accountant to read this but you know, you could say, hey, read this so it's easier to digest. It's great that you could do those. It's pairing it with our knowledge. As accountants, we got so much that we're good at. Now there's these tools that help us out. April Walker: Brian, we've had a great conversation today. I love it. I don't know if you have listened to our podcast before. It's called Tax Section Odyssey. On it, I like to think about taking an Odyssey together, journey together towards a better profession. We'll pip it a little bit to do you have any dreams outside of the world of tax that you have a bucket list or any travel you've got planned that's still there. Brian Davis: No, well, I definitely want to start traveling in the future. Again, before COVID, that was the one thing when I went out on my own, I got to start traveling. That's why I was hooked on, okay, I got to make this firm work because then I could keep doing these trips. My son, he's 11 months now, so when he's starting to walk, he's starting to stumble so when he starts walking, we want to spend the summer in a different country and those things. I'd love to do that. April Walker: My daughter had a passport before she was two, so do it. Brian Davis: Right. Exactly. Definitely looking forward to some travel, and just building the firm that can run smooth. I don't plan on selling my firm anytime. I do enjoy being an accountant. I kind of lost that love when I was at the firms and having trouble breaking through to the partners - hey, we should do this, there's some tools that we could use to save me time. We have to document every 15 minutes that we're doing. Now that I got out on my own, I saw that there's a better way that you could actually run an amazing firm. I know that there's a shortage of accountants that are trying that are getting into it because it's seen as this heavy, burdensome job and there's definitely ways you could break through. In the future, you know, just being a part of that, whether it means helping accountants that are kind of coming up in my shoes. I talked to a lot of my friends and fellow CPAs that just may have met me on a Zoom or something or met me on a community chat or something, and they're just, you know, looking for these tips to help them get out on their own. What is the tech stack you use? What should I maybe start off with?. Maybe some kind of coaching thing where I'm just helping out profession a little bit. That's something like an Odyssey. April Walker: I love that. That's great. On an Odyssey. Brian, thank you so much for joining me today. I enjoyed it. Brian Davis: This is great. Thanks for having me. April Walker: Of course. Again, this is April Walker from the AICPA Tax section. This community is your go to source for technical guidance and resources design, especially for CPA tax practitioners like you in mind. This is a podcast from AICPA and CIMA together as the Association of International certified Professional Accountants. You can find us wherever you listen to your podcasts, and we encourage you to follow us so you don't miss an episode. If you already follow us, thank you so much, and please feel free to share with a like-minded friend. Thanks again for listening. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
1/23/25 • 27:51
"The tax industry is a gift for people who want to learn and grow and be challenged. There's never going to come a day where you close volume two of the code and say, 'I figured it all out, I know what it all means now.'" Tony Nitti, Partner — EY National Tax In this final episode of 2024, Tony Nitti shares his journey within the tax industry, emphasizing the importance of finding one's passion, investing in oneself and overcoming personal challenges. Listen as Tony shares his personal experience and practical advice for career growth and fulfillment in the tax profession. What you'll learn from this episode: · Finding Your Passion: The importance of identifying and nurturing your specific passion within the tax industry, whether it's the law itself, client relationships, or running a firm. · Invest in Yourself: The value of investing in your knowledge and skills by learning, writing, and teaching the tax law. · Overcome Challenges: Strategies for attracting and retaining talent in the tax industry by providing intellectual challenges and growth opportunities. · Try hard things: The benefits of overcoming fears of public speaking and using writing as a tool to communicate complex concepts and share your passion. Resources S Corporation Shareholder Compensation: How much is Enough?, The Tax Adviser, August 2011 Note: This was the article referenced in the podcast written by Tony. In August 2012, it was the winner of The Tax Adviser's 2011 Best Article Award. Transcript April Walker: Hello everyone, and welcome to the Tax Section Odyssey podcast where we offer thought leadership on all things tax facing the profession. Today, I'm excited to be here with Tony Nitti. Tony is a partner at EY National Tax and he's a frequent guest on the show. We were just chatting about we think this is maybe the sixth time he's been with us. We appreciate you being with us. Our topic today is not a techie topic. It is a soft topic, but I think an important one. Tony, you did a session at National Tax which was just a couple of weeks ago, on finding your passion in tax and it incorporated some technical topics. But today, we're just going to lean right into the finding your passion. I think we, as listeners, we just want to hear your story, tell us more about how you started and got where you are today at National Tax at EY, which is pretty impressive, I must say. Tell us more, Tony. Tony Nitti: It's good to be here with you, April. I will also say I admire your bravery, because like you said, we just did this National Tax a couple weeks ago, or at least a shorter version of it you just went charging full speed ahead and said, let's do a podcast before we get our hands on those evaluations. We might just be doubling down on a disastrous decision. April Walker: Never know. Tony Nitti: Nobody wants to hear, but that's not the hope. Obviously, the hope is that something here will resonate with people who are listening who maybe are just struggling to find their center and find their passion within their careers. But if it's all right with you, I always want to address what I consider the elephant in the room of the conversation like this before we get started. When we talk about this passion for tax, when we did it at National Tax, when we're doing it today, we're talking about a specific type of passion for this industry. What I mean by that is this idea that people are lured to the tax industry as I certainly was by a desire to live in and learn the law. Because we take one look at that tax law and we realize that it's something that's not solvable, and we want to spend our careers being challenged and being forced to grow and learning that law and apply it to our clients. But that's not the only passion you can have in a tax industry. This passion for law, you probably need to learn the law regardless of your passion, but I've met many people in my career who have a very different passion than me. People whose passion is client relationships, building a relationship that lasts for decades, other people whose passion would be to run a firm someday because they want to prove that accounting can be done differently. Those are extremely valid passions and we don't mean to discount them, but we're focusing today on a passion for the law. Learning and applying the law, and we're doing it for two reasons, I think. Number 1, at the AICPA, we're keenly aware of the challenges we have attracting and retaining talent. And specific to retaining talent, we just see all these good people at all levels of experience, leave the industry and as they're on their way out the door, they say, You know what, I got into this industry because I wanted to work in the law. I wanted to solve complicated problems for sophisticated clients and be forced to think on my feet. Instead, for the first four years of my career, all I've done is prepare the same 30 tax returns every year. I haven't seen anything new in 18 months, I'm bored out of my mind, I'm going to go try something completely different. That should never happen. It should never happen in this industry because the tax industry, it is a gift for people who want to learn and grow and be challenged. I think we've all been around long enough to know that there's never going to come a day where you close volume two of the code and say, I figured it all out, I know what it all means now. That day is not coming and so we should never lose people because they're bored, because they're not being challenged. But we do, I assume for two reasons. One is the reason we want to tell ourselves when things aren't going well. It's not to say it's not appropriate sometimes. But this is the reason we want it to be and we want it to be because we're not getting a fair shake. We're getting a raw deal. We work for the wrong firm or the wrong people, and we're not getting the type of work that we enjoy. That may be possible. If you're in a situation like that, the beautiful thing about the industry today is there's more change available to you than ever before. We're not tied into geographic regions. There are purely remote firms. You can change your situation in a heartbeat. But there's also a second possibility. That's a possibility that people don't want to embrace as much. But there's a possibility that we're not in a terrible situation, we just haven't let it be known to the people we work for, the people we work with, what we're passionate about. We haven't shown what's meaningful to us and proven to people that this is the type of work that I want to do. That leads to the second reason we're focusing on this specific type of passion for the law. That reason, April is I'm not Tony Robbins, I'm not a paid motivational speaker. The only thing I have to offer your listeners is my experience, and my passion for this industry, there's no two ways about it is rooted in the law. I'm not someone who has a passion necessarily for forging client relationships that last 40 years. I'm not someone who ever thought I would run my own firm. My passion is constant intellectual stimulation, growth, learning that law. The only thing I have to offer people until I become a paid motivational speaker someday and go through the five step training program is my life experience, what I've learned in this career. That's why I just want to address that because I feel bad. I can't tell someone with other types of passions how to reconnect with their passion in tax, because I only know my experience at this