← AICPA Town Hall
AICPA Town Hall
Insights from the Digital CPA conference, profession update and evolving AI trends
01:01:57
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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. We're coming to you live from the nation's capital. Mark Koziel, it's fantastic being with the digital CPA community and the town hall community at the same time.
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C
It's great to bring it all together and, you know, give it, give the town hall community a flavor of what the electricity at digital CPA for sure.
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B
So we've got a packed agenda as usual. We're going to kick things off with a profession update with Mark Koziel and then Mark Peterson is going to give us a DC update. It's great to be with you here in dc, Mark. And then we got Rene Lacert, who you all know the founder of, of Bill.com is gonna talk about the agentic AI's impact on firms of all sizes. And then we're gonna have a technical update from Melanie Lauritsyn. So we got a lot to cover and what we wanna start things off with is just share a little bit with the town hall community about digital cpa. It's been a fantastic two days here. We're gonna be going strong through midday tomorrow. It's really all about the transformation of the practice areas. AI. AI. I think AI is in every talk that's being given. We've had keynotes, we've had concurrent sessions and really what we're all. The next slide will really. And I'm going to even hop to it a little bit and then let you comment.
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D
Mark.
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B
And we're going to bring Rene in here. It's all about this is not just a technology conference. This is a conference about people, process and technology. The core enabler.
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C
Yeah, technology is actually the, could be the smaller piece of the three legged stool. Right. It's really about how people are going to interact with it. What are the drivers for success because of where technology is going, giving our people new skills, upskilling the team from where they're at today so that they can properly do it. And then what are our practice strategies? How do we change our process to be able to, to create that? And it's also going to put pressure on the business model. I think as we go forward and.
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B
We like to say we love doing it this the end of the year, a lot of people talking about 2026 and the opportunity ahead of us. Renee, it's great to have you here. You've been to so many of these.
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E
Eric it's great to be here. I think this is number 14 for you guys. I think I've been to almost all of them. But what I love about this conference, and it's just the energy center room, is that built into the profession is a growth mindset. Everybody's here to learn, everybody's here to get better. And all the questions, all the accounts I've talked with, all the firms I've talked with, they're all asking themselves and each other, how do we get better? And so I love the content here. I love the people engagement. That's what I love about the profession that it's built in. You have to actually get your CPE credits every day to be able to keep doing the profession well.
- [03:02]
B
Thanks. So we've had a lot of great sessions. What we're going to be doing for the town hall community is posting some of this information on our upcoming newsletter on Tuesday. Today we had these seven to ten minute sessions here on the keynote stage from the CEO of Digits, Chief AI Officer at Eisner Amper, the CEO of CLA, and the Chief Technology Officer of Sage. So this, this is just a few of the videos and updates that we'll be releasing to the town hall community. And we're also going to be releasing them more broadly with our overall AICPA membership market.
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C
Yeah, this is a. I mean, each of those videos, I think will be critical for the town hall community to go back and watch. Because you talk about four different perspectives, it really does kind of widen the lens on how different areas of our profession are thinking about AI.
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B
I just want to tell you, those are live shots from today. That's awesome.
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All right, Mark, it's been a busy week. We got two shows going, two big events here in dc. We got the SEC conference along with digital cpa.
