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A
Welcome to the AICPA Town Hall Series.
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Your resource for the latest news and updates on pressing issues facing the accounting profession.
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C
Good afternoon and welcome to the AICPA Town Hall. I'm Eric Ouskerson, one of the hosts for today. You can see I'm with Lisa Simpson. Lisa, it's December 18, 2025. So this is five years, five years we've been doing these town halls. Five plus years we've been doing these town halls together. It's great to be with you today.
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D
It's great to be back. I've been on the road quite a bit the last few months, meeting our members and folks in the town hall community all over the country and just so thankful to get the chance to connect and get the positive feedback that they continue to give us about how important town hall is to them. And it's such an honor to be part of this group.
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C
It is an honor. And we've got a great, great show to close out the year. So let's look at that. We're a little bit ahead here. Let's go back to the open agenda slide. So we're going to kick it off with some welcome remarks. Lisa and I are going to have a little bit of reflection on some other insights from digital cpa. Then we've got a great economic update to look back at 2025 and look ahead to 2026 with Marcy Russell. We're going to have a DC update with Mark and Melanie. Lisa, I know you've got Melanie's going to do a technical update. And then, Lisa, your session with Paul.
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D
I'm looking forward to it. I think we've got a lot of great insights to share with everybody today as we close out the year.
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C
So, Lisa, sometimes we do make predictions on the town hall and at digital cpa, we made a prediction. It hadn't been announced, but we predicted, I don't know if it was a hard prediction, but we predicted that AI would be the Person of the Year. Here you're looking at the Person of the Year from Time magazine and they selected the architects of AI and they've got eight leaders there on the famous skyscraper shot from I don't know when that was the 1920s, but it really has been a very consequential year related to what AI has meant to society and the profession.
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D
Yeah, there's so much buzz about it and you've got some positives and you've got some skeptics still out there. So a lot to learn, but making great progress.
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C
Well, it was discussed extensively at Digital CPA, we had 50 different sessions. Probably AI was mentioned in every one of those 50 sessions. A lot of discussions with firm leaders and tech leaders. And what we've done here is we've boiled it down into four key points that we're going to be taking with us into 2026. So let me just talk a little bit about these and Lisa, welcome you reflecting on them as well. But the first one's probably the most important that what we're really seeing, and this really started in the second half of 2025. I mean, when you look back at 20, this is really when AI moved this gen AI moved from this experimentation to reality. It crossed the chasm. It's really being utilized in the profession, it's being utilized in society. But when you look at how it's being utilized, the exciting thing for the firms and for their clients and even if you're also, if you're in business and industry, is that it's increasing productivity and value creation. It's not just an efficiency play, clearly it's efficiency. Over the last decade plus technology has been driving efficiency. But the true sea change in one area we're seeing this in is in tax research, but it's happening in the accounting services and audit area is massive gains in productivity, but then opportunities to create different service offerings for the clients. So that's the first one. Lisa, any comment there?
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D
I think a lot of firms at Digital and throughout the community are challenged with understanding that value creation part. How do they move from just that compliance work to using the tools that AI and the skills that AI can give us to really create that value? I think we'll be spending a lot more time talking about that in 2026.
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C
That's a great shift into point two here because what we talked about, digital CPA, and we talk about it all year long, it's all about the people, process and technology. So this technology is adding this huge productivity gain, potential value creation. But it's how you're evolving the services, how you're evolving your staffing strategy, your training models for your staff, pricing, pricing models. All of that is continuing to change. And one other big trend that we saw this year was lots of investment in firms. Billions of dollars going into firms and billions of dollars going into these tech solutions. And we're just going to have ongoing business evolution that's going to continue. Just the final point here, and we say this a lot, is that in many ways technology is the great equalizer that's happening here with AI. I know solutions in a number of the categories, but one in the tax category that's being used by the largest firm, Deloitte, and it's being used by 10 person firms. So the same solution being used by both. This is an opportunity for firms of all sizes and I think Marcy's going to give some reflections on that as well. So, Lisa, thank you. I just wanted this was great to kind of open up with you. And now we're going to move to this segment with Marcy Russell. Oh, so you see we've got Marcie here and it was very nice of you to come to New York to be with us here in the studio. I think the town hall community knows you well. We've got a bio slide that we can bring up on Marcy. She's a former chief economist with cnbc, co host of Squawkbox. I've asked her to kind of give us feedback on our studio environment here, how close it is to Squawkbox, and she's been giving us a lot of great insights over the past couple of years and a doctorate in economics from smu. So we talked a lot about what we wanted to discuss today. I think we want to kick things off, we can even drop this slide because we wanted to kick it off a little bit about 2025. And one thing we had the recession that never happened, right?