point. But the hope would be that my experience can help some people because I am a good example of someone who got into this industry for a specific reason, like I said, this desire to learn and build expertise in the law. And then quickly went down the wrong path that so many of us do, and I arrived at a crossroads where I was ready to leave this industry four or five years in because I wasn't growing. I wasn't the person I wanted to be. I wasn't doing the type of work that lured me to this industry and I had to make a conscious decision at that point to say, if I'm going to stick it out in this industry, I am going to make what I'm passionate about the centerpiece of my career and hope that it pays off. That was, again, a proactive conscious decision, and it paid off in ways that I would have never seen coming because what I found is the more I showed people what I was passionate about, the more I made my passion the centerpiece of my career, the more the industry rewarded me with more of the type of work I was passionate about. We can talk about that process. But that decision being something that I decided to do proactively, I also ended up learning lessons later in my career that were taught to me that I didn't decide to do. That I learned the hard way, that had made all the difference as far as understanding, that in life, in our careers, it's probably best to leave no stone unturned. To try different things, to find out what you're capable of, what you might be passionate about, and just say yes to new opportunities. It's been a mix of making a proactive decision to invest in myself and we can talk about that. And then being taught through just the harsh reality of life that you're probably best served to say yes to as many opportunities as you can to just constantly move the goal posts on what you love and what you need out of your career to be happy. With that long rambling introduction.... April Walker: I think it's good. You don't have to convince me because I think some of the themes in your story will apply to a lot of people, even if, like you said, their passion is not necessarily your direction or whatever. Let's get into it. Tony Nitti: That would be the hope. Like I said, it's always uncomfortable because I only have my own experience to talk about, you end up talking about your own experience the whole time and you just sit there and go, why does anybody want to listen to my path? But listen, I didn't grow up dreaming of being a CPA, and I don't know that many people do. I didn't really have many dreams growing up as far as a career. The one thing I thought I would want to be was a writer. Because I love to read as a kid and I wanted to be a sports writer, but it's never something I took seriously. Because I decided at a very young age that I did not have anywhere near the talent necessary to be a writer, and so it's just something I never even pursued. But I went to college undecided as far as a major goes. The only reason I ended up an accounting major is because I told one of my college soccer teammates I was going to go to law school. And he said if you want to get into a good law school, be an accounting major. I'd never even considered accounting, and I don't even know if there's any truth to what he said. But I didn't want to go to law school because I wanted to be a lawyer. I wanted to go law school because I had no idea what I wanted to be. And I just thought I'd put off that decision as long as I could. I end up this accounting major by accident. But after I get through the cost accounting class and the microeconomics class and those types of things, I eventually land in my first tax class. I'm guessing that other people had a similar experience where I get introduced to the tax law and I say, now this might work for me. Because even though I didn't know specifically what I wanted my career to be, I knew that I wanted a career that provided an opportunity for constant challenge, constant growth. I wanted that feeling of going to bed every night a little bit smarter than when I woke up in the morning. To me, the idea of a death sentence was any career where after three months or three years or even 30 years, you've seen everything there is to see and you're just going through the motions. There's nothing wrong with a career like that, it just wasn't going to work for me. The first thing you see when you get introduced to the tax law, this stuff is hard. Hard is good, hard is what I want. We know that in common culture, the tax law is held up as this point of reference for something that's incomprehensible. Einstein once famously said that the hardest thing for him to figure out was the income tax. Sitting there as a 21-year-old kid, you're like, All right, if this was a challenge for Einstein, it's certainly going to kick my butt for the entirety of my career, and that's what I'm looking for. That's how I ended up choosing a career in tax and taking a job with Arthur Andersen. As I said before, this industry should certainly provide all the opportunities someone like me craves, that wants to grow and learn. You could even argue that if you are making your career in the tax industry, it's almost hard to not be passionate about your career if you're passionate about learning and growth. But that doesn't mean it's impossible. I am living proof of that April because pretty much as soon as I started my career, I fell into a very familiar trap. You take a guy who was lured to this industry by this desire to learn the law, and then you put him as a new hire at what was at that time, the largest firm in the world, Arthur Andersen. And pairing up with 25 other new hires. What happens. You get in that competitive environment and you say, forget that learning the law stuff. I have one singular focus and it is to move up the ranks as quickly as possible. To climb the ladder as fast as I can, because I will be damned if I am to let Sally make it to senior before me or Johnny make it to manager before me. That became the focus. That became the priority. How do I get promoted? That is largely based sometimes on just playing the game. Shaking hands with the right clients and being close with the right partners. And just making sure everyone knows what you want, when you want to get promoted, being the squeaky wheel. When you get promoted as senior, pushing your staff as hard as you can to meet deadlines. That's what I valued. That's what was important to me was moving up those ranks, and the thing is it worked. Now four and a half years into my career, I get promoted to manager at what is now PWC, not Arthur Andersen anymore because in the interim there, Andersen collapsed on itself like a dying star after the Enron scandal. Now I'm at PWC, and they promote me to tax manager, and it's supposed to be this cause for celebration. Because they say, you make manager in public accounting. It opens doors that aren't open at any previous level. You want to go make an extra 20, 30 grand and work at another accounting firm, you can do it. You want to go work in a tax department of private company and make some more money while working fewer hours, you can do that, too. Everybody's patting me on the back and they're telling me, this is an impactful day for you. It's a big day in your career. You can go anywhere and do anything now. The thing is, it wasn't just the biggest day to that point in my career. Looking back at it now a full 20 years later, the day I made manager at PWC was and is the single biggest day of my entire career. Now that I could leave you now on a cliffhanger like Dukes of Hazard. Remember, like, they would be launching off some jump, and they go to commercial and you don't know are they going to be okay? This was the biggest day in my career, April, and you probably wondering why? What was so big about? April Walker: Yeah, I'm wondering. Tony Nitti: I went home that night, and all, like, the pats on the back had ended. I'm sitting there, and it hit me like a brick wall. It was this realization that I was a fraud. I know that may sound harsh. I know there are people who are listening that may think you're just being unduly hard on yourself, but I also know there's people listening who are going to say, "I know exactly the feeling he's talking about." What I mean when I say I was a fraud, April, is it dawned on me that I had just been promoted to tax manager at the second biggest tax firm in the world, and I didn't know a damn thing about the tax law. I didn't. April Walker: I'm sure you knew some stuff. Tony Nitti: Well, that's what everyone says, because they say, "How could you get promoted to manager if you didn't know." I never have read a court case at that point in my life. I didn't know how the code was strung together. You know what I was good at? Do you know why I got promoted? Because I was good at following processes. April Walker: And competitive, a little bit competitive. Tony Nitti: But I could take the last year's work papers for the return I was doing and turn them into the current year's workpapers. I knew how to do that, but when I was doing that current year return. When I was adding back 50% of M&E, I wasn't doing it because 274(n) told me to. I was doing it because they did it last year. When I was asking the client, how much of your accrued liability was paid within eight and a half months? I had no idea it's because I was trying to apply the recurring item exception of 1.461-5. I was doing it because that's what they had done last year. April Walker: SALY, man. Tony Nitti: SALY. And I know people have shared this experience, but what hit me was that I had been so focused on those processes to get promoted that I had never actually bothered to learn much of anything about the law in which I lived every day. What was terrifying was the realization that I couldn't go anywhere and do anything. It was the exact opposite, April. I was a prisoner at PWC because they knew my limitations. They knew what I could do and couldn't do, and they were content to respond to my constant complaints about promotion by promoting me. But if I wanted to go somewhere else or think about what I had already learned four years into my career. I had learned the lesson that the largest firm in the world can disappear overnight. What if that happened again? And I had to go somewhere else. Could my resume get my foot in the door? Yeah, of course, I could. Would my undeniable charm possibly land me that job? I'd like to think it would, April, but then what after that? Because how long would it take my new employer to realize, Oh, we just hired a tax manager who can't think critically, can't research and solve problems in the code, can't provide planning advice for clients. You know what he can do? He can take last year's