- [04:13]
C
We do, yeah. And SEC conference is in DC proper. We're outside in Maryland National Harbor. So, yes, I was able to go over there and kick off the SEC conference yesterday before coming back here to kick off Digital CPA with you in the afternoon. And so just part of that, and I really had a great opportunity to connect with the publicly traded community. It is preparers, it is issuers, it is auditors, it is government officials, all there for a common goal around, you know, publicly traded companies in the public markets. So right after my keynote, Chairman Atkins was on for a short time and then following him was Kurt hall, the chief accountant. And I got to speak to both of them very briefly in between sessions. But really the message from the chairman Atkins was around getting back to basics. He's been vocal about things that are happening around the traditional financial statements, and he wants to refocus on the financial statements and the financial statement aspect of who we are and what we do. Feels like, you know, some things have gotten away with all these additional reporting requirements that are out there. And then the kind of funny line from him is he says he wants to make IPOs great again and actually really kind of make up for a bigger, more robust IPO community, because we have not seen as many IPOs in the US market as was there before. And a lot of people talk about, you know, it being complex, it being expensive to do that, what's the risk profile, and are you going to accomplish your capital needs on doing that? And private equity has really been an answer for a lot of businesses that are out there in today's environment. So trying to really push the IPO community, which then got us into the Kurt hall conversation because, you know, our team has been actively talking to the SEC on what their expectations are. One of the things, you know, again, I'm now finishing up almost my first full year. It started January 1st. You introduced me to the profession last year at this conference. And so in this last year, one of the things that we have found is that the SEC is very open and have been asking the profession for feedback. They've met with a number of our firms. They've had firm CEOs come in so they could talk to them about getting involved in the publicly traded community. What else needs to be done? What's the aspect from the smaller firm? How has it been with the pcaob? And that's really what Kurt's focus has been, is on restructuring the pcaob. First and foremost is many of you may know, if you're in the. In the public space, that they've all but, you know, eliminated all the PCAOB board seats, or at least most of them, I should say eliminated. But most of them have resigned in this year. And it's pretty common when there's a change in administration, but they are in the process. In the 43 days we lost due to the shutdown hasn't helped greatly as far as trying to get this process going. And they do expect by either the end of the year or early January that they'll have some announcements over the new board seats at the pcaob. Also, with the PCAOB is really focusing on quality management. Kurt's got this idea that, you know, maybe we shouldn't be looking at all these individual inspections as how we ensure quality. Why don't we look at the quality management system? Now a lot of you who are in the audit space and private companies know that our quality management standards were implemented or will be implemented, have to be implemented by December 15. But he wants to look at quality management. Quality management standards have been in the international space for a long time. How do we look at that and say okay, if the quality management system is functioning appropriately, how do we kind of lighten the load a little bit on the inspections then finally on changes to the, to the audit standards process and looking at it, he has a big belief in international standards plus. So you use international standards as the base and you bring them in here to the US and make the adjustments accordingly. So just really good feedback. I think a lot of positive energy at that conference.
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B
Well, Mark, thanks for that update and it's great to hear how supportive many members of that conference and actually say the SEC were of you being there. I know you got a lot of good feedback related to that. So now we're going to move to the DC update. And Mark, I can tell you we've got questions coming in and one of them you've got a slide on coming up. But the Department of Education proposal, that's a hot topic here for the town hall.
- [09:00]
D
Right. Thank you. And you can tell these pictures were not taken this weekend with the chill that's in the air here. I'll tell you what, where we are right now is wrapping up the year end of the first session of Congress. They're working through nominations. They're trying to get a significant defense authorization bill done. And there's some things that they try and attach to these must pass pieces of legislation like government funding, debt limit and then defense authorization is one. And so I'm going to mention something there because there's been these attempts to put a AI regulation moratorium in them and there's a story there. But I also want to just rewind just slightly on a couple things because we just got done with a record 43 day government shutdown, had an impact on the profession who utilizes the compliance guidance that we need out of agencies, not just IRS and Treasury, but OMB and Department of labor and the banking regulator, several others. We work through that process. Melanie's going to talk about IRS service. One of the concerns is that under that pressure will they be ready for a filing season that's going to be coming up here very soon. But the other thing to keep in mind related to that is that fix was Very temporary. So the funding is just till the end of January. So that shutdown that we went through, we may be back at it again close to filing season. Right. And so we're going to be keeping an eye on that. And there's a couple of things I'm going to talk about here as it relates to the numbers, the math of what it will take to keep the government open, but then also some of the issues that are in play. And so you know that's going to be playing out first quarter of next year. The other thing is if you're from Virginia, you would have noticed this, but there were some off year elections that just occurred at the beginning of November that also had an impact pact and reflected on on tariffs. So you know you've got the midterm elections that are coming up in 26, but then you have these handful of off year elections. There was a proposition and in California related to redistricting which is going to be very relevant going into 26. But then there were governor's races in New Jersey and in Virginia. It wasn't a surprise. The polling showed that the Democrats were probably going to prevail. However, winning is winning and the response because of those victories that the Democrat governors had and the issue at the top of the line was cost of living. We saw a very quick response from the administration looking at tariffs, particularly as it relates to groceries, commodities, coffee, eggs, those types of things. So elections matter. We saw a very quick response as it related to the administration and trying to create a little relief from the cost of living that is going to continue to play out this coming year as we go into midterm elections. The administration, the president's not on the ticket obviously, but the whole House of Representatives and a third of the Senate is. So it's going to make a difference and we're going to talk a little about tariffs as well. So retirements, the numbers matter. There's Speaker Johnson has a three seat majority, Leader Thune has a three seat majority. There's a very narrow Republican majority. Somebody sneezes, somebody misses a plane and there could be a challenge to whether they can get something off the House or Senate floor. And we have headed towards a significant number of retirements being announced. Now they're going to be on both sides of the aisle, but depending on the congressional district, depending on whether they serve out their term or they leave early could really have an impact on that math and things like keeping the government running at the end of January.