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A
That's exactly right. So when I sort of think about looking back and looking forward, which is what everybody's kind of doing this time of year, I look back at 2025 and I would say it was the year of the recession that simply wasn't. Everyone kept expecting a recession. It never occurred. And it really happened on two fronts. We had the tariffs introduced in April, the sort of Liberation Day tariffs. And a lot of economists out there were sort of expecting that to be recessionary. I was never in that camp. We've shared over the course of this past year many times about how the fact those tariffs don't rise to the level of a large negative shock. It's large negative shocks that cause recessions. Things like COVID 19, that was recessionary. Things like the financial crisis, the failure of firms in 2008, 2009, those were large unexpected events because the tariffs were not unexpected. They were telegraphed during the election. They were announced. Everyone was a little surprised by some of the numbers themselves. But because they weren't unexpected, what that meant was that they weren't recessionary. Now, it doesn't mean that they weren't somewhat inflationary. We're seeing evidence of that right now. But the inflationary impacts were delayed. They also are not great for long term growth. That's sort of the economist's point of view. Tariffs are not great for long term growth. But we're living in this world where the expectation is that the improvements in long term growth from AI are going to be so large that they're going to swamp any negative effects that come from the tariffs in general. And then of course, we had the government shutdown in the second half of 2025 also a lot of economists believing that that might be recessionary turn out that way. Because we know historically that government shutdowns tend to just move economic activity into the next quarter. And that is exactly what we're seeing right now. That there was a little bit of a slowdown during the shutdown and now we're seeing economic activity really picking up. But as we look forward and talk about next year, that's an issue for the Federal Reserve. And so when we look out into 2026, what we are seeing is that growth looks good, inflation appears to be elevated, it's higher than what the Federal Reserve would want it to be. However, we're starting to see weakness in the job market. And that's the thing that when we look into 2026, I think that's going to be one of the big stories of 2026.
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C
Well, let's move. Before we move into 2026, there are some questions coming in, some people saying, you know, is it some states might be in a recession and some sectors might be in a recession. So is this. And then we didn't hit. And people also vibrating a little bit about really what's going on with AI, the hype. But one thing that we did realize in 2025 was this huge boom in spending, but it didn't impact all areas of the economy.
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A
That's exactly right. So when you look at overall GDP numbers, what we saw was that about half of the GDP growth last year, meaning 2025, was coming from just the overall build out in AI data center capabilities. That is not job creating. It creates a few temporary construction jobs. But overall that's not a long term job creator. So even though big growth in GDP normally comes with big growth in the job market, we don't see that now addressing the regional disparities around growth right now, that is a very real thing. And it is always the case that New York and California account for an enormous percentage of GDP and GDP growth in the United States. They are kind of, in some ways countries of their own when it comes to just how large of an impact they have on the overall growth numbers of the U.S. economy. But it is very, very true that there are areas of the country that are struggling more with the impacts of tariffs, that are struggling more with the transition to AI led growth. And I think this is a really concern for public policy, not just next year, but in several years to come as governments respond to the job market implications of AI and all the things that are going to come with it.
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C
And Mark's got a slide on that. I mean there is a lot of government officials thinking about even in the states, how do they generate more, more business, more pro business related to AI. Well, let's move into 2026. Lots of passionate input though coming in about 2025 reflections. You highlighted these, if you want to bring the slide up, these three key points that we're going to cover. A few weeks back we did talk about stablecoins and you've got some comments on what they're doing to Treasuries and then the Federal Reserve. Top of mind for everybody in M and A.
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A
Sure. Well, I do actually think that when we look into 2026, the Federal Reserve stablecoins and a surge in M and A activity are going to be three sort of business relevant headlining activities and sectors as we move into next year. When you think about where the Federal Reserve finds itself right now, they're kind of in a little bit of a dilemma. They've spent the last year cutting short term rates because that's kind of the one thing that they can control. And in a normal business cycle, when they cut short term rates, you would expect to see job growth actually pick up. Now of course there's always some lags in things, but what we've seen over the course of the year is that the unemployment rate has slowly and steadily been ticking up. We had a number come out for the unemployment rate. Just, you know, today it's the first Friday of the month. And so you know that or not the first Friday of the month, but it's a Friday. That's when the unemployment rate comes out. But no economist out there is looking at that increase in the unemployment rate and really believing that it's real because of data collection issues and things like that. But we all know that the labor market is deteriorating. The other issue around labor markets is that we've seen youth unemployment pick up. So I think this has something to do with how AI is, is affecting the landscape right now. Because when you think about youth unemployment sort of College graduates and their skill set. Basically, one of the things that we know about AI is that depending on how it's implemented in a particular sector or job sort of area, there's a lot of uncertainty around it. And we don't know yet whether AI is going, what kind of technology it's going to be. Exactly. So it's still in the stages of implementation. But the analogy that I like to use in understanding its effects on labor market is for some jobs AI is going to be like the tractor was in agriculture, and for other jobs it's going to be like the spreadsheet was in this industry. And so what I mean by that exactly is that the tractor was a labor substitute for agriculture. When the spreadsheet came along, it didn't replace accountants. In fact, it made accountants much more productive and basically turned all of us into some kind of accountant in some ways. And so it was a complement to the accounting industry, whereas the tractor literally replaced people on the farm. And so how AI will affect the job market ultimately is going to come down to depending on the skills of the worker. Does it act like a substitute like the tractor did, or does it act like a complement like the spreadsheet was? So when I think about sort of entry level computer programmers, AI acts like a tractor for that industry. And so one of the reasons why I believe youth unemployment, younger people, their unemployment rates are rising faster than what we would normally expect when the unemployment rate rises. I think it's because it's acting like a tractor in some of these entry level, computer specific programming specific jobs themselves. So when the Federal Reserve gets ready to continue to cut rates, which is likely to be the case next year, markets are expecting at least two more rate cuts next year. They could continue to cut rates yet because, because the labor market is responding to not the business cycle, but a long term change in technology, they could continue to cut rates and you could still see the unemployment rate continue to go up as companies also postpone hiring until they're completely sure how AI is going to fit into their workflow. So they don't want to do it with young, inexperienced employees. They want to do it with the staff that they have already.