workpapers and turn them into this year's workpapers, and that's about the extent of it. I realized when I say I was a fraud, I realized that I had fallen into a trap of pushing so hard for promotion that I had gotten promoted to a level that I was not capable of delivering on. I hated that feeling. The reason it was the most important day of my entire career is because two things changed that day. Number 1, I said, no more am I going to measure my success in this industry by my pace of promotion or my pay rate. I'm done with that. Look what it's gotten me. I've gotten everything I've asked for and it's now made me miserable and terrified. From now on, I am going to reprioritize what attracted me to this industry, which was the law, the substance. I'm going to make that the centerpiece of my career. Whatever happens good or bad, I'm going to live with the results. But if I'm going to call myself a tax person, then I'm going to be the best version of a tax person that I can imagine being. To me that meant building technical expertise. The second thing that happened, and this is a part people aren't going to want to hear quite as much about. I realized that it was nobody's fault but my own. Of course, I wanted to blame PwC, but for what? They gave me everything I asked for. I showed them what I cared about. What I cared about was getting promoted. They promoted. It was not their job to feed me every piece of law I ever wanted to know when I hadn't prioritized that to them. They were trying to run a business and I helped them run a business. The fact that I hadn't learned what I needed or wanted to learn, that was on me. That's when I made the conscious decision to invest in myself. And April, it really was as dramatic a switch as I'm making it sound here. Four and a half years of my career, zero priority on my passion, learning the law. That day everything changed. The way it changed is, first things first, desperate times call for desperate measures. And I had a big gap between what I could do and what my resume said I could do. To solve that gap, I applied that day to the graduate tax program at University of Denver. Because I needed to be spoon fed tax law as quickly as I could. But as soon as I showed up in that program, what happened is I realized I had made the right choice in making this the focus of my career. Because I forgot how passionate I was about the law about learning and growing. Because now I'm sitting there in this class and they're feeding me the law and every day I am going to bed, a little bit smarter than when I woke up in the morning. And I'm saying to myself, this is what attracted me here, this needs to be the focus. Then the second thing is, I'm listening to these professors and I finally know what I want to be in my career. I don't mean a professor, even though that's a great gig as well. I just wanted that substance. I'm listening to them cite case law from 50 years ago, off the top of their head and reference private letter rulings down to the final digit. And I'm saying, I want to be able to do that, because one, that's where my passion lies, but two, I'm guessing if I can have that substance, I will never have to have this horrible feeling again of feeling like I can't deliver what I should be able to deliver. That just set me on the right track, but it didn't solve all the problems, obviously. This decision to invest in yourself, it's got to become a career-long process. I graduate from the program. I felt like the program really helped me bridge that gap, but I knew the process was just starting. Coming out of the program, the one thing I know for sure is that, yes, my one true passion in this industry is to live in the law. Let's be honest, we can argue about it, but you said in your intro. If you truly love working in the law all day and solving complicated problems for sophisticated clients, one could argue there's nowhere you can do that at a more regular level than National Tax group for a big Four firm. That was my dream job back in 2005, when I came out of DU, but it was never possible for me. The reason I say possible is because, look, if we had all the time in the world, we'd be talking about not just pursuing your passions professionally, but also personally. I am a guy that has a lot of passions from a personal perspective. From the time I was 16-years-old, I knew that I was not going to be a happy adult unless I lived in a mountain town where I could be on skis, 70 days a year and riding my mountain bike another 250 days a year. It had to be that way. When I graduated in 2005, I was already laying the groundwork to move up to the mountains of Colorado in 2006. At that time, if you were going to work in Big Four National Tax, you had to physically sit in DC. It's something I never even sent a resume, never even applied for. Because I knew that even if I were happy professionally, if I were miserable personally, it wasn't going to be a winning formula. What I did instead was I took a job at a wonderful regional firm called Withum. And they were so wonderful, in fact, that they let me work remotely at a time where remote work was not really prevalent within our industry. But they let me work from Aspen, even though they were an East Coast firm. But we finally get now to the lesson, how? How do you connect with your passion for your industry? Knowing that my passion was learning the law, now starting at a brand new firm. I don't have anybody spoon feeding me tax law every day. How do I unlock the secret to a happy career? That secret is not really a secret. You want a happy career, do more of the work you love and less of the work you don't. How do I get my hands on this type of work I love and the decision that I made. There are people listening who are at that crossroads right now who may have to say, it sounds like a lot of work, but I get it. Maybe it's time for me to make that decision as well to invest in myself. Was that if I can't bring myself to Big Four National Tax and do the type of work I love, I am going to find a way to bring the type of work I love to me. I realized that the responsibility is mine to show this new firm that I'm passionate about working in the law and that I'm capable of working in the law. Part of that happens obviously on the job. Part of it happens by doing diligent research and coming up with good answers and thinking outside the box. But I knew that I needed to really prove to everybody where my passion lies so I could get more of that work. What I did, and this was the thrust of our AICPA class, is I instituted this three-step process that I had been using for the last 20 years and just repeating over and over again, and it has served me better than I ever could have dreamed. But what I did was Step 1, I'd say, I am going to learn everything I can about some narrow area of the law. I would pick an area of the law, usually one that I found that the industry was struggling with. What I mean by that is we all know there's certain things we do in the tax world that all of us do, and we apply it all the time for our tax returns. We never truly understand why we're doing what we're doing. That was back to what we said earlier, the same as last year's stuff. Perfect example would be allocation of partnership liabilities under Section 752. We all fill out a K-1 on a 1065 and allocate recourse and non-recourse liabilities. But how many people truly understand what makes a liability recourse and non-recourse or how those liabilities should be allocated? I would say, Sec. 752. I am going to learn everything I could about 752. This is a part people don't want to hear, but it would happen outside work hours. I would read the code, I would read the regs, I would read the editorial content, I would read the key cases and the rulings and things like that. And I would read and re-read and make notes and do outlines until I felt like I understood what it was I was reading. Then I would move on to Step 2. Step 2 is, how do I cement this knowledge? I would sit down and say, if I truly understand all that stuff I just read, I should be able to explain it to other people. I would sit down and I would write up everything I just read. Try to re-package and re-purpose the law in a way that would make someone who read what I was writing understand. Maybe some of your listeners know that later and we'll get into this, I would go on to write for more national publications. That's not what I'm talking about here in 2006, April. I didn't have a platform. When I say I'm writing about the law, I was quite literally putting together an email for my firm's tax department that absolutely nobody asked for. I would summarize 752. I would put together a PDF decision tree and flow chart and show how we should be allocating things. I was doing it for two reasons. The reason I like to tell people is I wanted to help my firm understand 752. But the true selfish reason I was doing it is because I wanted to understand that law, and I wanted to show everyone else that I understood that law and that I was passionate about that law. I would send out this email to my firm's tax department explaining 752. Going through that process of writing it up really did cement that knowledge for me because I had to think about the law in a different way from reading it to say, how do I now explain it? April Walker: How did they react to those emails? Tony Nitti: You could almost hear the eyerolls in the system. You can almost hear, who is this kid? What is he doing? I wasn't even a kid at that point, I was near 30. Here's the thing. We're going to talk some life lessons here, but I was talking to somebody after the presentation at AICPA. Sometimes the key to success in any career is just being willing to do the thing other people won't. What I mean by that is those books, the code, the regs, we all have access to them. What I was doing is I was diving in and saying, I'm going to figure out what they say and what they mean. Other people probably rolled their eyes when I would summarize law that nobody asked for. But you know what those same people would do when they had a 752 issue? Who were they coming to? April Walker: For sure. Tony Nitti: Well, the only other option was to open the books themselves. That's what I mean about doing what other people won't. That's not everyone's priority and I'm not here to say it's right or wrong, but the reality is when I showed people that I'm willing to open the books, I started to get that work because other people aren't. Not everybody, but there are just people who say, I'd rather just push it to someone who enjoys that stuff and that became a common theme of my career where people come to me and say, I know you love this research stuff, so I'm going to give it to you. You probably