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The other and I mentioned redistricting proposition 50 in California. That is going to be a discussion. You know, it's mid decade, they're only supposed to be on the decade. And there's a little bit of a political arms race going on. You know, Texas, in response to a court case, started a redistricting and then California followed suit. And so you're, we're seeing many of these also be challenged in court. But it could again make the difference of a handful of seats that could decide the majority. The, you know, conventional wisdom is that the party in the White House usually loses seats in a midterm. And that's just historic, depending on the candidate or the issues that are in play. Just historic. But when you add this layer of redistricting and then court challenges, this is going to be a big discussion going into the elections this coming fall.
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Then I'm going to get into it. Department of education, in HR1 there were reforms to government funding and loans related to higher education. So we knew that, but there weren't specifics. They were general reforms impacting all higher education and again federal loans. What happened though is Department of Education took that, those that statutory issue that was in HR1 and moved forward with caps as it relates to post secondary. And in order to meet a goal of capping post secondary loans, they created two bands. One band with an annual cap of $20,500 and another cap of $50,000 annually. Okay. What they did for the $50,000 cap is they created a list of what they called professionals. Accounting was not on that list. Engineering wasn't on that list. The architecture wasn't on that list. The nurses were not on that list. And they have been very, very vocal about it.
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And then the other list which we are on is non professional. And so there's definitely challenges because of we're an in demand profession. Resources are important, but particularly this concept of being described as a non profession. And we actually utilized. Mark, one of your quotes here.
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C
That.
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D
This is just is not common sense.
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C
Right.
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D
So anyway, we're engaged with our partners in the state societies. Mark's reached out to your colleagues with the other accounting professions. The other professions, the engineers and the architects. The comment period for this isn't going to open until January. That doesn't mean that we can't start engaging now. So we're really, really leaning into this.
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C
You said you used one of my quotes. I had to figure out which one. So many bad quotes out there. I wasn't quite sure these were very good quotes.
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E
One without explet.
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D
Very good quotes on a tough issue. So let me get into AI. I mentioned that there has been this push from the administration primarily about being competitive with China. So it's about being able to make sure that we can evolve and innovate AI and that there aren't restrictions put on that innovation through regulation. That has really been where this administration is. You can see everybody, every country feels like they can be the leader. They're all coming at it differently in different ways. You know, some are being more prescriptive in their regulation. There is everybody's got concerns about bias and intellectual property disclosure and those types of things. But the administration's been very focused on.
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Making sure that the states don't move forward in regulation. We have started to see regulation pop up in the states. We saw a moratorium or a federal preemption in the big tax bill, H.R. one that ended up not making it through the process. We saw it included originally for a short period of time in the defense bill, and then that was pulled out as well because it's controversial. Now the President and the administration are moving forward with something through their executive powers. And really it's focusing on preempt federal preemption of states moving forward with regulation. And then attached to that, the string to that is federal funding. And so that will be part of the purse strings that they may be able to pull. Again, all of this is about their view that they can incentivize competition with primarily China through making sure that innovation isn't hindered. Now, let's talk about the other big game in town is what's going on at the Supreme Court. Supreme Court kicked off this last session at the beginning of November. One of the things that they've been looking at is among several presidential powers is the utilization of this economic emergency, economic powers that has been utilized to impose these reciprocal tariffs on countries. So in between countries, not on industries or sectors, aluminum or car manufacturing, it's reciprocal between countries. So the reason the administration used this authority was because it was very broad and they had the ability to utilize it very quickly. But from the get go, we knew there would be Supreme Court challenges. I will say that as orals kicked off, the justices, particularly the conservative justices, were very skeptical about the utilization of this power and the aggressive utilization of it. And so, you know, it's always dangerous to bet on the timing of a decision and, you know, the outcome based on orals. But the consensus is growing that there is going to be a Supreme Court challenge to utilizing these powers. Now, it can play out in a couple of different ways. There could be a narrowing, a decision that narrows the utilization that you can utilize. Maybe the tariffs that have occurred so you don't have to give the money back.
