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- [00:01]
A
Welcome to the AICPA Town Hall Series, your resource for the latest news and updates on pressing issues facing the accounting profession.
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B
Good afternoon and welcome to the AICPA Town Hall. Today is January 8th, Mark. 2026. This is our first town hall of the year. I know you're allowed to say happy New Year, at least till January 9, I think. So a big happy new year to our town hall community. Looking forward to another good, productive year with all of you. So welcome. Mark.
- [00:35]
A
Yeah, no, absolutely great to be here and excited to kick off the year.
- [00:40]
B
So, Mark. Well, I know a lot of people were well into the work year already and you and I were just with a big group of the largest firms, the top 100 firms here in the United States. And we spent a couple of days with them and we've got a slide here that hits on a couple of the major themes. And these themes are not a surprise, actually, our last town hall of 2025, I think we talked about each of these elements, but just tremendous focus on AI, on really incorporating AI into all parts of the firm. We Talked about how 2025 was when AI moved from experimentation to impact. What we're going to see, I think in 2026, is this AI productivity revolution. It is dramatic. It is dramatic that the opportunities that AI is offering to all areas of the practice and to all areas of finance and accounting. And when you really think about it, it's driving a lot of productivity enhancements, not just efficiencies. We've been thinking a lot about technology over the past decade and it's driven a lot of efficiencies, added a lot of capabilities. But what we're seeing right now is this opportunity to not just you are going to drive additional efficiencies, but to really evolve your service offerings and to drive enhanced value in all areas of the practice. And then I'm going to bring you in here, Mark, for some of your comments in a second. But the final big theme here was the human element, the human in the loop, the judgment required in the tax area, in the advisory and accounting services area, and obviously in the audit area. And in particular, when you think about the marketplace and you think about the mid tier businesses, they do want someone else helping them leverage all of these new capabilities. This whole AI movement is going to in many ways propel the profession to play that critical role for the mid tier businesses and the small businesses to usher them into this era of dramatic new capabilities and new opportunities. So a lot of discussion about the human element, a lot of discussion about relationships. And we're going to have the former Treasury Secretary Michael Faulkner joining us later in today's town hall. And one reason I'm just referencing him is because he really played such a big role for us during the pandemic when we were all virtual and now we're five, six years, three years post pandemic. And relationships are more important than ever. And just that connectivity between the firms and the clients, or if you're in business and industry just inside your corporation.
- [04:00]
A
Absolutely. Within the firms. No, it was a very, very positive couple days with those firm leaders and really discussing AI as something to enhance and augment, not replace. Just a lot of energy around what the profession could be doing for clients that are also starting to see how AI and these new technologies can advance them as we kind of go into these new opportunities in this coming year. And there's going to be a lot, there's going to be a lot for the profession and there's going to be a lot for our clients.
- [04:33]
B
Yeah. And sometimes people, you get frustrated and saying there's just more and more opportunity out there, but this really isn't, it's true. And it's an exciting time, an exciting time related to how businesses operate and evolution of services. The next slide here highlights a blog that just came out of our digital CPA conference, which was in mid December of last month. These topics we had over 1,500 attendees at this event and we summarized kind of some of the key learnings here in this blog. And this talks about just what I was just referencing, moving beyond pilots with AI. And then it also talks about the different areas of the practice, the huge opportunity in the client accounting services area where things are going related to audit and insurance. We've got a benchmarking survey that kind of assesses where firms are today. Big, big, big opportunity in tax. We're going to be talking about the tax area on today's town hall. And there's probably no area that is getting more investment right now with new startups than in the tax arena and just the evolution of firm business models. So, Mark, we've got a great agenda. We're going to kick things off with you in the DC Update. And and then the other topics that we're going to be covering today is we're going to have a discussion with the former Treasury Secretary Michael Faulkinder. And then we're going to have the technical update portion of our town hall. And we're going to close with a session with Dan Snyder and Lyle Benson talking about financial planning and really connecting with your clients during this very critical time period. But let's kick things off here. And we got this very peaceful picture, very peaceful of the Capitol. It is a winter picture. There's no leaves on the trees.
- [06:39]
A
There is not. It's a little chilly in this one compared to the one that's behind us every time we talk in a town hall. So, yeah, I mean, we're entering the second session of this Congress, and you have to think about all of the activity that goes on in Washington and Capitol Hill related to the upcoming elections. We are less than eight weeks away from the first primaries that'll be starting. And so a lot of the activity, whether it's things that are going to happen or things that may not happen, are going to be put through that political filter. That's just the reality. Doesn't matter who's in charge, doesn't matter what year it's been. But when you get to the second session of a Congress, you start to think about reelection. There are a bunch of elements that we're going to be watching related to the politics. There's redistricting going on. There is a significant number of retirements that are being announced that could have a real impact on the outcome. And between now and then, you know, we've discussed in the past these very narrow majorities in both the House and the Senate. And Speaker Johnson's dealing with, you know, some of his members have been out with health issues. We actually had, you know, unfortunate event where a member passed away, which until that member can be replaced, whether they are in Washington or not, they have to figure out how to deal with the votes that they have. So it's going to be a real challenge to get legislation over the finish line because of the narrow majorities and because of everything is going to be put through that political test as what's the impact on the profession. So when you look at the short term, we're going to talk about government funding. We've got another potential deadline at the end of January for a potential shutdown. Everything that's gone on in Venezuela obviously has hit the news. It doesn't specifically impact the profession generally. In business, there may be some impacts. However, it will have an impact on Capitol Hill. They'll be discussing War Powers act and other things. And none of these decisions or votes happen in a vacuum. As you remember, one of the big reasons why we had the longest government shutdown in history this past fall was because of a debate over renewal of those aca, Obamacare, health Credits. They're still trying to figure that out. And there is some discussion of some legislation in a bipartisan way related to market structure which could have an impact on crypto longer term. Again, there are things that they have to get done, must pass certain authorization bills like Defense have to get done each year. That can be an opportunity for legislation to be included in it. Appropriations bills. We're going to get done funding this round and then we got to get to. We'll get into the summer to figure out how we're going to fund next year. So that happens all the time. And again, we're going to be dealing with the same situation we had this past year, lots of hearings. AI is another discussion we're going to be having. So they do seem to have. Here's the good news on this next slide. Eric is positive. There are discussions. Both sides are talking about putting together a minibus. Minibus is not an omnibus, which includes all of them, but at least three of the appropriations bills. And if they can figure out and get a deal for that and get that vote done, that is a chunk of the government funding that will be, that will be at least funded until we get to the end of the fiscal year. And so it's not the entire government. But I will tell you that if they could get this done, get the votes for it, it will narrow what could possibly get shut down if they can't figure the rest out. But it also is a step towards proving that they could get something done, which would include agencies like the irs.