give it to me because you don't want to do the research stuff. That's fine by me because I do want to do it. I do want to do this work. To your point, there are eye rolls, but those eye rolls, I'm sure, were the same people who'd say, I got this question. I know this dude seems to care about this stuff. I'm going to go to him and let him answer it for me, which is exactly what I was hoping for. After that writing step, I would go to Step 3. Step 3 was the uncomfortable step. Because as much as I enjoy writing, and I know this sounds strange because we're doing a podcast about a presentation I gave, but speaking in public, not for me. We're going to talk more about this later, but terrifies me. And I would go into my partner's office, and I'd say, you see that email that I sent around about 752? I need to teach it. I need to teach here at the firm - some lunch and learn local office or the firm's annual update, but I need to teach it. Why would I ask to teach if I was terrified of it? It's because I was terrified of it. Because if I want to know that law, there is no greater motivator than fear. If I'm going to stand in front of a room full of my peers or some people who've been practicing 20 years longer than me, I was really going to make sure I understood that law really well. To this day, I don't give a presentation that I don't walk around my house and rehearse to air, just to time it out, to make sure I'm comfortable with the transitions, to make sure I know the law. Because that fear still exists from a public speaking perspective. I would go through that process, and by the time it was done, by the time I was done handling that fear and speaking in front of - these are tiny rooms. These are my firm. These are not strangers to me, but by the time I was done, I would say, that area of the law, that is in my back pocket. I feel like I know that well, and more importantly, my firm now knows that I know that well. All those questions are going to come to me. I would just repeat that process, every year, not every year. I'm just repeat it over and over again with deducting accrued liabilities or 263(A) or prepaid expenses. I would just repeat the process if the firm. Read about it, write about it, teach about it. The more I'm doing it, the more they can see where my passion lies and that I'm capable. To the point where 2008ish, the firm decides to launch its version of a National Tax Group and in addition to our mutual friend Brian Lovett, who's still at Withum, and I get to be one of the founding members of that National Tax Group. Now all of a sudden, I have brought national tax to me and my passion is much more of the focus of my career. As I said, that's the recipe, right? Do more of what you like and less of what you don't and that's what I'm getting now as a return on my investment. That's where the proactive decisions I made to help improve my career, that's pretty much the end of them. From there, it's just life has taught me because now you get to 2008, April and my career is going really well. I'm doing the type of work I love to do. Personally, I am living in Aspen and like I said, I'm on skis 70 days a year. I'm living on my mountain bike all spring. Life is good. April Walker: That's when life smacks you in the face. Tony Nitti: Exactly. That's when the headache started, and I'm your audience with the entire story, obviously. But after one particularly brutal race in Aspen, I was rushed to the emergency room with a terrible migraine-type headache. But I imagine more intense than most migraines because eventually, what they would figure out, it took a little bit of time, was that I had an aneurysm in my brain. Most people know somebody impacted by brain aneurysm and those stories typically do not have happy endings. The reality is once an aneurysm leaks blood into the brain cavity, 70% of people are dead by the next morning. As my surgeon so eloquently put it, of the other 30%, half of them will wish they were by the next morning because they're permanently disabled. This is something where I went from thinking I was invincible at 33 years old to absolutely certain that I was going to die. The only reason we bring this up here is because I had to face my mortality, and I had to go in for 8 hours of surgery to save my life. I had that morning to lay on that metal table before they wheeled me in for the surgery. They were very clear about the risks. There's a 5% chance I go into vasospasm and I never wake up. There's a 15% chance if I wake up, I've got memory problems, right side of the body problems, cognitive deficit, and that's terrifying. Laying there that morning, I know it sounds cliche, but looking back at 33 years I'd spent on the planet, I wasn't spending any of that morning regretting the things I had done that maybe didn't go the way I wanted him to do. I was spending the time regretting the things I had said I was going to try, but I hadn't tried yet. It was eating away. Like, I thought I had so much more time, and now the prospect that either I don't wake up or I wake up a different person and I never get to find out some of those things about myself. It was not something you ever want to have to face. That the tomorrow you thought you had may never arrive. Now, obviously, I had a good surgeon. April Walker: Given that that was in 2008? Tony Nitti: Yeah. Doctor Jefferson. He fixed me right up. I knew within 48 hours that all the Simpsons references, all the code sections, they were all still in there. But I did come out of it a changed person. Not cognitively, necessarily, but I came out of it saying, I'm going to live the rest of my life slightly different than I did before, starting with the fact that I'm leaving no stone unturned. This is what we were talking about earlier. Anything I've been curious about - personal, professional, could I be good at it? Would I enjoy it? I am going to find out. I'm going to say yes, because I just want to know. It started simply enough. I wasn't even in my professional capacity, like silly little thing. I spent my whole childhood saying I wanted to learn how to play guitar. I never bothered to learn guitar. I had a year, basically year it took me to recover from that surgery before I could get back to my normal life, and I spent that year playing ten years worth of guitar. But what happens is you realize, I love this. I thought I would enjoy it. Tony Nitti: I do enjoy it. I shouldn't let other things slip past me like this. I should try everything. Within my career, it's now 2009, and I've made partner at Withum. There's no impetus to try new things in my career. I've gotten the last promotion I'm never going to get. But that's not what's driving me at that point. What's driving me is this primal realization that, life is fleeting and so I'm going to go find out whatever I want to find out about. We go back to how we started this conversation. Growing up, the only thing I ever thought I would enjoy was being a writer. I had been doing those emails to my firm, but I never tried anything bigger than that because I just assumed I didn't have the ability. What bothered me after the surgery is I never even risked it enough for someone to tell me I wasn't any good. I just decided it for myself. I said, look, I'm never going to write the Great American novel. I'm not that talented, but they say write what you know and I know some things about the tax law. April Walker: Sure. Tony Nitti: I said, I just want to find out. I want to find out what I'm capable of. The next time I went through that three step process, it was about a court case that came out on S corp reasonable comp. I said, well, this time, even though no one's pushing for it, no one at my firm cares, it's not anything anyone else values, I'm going to find out if I can get this thing published externally. I wrote up the entire case history of S-Corp Reasonable comp for The Tax Adviser. I wrote and rewrote and I edited, I reedited and I eventually submitted it for publishing and they published it as a feature article. What I had learned in that process was not that I was a talented writer, but that I was as passionate about it as I thought I would be. I loved it. I love the process of trying to explain the law to somebody else in the hopes that the light bulb goes off and they go, I never understood that before, now I understand. Of course, I looked from a selfish perspective having to learn the law that well, to read all of the cases that had ever been settled. It was just a really gratifying process, but the problem is, my firm's not paying me to sit around and write articles all day, so it's a bit of a bummer. Because I had done it, I loved it. But how do I get to do more of it? This is where the worlds collide between leaving no stone unturned, but also investing in yourself. Where the article, it went well. Tony Nitti: It went well to the point where The Tax Adviser asked me to write a couple more articles, and I did. Then what happened is just if you invest in yourself, I firmly believe good things happen. You get a return on that investment. CCH reaches out to my firm and they're like. Hey, we see this writing this kid's doing, it's pretty darn good and we need someone to co author a treatise on consolidated returns and we'll pay your firm for six months of his time if he can contribute a bunch of chapters to this treatise. Tony Nitti: My firm comes to me and says, CCH wants you to write a treatise on consolidated returns, you want to do it? Like any rational human being, every instinct in my body said, absolutely not. Why would I want to write a consolidated returns treatise, it's terrible. It's the worst area of the law. But the point is, who am I to say no? I'm passionate about writing. I want to be challenged, and it's just this idea of leave no stone unturned. I'm going to write it just to see if I can write it and to see if good things come of it. Now my firm is getting paid for me to write, so they allow me to do more of the type of work I'm passionate about. I got to write that treatise, which is probably the last time I thought about a consolidated return. But it just things snowballed. From there, April and now the editor at Forbes, Janet Novack, she's reading my writing. She reaches out to me more than day. I'd never met her, or heard her. She reaches out to me and says. Hi, I like your style of writing. Would you move your platform over to Forbes? For a regional firm like Withum at that time, the exposure was tremendous. Of course, we'll do it and so that's how I land at Forbes, where now anyone who ever read anything I wrote on Forbes, I'm not making up this three step process. Because the entirety of my writing on Forbes, for the most part, was this, like trying to explain complicated areas of the