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C
Well, Marcy, I think the tractor, the spreadsheet, it's a great analogy for us. And you could, the tractor here at times you could use data entry. Like data entry is being automated. It was being automated with machine learning. It's going to be further, it's further automated with the Genai tools that are auto inputting all kinds of data. In the tax area, accounting area and audit area. But the opportunity, that's what I was talking about earlier, the value creation opportunity is very, very significant. The spreadsheet did create ability to provide more value, more insights to businesses. These AI tools is going to continue to offer the firms ability to provide more insights and better services to their clients. One thing that at a very fundamental level, the profession, professional services, is about outsourcing in these mid sized small businesses. They want other experts to help them in non core areas.
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A
Well, and also remember too when it comes to AI trust over the next, I would say five to 10 years, as we sort of continue to see these technologies evolve, the trust issue is going to be enormous. So you're going to see entire categories of jobs being created simply around that last little bit of how can we convince you to trust this AI? And that's going to come back to a particular type of person to person interaction that I think will be incredibly important for firms over the next sort of 10 years, which is my time frame for the full AI transition in that period.
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C
Right now, even if you look ahead over the next 12 months, there's probably going to be corrections. I mean, what's your thoughts as questions coming in? Is there a bubble? Is there over investment? Yes, and there's probably underinvestment in other areas. But let you answer the question.
- [18:15]
A
Oh, that is a wonderful question that many folks are grappling with right now. And one of the best analogies that I've seen out there around what to expect that will happen in this AI build out sector over the next five years or so really has to do with forgetting the bubble analogy because bubbles imply that there's not real value there. So if you go back to sort of the classic bubble, the tulip mania, I mean tulips are valuable to me because I'm a gardener, but they weren't really of particular value to an economy. People were simply buying them because they expected the price to go up. So using the bubble analogy for AI, I don't think is what I think we will see is something that looks very much like what we saw with the dot com boom and bust of the late 90s. And the proper analogy there is of a wildfire where a stressful period will occur, where we figure out that there's probably been some firms in this space that have made investments that aren't going to pan out. Those firms will go to the wayside and it will clear the capital market environment for the new next round of small firms innovation to arise. Kind of out of the ashes, which is exactly what we saw in the early 2000s in the wake of the dot com boom and bust. But what I also want to say is that we have to keep in mind that enormous investments are being made right now in data center build out. And all of those, I believe are being made under the most optimistic assumptions around the AI breakthrough timeline. So we're sort of on the cusp of the next generation of AI that will be far more capable of substituting for human beings and look much more sort of human like it'll be agenic to sort of use their term. And that can happen in the next two years. That's the most optimistic assumption. But then there are folks who think it could be up to 20 years out. And so everything right now is priced for the most optimistic timeline. And if that most optimistic timeline does not materialize, I do think you will see some revaluation of firms and investments within the sector now, calling that a bubble. I think it's much more nuanced and complicated than that.
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C
Well, we're seeing the exponential increase in startups in our category and there's clearly going to be startups that do not succeed. And that's just the way the venture community works. That's one of the strengths of America is its entrepreneurial spirit and then some flourish. What I also can say is there's a lot of comments coming in about trust, about AI hallucinations. The thing that we are seeing, we saw a lot of this in the second half of 2025. The solution providers understand that the solution providers are building better data sets. They're building verticalized solutions that are specific to the tax, auditing and accounting services area. I think you're going to continue to see that trend. OpenAI and Gemini, those tools aren't meant to be necessarily supporting specific verticals. That's going to continue to happen in 2026. There's judgment needed. That's why, that's why they want to outsource to a professional services person to leverage these AI tools so you can understand when you're being given an answer that's not accurate.
- [21:48]
A
Sure. The analogy that I use is one of the last inch, if you recall from the Internet build out. The issue was always around the last mile. That was the hardest part with AI. I think the last inch is the human to human interaction, the closeness that people will expect in the areas where AI is going to make the biggest difference. It's health care, it's education, it's professional services, it's legal services and accounting services where trust is an enormously important element. And so human beings are still going to be human beings and they are going to want to trust at the end of the day, that last little interaction to be with other human beings.
- [22:36]
C
The human in the loop. Marci, thank you so much for the economic reflection, the economic update, and also leaning in and giving us a lot of insights on how you're seeing AI. We'll be bringing Marcy back for the open forum. A lot of questions coming in, one being what do you think about oil prices? We'll hit that at the end. With that, we're going to but we are going to bring Mark Peterson up from our new it's a new studio there. It's a little expanded. So welcome. Mark, Is it sunny in D.C. today?