- [10:17]
B
So positive Netflix, Mark, to say the least. It's been a busy news cycle for the first eight days of the year. So this is the headline. There's been a lot of headlines out there. How are you feeling about this? Do you think that this is going to happen? We're not going to have another shutdown with everything else that's going on.
- [10:39]
A
It's tough to make predictions, as you know, but this is trending in the right direction. This is trending towards a resolution. Now, again, there's a lot going on, including what I mentioned about Venezuela. And day by day, different issues can get piled on. However, this is an indication to me that it's more likely that they're going to get funded than not. Now, here's another announcement. We've got a filing date, January 22nd. They're going to open up filing season. Again, this is good news. You know, we are. Everybody is concerned about what, how filing season is going to go. And we're going to talk about that a little bit in a segment. But we are in constant conversation with both treasury and the irs. We know they're working hard in order to make filing season work as well as possible. You know, last filing season we were very concerned because of all of the issues that were going on with the agencies and furloughs and headcounts and actually there were fewer problems than we had anticipated. So we will see again, we're very focused on getting information back to the IRS as quickly as possible. If there are issues, that's how this works. We work very closely with them. We're hopeful that there are as few problems as possible as the season gets opened up.
- [12:00]
C
Eric.
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A
Now here's another issue that we've talked about the last couple town halls. That is a big one and there's a lot of passion in the profession as it relates to it. But in HR1, there was legislation for reform of funding for higher education post secondary. Now, it was very general in nature. That statutory authority went over to the Department of Education. Department of Education started to put forward a proposal that would cap the loans for post secondary. So what they did is they wanted to have two buckets, one bucket at annual limit of 20,500, another one at 50,000. But in order to determine the buckets, they had a professional bucket and then a non professional bucket. They put accountants, engineers and architects in the non professional bucket, which is a huge issue. It's incorrect. It's common sense for all of us that understand that accounting is a profession and we are a profession. I do not believe that the policy goal was to put caps on these federal loan limits. The way they went about it is created this issue. And so we have engaged. Marcos Yell, our CEO has made comments. We've written letters directly to Department of Education. We've been working with the other associations in the accounting family. All of the state societies have sent signed on a letter that has gone Department of Education. We've been in direct conversation with the Department of Education and with Capitol Hill. This proposal, the comments will open up in January. We're continuing to have conversations. We are very hopeful that there is a solution here that will address our concern about not being defined as a profession. So we are working aggressively related to this. There is nothing to do for the town hall community at this point, but at some point we may have a call to action on this. Right now we're hoping that we could get engaged in real productive conversations. Eric.
- [14:03]
B
Yeah, a lot of alignment, a lot of important logos up there supporting pushback on that.
- [14:09]
A
Absolutely. And Congress is involved as well. There are several different legislative proposals that came out very quickly. The proposal by Congressman Lawlor from New York was actually just to move accounting and engineering and architect into the bucket that was professional, which is the higher threshold. And then there were several others. One was a complete repeal of the provisions from HR1, and another one was to just make it one bucket versus two. It's hard right now to handicap the outcome for these legislative vehicles. So, you know, again, we're going to focus on our conversations right now with the Department of Education. Hopefully they're productive. This is also potentially an opportunity to have our voice heard. But again, it's tough for me to handicap after they've just. Just gotten back from. From the holidays to figure out, you know, where we should be putting our effort into. More to come on the legislation. Absolutely. E Now here's tariffs. So it's been another ongoing conversation since this time last year after the election. It really kicked in as it related to this administration and tariffs. We've kind of seen the ups and downs of the negotiations as this has played out. Utilizing emergency economic powers. This has been all through administrative action and executive powers and through this economic emergency, International Emergency Economic Powers Act. So that immediately went to the courts because this was extremely aggressive utilization for all of the tariffs that were imposed. We are hearing that we could see. We may hear something from the Supreme Court as soon as tomorrow. Eric. It's a guess. It's being reported right now. There are a couple ways this could play out. They could uphold that the Supreme Court was in complete authority while using the IEEPA in order to impose these tariffs. They could say that they should be completely withdrawn, or there could be a mix or a narrowing of the utilization of them. It's hard to guess. I would say that the most likely of those three outcomes is that there are some limitations in some of the areas that they were utilized, those executive powers. I will say that there is a backup for this. So there are other statutory authorities that the administration could use to impose tariffs. The reason they used these emergency powers was because they were the broadest, they were the easiest. In order for them to implement, there would be a patchwork of other authority. They would have to do so. Even if there is some limitation coming out of the Supreme Court or even a wholesale overturn, this, the administration does have a plan B. The other part of these conversations that you've heard come up are the idea of, you know, refunds. So Supreme Court throws it out. Do the businesses that were paying for the Tariffs get a refund. We've seen there's a couple examples in history where there have been some narrow refunds, but nothing as significant as what we've seen. And it's hard to figure out how, what that would look like. There would definitely be a process, an application process of how they would do that. At the same time, again, the administration would be trying to figure out how they could utilize other powers. And then this idea of a taxpayer rebate spreading some of the revenue from the tariffs to taxpayers through rebates. Again, there are challenges there with the amount, how best to utilize that revenue. You know, there have been discussions of how they could use it in other funding priorities or even to pay for some of the, of the tax cuts from the last bill. I will also say that Congress is reasserting some authority. All of this has been done through executive orders and executive powers. Congress also has the power to impose tariffs. So there is some pushback coming in a bipartisan way from both the House and the Senate, Republicans and Democrats. Is it enough? Probably not. But it's starting to send a message, particularly going into this election season, that Congress wants to be back in the game when it comes to tariffs.