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But you know, moving forward they would have to find other statutory authority to do that. Unless Congress passed something. Again, this is unilateral through the executive branch. And then the other concept is a complete.
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Overrule or overturn of the executive power. And then they've got to figure out what do they do with all of that money. And it's a big chunk of money and the idea of, you know, rebates as it relates to companies, that would be a very, very complex and challenging progress. Now they do have a plan B. The reason they use the emergency powers is because it was the easiest to use and it went the deepest. But there are other authorities that can be utilized and kind of put together to get at the same outcome. That not as complete and not as, you know, not as easy to implement. But there are fallback plans that they can utilize. So personally I don't think they get to the full overturn. I think that they will, even if there is a significant challenge by the Supreme Court decision, they will fall back on some other existing authority. But again, it's going to be messy if that happens.
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Really because we get a lot of questions from the town hall community as it relates to fiscal responsibility. You know, we spent a lot of time talking about the tax bill. We're working through implementation of that thousand page bill. But we do get questions about debt and deficit. A lot of focus during COVID on getting the economy going again, not so much on running up debt and deficit, but we are seeing that. We are focused on it as a profession. We've got some great thought leadership and actual legislation that would really focus on the financial statement of the US government and require statutorily a joint session between the House and Senate to review those financial statements. Not picking sides, not picking whether taxes is up or down or what do you do with entitlements, but making sure that the policymakers know when you engage in policy there's an impact on the financial statement and really focus on that. So it's a great place for us to go from a thought leadership perspective.
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Lastly, there's a lot going on in the states. We're working through enacting the pathway, the new pathway at a 120 hours bachelor's degree and two years of experience.
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But we're doing that. We've got about half the states done have to go. We're doing that In a very anti regulatory climate, the role of licensing boards are being challenged not just only for us, but for the engineers and the architects. We work very closely with them. We're seeing more and more states focusing on tax on professional services.
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Again, there isn't a lot going on at the federal level on these issues. But artificial intelligence, we talked about that. Digital assets and then sustainability in some states certainly not happen focused on that at the federal level. So lots going on at the state level that we continue to be very heavily engaged in and working closely with our partners in the state societies.
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B
Well, Mark, I do. We've got a couple of questions that have come in that I just want to bring to you. Just one is there is just a lot of comments about the Department of Education's statement that came out. A lot of the town hall community want to know, you know, when can they send an email in, when will you activate them?
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D
So what we do is we time things to be the most effective and the goal is that we get the outcome, which is a correction of what we consider to be a significant mistake. We're obviously a profession, obviously common sense. And so, you know, we started out by Mark putting out a statement. We have a letter that has gone directly to the Department of Education. There is a letter that has all the state societies. So every senator and every congressional district is represented in that. And we're going to continue to escalate that again with activity that we're working on with the other accounting associations and with the other professions. We will in all likelihood reach out to activate a grassroots level. But what we want to do is start out and escalate, intern in a way where we can have conversations at Department of Education. Maybe we can meet their goal but address our issue. So more to come and we will be asking for help.
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C
And I think Mark, safe to say if we were to bet on a timeframe, probably not till after the first of the year. What is the deadline on the.
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D
So they're not gonna. We don't think the comment period will even open until January. And so that's another issue on timing. We want to be the most effective we could be.
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C
Yep. But appreciate everyone in the town hall community want to really get their voice out there because you know, we had that quote at one of our events. You know, when, when you don't show up, you give them the opportunity to ignore you. Mark's team, they have a great plan in place right now and I think we're going to take it cautiously for a little while. Like you said test the waters. So I'm confident that when we need you, we will call you. And we appreciate everyone's volunteerism with that.
- [23:41]
B
Okay, thank you. So more to come on that. So now we're going to dive into this AI discussion with Rene Lacert. I mean, he is someone who's been a partner for the profession for the past 20 years. He founded the Pay Cycle, which was really one of the first cloud payroll companies out there that was sold Intuit. It's kind of the backbone of some of their payroll platform today. And he created and founded Bill.com and close to 10,000 firms are leveraging that. And really he's been a key part of building out the client accounting services area with us. So, Rene, it's going to be great to have this discussion with you. What I'd like to kick this off with is you saw the move to the cloud, so you can reflect on that. And now I know you are actively working on. You've been. The AI movement didn't start just with ChatGPT three years ago. This started like eight years ago, nine years ago in machine learning. We're in the next movement here, but just we are in a moment right now. So reflect a little bit on this moment and how you see things trending.