- [23:08]
E
It's always sunny in D.C. eric. And we are we wore out the last studio, so we're in the new one. It's very, very nice. So I'll tell you what I'd like to do, Eric, is kind of start out with some reflections on 2025 again as we kind of wrap up the year. And it was a pretty phenomenal year if you think about it. New administration, you know, some anxiety. We just talked about the impact of the tariffs and uncertainty around inflation and the economy. But there were also a lot of changes going on through government reform. If you think about the activity around doge, concerns about the impact on agencies that we work with closely like treasury and the IRS and several others as well, you know, gao, Department of Labor working through those things. You know, in the end, we actually got through the filing season pretty well. We did our satisfaction survey and it came back kind of consistent with the last few years. But, you know, who knows what this upcoming filing season is going to look like. And we also dealt with a historically long government shutdown which had some level of impact. We also had 1,000 page text bill HR1. And within that, although, as everybody knows, it went through the reconciliation process, it was a partisan vote. Elements and provisions in that, particularly the very popular business deductions had been in other packages that were bipartisan and those were deductions and some business certainty that we had been for and had worked for several years actually to get those positioned. We defended successfully maintaining the salt PTET pass through deduction, which was a significant issue not only for our clients but for also the firms. So that was a big one we got. Disaster relief was another one that was a big one, trying to provide some certainty around delays and deadlines so that during Those points in time, usually the IRS does the right thing, but keying off the governor in those cases allowed for a little more certainty. You think about the crypto package that passed as well, where there was a language in there. Marcy talked about trust, focusing on the profession to do work around financial statement audit and audits of reserves. And so lots of stuff was going on this whole year where we really were in the conversation and in play. And I've got a couple other issues to wrap up with. But if you go to the next slide, Eric, one of the things that was kind of a significant change that we had to navigate was, and we talked about this at the beginning of the year, the administration was going to heavily utilize executive powers. And the executive orders that have rolled out, we're actually going to talk about one that was signed today at about 1:30. And so the extremely close margins in the House, the Senate, three votes. And so what this administration did is really relied on executive powers. Now, what that did, using those very aggressively and very broadly on issues like tariffs on global mobility, immigration, and actually in some of the reforms and redesign of the government agencies where there were plenty of court challenges. And so some of those are going to be even playing out into 2026. And I'll talk about that as well. But if you kind of look at where the court was with the elevation, this is just the first month of President Trump's term in office. You can see the level of challenge that was utilized and the emergency dockets that were utilized to push back from the administration and to be honest, fairly successfully. So one thing to think about is, although we're talking about this administration now, that kind of empowerment of the executive branch that is occurring will likely stay through the next administration. Who knows who that is. But it does create a different dynamic. The Congress and the legislative process work slow. Executive branch can work very quickly. Now. A lot of things that are done through executive orders can be undone later through the executive. Whoever the next administration is, however, the breadth of what they may be able to do, and that includes, again, tariffs is significant. And so if we go to the next one, I want to talk about a here and now issue that's going to leak into January when this comment period will open. But the Department of Education is moving forward. There was reforms to funding of higher education loans in the HR1, the big tax bill, General, the idea of capping federal loan amounts. Department of Education got that. They want to implement a proposal that will put caps, two categories, one professional, one non professional. The problem is they did not put accounting into the professional bucket for that cap. That cap is $20,500. And the higher cap, the richer cap, is $50,000. Now, that is a significant issue for us. We are a profession. Everybody knows we're a profession. That's common sense. Answer. We have engaged very quickly. The comment period hasn't opened yet. We've worked with the state societies, our partners in the states, to make sure that their representatives in the federal government understand that we're pushing back on this. We just sent a letter to the Department of Education, combined with others in the accounting association family, totaling about 1.5 million members, to let them know that they got it wrong. You can have a debate about funding camps, but don't use funding caps, but don't utilize whether we're a profession or not in order to make those determinations. And so this is going to play out in the next year and we'll keep the town hall advised and we may actually ask you to engage once we get into that comment period. So the other issue that just popped again was utilizing executive powers. The administration announced a executive order to put a moratorium on states moving forward with regulation of AI. Now, this conversation has been going on for a while. There was provisions that were in the original tax bill that couldn't make it through the process because it was reconciliation. We're actually in a significant defense authorization bill that just passed that was dropped before it was signed. And then they moved forward with this utilization of executive authority. And the whole theory behind this is the administration wants to compete with primarily China to make sure that we can innovate and to do that to make sure there aren't regulatory barriers. And so they're utilizing the executive power to put that moratorium on the states. They're actually going to use some funding mechanism, utilization of federal funds in the states to put some teeth into this. They've also announced a tech force where they're putting they're bringing in 1,000 engineers in order to really focus on innovation, reduction of barriers and readiness as it relates to building a platform to be the leaders in AI in the world. So a lot of activity that's going on in there around AI, and that's again going to play into next year. Eric?
- [30:23]
C
Mark, one thing that you've highlighted in some of your other presentations and I've spoke about as well is just the US Investment actually is leading the world in AI. And you look at. So it's a great story. It's a great story of entrepreneurialism, of tech leadership. And it's important, it's important to have the right regulatory environment. You need to put some safeguards in place, but you definitely want these new technologies to advance.
- [30:54]
E
You do. And there is a debate over the tactics. And so I think we're going to see some of the states that will sue over this, but they're going to figure out how to move forward. And so this is something that's going to play out over the next month. The other one, and this was just signed, I mentioned an executive order related to cannabis. Now we've been talking about cannabis for years because the profession got caught in the middle of states that legalized either medical or recreational. And then the legality of it at the federal level states there have not been, the federal government has not been enforcing this, but it still is a conflict for the profession. There are banking issues, there are tax issues that we're going to talk about. Melanie and so an executive order just came out, was just signed to reschedule, not deschedule, but reschedule from level one with heroin to three, which would be like I guess Tylenol with codeine or something like that. So there are still restrictions around this, but it will create hopefully some more certainty around the tax consequences. And it does start steps towards maybe this concept around how you're going to handle the banking elements. This will accelerate the consideration. So we still don't have an exact timeline about when we'll get to the finish line on this, but the trajectory is that this is going to get resolved at some point, hopefully in the near future and then some outlook on 26. So I hate to say it, Eric, because we've talked on town halls many times about either a historic 43 day shutdown or shutdowns that were about to happen that didn't because they got a deal. But the current funding that the government agreed to to get out of that historic shutdown that actually runs out at the end of January. And so we could be looking at the potential of a shutdown going into filing season, which raises concerns. And I have to say when you look at the pieces on the game board, I am thinking that there's a possibility we could see some level of shutdown depending on how they negotiate some things like these premium tax credits related to aca, Obamacare. But some other things that we're going to continue to discuss. There is the potential for another reconciliation bill. Lots of conversation. Marcy just mentioned it about affordability. It is going to be a significant, significant issue in the upcoming midterm elections the midterm election politics is going to drive a ton of political behavior, and getting costs down is going to be significant. Now, we've already seen some adjustments to some of the tariffs which are going to continue to play out related to commodities. Some of the tariffs with South America to try and get some costs down that you're going to see at the grocery store. The negotiation with China is one US Canada, Mexico is still under negotiation. Continued conversation around technology, around crypto. And so we'll see that play out in the next year. The big game is going to be the Supreme Court decisions around the ability of the administration to use those executive powers to move forward with tariffs. If in fact they're overturned or narrowed. There is a plan B and how they'll deal with it. However, it, it could get extremely messy conversations around you actually refund business. The president has talked about giving rebates to taxpayers, but we'll have to see how all that plays out. It's all up in the air as we go into 26. Eric?