- [18:21]
B
So plenty for us to continue to watch. So we opened up talking about AI and we'll, we'll close this session with a little crypto and AI update.
- [18:30]
A
Yeah, you know, I mentioned this market structure bill and there is there it's going to be going through committee here shortly this month. And one of the provisions that's added to it had previously been the Clarity act, which really kind of resolves the jurisdiction between the SEC and the cftc, see, as it relates to crypto. And so there's some clarifications that we'd like to see related to the responsibilities for CPAs doing audits and then looking at the reserves related to stablecoins. So we're watching that closely. It's hard to tell right now. The outcome is very uncertain as it relates to it moving through committee. There's bipartisan interest, but there are some challenges as well as that moving forward. And then AI, there had been. This is primarily about this concept of a moratorium on states moving forward. Eric. There had been an effort in HR1, there had been an effort in the defense bill. There's an executive order out right now that puts the moratorium out there. The states are definitely going to challenge this in the courts. We'll see how that plays out. The administration's put together a task force to bring in engineers to try and build a framework. They're doing a lot of investment in trying to stay competitive with China. That is really the program here is to figure out how to stay competitive with China and to be the world leader as it relates to AI.
- [19:52]
B
Well, Mark, I mean, we've got another slide that we're not highlighting today, but that just shows the level of investment in the United States is far ahead of any other country in the world. So it is. It is. I think the US Is leading and, you know, there's a lot of efforts to make sure that that leadership position is held. So let's we've got a lot to cover here today. Mark, that was a great update. Let's bring up the former deputy secretary of US Treasury, Michael Faulkinder, who is a very good friend of the AICPA town hall, somebody who was with us when we started back in the spring of 2020. Deputy Secretary, I'll let you know that back then we had a viewership of around 3,000. I think today I'm getting some reports we might be hitting a a record level, close to 15,000 viewers online with us today. So it's almost a cable news show. So welcome.
- [20:50]
D
It's a good warmup for me going on Larry Kudlow show right after this.
- [20:54]
A
Oh, that's great.
- [20:56]
B
Well, here's his bio. He also served as acting commissioner of the IRS last year. He was in the first Trump administration as the assistant secretary for economic policy. In that role, he really was the key architect of the PPP program, which helped keep millions of businesses intact. And many of all of the firms played a key role in that. So let's get right into it with you. There's so much to talk about. We do want to get your insights on how you're thinking about the economic outlook for 2026. There's some very interesting economic data that came out today just with the trade deficit hitting a low since 2009. But before we get into that economic discussion, let's talk a little bit about the irs. As a former acting commissioner, and I know you were heavily involved in thinking a lot about the modernization of the irs. So maybe comment a little bit on the state of the IRS and then some of the thinking behind the modernization effort that you were leading in 2025.