law. There was that whole Tax Geek Tuesday. That's all it was. Breaking down things that no one was insane enough to want to write about because it's so dry and so complicated, like opportunity zones or 263 A or whatever it may be. Now all your listeners know my deep dark secret, which is it may have looked like I was doing all that writing because I wanted to help the industry, which obviously I'm joking. Obviously, I did. But why else was I doing it? Because I wanted to learn that stuff. I wanted to build that expertise and hope that it would pay off. One of the things we'll finish with in a couple of minutes is how that ended up paying off with my dream job. But even at that point, even with the writing, and this comes full circle to how this class came to be for us because of what happened in Engage this summer. But at that point, we're talking 2011. I've never done public speaking. Outside of my firm, outside of a lunch and learn, I've never stood in front of a room full of strangers and taught. What happened was you do enough writing, eventually, someone's going to come to you and say, you're decent at explaining a tax law, wouldn't you like to try it, like in person. So you don't have to trust that someone's going to read your writing and understand it all, first try, things like that? My friend Mark Friedlich at CCH approached me and said, "We do this conference every year. Come speak at the conference.". Again, every fiber of my being said, Mark, absolutely not. Because I am someone who has got more than my share of social anxiety. I just do, I'm an introvert. There's a reason I love having my nose in the books. The idea of standing in front of a room full of strangers, it terrifies me to this day. I just learned to deal with it a little bit better. Then, of course, there's the impostor syndrome that comes with it. I'm like, why would anybody want to listen to me? There's so many people who know this stuff better than I do. I said, "Mark, it is not for me." Because as much as I always knew I would enjoy writing, I knew I would hate public speaking. He just said, "Look, just give it a try. What's the worst that could happen?" Eventually he's right. Who am I to say no to this? The whole point of this second act I'm getting in life, is say yes, find out what you're capable of, find out what you might enjoy. I flew to Arizona, April and I did 90 minutes on the tax consequences of foreclosures and short sales. That tells you. April Walker: That's very specific. Tony Nitti: It's 2011. This is where it's getting real for the crash and so everybody's dealing with foreclosures and short sales. I went in there and I talked for 90 minutes, and let me tell you, it was every bit as awful as I thought it was going to be. But when I walked out of that room, I knew my goals in my career. I knew my passion in my career had changed, had evolved. Because I walked out of that room saying, I need to do more of this. But why? If it was so terrifying, why? Because it was so gratifying, Just to have even one person come up to you afterwards and say, "I struggled to understand that now. The light bulb went off. I get it." This desire to communicate and help other people and explain the law in a way that people can understand. It's fun to do it in writing. Maybe not that efficient. You have to trust that they're going to read the whole thing, not have any follow up question. But with speaking, I could read their faces. Are they following along? Do they look lost or are they tilting their head to the side like my pup Maggie does in some futile attempt to understand what I'm saying to her? I'm like, I'm not built for this, but I need to do it. For me to be the best version of myself, the happiest version of myself in my career, I need to do this thing regularly that terrifies me because the reward is so great. That ability to repackage and repurpose the law in a way that connects with other people in the industry. Of course, the byproduct of learning it so well. If I'm going to stand in front of the room and talk about foreclosures and short sales, that's another thing I'm going to get to add to my quiver as far as areas of expertise. It's funny, because like I said, growing up, I knew I'd be passionate about writing, and I was. Knew I'd be terrified to speak publicly, and I am. But I'm just as passionate about it now as I am the writing. One final story to just tie everything together and just show you how. Look, I don't know. Maybe my experience is unique. Maybe we need one of those things to run on the bottom of the podcast that says. What is it? Past performances are not indicative of future performances? April Walker: Future yeah? Tony Nitti: I don't know. Maybe it's just unique, but this right place, right time. The rewards I've gotten on the decision to invest in myself from Withum's willingness to create a national tax group, to Forbes noticing my writing and bringing me on. Just the little things that have impacted the course of my career. It's remarkable because listeners out there, especially the younger variety, they're going to think it's these big decisions that I stress out about that are going to impact the course of my career. Which job do I take or what area of the law do I focus on? But my goodness, it's sometimes the smallest things. What changed the course of my career was a decision in 2013 to waste my Thanksgiving weekend. Because 2013, right around this time, the IRS issues regulations under 1411, the net investment income tax regs. I didn't want to necessarily spend my Thanksgiving weekend learning about those regs and writing about them, but it was new. I love writing about new stuff. I love trying to explain to people how to read [how the] law works and so I said. I'm going to sit down and go through the three step process, at least the first two. For now, I'm going to learn about it, I'm going to write about it. I wrote about the net investment income tax regs. It was no different than any other article. There's nothing special about it. The only thing that was special is a couple of days later, I get an email from the attorney at the IRS who wrote those regulations. April Walker: Spoiler. Tony Nitti: Felt encouraging. He just reached out to me to say, here's what you got right. Here's what you got wrong. I want to send a unified message out to the people. You know [David] Kirk, so there's probably some expletives thrown in there. April Walker: Absolutely. Tony Nitti: I just thought, that's so admirable that this guy would take that level of ownership over his work. Dave and I would become what I would loosely call friends. I think we met in person once at National Tax, but other than that, we maybe connected once a year for the next decade. But the point is, this return on investment, that decision to write that article would change everything. Because 10 years later, Kirk is not at the IRS anymore. Now he's at EY running one of the National Tax groups, and one of his partners is retiring and unbeknownst to me, he's been keeping track of my career the entire time and he's seeing this investment I'm making in myself. He's seeing my passion for learning the law and whatever small ability I might have to explain that law to other people. He's saying. That's the guy I want. He's going to his bosses and saying. This is the person I want to come in as the new partner in EY National Tax. In 2021, he reaches out to me. And I was working for an amazing firm at the time, Rubin Brown, and I loved my job. But he reaches out to me and he says. Come work with me and work in this National Tax group. The opportunity, obviously, to work with Dave Kirk is pretty much all you need to hear. But of course, me being a pain, the first thing I say is, do I have to move to DC? Now, this is the benefit of the post pandemic world. We can do this remotely from Aspen and so he's offering me my dream job, April. What's amazing about that is I spent a couple months agonizing over that decision. I very nearly turned it down. Why? Because, honestly, I was scared. I couldn't do it. It was back to almost that feeling of being a fraud again, but just feeling, I don't know. This guy has forgotten more about the law than most people know. And I had that impostor syndrome kick in again. Can I do it? Am I capable? Who knows? Maybe I'm not and the firm has just been lying to me for the last three years. The point is, I almost didn't take it and then I sat down and said, hold on a second. What is it that makes you not want to take this job? I'm scared because I think I might have to learn a lot to be able to hang. Then I'm like, wait a minute. What is it you're most passionate about in your career? Where you're forced to learn a lot so that you can hang? Finally, it just became obvious to me that I had to take the opportunity because this was my dream. My dream to just live in the law all day, every day, and it came about in the most bizarre fashion. April, I didn't submit a resume because it didn't mesh with my personal goals. But then this decision to invest in myself, which eventually led to Forbes, which got me in front of Kirk. It's just crazy. Crazy to think how it all unfolded. The message for someone listening out there, is I was no kid when Dave Kirk called me. I was 45 years old. 45, to land my dream job in this industry and patience is certainly a virtue. The bigger virtue is just understanding some of the things we talked about here today. Which is, look, no one wants to hear this. The easy way out is to say, I'm in a bad situation, no one's treating me fairly. I'm not learning what I want to learn. Look, there are bad situations out there. Like I said, if you're in one, it's pretty easy to move. Problems are going to follow you even to good situations, if you don't take ownership over your own career and if you don't say at a certain point, it's no one's job to make me the professional that I want to be other than myself. That's not easy. It comes with a lot of extra work. You think I wanted to be reading Bittker & Eustis on the beach on a weekend back when I was fielding materials a lot? Of course, I didn't. The BNA portfolio at night? No, but I was making an investment in the hope that it would pay off. The way it paid off, like I said, was doing more of the type of work I love, which is all you can possibly ask for. It's not an easy thing to communicate to people - as much as we work in this job, sometimes you have to you go above and beyond to show people what you're passionate about and that you're capable of handling it. If you don't show, no one knows and you can just get lost in the shuffle and end up being that person we talked about that's doing the same tax returns five years in a row and not growing and not learning. If you haven't shown people