- [34:20]
C
Well, Mark, one thing, you're going to have plenty to do in 2026, no doubt it's going to be a busy year. And it is the thing is, it's polarizing. And Mark, your team, you try to just sort through what's going on, make as much of an impact as possible. But that's one thing we understand. There's a lot of different views out there, and there's different views on. And at times it's hard times. It's hard times for what people are going through. And hopefully the town hall community, we help them navigate it. With a lot of input from your team.
- [34:58]
E
No, thank you, Eric. And we do, we are successful and have been successful through different administrations, through different majorities in Congress because we do stay as best we can above the politics to try and get good outcomes.
- [35:12]
C
Yeah. All right, Mark, I know you've got, you got your partner there. Melanie.
- [35:18]
B
Hey, Eric. So let's go ahead and dive in with cannabis. As Mark mentioned, we do and are looking forward to a reclassification from Schedule 1 to Schedule 3, because that really would allow businesses to be able to take a tax deduction. Could be a significant tax deduction. But I do need to make clear that this would be at the federal level, not at the state level. Each state has their own rules, and that still needs to be followed. Now, as we go through a period of transition, when that reclassification actually happens, there will be a lot of unknowns there. And so we've actually put put forward A comment letter back in 2024, waiting for this to happen, where we would alleviate a lot of those burdens. So, for example, we would want a retroactive treatment for the full year so people don't have to maintain two books and try to figure out where they need to divide things. We're also asking for the deduction to be both for both medical and recreational, because keeping the books again for both of those would be very difficult. And penalty relief is something that would be very important at this time. We know that some people did file already some returns believing that the reclassification happen. And so IRS should be kind as they move forward because it's not intentional to be trying to gyp the tax system. So moving on to the next topic, on the next slide, I want to bring up that there are new contacts information at the irs. Can we move to the next slide? Okay, so I will talk. Once you guys see the next slide, you will see what I'm talking about. But the IRS has new contact information for collections offices. Go back one slide. There we go. And you see Publication 4235. That link will actually give you the people who you should be contacting if were you to have questions on collections, tax liens, or even lean certification issues with it. So a lot of good resources, but also something noteworthy. The United States Postal Service actually came forward and they've made changes to the postmark date system. And essentially what they're doing is they are no longer going to be stamping the postmark date at the local offices, but they will be doing at the regional processing centers. So what that means for us, it could take a day or up to three days for that mail to be transferred from the local office to the processing center. And that's not including weekends. And obviously that would have a significant impact for tax filings and also legal filings. So there are things that you can do if you need to have that postmark show up on the day that you deliver it. So the first one would be, obviously you could drive to the processing center to get the postmark there. But if that's not an option, or you go to your local post office, if you physically walk up to the counter, you can request a manual postmark and that would show the effective date of when they receive it. The other thing that you could do is purchase the postage validation imprint, which is that label that has the date and also the payment of postage with it. And of course, tried and true certified mail. One thing that the post office did say is that that postmark is no longer longer the date they receive it, but it's just the date of showing that they had that letter, that mail in possession at that time. Okay, on the next slide I'm going to talk About Perfect Notice 2026 05, which has the expanded HSA eligibility, which is what came forward from HR1. And what's on this list are those changes. But one thing to note is that these changes actually create several planning opportunities for tax professionals. So, so read the article and we hope to come forward with some more guidance for you guys so that you can provide guidance to your members. Okay, Criminal Investigations had quite a few updates and they're all kind of correlated and intermingled. Their FY 2025 report came out and in it the results are that they identified $10.6 billion in financial crimes which is an increase of almost 16%. And of that 4.6 billion are tax fraud, which is an increase of almost 112% in that area. They also denoted that 64% of their work and efforts and investigation of that time was dedicated to tax crimes. So there were a lot of questions about who would be leading the Criminal Investigations department. And Guy FICO actually came forward in a conference and he said that he and his acting Deputy chief would be there for 2026. So we can expect consistency from 2025 to 2026. Now we also saw that there was a transfer of powers in the Department of Justice from the Tax Division over to the Civil and Criminal Division office. And what that means to us is that that early stage representation, which is what we do, will become more critical for taxpayers. We also are going to expect to have closer interaction with IRS's council versus the more options to negotiate with DOJ. So just keep aware of what's going on. Okay, we're going to move on to round Robin form 1099K. Got substantial updates to their FAQs. So take a look at that link when you have a chance. Also, IRS is still and you've heard me talk about the security scam awareness. There's a lot of tax related identity theft and there's lots of social media and I actually saw one saying that Louis Vuitton bags are tax deductible, which would be nice but not reality. And also they're also reminding tax professionals that they should have a written information security plan in place. And you're going to be hearing from Lisa and Paul about the WISP plan. Now also through formal official channels, we've been hearing more guidance coming forward. We know that the car loan payments, the interest on that, that guidance will be coming by the end of the