- [24:56]
E
Well, thank you for having me, Eric. And I would say when I step back and think about it, like the next five years are going to change the profession more than the last 50. That's just my belief. And I think when you think about what technology does at the core, technology is an enabler, always has been. From the time of the wheel to the time of the cotton gin to the time of the Internet, AI is just going much faster. And so the enabling is. How's it going to enable all the firms? How's it going to enable the profession? How's it going to enable each person who's a part of this profession? And I think it's going to enable us in a way that allows everybody to actually become the best version of themselves. Right. And this is technology. It actually unlocks creativity. We do way more creatively today than we were doing a hundred years ago because technology has made some of the mundane tasks go away. Well, AI is going to continue for us. When I look at accounting, the financial operations, the mundane, the tdm, the tasks that just have to get done, like it's going to eliminate those tasks and put everybody in a position to actually use their expertise to in a way that's different. So for me, this is a complete unlock. I Think, all of us adapting and understanding and really understanding what does this mean for ourselves and our profession? We have to think about that a lot. So I do think it's a game changer. And lots more to talk about.
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B
Wow. I mean, so just that. That's pretty dramatic. Is it the most powerful technology you think you've seen in your lifetime, your career?
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E
Yeah. I mean, I think. I mean, it's interesting you asked that question. I remember having a dinner table conversation. My dad and granddad. It was in the early 90s, and we were just talking about. It wasn't the Internet, it was just talking about information. And they had said in their lifetime that they could never imagine anything more transformative than the car or the radio or the tv. And I'm like, this information thing's going to be real. And it has totally transformed how we think about work and what we should be doing. Nobody gets into business to actually do the finances unless you're an accountant, because you like numbers, you like the debits and credits, you like the matching principle. You like these things. All of your clients, all of your customers, they got in to pursue a passion. That passion is what we need to activate as a profession, as an industry. That's what I do every day that I want to do every day is activate that passion. Because when people are pursuing their passions, it is a game changer. So I do think this time it's accelerating and it's going fast. I do think it will be transformative to see the unlock that comes, and it will be different for everybody. Everybody will find a better level of expertise that they can leverage with their clients, and that's going to be exciting.
- [27:33]
B
Well, let's just. And Mark, I'm going to bring you in in a second. But, Rene, one thing that there's so much discussion here at digital CPA about, are the agents, the AI agents, and what do they mean? And how are you seeing them being harnessed and what does this mean to the firms?
- [27:50]
E
Yeah, I mean, so one thing that I would say that's very interesting to me is I think that AI is going to give accounting back to accountants. Right. So you think about what happened in my lifetime. Accounting was with accountants. Then technology came, and somehow software gave us all the pretense that anybody could do accounting. We just talked about the profession. How many hours do you need to be an accountant? I worked at Pricewaterhouse. I don't have a CPA because I did not work there long enough. And I worked there three years. I didn't work There long enough be able to study for the test. Right. So it is a real thing that accounting needs to actually go back to the accountants. And I think that becomes a strategic lever. And so what I see happening right now with the agents is taking. Getting rid of what I was calling this morning. Actually one of our partners is calling this morning the elimination of the controllership. If you think about the mundane, tedious tasks that happen every day that keep you maybe from taking up the accounting of your clients because you're not in the office, all that goes away. All the data is centralized now. The cloud actually enables all this to anybody can do it from anywhere. And when you take care of that controllership, then that elevates everybody in the firm to think more strategically about being the cfo. But first you have to take care of that controllership. So what we think about at Bill is how do we take care of those mundane tasks and eliminate them, get rid of that friction so that the firm can actually be leveraging their expertise. Every firm that I talk with has a focus, has an area to understand. It might be their community, it might be a particular vertical niche, it might be something very different. And leveraging that, that's the expertise that's going to make you strategic to your clients. And it's going to take accounting and cast from being, you know, an hourly based billing thing to something that is strategic. And when you get to that point, it is priceless. Right. People will pay what they need to pay because you're offering advice in a unique way. So I think the agents are the first thing to actually up level the game.
- [29:49]
B
Okay, well, you want me to give you a question mark from the, from the town hall community. They're saying if AI eliminates the entry level work, how will new graduates gain the expertise needed to land a job and leverage AI?