that you're not content with that. If you haven't shown people where your passions lie, human nature is such that firms of any size are just going to say, April just keeps doing what we ask for every year. We're just going to keep asking her to do it. April Walker: I think that's great. It's funny when you were starting to tell your story about that you hadn't learned anything. I had a question in my mind, like, don't you think that's partially the firm's responsibility that they hadn't invested in you to send you enough trainings or things? Then you answered the question. That's a personal responsibility thing. Tony Nitti: Perfect example of that. They did send me to trainings. I can remember most of those trainings, and everyone knows someone like this. Being the guy who spent half of the trainings outside the room, doing work for my senior or my manager back in the office because I didn't value the training. What I valued was getting promoted. If my senior manager said, I need you to do something right now, even though I was at a training at St. Charles for Andersen, I was going to walk out of that room and get that work done for them. Everybody wants a villain. Life is always easier with a villain. PWC was no villain. Because it's not like I asked them to teach me and they refused to. I showed them what I valued and they rewarded that. If I only valued promotion, they gave me promotion. Since that point in my career, when I showed my employers that I valued the type of work I love, I valued being challenged, I valued living in the law, I have gotten rewarded with more of that type of work. I refuse to believe my experience is a one-off, that it's completely unique. I definitely got some very lucky breaks at some key points in time. Then I got dealt a harsh lesson that I wouldn't wish upon anybody. I don't want anyone at 33 years old to have to face their mortality. But that was an impetus to say, I got to find out more of what I'm capable of. And that opened up doors that I never dreamed, April, that I would spend as much of my career doing. When I say passionate about my love for writing, I just never thought it would even be an option in a career in tax. Then it ended up being a huge part of what I did for so long. I refuse to believe that that's unique to me. I think that anybody who says, I'm willing to do what the other person isn't. I'm willing to get into these books, learn what they say, show people that I care about what they say, and that I can communicate them to other people, that really good things are going to follow. April Walker: Writing might not be your passion, but I think the message today, as we're wrapping up, figure out what that passion is. It doesn't matter how old you are. You can try to figure it out and do more. I just read this book that was talking about - do the next right thing. The big picture might feel huge and scary, but just whatever the next step is, just do the next right thing. Tony Nitti: The way I've always described that too, April, is you shouldn't at any point in your life be finished finding out what your passions are. That's the whole point, is you should be a fundamentally different person at 35, that you're at 25 and 45 that you're at 35. You should be saying yes to opportunities that help you unearth new passions and new things that you are capable of doing. Because like I said, there is no scenario, and people who know me well know what I mean, where I should be making career out of public speaking, doing as much public speaking as I do. It is so foreign and uncomfortable to me. But I look past that, because I'm passionate about it and so I find a way to make it work through truly ridiculous levels of preparation. April Walker: Some might say you're good at it. I'll give you a little spoiler. Your two sessions were the top rated at National Tax, so there you go. Tony Nitti: Now, you have to edit out earlier today when I said, we're doing this without the safety net of the evaluation. April Walker: I didn't want to tell you in advance. Tony Nitti: See that. Again, but that is proof that anybody, if I can make any career out of public speaking, anybody can. That's why you got to try. That was the thing at ENGAGE that started all this, is when we were just talking about say yes to opportunities because you know what, if you are as bad as you think you're going to be and you hate it as much as you think you will, you haven't lost anything. You just go back to not doing it anymore, but you might unearth new passions that move the goalposts on what you need out of your career. That's a goal in life to keep growing and keep finding things that really drive you. Hopefully, April, something we said resonates with the listeners, but I guess we'll find out. April Walker: I hope so too. This is our last podcast episode of the year. You can listen to it at the end of the year. I used to love your resolution articles. I think that was a Forbes thing. I love these articles. I miss those articles and people come up to you still all the time and are like, I really miss those articles. Tony Nitti: What's funny is the last thing I ever wrote for Forbes was one of those resolution articles and I don't know. Maybe I wrote 200, 300 articles for Forbes over the 10 years, but the last thing is my favorite thing I ever wrote because it had absolutely nothing to do with tax. I had to do with my pup Macy. April Walker: I know. Tony Nitti: You knew well and Macy was on her way out of the world at the time and just to be able to even have a platform to write about my pup, that is still the one thing I've ever written that I go back and read. I don't hate this. I don't want to change anything. April Walker: That's good. Thank you so much, Tony. This was so fun. I know our listeners will enjoy it. Also, again, thanks a bunch. This is April Walker from the AICPA Tax section. This community is your go to source for technical guidance and resources designed, especially for CPA tax practitioners like you in mind. This is a podcast from AICPA and CIMA together as the Association of International Certified Professional Accountants. You can find us wherever you listen to your podcasts and we encourage you to follow us so you don't miss an episode. If you already follow us, thank you so much. Please feel free to share with a like-minded friend. You can also find us at aicpa-cima.com/tax and find our other episodes. Thank you so much. Have a wonderful holiday season and come back and 2025 is going to be an exciting tax year. I just feel it. Thanks for listening. Keep your finger on the pulse of the dynamic and evolving tax landscape with insights from tax thought leaders in the AICPA Tax Section. The Tax Section Odyssey podcast includes a digest of tax developments, trending issues and practice management tips that you need to be aware of to elevate your professional development and your firm practices. This resource is part of the robust tax resource library available from the AICPA Tax Section. The Tax Section is your go-to home base for staying up to date on the latest tax developments and providing the edge you need for upskilling your professional development. If you're not already a member, consider joining this prestigious community of your tax peers. You'll get free CPE, access to rich technical content such as our Annual Tax Compliance Kit, a weekly member newsletter and a digital subscription to The Tax Adviser.
12/19/24 • 59:08
Note: This podcast episode was recorded Nov. 20, 2024, and since then, the U.S. House of Representatives races have been called, giving the Republicans 220 congressional members and the Democrats 215. This balance could change depending on potential special elections if some members of the House are appointed to positions within President-Elect Trump's administration. In this episode of the AICPA's Tax Section Odyssey podcast, Kasey Pittman, CPA, MST, Director of Tax Policy — Baker Tilly US LLP, discusses potential upcoming tax legislation for 2025, focusing on the complexities and challenges of extending the Tax Cuts and Jobs Act (TCJA) and other tax provisions. What you'll learn from this episode: The potential complexities and challenges of extending provisions of the TCJA and other tax legislation. The implications of a unified government and the reconciliation process for passing tax legislation. The financial constraints posed by the national debt and the importance of managing the deficit. The influence of individual policymakers and the importance of state and local tax (SALT) deductions. Potential revenue raisers like tariffs and ending the employee retention credit early, and their impact on the overall tax legislation. AICPA resources Planning for tax changes — CPAs need to not only brace for tax law changes such as the TCJA and expiring provisions but also be proactive in planning for them. Tax advocacy — Advocacy is a core element of our purpose and value proposition. It is a strong mechanism for promoting trust and confidence in the CPA and CGMA credentials around the world. Transcript April Walker: Hello, everyone, and welcome back to the AICPA's Tax Section Odyssey podcast, where we offer thought leadership on all things tax facing the profession. I'm April Walker, a lead manager from the tax section, and I'm here today with Kasey Pittman. Kasey is the director of Tax Policy with Baker Tilly's National Tax Office. Welcome, Kasey. Kasey Pittman: Thank you for having me. April Walker: I thought we'd spend a few minutes today setting expectations for tax legislation for 2025. First, a little bit of a spoiler, tax legislation is likely, right, but what it will actually entail is probably a lot more complicated than just a straight status quo extension of TCJA. Kasey, let's set the stage a little bit and talk about what we know about the makeup of the government and what that will mean for upcoming legislation. Kasey Pittman: I think going into the election, the vast majority of people assumed we were going to wind up in some divided government. We knew it was very likely that Republicans would capture the Senate. The math there was not very good for Democrats, just in terms of how many seats were up, and one of the Democratic-turned-independent retiring senators from a deep red state was almost a certainty to flip. I think the general thinking was that either Democrats would capture the White House or the House, and neither of those things came to fruition. We are sitting here in the 2024 election was a Republican sweep. We've done a lot of worrying about things that we can let go of, and I think probably we'll touch on that a little bit later in the podcast. But the margins aren't very big. Trump captured the White House actually by a good margin in terms of both electoral votes and total votes in the country. It looks like Senate Republicans will have the majority with a 53-47 split between Republicans and Democrats. The house is currently unknown. We know that the House has captured 218, and that's what you need for the majority. There's 435 seats. 