year. We've also know that the G7 statement on the side by side should be coming out very soon. And that is the OECD asking for the US to have some exceptions for there. And if that doesn't come out out soon, we could be seeing the retaliation tax coming forward and that does not need a reconciliation bill for it. We're also expecting to see the corporate AMT interplay with the section 174R and E expensing guidance to be coming out very soon, hopefully by this week, if not next week. So just heads up, there's a lot coming forward. FACA for those who have assets of over 50,000 FAQs were updated there and there's a link there. And we also have a podcast for reimagining and how to really successfully navigate the selling of your business in this competitive market. And finally, and I already saw some questions coming in, engagement letters are already out. However, the organizers checklists and practice guides, those are going to be a little bit delayed. They're usually out by now. And it's because HR1 guidance has been coming out slowly. So you can expect to see a lot by December 19th and the majority of it by December 19th and all by January 9th. Onto this next slide, it would not be 2025 if I did not give an update on BOI. When we started the year with BOI, and there's a small update, one of the court cases came forward and saying that yes, it is constitutional to be able to request this information and it is not a violation of your privacy, but this does not have an impact for us because the interim rules are still at play and it's still the same. So status quo. On this next slide, I have digital assets. I've already talked in previous town halls of how complicated digital assets will be for compliance for this year. And we actually have that practice guide. So there's two links there. The first one is open to all AICPA members and it's an abridged version. And then the other version is for Tax Section members, which is more encompassing. So please take a look at those. And then finally, our advocacy efforts have been paying off and we have been working with the Office of Management and Budget closely with them in order for them to push out the compliance supplement resource. And it is final now. So take a look at those links too. So with that I turn it back over to you guys.
- [43:09]
C
Well, Melanie, thank you. Great review of many, many important items. So we'll come back to you in open forum. And now we're going to move to this important cybersecurity discussion with Lisa.
- [43:26]
D
Thanks, Eric. And I'm happy to be joined by Paul Perry. Paul is with Warren Averitt, which is the top 50 firm in the U.S. he speaks all across the country on cybersecurity issues. He is the chair of our CITP Credential committee, excuse me, and he's also chair of the Alabama Society. And with all that going on, he took time out to join us today because I think as we head into year end, it is so important to think about cybersecurity and to talk about some of the requirements that we have around cybersecurity. So, Paul, thanks for joining us. I'm just going to jump right in. So you're all warmed up and ready to go. Melanie just talked about a wisp, the written information security plan. I know this is just for tax practitioners, this requirement for having a wisp, but I think what we're going to talk about today applies to any business not for profits. Your parents, your grandparents. We all need to be thinking about cybersecurity in this age. So let's start with the wisp and then we'll move on from there.
- [44:34]
C
Yeah.
- [44:34]
F
Lisa, thank you again for the opportunity to be here. So as it relates to tax practitioners and really accounting firms as a whole, if you go back to 1999, Gramm, Leach, Bliley act kind of constituted tax practitioners, accounting firms as financial institutions. And the reason is for that classification is we really hold non public financial information. We have information that can be used to identify tax preparers and so, or I'm sorry, taxpayers. And so the wisp, which is a requirement out of publication 4557 really takes in the FTC safeguard rules and it says, look, if you're going to be holding this information, you've really got to keep it secure. And so that's the reason for it. And for the tax practitioners and the accounting firms listening in, 4557 is a really good summary of some really good cybersecurity controls that should be in place at your organization. Again, a requirement if you need help creating that wisp. A WISP is a written information security plan. Right. So it talks about what we do as an organization to keep information secure. And so actually IRS also has another publication, 5708. 5708 is really a template for the WISP. So if you're out There looking for, okay, how do I get started? How do I write this plan? There's some really good resources there. And we'll see in a couple slides that the AICPA also has some resources around this. But when you talk about cybersecurity, it's a holistic, it's industry agnostic, everybody, it applies to everybody. There may be nuances based on the information you have, but the wisp really details, hey, this is what we are doing and this is what we can do specifically as it relates to 4557. If you summarize it, you know, it's requiring a risk assessment, it's requiring employee training. And we're going to see in just a minute why employee training is so important within the cybersecurity realm. It talks about access controls, talks about, about multi factor authentication, passwords, incident response plans, how you handle your vendors. Most breaches that are occurring right now are because of a vendor of an organization. And so you've got to make sure you understand who they are. We always say with vendors is you can outsource processes, but you can't outsource responsibility, accountability for knowing what they're doing. So that's why that becomes extremely important. But for folks listening in right now, 4557 applies to you. FTC safeguard rule applies to you because you hold that non public information.
- [47:13]
D
You go ahead. I interrupted.
- [47:14]
F
I was gonna say if y' all wanna go to the next slide. Sorry about that.
- [47:17]
D
Yeah, so when Paul, when you and I were talking and I saw the headline of your slide, society Cyber Problem, I thought you were gonna explain to me why there were people in basements all across the world trying to hack into my phone or hack into my bank account. But that's not really what what your approach to talking about cyber is. So clue us in. What's the cyber problem that we should be dealing with?
