AICPA Town Hall: Economic Outlook, BOI News, and Reflections

Podcast: AICPA Town Hall
Date: December 19, 2024
Hosts & Guests:

• Erik Asgeirsson, President & CEO, CPA.com
• Susan Coffey, CEO – Public Accounting, AICPA
• Barry Melancon, outgoing CEO, AICPA
• Lisa Simpson, VP Firm Services, AICPA
• Marcy Russell, Economic Forecaster and former CNBC Chief Economist

Episode Overview

The final AICPA Town Hall of 2024 tackled three main areas:

1. An in-depth economic review of 2024 and outlook for 2025 from economist Marcy Russell.
2. A comprehensive update on the Beneficial Ownership Information (BOI) reporting requirement, including legislative, regulatory, and legal developments.
3. Reflections and parting words from outgoing AICPA CEO Barry Melancon after three decades of service.
   The episode featured real-time responses to late-breaking legislative news and audience questions.

Economic Outlook with Marcy Russell

Segment Start: [03:15]

2024 Review

• GDP Growth: U.S. GDP grew by over $1 trillion, with estimates indicating Q4 growth above 3% (above the 2.5% trend rate).
  • "The economy right now is growing faster than trend. So this is relevant for the Federal Reserve’s policy decision because...the economy is clearly not in recession, it’s in expansion." – Marcy Russell [05:19]
• Unemployment: Rose from 3.7% to 4.2%, indicating a slight deterioration despite strong GDP.
• Inflation: Dropped from 3.1% to 2.6% but did not reach the Fed’s 2% target.
  • Services inflation remains stubbornly high, running at 3-4%, while goods inflation has dropped significantly.
  • "If you break inflation down...service inflation is running at a much faster clip right now than goods inflation." – Marcy Russell [07:33]
• Federal Budget Deficit: Deteriorated to 6.4% of GDP, much higher than the generally sustainable 5%.
• Federal Reserve Policy: 2024 was “the year the Fed cut rates”—100 basis point reduction, now at 4.25%.
• Housing Market: Flat year due to sticky high mortgage rates, discouraging both new buyers and sellers.
• Stock Market: S&P 500 rallied over 20%, reaching new highs, especially post-election.

2025 Outlook

• Four anticipated economic pillars of the new U.S. administration:
  1. Tax cuts
  2. Deregulation
  3. Tariffs
  4. Escalated deportations
  • "Markets are anticipating pretty big tax cuts in 2025 and a lot of deregulation..." – Marcy Russell [14:15]
• Markets suggest growth will remain robust, but bond markets price in elevated inflation risk due to labor force shrinkage and tariffs.
• Caution on predictions: "I don’t really believe one bit that it makes any sense right now to be forecasting eight months into the future. I think best you can do is forecast into the next maybe eight days at a time like this." – Marcy Russell [15:27]

Audience Q&A

• Inflation “feels” higher than reports: Marcy clarifies that individual experience varies, especially due to elevated service inflation and sector-specific price rises (e.g., auto insurance).
• Housing: Monthly volatility exists; year-over-year numbers are key for perspective.

Business Optimism

• AICPA’s recent CEO/CFO survey shows optimism spike going into 2025.
  • Still, concern remains about deficit sustainability and rising interest rates.

Notable Exchange

• “I don’t worry about [the deficit] until financial markets worry about it.” – Marcy Russell [20:30]
• “When we talk about deficits... there are a lot of obligations... Social Security, Medicare, Medicaid... that add way higher percentage from our debt.” – Barry Melancon [21:39]
• “We are incredibly rotten at forecasting future deficits.” – Marcy Russell [22:47]

BOI (Beneficial Ownership Information) Reporting Update

Segment Start: [24:21]

Legislative & Political Developments

• Turmoil in Congress: A key bipartisan funding and disaster aid bill disintegrated, endangering a one-year BOI reporting delay extension.
  • "If anything is in [the continuing resolution] other than just pure funding... BOI remains pretty high on the likelihood stage because it does not actually have a funding issue to it." – Barry Melancon [34:37]
• BOI delay enjoyed broad support but is now at risk due to wider political gridlock.

Legal Landscape

• Current national injunction: A court ruled BOI enforcement unconstitutional (NFIB case), but DOJ is aggressively appealing with a December 27 decision pending.
  • "They are claiming that the injunction will inflict irreparable injury against the government." – Lisa Simpson [33:03]
• Advocacy ongoing for a clear “window of opportunity” if the injunction is lifted, instead of sudden enforcement.