218 is literally a one seat majority. There are five races outstanding, and probably threeish, maybe four of those are likely to go Republican. We're just waiting on final vote counts. In the House, we're looking at a few vote margin, in the Senate, we're looking at a few vote margin, and that can make legislating really difficult. One of the themes we touch on here as we go through is reconciliation. When you have a unified government, and a unified government is one where one party has both chambers in Congress, and the White House, which is what we're going into in 2025, there's this process that you can use for certain types of legislation, fiscal legislation called reconciliation. What reconciliation does is it allows you to overcome the filibuster in the Senate. You actually only need a simple majority, like 51 votes in the Senate to pass a bill, but anybody can hold up a bill with a filibuster, and you need 60 votes to end debate and force the vote on the floor. But this type of legislation doesn't require that, so we can move forward with a simple majority. However, there are a lot of limitations to the reconciliation process. Everything in a reconciliation bill has to be financial. It needs to deal with spending or revenues and it can't be incidentally related to those. That has to be its primary purpose. Tax provisions are perfect for this. It cannot increase the deficit outside of the budget window. The budget window is typically 10 years. Then inside that budget window, you can only increase or decrease the deficit by the amount in the reconciliation instructions. Reconciliation instructions are set again, by a simple majority on a budget resolution in the House and in the Senate. That number can be hard to define. We also can't touch Social Security, by the way, which is why you never see Social Security in a reconciliation bill. However, that number is really difficult to come to an agreement on sometimes, and I predict that we're going to face some issues just in getting to that budget reconciliation number before we even start to put together the bill. April Walker: That's a great summary, and we used reconciliation before to actually pass TCJA and some other legislation in the past few years, but it's still not how I grew up learning how law was passed. It's a little bit interesting and that's a great summary. Kasey, I led with saying, we don't think it's going to be a straight extension of TCJA and some of the other proposals that have been thrown out throughout campaigns. Talk through a little bit about specific provisions, what they're scoring out at, why they may or may not be included in this legislation. Again, I don't think we have to say this. This is all just speculation on our part. We will have to see what we will see once it turns to 2025. Kasey Pittman: Some of it is really speculative. We're guessing, they are educated guesses based on history and based on what influential policymakers are telling us. For many months, Republicans have really optimistically been planning for reconciliation, hoping to capture both chambers, hoping that Trump would be in the White House. They've been planning. Honestly, there's been a ton of organization inside the House Ways and Means Committee around it. What I said just a minute ago was that I think we're going to have trouble getting to that number, and here's why. If we want a blanket 10-year extension of the Tax Cuts and Jobs Act, all these taxpayer-favorable provisions, they're mostly taxpayer-favorable and we'll get into that in a second too. It's going to cost $4.6 trillion. Just for benchmarking for everybody, our national debt, which is the sum accumulation of all the deficits we've ever run right now is $35 trillion. That's really impactful because each year, honestly, I believe since Clinton, we've run at a deficit and some of the Clinton years too. But each year, since I was in middle school, we've run at a deficit, which means we're spending more money than we're bringing in, and part of the reason we're spending more money than we're bringing in is because we have to pay interest on all this debt. It's really come to a head over the last couple of years for two reasons. One, our debt skyrocketed. Recently, TCJA added to it. COVID certainly didn't help it at all. Then additionally, because we've had such high inflation, the Fed has increased interest rates and that's the rate that we pay to service the debt. In FY 24, which ended at the end of September. This year, we paid over a trillion dollars just to service our debt, not paying down our debt, just paying the interest on our debt. That's more than we spent on defense spending for the entire year. It becomes a liability if our debt is too large. Particularly, we like to compare it to our GDP. This year we ran a $1.8 trillion deficit. Over a trillion of that we could say is attributable to interest costs. Anyway, here we are. We've got $4.6 trillion to extend the TCJA. Then we've got a whole host of other campaign proposals that Trump made on the trail. No SALT, and we'll get to SALT in a second. No SALT, no tax on tips, no tax on overtime, no tax on Social Security benefits. There's family caregivers credit for home caregivers. There's just a number of things, and some of them are hard to score because there's not a lot of details around the policy yet. They're more on the idea than the actual detailed policy phase at this point but those are a lot and estimates are 8-10 trillion with the Tax Cuts and Jobs Act plus all of the other campaign promises, and that is just wild as compared to our current national debt and the fiscal responsibility that I think a lot of policymakers and Americans really are focused on. Do I think that Senate Republicans and House Republicans are going to come together and say, let's write a $10 trillion bill that's not paid for at all, that increases the deficit? No, I don't. We still have deficit hawks in the Republican Party, we have people who are really concerned about it and for good reason. That's going to be a struggle. I want to say SALT is really important here. Republicans are fairly united in the general extension of Tax Cuts and Jobs Act. There's a lot of campaigning this cycle on it. It's been a priority where we're fairly unified. However, that's not where it ends. We're looking again at these small margins in the House and the small margins in the Senate. When we have that, we have individual policymakers who have a lot of influence. We saw that in 2021- 2022, when Democrats had a big bill and they said, Hey, this is our wish list, and Joe Manchin and Kristen Sinema, who are Democrats, turned independents in the Senate, said, Oh gosh, no, thank you, that's way too big. Here's what we can do. We'll do the Inflation Reduction Act, which was a fraction and a little bit of a different direction on some than the original Democratic priorities. That's what we passed, because again, these two policymakers were able to exert a ton of influence. Then we saw it in 2023, when I think it was a total of eight house members ousted their speaker, which was the historic moment for Republicans in the House, what we see is a lot of power when we have those small vote margins. In the House, there's a really strong caucus for repeal of the state and local income tax, a limitation of $10,000. It's bipartisan. But there are a number of Republicans on there, particularly from high tax states, from traditionally blue states, New York, California, Connecticut, New Jersey. There's dozens of them, really, and they've won re election to the House and they've campaigned on this, and this is going to be a priority for them. I think it's really impractical to think we're going to see a tax bill that doesn't have SALT attached to it because this is a pretty strong caucus. Again, the margins are small, and to fully repeal SALT for 10 years is another $1.2 trillion. Now I'm at $6 trillion April, and that's before the overtime and before the Social Security, which is already system in peril in terms of being able to fund it. It's not quite that simple, and we do have deficit hawks. When we saw Tax Cuts and Jobs Act originally come through in 2017, we used the reconciliation process, Republicans did, and then Democrats used it in 2022 to pass the Inflation Reduction Act. There were many Republicans who wanted much more than TCJA cost. TCJA eventually they came to an agreement, and they said, We can do $1.5 trillion. 1.5 trillion is what we can sign on for. We can get everybody on board for that. That's what the budget instruction said. You can write a bill that increases the deficit by 1.5 trillion dollar over 10 years and so they did that. But it's not quite that simple. People say, $1.5 trillion, it wasn't 1.5 trillion dollar in tax cuts. It was $5.5 trillion in tax cuts with four trillion dollar in revenue raisers, some of them were pretty simple. I replaced these itemized deductions with the standard deductions, they kinda offset, but there were some provisions in there that were just revenue raisers and one of them is 163(j), the business interest limitation. Then additionally, we couldn't see them all through the entire budget window and still hit that mark. When I originally described it literally in 2017, 2018, when I was talking about it, I would say. Hey, look, we've got all these dials, and at the top, we've got this big number, and this is what we've added up to. We want to turn this dial up, but that costs too much money, and that puts us over, so maybe we dial it down on the number of years or maybe we add this revenue raiser. We're trying to back into this $1.5 trillion number, and that's part of the reason we saw some of these changes that transitioned under TCJA. We're seeing right now the bonus depreciation number come down. We've seen a change in how we calculate ATI for that business interest limitation, and we've changed how we deduct research and experimental expenditures. Honestly, they just couldn't make it all the way through that budget window at that number. Just a quick note on those things that have already changed, we saw a bipartisan bill sail through the House, sail through 83% vote margin, 357-70, I want to say on January 31 this year, and it died in the Senate. Senate Finance Committee Leader Ranking member, Mike Crapo, said, No, thank you. [He was] really confident that he was going to have a majority in the Senate in 2025 and he does, and he now also is able to have a Republican House to