- [22:13]
D
Yeah. So it's great to be with all of you. One of the things that was, I think, ultimately a benefit of the fact that I was both deputy secretary and acting commissioner at the same time while we were negotiating the big beautiful bill is that implementability was at the forefront of our conversations. And so whenever we were negotiating provisions of the bill with Congress, I was already putting on my IRS hat thinking, okay, what are the issues we're going to have when it comes time to implement it? So even though we only had six months this time to implement a very comprehensive piece of legislation, the fact is, is that IRS got started on it as soon as we had draft text coming out of the House Ways and Means Committee to start thinking about, you know, what are the processes, what are the forms, what are the systems that are all going to have to get changed. And that's why I was very happy to see the announcement come out that tax filing season is going to start in full in January, just as it normally does, so that the American people are going to have a full season to do it. And, you know, I'm getting ahead of myself a little bit as we think about the economic prospects. But just I think people in this, in this town hall understand why when the secretary says tax refunds are going to be so much larger this year, it's because we did not change the withholding schedules. Right. And so whether you think about no tax on tips, no tax on Social Security, no tax on overtime, those taxes still got withheld, and they're going to show up in the form of a refund. Now, part of that was because we hadn't yet put out the rules. And so you couldn't change the withholding tables if you didn't yet know the eligibility criteria and the rules. But also, just from an implementability and a feasibility standpoint, it made sense to do them as part of the refund process rather than try to mess with holding tables mid year. That means that there are going to be much larger refunds than normally has been the case. And we think that that's going to be beneficial towards economic growth in the first half of this year. With regard to the modernization, Eric, you and I have had this conversation on a number of occasions. This is where I think that the Doge team did good work. Despite their inability to really explain to the American people and to Congress what was going on. They came in and brought some fresh thinking. As many people on this town hall probably know, the Modernization up until 2025 was really focused on taking literally millions of lines of code that's in languages like Fortran and assembly language, and trying to bring them into more modern languages. Well, we don't actually need to do that anymore, because with artificial intelligence, what you guys were just talking about, you can actually have AI reprogram old code. So maybe humans don't know how to program in those languages anymore, but AI does know how to program in those languages. And so we actually don't need to update code that essentially works. Instead, what we did is completely shift the focus of the modernization to get systems to talk to each other, to have an overarching API where all of the information was simultaneously available for any of you or any of your clients that have ever had to sit on the phone with an IRS customer service agent. You know that a significant portion of that time is spent literally reconstructing the tax filing, because that information gets spread across about 18 different systems every time Congress created a new program within the tax code. What the IRS did essentially was create a new IT silo that didn't talk to the existing systems. If you would have somebody file a somewhat complex return that hits lots of different programs, the information would be piecemeal in lots of different places. And the agent has to go into each one of those individual systems, find the information, and then reconstruct it all together. Instead, the focus of the modernization is to create a uniform API that reads all of the systems at the same time so that you can essentially quickly reconstruct the filing. And what that means is that we're going to have enormous change in how quickly our customer service agents can access that information, but also in terms of what kind of platforms are going to be available@irs.gov so that there's more self service of a number of these questions. And finally, let me say about the modernization, you know, I've said in a number of audiences, while there are many computer systems of the federal government that have to be custom built, financial services systems are not one of them. There are a lot of. There are a lot of available systems that are provided for banks that are provided for, you know, accounting platforms that are easily modifiable and can be used by agencies like the irs. And so what we have been doing and why I'm so happy that the head of the Social Security Administration has been named the CEO of the IRS is because his background is that of a chief operating officer of a regional bank. And if you think about regional banks, they became regional banks because they were combinations of lots and lots of lots of community bank mergers. And what that means is that anybody who understands the operations of a regional bank knows that they have to consolidate lots of different computer systems altogether to provide modern financial services. So somebody who comes from that experience is very well positioned to lead the IRS at this time of modernization.
- [27:55]
A
Michael, one question on that so obviously rewriting code was going to take forever. What you have described putting something over the top that can, can do it for us. I know this is a finger in the wind, but what does a timeline for that look like? Obviously it's much shorter than rewriting code, but are we years away?
- [28:17]
D
Okay, so I will give you the same line that I gave a number of times when I was Acting commissioner for 35 years, the IRS was five years away from its IT modernization. We will not say that in the 36th year. The plan was to get it done by the end of this term. So by 2028.
- [28:34]
A
Great, thank you.
- [28:36]
B
It does seem with this advent of AI and in some cases putting the right people in the right positions, that you really could make an impact over the next couple of years. This is really exciting and it is. AI is completely changing how code is written in. Your earlier points make lot of sense, but let's now move to have a little bit of an economic outlook discussion. You can start where you'd like to start. You want to start rates, inflation, the recent economic data about the trade deficit, or even the price of oil. So I'll let you lead this.
- [29:18]
D
Sure. So when I think about the things that need to be done in order to generate economic growth in a low inflation environment, it really is unleashing, unleashing industry here in the United States. And so the deregulatory agenda that the administration put forward, and, and you know, you just, we just discussed one of them, which is artificial intelligence. The administration has taken a much more approving approach towards AI. Very much wants this nation to lead at it. And that means two things. Number one, providing a regulatory environment where people can develop AI applications. But then number two, having the energy infrastructure that's necessary. When I talk to people about the constraints on AI, it's not so much hardware, it's not so much software, it's the availability of energy. Unleashing American energy is really critical to building out the capacity to fully unleash AI without massively raising electricity prices for consumers. And so I know that the administration is very focused on, on that right now. But as you said at the top of this, of this town hall, Eric, AI is critical towards realizing productivity improvements, not just in the accounting sector, but across the broad economy. And as you saw with the GDP numbers that we got recently, for the third quarter, we got 4.3% economic growth, despite there not being a lot of job gains. So you might ask, how can the economy, how can we produce 4.3% more stuff if essentially the same number of people are working. And the answer is we're becoming a lot more productive. So it is critically important, as we have an aging population, that we make our, that we provide the tools so that the workforce can continue to grow in productivity in order to keep our economy expanding. And that means really unleashing AI and improving the education system so that people can do it. So I'm pretty bullish about how quickly AI is going to be adopted by industry and the speed with which we're going to see productivity improvements. Second, you know, also you said energy prices are coming down. You know, it will be interesting to see how quickly some of that Venezuelan oil can be brought back online into the global oil market. But you've already got oil prices, you know, in the mid 50 range. And so that means that, and that is the base price that's going to go into gasoline. So that's very helpful in terms of bringing down energy prices. And what a lot of people don't realize is it's not just the piece. Our budgets are not, our personal budgets are not just impacted by the amount we pay at the gas station. But think about everything we purchase that has to come to the stores. The transportation costs of getting it there, the manufacturing costs that are impacted by it, food costs. One of the biggest prices, one of the biggest costs that farmers have is fertilizer. Well, what's the biggest input into fertilizer? It's natural gas. So bringing down the prices of oil and gas are going to have impacts that permeate the economy and be beneficial there. I already mentioned the fact that tax refunds are going to be larger. And so if you think about the middle class, they have high debt burdens right now. So kind of a positive surprise or a nice tax refund is going to help them out to maintain the consumption piece that's really driving their activity right now. And then finally, as you said, we're going to, we're going to get some clarity on the tariffs either way. So you know, anticipating a decision by the Supreme Court, as was already mentioned, there are some backup plans, but they are going to have to be more narrow. So the IPA authorities allow for, you know, pretty much any product, any country for the imposition of a tariff. If you go a 232 or a 301 type authority, you have to link it towards some kind of anti competitive activity that's going on by the country or you have to link it to some kind of national security interest for that particular industry. Those require more process in order to be able to utilize those authorities. And then when they're utilized, they're more narrow. But ultimately, we are going to get some resolution on what tariffs are going to be, and that also is going to be helpful. So overall, I see there being a lot of tailwinds coming into the first half of 2026. And so I think we're going to continue to see pretty strong economic growth leading into 2026.