Reporting Timelines (If Delay Passes)

• Entities created before Jan 1, 2024: Filing delayed to Jan 1, 2026
• Entities created in 2024: 90 days to file BOI report
• Entities created in 2025 (under current rules): 30 days to file
• Updates/corrections: 30 days

Practical Guidance

• CPAs should keep clients informed about the evolving situation but prepare BOI compliance materials in case regulations are enacted or enforced suddenly.
  • "If you or your client are fine and want to go ahead and get [BOI filing] out of the way, they certainly can." – Lisa Simpson [50:37]

Audience Questions

• Why not repeal BOI entirely? Not realistic due to global anti-money laundering efforts; best possible is delay/improvement of implementation.
  • "The pursuit of perfection is the enemy of progress." – Barry Melancon [41:27]
• Should I file now? Not prohibited; clients can file voluntarily during injunction.

Technical & Practice Updates

Segment Start: [44:05]

Recent Technical Changes

• Disaster Relief Legislation: Recent bill addressing special disasters (e.g., East Palestine derailment) and closing previous relief gaps.
• Digital Asset Basis Tracking: New requirement from Jan 1, 2025—use either global allocation or specific identification method for digital assets.
• Resource Reminders: Comprehensive AICPA guides on 1099K reporting, Tax Section Odyssey Podcast, and practice management toolkits for busy season preparation.

AI and Transformation

• Discussion of insights from CPA.com’s Digital CPA Event:
  • AI is rapidly advancing efficiency, especially in CAS (Client Advisory Services), audit, and tax.
  • Benchmarking, branding, and business development practices are evolving quickly.

Real-Time Legislative News

Segment Start: [49:21]

• Breaking news: House GOP claims a deal on a continuing resolution, but unclear if it includes BOI delay or if it’s bipartisan.
• "If it’s a clean continuing resolution, all it’s doing is funding the government...then BoI might probably not in it. If it’s skinnied down [but with extras], there’s probably a reasonably good chance that BOI is in it." – Barry Melancon [49:21]

Reflections from Barry Melancon

Segment Start: [53:40]

• Expresses gratitude and pride in the accounting profession’s resilience and trust.
  • “The men and women in this profession are incredible. You’ve heard me talk about trust. We are the most trusted profession in the world. That makes a difference.” – Barry Melancon [53:48]
• Notes transformational period: Enron, WorldCom, computerization, Covid, global expansion, tax change, and now rapid evolution with AI.
• “AI is going to have some very significant changes in who we are... But the importance of our profession to the quality of life in this country...is very, very, very serious.” – Barry Melancon [55:23]
• Pledges continued involvement in the profession and support for the new CEO, Mark Koziel.

Tributes from Colleagues:

• Lisa Simpson: "I've grown so much and learned so much just from your leadership...I'm just honored to have had the chance to work with you." [56:21]
• Erik Asgeirsson: "Thank you for the drive...helping create CPA.com...your timeliness and your ability to be accessible to everybody." [56:48]

Key Quotes & Takeaways

• On Economic Prediction:
  "I think the best you can do is forecast into the next maybe eight days at a time like this." – Marcy Russell [15:27]

• On Deficit Worries:
  "I don’t worry about it until financial markets worry about it." – Marcy Russell [20:30]

• On BOI Practicality:
  "The pursuit of perfection is the enemy of progress." – Barry Melancon [41:27]

• On the Profession:
  "We are the most trusted profession in the world. That makes a difference." – Barry Melancon [53:48]

Timestamps for Major Segments

| Segment | Timestamp | |----------------------------------------|-------------| | Economic Outlook with Marcy Russell | 03:15 | | Inflation & Housing Q&A | 16:11 | | Business Leader Optimism | 18:31 | | BOI Legislative Update | 24:21 | | Legal & Regulatory BOI Details | 29:30 | | Real-time Legislative News | 49:21 | | Audience BOI/Technical Q&A | 50:35 | | Barry’s Reflections & Farewell | 53:40 |

Final Notes

The session underscored the importance of staying engaged in advocacy (especially regarding BOI), the challenge of interpreting fast-moving economic and regulatory currents, and the resilience of the accounting profession through turbulent times. For more resources and up-to-date guidance, listeners are encouraged to access the AICPA Town Hall series website and resource center.

Happy Holidays from the AICPA Town Hall team!