work with. One of the questions I get a lot is, do I think that we're going to see that bill be taken up in the lame duck session? My answer is no, I do not. I don't see what the incentive is for Republicans to make the concessions in there with Democrats around the refundability of child tax credit because they've got different methodologies on that. I don't see an incentive for them when they know they're going to run the table next year. April Walker: One thing I know you and I have talked about before, there's in evaluating "pay fors" and revenue raisers, there's the ERC provisions that are in that legislation that you're talking about in the past. I guess that's still potentially on the table ending ERC in January, that's potentially out there. What about tariffs? Tariffs have been suggested as a revenue raiser. How does that work with reconciliation? Kasey Pittman: There are a couple of revenue raisers that have been widely talked about, and I think there's a lot of bipartisan agreement around ending the employee retention credit early, and that's scored, if they use it from the old bill, that's scored around $77 billion. But you have to think that's drop in the bucket when we're talking about $6 trillion, $8 trillion, $10 trillion dollars. But it helps - every bit helps, obviously right? And then there's another one that's clawing back a lot of the IRA provisions, some of those clean energy provisions and semi recently, I think last weekend, President Elect Trump said,"Hey, I'm going to take away this $7,500 EV credit. We're not doing that anymore once I'm president." That's one item, but there are a lot of energy provisions outside of just that. That's the one that I think most individuals know about, but there are a lot of energy provisions outside of that. How they dismantle that is going to be really interesting to me, because there are some proponents who just say kill it all. This is not where our priorities are. There are others and there was a letter, I want to say to Speaker Johnson in the summer, that came from a number of House Republicans, a dozen or so that said, Hey, these are really beneficial in my district. I really hope that we and the language we've heard a lot of here is take a scalpel and not a sledgehammer. That's the talking point, scalpel and not a sledgehammer, to clawing back some of these provisions. I do expect some exploration of clawing back those provisions, and then tariffs. President Trump has talked a lot about tariffs and we've heard a number of things between 10 and 20% across the board tariff rate for anything coming into the country, about 60% on China. I believe we've heard 100% on cars coming from Mexico. What we don't know is and I've gotten a ton of questions on this, honestly. What we don't know is how serious he is about those. Is it an idea? Is it something that he intends to use as a bargaining chip in trade negotiations? Is it something that's going to be applied potentially in a more specific niche, these particular areas? That's what we saw in his first presidency was that it was particular items coming in. We saw it on aluminum, we saw it on steel. Or is it going to really be, does he intend to do it across the board? The thing is that presidents do not have completely unfettered power here, but they have the ability to enact certain tariffs without the consent of Congress. That being said, unless they find a way to write that into the reconciliation bill, they can't use the money they believe they'll generate from the tariffs as an offset to try to get back into that number. Because again, TCJA, $5.5 trillion in cuts, $4 trillion in revenue, if we want to include that in revenue, it's going to have to be present in the bill in some fashion. What I have been reading and researching a little bit, does it have to be explicit or does it have prescriptive or does it have to authorize him to move in that area? I'm still doing a little research there. But anyway, it would have to be in the bill in order to be included in the revenue scoring. April Walker: Lots of items to think about as we're rapidly going towards the end of the year and our listeners are [a lot of] tax partitioners talking to clients. I think another top question I'm sure you've been getting is, what are we thinking about timing? When is this going to happen? When is legislation going to happen? Because we really think it's going to happen, they're not going to let TCJA expire at the end at 12/31/25. But what are we thinking? Kasey Pittman: Speaker Johnson has been very bullish on this and saying he would like a bill coming out of the house, not necessarily enacted, but out of the house in the first 100 days of Trump's presidency. Just if we're going from inauguration day of January 20th, that date would be April 30th. That is a really ambitious goal. There's a number, it's ambitious in ideal scenarios. There's a ton of other priorities as well, including government funding, which as of this moment, is not done, and we don't know if it'll be a continuing resolution or if they'll fund the government through the end of the year. But there are a lot of priorities for this Congress, and one of them is the confirmation of all of President Trump's picks for various administration positions, which is going to complicate this. Because right now, the House Republicans have the generally accepted number is 218 seats. There are five seats outstanding. They could wind up with a total of 223. That's probably more like 221, 222, maybe 220, but probably 221, 222 (See note above for the final results). There are three people from the House that President Trump has nominated. They're leaving their seats, assuming they get this job, Matt Gaetz has already left his seat, and that's going to complicate matters. It's not an easy swap. Speaker Johnson will be working with a very tight majority, like a very razor thin majority in the House until all of that is sorted out, and you've got new policymakers in seat. That's going to complicate things as well, and it's going to be difficult to get to that number. Again, I think that there are a lot of different, even within the Republican Party, even though they believe in the TCJA. They believe it was stimulating. They think that they should extend it. Deficit funding for a large number is going to be really difficult. First, we're going to have to come to that number, and that is going to be a negotiation in and of itself. It's not going to be $10 trillion. It's not going to be, hey, we get everything we want for 10 years. In addition, then they have to figure out how to work with that number. Let's say $2 trillion, I'm just going to throw that out there, $2 trillion, $3 trillion, whatever they've decided on. You can increase the deficit over the budget window by $2 trillion dollars, $3 trillion dollars. I've got 10 years. In my budget window, what am I going to do with it? I could try to find a ton of revenue raisers, and I think it's honestly going to be a mix of these things. I could try to find a ton of revenue raisers. I could try to reduce government spending. I could not put everything in place for 10 years. We could see a bill that comes out for four years. Even though the budget window could be larger, they could say, hey, they're all going to expire after four years because that's how we can get most of our priorities in, and then we're going to kick this can down the road. When they crafted TCJA, it was very intentional. The portion that they made permanent was the corporate rate, there's a much longer planning runway for large corporations and businesses than there are for individuals, typically.That was smart. In addition, the things that are expiring are the things that are popular with voters, lower rates, increased child tax credit. It puts political pressure on the extension of these items. They could do that again because the items we're talking about are by and large, popular with voters. Nobody's looking, nobody raises their hand and says, I'd really love you to increase my tax rate. Personally, thank you so much. I'd like my bill to go up every year. Now, many taxpayers are okay with it and they believe in the methodology of a graduated system, but nobody's personally asking for an income tax increase that I've seen anyway in my practice. They're popular, they could kick it down the road and put pressure on the 2028 election, if they only do it for four years. I'd be interested to see what happens. They could also only enact them partially or phase them out or make other changes. There's a lot to figure out. There are a lot of dueling priorities and there's a lot of money at stake. April Walker: Lots to think about as we move into 2025, but I so appreciate your sitting down with us today, Kasey, and thinking through the scenarios. Very helpful for me. In closing, as we wrap up this podcast, I like to take a little bit of a left turn and think about, hey, we're together, we're taking a journey together towards a better profession in doing that, I like to get a glimpse of my guest other journeys outside of the world of tax. Kasey, tell me about a trip you have planned or a bucket list item you've got on the agenda. Kasey Pittman: Actually, we took our kids out of the country for the first time this summer, and we had a little bit of a larger trip planned and it got delayed because of a couple of years, mostly because of COVID, honestly. It was wonderful. We went to Germany and Austria and London, and we were hoping to add France on there too, but we couldn't because it was the Olympics and it was bananas getting into France. It was absolutely bananas. We are hoping to go, not next summer, but maybe the following summer go back and bring the kids to France. I enjoy traveling a lot, but I think it's so cool to see it through their eyes, too. I think it's really neat because the world. April Walker: I love to do that, too. Traveling is definitely I didn't do it a ton as a kid, and so I try to do it and get my daughter on the road as much as possible. Kasey Pittman: But in the short term, April, I'm going to come down your way. Let's see. I want to say it's the first Sunday of December to watch because on Monday, it is the Women's NCAA soccer championship, which will be very exciting. It'll be our third year and it's in Cary. Unfortunately, the next three years, I think, after that are in California, and we're not going to make that trip. It's probably our last year. April Walker: Yes, you're always welcome to come down to a lovely North Carolina. Hopefully the weather will cooperate. Kasey Pittman: Fingers crossed. April Walker: Thanks again so much, Kasey. Again, this is April Walker from the AICPA Tax Section. 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12/13/24 • 25:22