- [33:52]
B
So, final parting question, just on rates and the new Fed chair coming in.
- [34:01]
D
I mean, I, I am totally biased here because Kevin Hassett has been a friend and mentor for a very long time. I think he would be an outstanding Fed chairman. I also think that when, when the President looks back on what he probably thinks was his biggest mistakes of the first term, I would say he thinks that naming Jerome Powell as Fed Chairman was one of his biggest mistakes, and that's because he didn't know him. And so I'm hesitant to think that the President's going to go with anyone for Fed chair that he does not know. And so that, again, puts Kevin Hassett pretty high, if not at the top of the list of where I think, who I think the President is going to select.
- [34:44]
B
All right, well, thanks, I mean, thanks for being on with us today for, you know, the work you did with us during the pandemic and the people PPP program and continuing to staying, staying connected to the profession. We appreciate the partnership.
- [34:59]
A
Thank you.
- [34:59]
D
Absolutely. The work all of you do is essential and making sure that we have a successful tax filing season. Everybody on this call is critically important to realizing that. So thank you for helping us get this filing season going, despite all the changes that were necessary from implementation of the bill.
- [35:19]
E
Great.
- [35:19]
B
Thank you. Thank you.
- [35:27]
A
So.
- [35:28]
B
Oh, we're ahead. Let me say we're ahead. A couple slides here. So Mark here now while you're getting.
- [35:33]
A
There, I'm going to introduce Daniel Hoffey, who is a senior manager here in the Washington office. He's a senior manager focused on a lot of the issues we're about to talk to. It's nice if I mention the code, it's nice to have him right next to me because he's definitely, definitely one of our technical experts. And so, you know, Dan, let's get you started with the next slide.
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C
All right.
- [35:57]
F
Thank you. Thank you for having me. So we'll begin real quick with an update or a recap on the car loan interest deduction. So a couple quick rules. The loan must have originated after December 31, 2024. It must be from a qualified lender that doesn't include friends and family. Refinanced loans are eligible subject to certain restrictions. There is an annual deduction limit of $10,000. This is available for itemizers and non itemizers. So on the next slide. The reason for this recap is that on the next slide so on December 31, the IRS issued proposed regulations on the car loan interest deduction. So it provided a couple detailed definitions and standards. One of them is the 50% personal use test which essentially says that the vehicle must be used at least 50% for personal use. It defines when original use commences. It states that final assembly is determined through the VIN or the vehicle label. It provides that VIN reporting is reported on Schedule 1A. And it also provides special rules for mixed use vehicles and the allocation of those interest payments between the personal use and the between them for the mixed use vehicle. Now on the next slide we have three disaster relief updates. So the first one is Washington State. There were storms on severe storms on December 9th. Taxpayers that were affected now have until May 1st. The last town hall we mentioned, HR 1491 had passed Congress. It has now been signed by the President. Just as a recap of what that does for taxpayers that were affected by that did have a postponement period due to a disaster. The IRS was disregarding that postponement period for purposes of filing refund claims, claims for refunds and credits. This act adds that back in.
- [38:09]
A
And.