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C
Great question, and one that we are focused on when we talk about the competencies. But this isn't the first time this has happened. Maybe it's at a far greater scale. But you know, we're talking a lot right now about simulation training. How do we take. Because you think about it, we have been in an experiential learning community in accounting that you do your first two years and you do the nuts and bolts and you learn it, then you take your next two years and now you're starting to review the nuts and bolts and get more critical thinking in the process. And then after that you become a manager. Now you're reviewing other people and their responses to all that. That training from new Associate to manager was six years. Now it may be six months because you're going to have to have those. And it's not something that the education system is necessarily going to be able to do into the classroom in the universities, because you're going to have to take what happens in your practice in your firm and you say, this is how we do it here. Here's real life client examples and how you put it in the simulation. So learning from the airline community and creating PIL and the medical community has been there for a long time to be able to do it. And it's funny, your keynote speaker yesterday, Zach, talked about his father being a doctor and how much less he knows technically today versus what he knew when he was before. But he's one of the most successful doctors because of his bedside manner. And that's the differentiator inside of the medical community, because three oncologists, they all have access to the same tools. It is the bedside manner that is going to be the same thing that we're putting P back in cpa, the public, the people aspect of who we are. And that's going to be an important training aspect because we're going to take the routine and we're going to completely automate that. It's going to be more about that client relationship and how we're talking to the client 100%.
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E
And one of the ways I think about this is when I think about the mundane tasks that I was doing at PayCycle that helped me understand that there was a need here for everybody. Those tasks didn't help anybody. Nobody teaches you in college how to file a document and keep it so everybody can find it. Nobody teaches you how to reconcile a bank account. These are very mundane tasks that are very easily automated, and they should be automated. So when I step back, the way I think about it is that the expertise that all of us want, that requires practice. You think about Malcolm Gladwell's statement, 10,000 hours is when you get to be an expert, right? So if it requires practice, how do you get that time? Well, practice requires time. That time requires efficiency. Right. And you just go through the chain here. Efficiency is going to be enabled by AI. AI requires central data. This is the cloud that we have. And that cloud actually required software that came from the Internet and then that came from. So this cycle is super important. But that expertise and that opportunity for everybody here to say, this is going to be an expert, I think it means college grads are going to become experts faster, which is going to be awesome.
- [33:01]
C
Yeah, that exactly it. I mean, what we're asking our new associate to do today is far different than what we were asked to do when we started. And I think we have to focus on that. But there are some pieces of what we learned along the way in experience that we still need to provide in that. In fact, I had a meeting this morning. We talked about an education system where we could have maybe 10 hours of classroom and then 30 hours of work and experience, training and trying to get to a different model and how we provide all this. And I think it's an interesting way of looking at things.
- [33:33]
B
So let's pivot a little bit. Mark, you and I talked about this at the opening yesterday. There's always concerns. So there are concerns around trust and can these agent, these agent techs be trusted and how do we think about that?
- [33:53]
E
I think it's just against stepping back. The most fundamental foundational building block of any relationship, personal or commercial, is trust. It's what everybody in this hall, everybody on the town hall, everybody does every day is build trust with your clients. And the way you build trust starts with a say do ratio that is near as close to 100% as possible. You say what you're going to do and then you do it. And that trust matters. And it's also true when you build software like we do, we have to say what we're going to do, we have to then deliver that. And when we fall short, we then have to make it better to actually come back and meet this expectations people had. So I think you have to look to who do you trust to actually do what you need them to do. And so I think another part of trust is, is really empathy. Like everything that everybody does with their clients every day is actually lean in on the empathy. Everybody's learning how to actually leverage their expertise because they're listening to their clients. And so if you have partners that are not listening to you and listening and wanting to know what you need to do, then that's a different opportunity. And so you have to be building that trust. You have to be building that through empathy. It's built over time. And I would say that the agentic world is going to be very much the same as trust in your, in real life world. It's going to be built on a safety ratio and a listening capability that isn't something that you can fake.
- [35:22]
B
So those are some good insights. Is there any, just when you're, how do you think about this from a system standpoint? I mean, the controls, I mean we've got the SOC standards. These are things that the AICPA is thinking about. But what other advice do you have for the firms as they're putting these systems in place?