- [47:37]
F
Yeah, And I say it's society cyber problem because everybody has the same problem. And we go back to what a wisp says, these are the controls you have to have in place. One of those controls is training, education around what's happening, how to solve it yourself, how to react to it. But there is no control for the human behavior.
- [47:56]
E
Right.
- [47:56]
F
And so I'm a big why guy. So if you can break down why these are so many issues in society and in business, the top part reigns true, right? It's a people problem. The technology works. The technology is built in such a way, if it's not done in malice to be able to work the way it's supposed to. It's our use, or I would argue our misuse of that technology that creates so many issues. And so we have to solve the people problem. So society's cyber problem is people. It's the behaviors of individuals, right? And so forget the technical piece, let's just talk behavior. And I've got five points here and there's probably a lot more. We're not going to go through every single one of them. But up top is present bias. As an individual, I care about today, I don't care about tomorrow. I care about the conveniences technology has given me. And when you choose convenience, you give up privacy, you give up security, you have to choose which one you want, right? So if you hear nothing else today, in order to solve the people problem, we need to be more inconvenient. Now there's a whole AI discussion and I'm not going to get into that today because that's the ultimate choice of convenience. And in some elements it works and in some elements it doesn't. We all have optimism bias. It's not going to happen to us. A small fish, big pond. I don't have anything anybody wants. Well, you have three things. You have money, you have data, and you have people. And if they're not going after you as an organization, they're going after your people individually. And so you've got to continually talk to people and understand this is how we do it. System one, system two thinking. That's my gut feel, right? System one is my gut feel. If I'm just reacting to everything and I'm not logically thinking about it, then I have Too much System 1 thinking. System 2, thinking is the logical, the piece of it, and then social proof, right? If everybody else is doing it, maybe then I should do it. And that's really where we sometimes get into an issue, especially with, with artificial intelligence. As the ultimate convenience piece is there's an inequality of understanding. We don't understand it the same way, we don't use it the same way, but yet everybody is telling us we should. And when you follow social proof, when you follow groupthink, you kind of miss out on what you're supposed to be doing. So if you want to solve society's cyber problem, you solve these behavioral issues within people and we don't have to have this conversation. Unfortunately, that's not what's going to happen.
- [50:20]
D
And you know, you and I were talking about like multi factor authentication. People are going to push back on having to use their phones to access to get security access into a system. There are all kinds of other pushbacks that we're going to get, either from our, our team members or our clients, and a lot of circumstances. So how do we talk with them about why these requirements are needed?
- [50:44]
F
Yeah, and I think that's where we have to break it down and say, look, it's not, yes, it's an inconvenience, but the inconvenience of five seconds of waiting for multi factor authentication code to come in versus the inconvenience of trying to get my life back over a year and a half. Choose which one you want. Right. Choose the one that is easier for you. We're always going to say, well, obviously the six seconds versus a year and a half is more convenient. But we go back to present bias. We don't. So. So we have to educate people constantly. You have to beat the horse. You have to beat the dead horse to just say, you cannot have this discussion too much. If you don't feel like you've talked about it a lot, then you're not having it enough. And then you've got to really frame things in a very positive manner. And when I'm talking to organizations or clients, what we say is, look, let's stop thinking of cybersecurity and it as an expense, and let's think of it as a revenue protector. The expense is a bad connotation sometimes. But if I don't do these things that are simple and easy and written down, then I don't have revenue. If I don't have revenue, I don't have a business. And so if we think about it in those terms, we get to handling the pushbacks. And then you just really got to say, look, there's zero tolerance for deviation. Right. The biggest issue in any control environment is what is written, said and done are never the same thing. And if you can align those three, you start to get to the point of, okay, everybody's bought in, so you really have to have buy in for this.
- [52:11]
D
I love the revenue protection mentality because every time I hear about a cyber incident and you hear about hospitals closing down for weeks on end, you hear about governmental offices being forced to close and they can't collect tax revenue, they can't collect revenue from real estate transactions. That's real money that impacts real lives. So I love that approach to the why. I think I'll start using that one. Oh, go ahead.
- [52:40]
F
No, I was gonna say the mental accounting. Right. If I haven't had an issue, if I haven't had A breach. Why do I need to spend the money? And it's like, let's spend 25,000 now so we don't have to spend a million in the future. That's the mentality and that's great.
- [52:52]
D
You know, I just saw a video of an NFL player's home being broken into it through the back, through the back door. And it's like, where was the security system that should have been protecting that? If they'd invested in that, they might not have been robbed. Who knows? I'm just looking at that mental accounting component and how we can all justify why not to do something. But the long term approach is much better. We have a ton of resources around the wisp particularly and cybersecurity as well. So we've given you just a sampling of those. I'm going to call out one because I'm biased. The AICPA PCPS resource on 21 cybersecurity questions for small firms is really just, just a great reminder of all of the things to be thinking about. Don't get overwhelmed. You've got so much here available to you. And we also have, if you're struggling with how to get your wisp actually up and running, how to get it documented, how to get it off the floor. We have a special relationship with RightWorks that can help you save money on that. Again, use the template that the IRS and AICPA have provided. But if you're still struggling, get some help. And we wanted to make sure you know about our relationship with RightWorks. Thank you for that, Paul. We'll have you back. Well, stay up. It's open Forum time. That went fast.
- [54:15]
C
Well, Paul and Lisa, that was fantastic. I mean, a lot of great segments today, a lot of compliments. Some people say they'd like us to spend two hours with them, but the time, town hall, three to four on Thursday afternoons. Unless we're having a special town hall. It's great being with everybody. We do have a lot of questions that came in. I'll jump and ask the first one here, Lisa, then you can jump in. So, Marcy, stablecoins. We got into AI a little bit and maybe didn't cover enough on stablecoins.