- [38:09]
F
The effective date for this is the date of enactment. And then also we still have a lot of room left for disaster relief improvement. So we just submitted a comment letter requesting that the IRS implement an automated determination process for section 1033 extension requests. This automated process would provide a great deal of certainty to taxpayers. Then on the next slide we'll move on to digital assets. So 2026 is going to be the first year that brokers will be issuing those 1,099 DAs. Last town hall, we mentioned our digital asset tax framework that is now available online for our Tax section members. There's an excerpt that's available for all members. This framework really provides the ins and outs of the 1099 DA reporting regime, but also a lot of excellent practical, practical tips. Like even even though a transaction may not be reported on a 1099 DA, it still may need to be reflected on the taxpayer's tax return. Separately, the House released a discussion draft on the taxation of digital assets. So why is this important? It's as you review the 1099 DAs, note that these issues are generally unsettled. So for example the wash sale rules, the qualified appraisal exception for charitable contributions, those not apply to digital assets. On the next slide we have an international tax update, the pillar 2 side by side Package so Treasury Secretary secured an agreement from the Group of Seven allies in June to exempt American companies in exchange for removing that revenge tax provision from an initial draft of HR1. The agreement effectively exempts U.S. multinationals from most BEPS 2.0 pillar 2 global minimum tax rules in recognition of U.S. minimum tax rules. The agreement blocks other countries from imposing additional taxes on foreign subsidiaries of U.S. multinationals to compensate for profits that are undertaxed. And the package has five components including a series of simplification measures to reduce compliance burdens on multinational companies and the treatment of tax incentives. It also includes a new safe harbor for certain substance use based tax incentives like the U.S. r&D credit. Next up, we've got our Tax Round robin. First we have our annual Tax Compliance Kit with updated checklists and organizers that's now available online. There are even more resources on the way. This is available only for our Tax Section members. I'll move on to the next one. If you recall the erroneous CP59 notices from May of last year, you may be seeing those again for extended 2024 joint returns as the IRS systems may not be picking up that secondary Social Security number. The transcript should be correct and practitioners can call the IRS to resolve that erroneous notice issue. We are in touch with the IRS on this and we'll continue to keep you updated. And then finally, we have a free interactive Q and A roundtable on reimagining your tax practice. So please join our leading tax innovators on January 21st at 3:00pm Eastern Standard Time to explore practical strategies to get the year off to a great start. Note that CPE is not available for this. Then we have a couple updates for our ANA audience. The AICPA released some technical questions and answers or TQAs on how HR1 affects tax accounting under FASB ASC 7. So for interim disclosures, the TQA discusses how tax expense should be reflected in the interim period that includes HR1's enactment date. It also provides some great examples of that impact so AICPA members can access these TQAs via the link provided. Then on the next slide for our ANA audience, along with valuation specialists, we updated our Valuation Guide and we're in an open comment period until June 1. The guide covers valuation and accounting for privately held company equity securities issued and issued as compensation. This updates are 2013 edition with best practices and new GAAP guidance. If these updates are of interest to you, please check out the QR code on the slide for information on our monthly A and a Focus Webcast series which is included with your membership. The next Webcast is on February 4th at 1:00pm Eastern Time and that wraps up the tax technical discussion.
- [42:59]
B
Well Daniel, thank you very much for covering all of those different items and we've got a couple of questions but I'm going to get to those during the a couple of them during Open Forum. So thank you. And with that I'd like to move to this planning discussion that I referenced earlier which Dan Snyder will be leading with Lyle Benson. And I'll let you Dan, introduce Lyle, who this audience I think knows well as one of the founders of the PFP Conference.
- [43:31]
G
Excellent. Thank you Eric. Appreciate the time on here. So before we get into the deep into 26, it's a great time to take a step back and look at some of the critical planning ideas and things we need to be talking about. So our guest today, go to the next slide. Our guest today is Lyle Benson. He's the founder and president of LK Benson and the key point here is CPA financial planning firm that does tax and financial planning as well as investment advisory. He's been a past chair of our executive committee. So he's well versed with all the things that the efforts that we do from a planning standpoint. And he has been the co chair of both the Summit and new PFP symposium. So welcome to welcome Lyle.
- [44:11]
C
Thank you Dan. Thank you Dan and Eric, I appreciate being here and look forward to catching everyone up on some of this.
- [44:16]
G
So let's jump right in. You know we want to look at a variety of categories and let's start with tax planning and you think about for individuals what's top of mind when it comes to planning for this year.
- [44:26]
C
I think the things that really come to mind obviously we've got the big tax bill from last July 4, HR1 and there are so many provisions in there that I know we're all worrying a little bit about how we integrate that in to the planning that we do and obviously the compliance work that we do as well. I think the important thing is it really you need to take a look at all clients, each client think about their situation, really do the projections and it becomes so important to do multi year tax planning as well to really incorporate all of this into the planning. One of the challenges I think in HR1 is that there's so many different levels where different things phase out, phase in and so forth. That you really using technology is really important to help you think through that and help you understand the impact on any individual client as well.
- [45:15]
G
Yeah, I think, I think the whole idea that multi year, multi generational is the norm and it's just what's expected to get the biggest benefit out of the tax side of things there.
- [45:26]
C
So it really gives you the opportunity to look at a client from a longer range perspective and a broader family perspective as well, and look for opportunities where tax rates might be lower in a given year, where you can do a Roth conversion, or where you can recognize capital gains in that donut and that zero capital gains tax rate either for a client, for a client's parent, children and so forth. And weaving all that together becomes a really important part of the planning that we do with clients in the income tax area.
- [45:54]
G
And I think it's really important that CPAs lean into that piece of it because tax planning is a huge discussion when it comes to investment advisors, non CPAs and the ability to be able to connect the dots over multiple years and multiple generations can really set us apart. Let's jump into estate planning. You know, we tend to categorize clients to help kind of keep things straight when it comes to legacy and estate planning.
- [46:17]
C
What?
- [46:17]
G
Talk a little bit about that.