- [35:42]
E
I mean I think you have to have a focus, you have to have a belief and understanding about what is you want to do. One of the things I tell folks is when you think about I just don't do it willy nilly. Have an AI strategist like have a strategy that is how you want to deploy AI for your firm over time and think about how you get there before just doing so. I think it's super important that you don't create more tech debt across your firms because you're just taking all the AI across every one of your offices and every employee gets to pick. That's going to create all sorts of havoc and something that will not be trustworthy by the clients. You have to step back and actually assess and then really understand the strategy where you're going. I think one of the things that I think about is that sometimes trust has to be built over time. Right? And you think about what we've been doing at Bill. One percent of GDP goes through Bill. We've done that over 20 years. We've learned a ton over 20 years because as we've grown there's been different fraud attacks, different credit losses, different things that allows us to build trust with the community today because we're leveraging that expertise in the experience we provide every second. And so I think that's something that also needs to be looked at is like when new folks are coming in, you have to look at their experience, how they are going to lean in and help build that trust. And that's something that you can't just take for granted. You can't just assume because they're venture backed actually that they're going to have the trust that you need.
- [37:08]
B
Well, we've covered a lot. What we always try to do for the town hall and the digital CPA community is to give give summary slides. So this was a lot related to what we covered. I don't know Rene, if there's anything you missed Marcosial any.
- [37:22]
C
Well, I love the. Just the first one. Eliminate, not automate. And it is, you know, so many times we're all going through transformation in one way or another but so many people want to take their existing process as it is today and automate it. They think this is, this is the answer and it's not. That's not what we're talking about with AI here. How do you manage that inside of Bill?
- [37:44]
E
I mean, I think the thing that we do is again, it's setting that roadmap about where you want to get to. Like, our mission is to make it simple to connect and do business. I define do as actually all the things that we actually do for our clients as document management, it's payments, it's integrating managed supplier management. All these things are things that we do. And that's something that you have to have that strategy around. So I think this eliminate, not automate, is super, super, super critical because the friction that people have with technology is learning it. And if we can use AI to actually bypass a couple of learning steps, that's going to help people adopt it. And so it is, it is an interesting time, exciting time. And I just encourage everybody to develop their strategies and to think hard about where they're going and really putting that energy on what's the expertise that you want, because AI will help you get to that expertise. And that's something that I look forward to seeing everybody develop.
- [38:34]
B
Well, thank you, Renee. Thanks, Mark, for those comments. And when we think about this, with all the work that we've done in client accounting services, this is really and you look at the other, other practice areas as well. This is going to move the trusted advisor, the firms into the role of being a much better advisor, providing more business insights in the accounting services caf area, in the tax area. It's also doing a lot to drive efficiency and quality in the audit market. We've got a number of resources here that will help you unpack this further. A white paper on the highly automated firm. We've got a couple of new AI guides. These were highlighted this morning in that earlier discussion with Pascal and that group of panelists. Some of these new AI guides that we're releasing. And then we've got the 2025 AI in accounting report. So we're now we're on time, too. We're on time, which is always good. We like to be on time with the town hall. So, Melanie, looking forward to your technical update.
- [39:43]
A
Thanks, Eric. And there's always a lot of information to cover. So as we've talked about the shutdown and its impact to the IRS and the status of where we're at, I get two main questions from people, and the first one is when will the filing season start? Which the answer is, in theory, it will start on time, around the Martin Luther King celebration date, start period. Now, the irs, as of my conversations with some of their executives, as of about two weeks ago, they are on track. The other question that I get a lot of has to do with the guidance with regards to HR1, when is the guidance coming? And you know what, we've actually been seeing the guidance coming and it's been coming fast and furious. And we are getting different pieces. So notice 2025, 69 came out right before Thanksgiving. And that guidance really is about how people can claim the deduction for the qualified tips in qualified overtime. Now, that guidance is really important because the IRS actually came forward and they said that for 2025, they are not updating the W2 forms, they are not updating the 1099s, and they also gave penalty relief to employers, which essentially is saying the employers don't need to provide anything to the employees. And that really created a lot of concern for people as to, wait a minute, how can we claim that deduction when we've got nothing coming down for us? And the way that this guidance comes forward really is trying to give leniency for taxpayers. Now, when all these concerns arose, no shocker, AICPA submitted a comment letter to the IRS and Treasury. And actually our work really resonated with them. And in this guidance, those examples that we're going to talk about here in a minute, those were pulled from our comment letters and they were tweaked to modify. And that is part of the guidance. So we are effective when we hear