- [54:45]
D
Sure.
- [54:45]
A
Well, when you sort of think about what we've all been hearing around cyber and AI and cryptocurrencies, this really is kind of a grand new world that many of us are having to navigate. And as an economist up until the last few months, I personally sort of in my remarks have been very negative around cryptocurrencies. Potential impacts on the economy until legislation was passed this year, the Genius act, and the emergence of a regulatory environment that really spells out the conditions, the regulations, how cryptocurrencies are going to work in the US Going forward. And stablecoins are a big new part of that. And the way that I sort of think about them, the analogy I use, because all this is sort of outside of most of our understandings, is that they're a little bit like a money market fund, right? They're the cryptocurrency money market fund, where unlike a bitcoin, which is just a doesn't really have any real assets backing it, stablecoins have real assets, particularly short term Treasuries that they are pegged to in value. This does two things, right? It creates an instrument that folks can use that acts a whole lot more like real money, like a dollar, right. It's a store of value. It's a medium of exchange. It's very different than a bitcoin in terms of its use case for the economy. Makes international transactions much cheaper. You don't have to worry about foreign exchange risk, the timing, all of these things. It also creates demand for short term Treasuries which is going to put downward pressure on short term interest rates. Now in the long term, stablecoins can create volatility and they are untested in terms of how they will respond during a financial crisis. So I think I don't expect a financial crisis, but when one occurs, it will test the stablecoin market in some ways.
- [56:56]
C
But they're buying a lot of treasuries.
- [56:58]
A
They are buying a lot treasures. Now remember, they're short term Treasuries. So it doesn't have any impact on the government's ability to finance its deficit long term because these are things that are rolling over every single day, every single week. So it doesn't really provide a big demand for government debt except on the really short end. So it does change that.
- [57:20]
C
Thank you, Lisa.
- [57:23]
D
We've got a couple of questions about tax and so Melanie, I'll throw this one to you. Are taxpayers still alive allowed to send in paper checks for their fourth quarter estimates and extension payments and those kinds of things?
- [57:36]
B
Yes. So until we get that guidance, paper checks are absolutely acceptable for the irs. And now they have said they are going to release that guidance right before the start of the filing season.
- [57:47]
D
Okay, that's good to know. Thank you.
- [57:49]
B
And I'll chime in. Since we were talking about paper checks, the postage to the postmark that's effective December 24th.
- [57:55]
D
Okay, thank you. That was the other question I was going to ask you. You're a mind reader, Melanie, you're a mind reader.
- [58:01]
C
Well, Lisa, with that, we've got two and a half minutes till the end of this town hall. So we're going to move to resources. Want to thank Marcy Russell for being with us a couple of times over the past year. Thank you today. Paul Perry, thank you. And Mark and Melanie, thanks for your great updates.
- [58:18]
D
So earlier in 2025, we released the results of the PCP House benchmarking study and we're grateful for for CPA.com's partnership on that. So we have a new podcast that goes into the numbers with some small firm practitioners who use the survey insights. And also wanted to remind you that we also have the executive summary and all the detailed reports so that if you're taking off some time between now and the end of the year and want to do some planning for how to run your firm a little differently, take a look at those.
- [58:52]
C
We also, we mentioned this on the last town hall. There's been a lot of downloads, some great reading over the holiday break. It's a 30 page audit transformation report, really looking at the people process and technology transformation related to kind of the future audit practice. And that's a good setup. And actually we've got some additional resources here that you can leverage related to AI. A lot of discussion today. These are resources that were just released at Digital CPA last week.
- [59:29]
D
We are also asking for your input if you're in the audit space or if you're not in the audit space. If you could share this with those in your firm who are. The Auditing Standards Board is looking for your insights into how you're using technology in financial statement audits. You'll see some of the areas of focus there. This is 20 minutes of your time and my favorite part, there's no right or wrong answer. So just gathering that information will help our Auditing Standards Board determine what kind of guidance or standard setting may be useful to members around that technology uses. So again, 20 minutes. We really do need your input or share with the auditors if you're not in that space.
- [60:14]
C
So here's the LineUp for the first quarter of 2026. Look forward to kicking off the year on January 8th with you. We've got a great lineup. We're going to have more kind of keynote speakers like Marcy Russell as we move into 2026. Other industry leaders as well as our stable crew here from the AICPA and CPA.com we do have all of these resources available to you. We issue the newsletter. A lot of the resources that we highlight during the Town hall are highlighted again on that bi weekly newsletter. So with that Lisa, here we are end of 2025 town halls. We got this Town hall mugs here wishing all of you a very happy and healthy new New Year. We will find out a way in 2026 to get some of these mugs out to the community. So Lisa, I'll let you sign off for all of us here.
- [61:11]
D
Thank you Eric. I appreciate that. Again, just our big thanks for being part of the community for giving us your insights, your feedback, for sticking with us when we have to tell you we don't know the answers yet. That means a lot to us and just know how important you are to the AISPA, to CPA.com and how much we value this relationship.
- [61:33]
B
Thank you for your participation.
- [61:35]
A
You can also subscribe to the AICPA.
- [61:38]
D
Town Hall Series on your favorite podcast.
- [61:40]
B
Platform, as well as watch archives on YouTube and find resources@cpa.com Townhall Tune in for live broadcasts Thursdays at 3pm Eastern Time.
- [61:54]
E
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