- [46:19]
C
Yeah, I think it really. With the high federal estate tax exemption that we have now at $15 million a person, $30 million for a married couple, it becomes important to think of your clients sort of in different buckets, if you will, those that are over the $30 million level. There's still a lot of planning, a lot of really good tools out there that you can be using to help reduce their potential federal estate tax. The ones at the lower end of the spectrum that don't have any federal state tax to worry about, possibly don't have any state estate tax to worry about. They sometimes we tend to overlook them and not think about estate planning for them, but for them it comes down to getting back to basics. You know, making sure their documents are current, making sure they've got beneficiary designations appropriately set up that weave into the planning. Making sure they've got custodial guardians and other folks that are the right people in different roles in their estate planning. It's that group in the middle, that 10, maybe 15 million to $30 million kind of net worth client that is in a unique position. Because in all likelihood that's very possible that the estate tax exemption could be reduced in the future. If it is, they're going to be subject to estate tax. They may be subject to state estate tax already. And they're also in a position where they probably aren't able to push a lot of wealth out because they may need that for their own needs. So you have to go through that asset sufficiency analysis before you go through and talk about any aggressive estate planning. But I think that's how we think of our clients groups, sort of in these different buckets, if you will.
- [47:49]
G
And I think it's helpful for the broad audience here as they do think about those buckets is kind of categorizing and having a system in place of when you're talking to a client, mentally put them into the bucket and making sure you're covering those bases. Because the risks associated with these various areas I think is critical. And the CPA planner can bring those risks out and have some great discussions. You think the low end you mentioned, there's no the low end side of things. They don't have that issue, but they have the issue. They still are going to want to send their money and send their assets to the next generation and they want to do it efficiently. So great points there.
- [48:28]
C
Exactly. I think about their legacy as well. Go ahead, Dan.
- [48:30]
G
Yeah, so shift over a little bit to the idea of charitable and giving because it's not just legacy, it's what do you do during your lifetime too?
- [48:38]
C
I think a lot of our clients are very focused on charitable causes and wanting to give back to their communities. They've been successful, they've built wealth and they want to do that. And in a year like we've had the last couple of years where the investment markets have done very well, that creates more of a need to focus on doing that when asset values are high. Donor advised funds played a key role in our planning over the last couple of years and especially last year with the strong markets, qualified charitable distributions from IRAs. Trying to help clients think about how do I best meet my charitable goals, what are my charitable goals, what do I want to benefit, what's important to me? And then what's the best way from a tax efficiency standpoint to accomplish that. There's so many different ways to approach it. And many of our clients want to do that during their lifetime. They may have some estate, they may have some charitable giving in their estate plan, but their primary focus is they want to give the charities where they can see the benefit during their lives.
- [49:33]
G
And this is where tax planning comes back into it again. Because of all the different vehicles that are available to them. And trying to address the timing as you shift and you think about during their lifetime, it would kind of naturally go to some of the kids and the education. You think of education planning when you think of your children. And with the new HR1 bill, we have the student Trump accounts and some of the options that that brings to the table as well.
- [50:00]
A
Yeah.
- [50:00]
C
And I think that really, you know, to me the biggest thing, the Trump accounts aren't a huge dollar amount in terms of the overall planning, but it really does shift the emphasis to lifetime savings and starting early. And that can get you set up the conversation with clients about why it's so important to start saving early for children, start to accumulate money. The power of compounding. We can go through that kind of and have that kind of discussion and really be meaningful for clients, you know, than their children. And I think clients, many of our clients are focused not just on the education, but helping their children and grandchildren have a good foundation to start from. So 529 plans can be a great tool for that, as can Roth iras when the children are older enough to have some salary and some income. But I think it's just getting that discussion going and educating clients about it is such an important part of the process.
- [50:51]
G
Yeah. And I think that broader conversation allows the opportunity for parents to kind of think about what their family values are and then how do we transfer those to the next generation in an effective way. And, you know, using some of these tools to be able to do that. We are going to be coming out with a Trump account guidance that's going to give more details. The notice 202568 has come out and comments and that'll increase over time. Why don't we jump to retirement planning? With so many baby boomers and even Gen Xers now starting to retire or finishing retiring, when it comes to boomers, it's a real change in mindset right from I've been saving for my entire life and now I'm going to be spending. And that's a hard shift sometimes. It's a great discussion with clients.
- [51:42]
C
And that's where I kind of go back to what Eric said at the beginning of the town hall today about the human element. We can run the projections, we can show clients where they stand. We need to go through that kind of analysis, but we need to be there to talk them through this, to help them understand the mindset and the fact that they have enough to accomplish this and that it's comfortable. They can spend down those assets. So being the human in the planning process is really what makes personal financial planning so important. So I think that's an important element to keep in mind. And I think any CPA that's helping clients with any aspects of their personal finances can really make a difference. There's so much technical planning around retirement. Where to take money from what asset basis, what what asset pools to take it from asset location. As you accumulate to retirement. Do you do Roth conversions or not? You know, the window before, before required minimum distributions start sometime presents some very low tax rate years. So taking advantage of that again, that's why that multi year tax planning becomes so important. But weaving all that together, a Social Security, Social Security decisions on when to take Social Security, wait till 70 and get the full increase or not. You know, all of that comes into play. But it also has that personal aspect to it that you've got to listen to your clients and really understand what their concerns are and where they are.
- [53:03]
G
Yeah, and I think like you said, life events are really going to drive some of these conversations. So they'll be bringing these topics up to the, to their CPAs and advisors. So it's really important to kind of understand how these life events connect to some of these different planning strategies we've been talking about. As we wrap this up, let's just hit one point under investments. That idea of. I know many of our folks here may not handle investments directly, but this concept of aligning the client's feelings or their fears when sometimes to get the retirement done the way they want, what's in their best interest and having that discussion, it's a challenge there as well.
- [53:40]
C
It really is, really is. And CPAs, even if you're not helping the investment area, as Dan mentioned, not directly involved in the investment area, being that sounding board for clients and helping them put it in perspective, stepping back, especially after strong years in the market and more importantly after bad years in the market, you know, that communication becomes so important to have somebody they can turn to and help put perspective around that as well and tied into their personal financial situation. You know, many clients called us when the 2008, 2009 downturn, very worried about their portfolios, but yet they had three years of cash reserves sitting there. They were maybe 50, 50 stocks and bonds and they really weren't as impacted as they thought. But the headline news made them scared. So we play a key role in that regard.
- [54:24]
G
Yeah, kind of that weight of that keel in the sailboat that keeps them from going one way or the other. Right. So it's a great, great situation. You know, these conversations, all these conversations we've been talking about are critical to being considered the trusted advisor and not focusing on one area. So connecting the tax planning that we're so good at from a CPA profession standpoint, connecting those conversations with the client's goals and dreams is a hallmark of what being a CPA financial planner is all about. It's not about the investments, it's about the planning. If we can go to the next slide, we can just, I just want to hit real quick some of the resources that we have available to us. We've obviously, we've got the Planning After Tax Changes landing page we talked about on Town hall in the past, as well as the section for PFP and Tax. But there's three that I wanted to bring to your attention. One is the topics we've been talking about. Coming up in the end of January, Lyle is going to be leading a panel discussion that dives much deeper into all of these topics in a webcast. So I encourage you to take a look at that. We have at the end of January, we also have our personal financial planning symposium, which takes a lot of these topics and puts them in a discussion point where it's a meeting where everybody's together. We can talk about that, and experts in getting peer impact and peer responses on that. So it's a very, it'd be a very good time to think, kind of hear what other people are doing. And the last one is, if you remember, our HR1 masterclass in the that the tax and financial planning volunteers have heavily contributed to. We have a new one coming out again at the end of January, which is turning guidance into action. There's been guidance in a variety of these areas, and we'll have some of our familiar faces that have been talking about this stuff back in front of you and being able to do that. So take advantage of these QR codes and see what fits in your situation. And I think there's some great, great areas there. So, Lyle, thank you for your time here. And we'll be back with the next step here.
- [56:25]
B
Okay. Well, let's bring Mark Peterson up as well. Great dialogue today. Lots of questions coming in. One just kind of clarification. I think we, you know, we might have thrown out January 22 instead of January 26. The opening of filing season is what in the press Release there, Mark Peterson, 26th, 26th, January 26th, January 26th. We apologize if someone said January 22nd. It's the 26. Mark, also, you know, your team, you work so hard down in Washington D.C. to be bipartisan. I know today we had somebody who was part of the current administration. We work all the time with the other side, the Democrats. And we can have. And what we always want to do is just understand, understand what these government officials are trying to do.
- [57:17]
A
No, it's a challenging time and there's a lot of passion around this. We've worked with both administrators. I mean, my career, I've worked with both administrators. I've worked with administrations on both sides of the aisle. I've worked with Congress. I worked with divided Congresses. We're headed into an election which could create a divided Congress. The profession has incredible credibility. But we work with whomever is in charge and we talk to everybody and that's how we advance the things that are the most important to the profession. And we try and understand. Again, it doesn't mean that we are for or against either side. What it means is that we're for the profession and advancing the initiatives that are important to CPAs and our clients.
- [57:57]
B
And Mark, last week or this week we were with the chief accountant, Sec. Kurt Hull, and he's just a great representative of the profession.
- [58:05]
A
Yeah, Very interested in what we had to say and listening. Really good example of whether it's the SEC on the audits or the IRS on tax. They want to know what the profession has to say. It doesn't always mean we agree, but they want to understand what we're doing and how what they're doing impacts us.
- [58:26]
B
Dan, I don't know if you'll be able to address this. If you can, we can always do it in the newsletter, but there's a number of questions about the CP59 notices. Can they be disregarded?
- [58:39]
G
Dan? Okay, go to Dan, Sorry.
- [58:42]
C
The other day. The other day, yeah. So.
- [58:44]
F
So right now we're still trying to reach out to the irs. We're still in contact with IRS and asking what the appropriate remedy is. But they did say that you can call and they will try to resolve the issue via. Via the phone.
- [59:00]
A
And we can further communicate.
- [59:02]
C
Yes. Yeah.
- [59:04]
B
Well, that. Thank you very much for today's participants on the town hall. I'm now going to move to our closing slides with resources. We've got this great map survey that we really encourage you to take advantage of. You can leverage this through these QR codes and links. We also released an audit transformation report. 50 plus firms provided a lot of detailed information related to their audit practice. This was an agnostic survey. Really talking about how they're looking to transform those practice areas. We also are the AICPA is launching a technology survey here. This is being led. It's in the audit area. It's being led by the Auditing Standards Board. So here's information related to that survey and a link to participate. Here's the upcoming Town Halls Today actually, we kicked off 2026 with a record attendance, so greatly appreciate all of you joining us. The next town hall will be on January 22nd. I think Marcosial will be joining us for that session and here's the resources that you can leverage related to the town hall. You will see our newsletter coming out next week and we also do an archive rebroadcast on Mondays following the Thursday town Hall at 1pm so hope you're all having a good start to 2026 and look forward to a good year with you. Thanks for your attendance today.
- [60:46]
A
Thank you for your participation. You can also subscribe to the AICPA Town hall series on your favorite favorite podcast platform, as well as watch archives on YouTube and find resources@cpa.com Townhall Tune.
- [61:00]
B
In for live broadcasts Thursdays at 3pm Eastern Time.
- [61:07]
E
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