your concerns and we take it back to treasury and the irs. Now, to be very clear, the guidance, it is not all encompassing. We recognize that there is substantial complexity, like for example, including state conformity and those laws, which gets very messy. And we are going to be waiting for that guidance for 2026, because again, that's when those forms are going to change and that's when we need that guidance. So what does it mean for those that have tips and want to be able to claim it? Like I said, it is going to offer them some leniency. This guidance gave them a list of examples of documentations that they can rely upon to be able to take that deduction. And they also said that the calculations, as long as they were reasonable, the IRS would be accepting them. Now, there were two things that came forward for this. Notices for the no tax on tips. The first one being that if you received a tip through an eligible occupation, you can pretty much count it as a qualified tip and then apply the rules to it. And also the sstb, the specified Service trader business limitation, was not going to be taken into account for 2025. That is now a transition period for 2026. So moving on to overtime, the IRS has said absent any guidance or documentation from the employer, any calculation that's reasonable will be accepted. And again, we are hoping to get more clarification for 2026. But the other thing that they did is they really ensured the definition of overtime was clear. And that comes down to that premium portion. That half portion of overtime would be considered the portion of time and a half. So that could be deducted. So for our members, we say keep really good records, which we say that all the time anyways. But in this particular case, when you're kind of, you know, coloring a little bit outside of those lines, you need to have those good records for that. So Trump Accounts, those also dropped. The initial guidance for that came out on December 2nd. And essentially, Trump accounts are individual retirement accounts with special rules for their growth until the beneficiary becomes 18 years old. But again, the devil is always in the details because Trump Accounts, what it really does is it blends quite a few different code sections into this. So for example, if you're setting up the account that's under code section530, cap A, if you're talking about the IRAs, you're in another code section, the initial payment, into a different code section. So again, you really do need to pay attention. But in general, if the child is born in the US between 2025 and through 2028, they will be eligible for this. There will be $1,000 federal seed money that will go to them, and families can contribute about $5,000 and employers can also contribute up to 2,500. Now, we've heard about the Dell family that did contribute to this. There's no formal guidance out there right now. There's kind of something out in the White House's website and that is meant for children up to 10 years old that didn't qualify under these rules. And it's about $250 for those children. Now, there's a link on the slide for you to pay attention to that has some resources that we are opening and unlocking for about two weeks. So take advantage of that during this two week period. Okay, so whoever said the IRS wasn't witty? The form for the Trump accounts is named form 4547. So with that in mind, you can actually use this form to open the account. And the form can actually be filed at any time. But it really is encouraged and recommended that you file it with the tax return. Now, the interesting part about the instructions is there is A link in the instructions that provide more information like eligibility. But that link also tells you that on December 17th more information will be provided. So pay attention to the instructions for that link.
- [45:44]
D
Link.
- [45:45]
A
And also the online enrollment should be kicking in about mid-2026 for those that are interested. So we're going to jump into the round robin. IRS funding. The Senate Republicans came forward with their proposal and overall they gave the IRS a haircut of 4% from prior year, which brings them to $11.8 billion. But they increased taxpayer services about 15%. That's important because now we want to see HR1 get implemented properly and smoothly. Now, like all things, there needs to be a balance. So where did that money come from? It came from them slashing it and operations support by approximately 22%. Now enforcement is staying steady, so there's no change there. And if you look at earlier proposed budgets, that's actually pretty good because in earlier proposed budgets There was a 23% cut across the the board, bringing it to the lowest level. So this is good news. So we're still waiting on that. The math Error Authority, the bill actually was presented, it moved through the House and Senate and was signed by President Trump on November 25th. And what that does, it requires the IRS to provide very clear and simple language as to what they're doing on the notices and what adjustments they're making so taxpayers can understand their notices with regards to disaster relief in Missouri for those that were impacted by the storms that occurred on March 30th of 2025. Now you will have until March 30th of 2026 to be able to make payments and file returns. Okay, international guidance. This one's a deep dive. And if you really wanted more things, you really need to take a course in this so high level. On November 25, the IRS issued some guidance which to the one month deferral selection, which was election, which was actually the biggest concern that we had in the international arena. Now the IRS had said that by the end of the year they would issue four pieces of guidance and they did. And the other three pieces of guidance were released on December 4th. And that really does complete the guidance that we will be seeing from the IRS through this year on international provisions. Now, employee retention credits, there hasn't been much movement there, but I've had a few members reach out and asking about about the disallowance notices and what's going on with that. We are aware that right now the IRS is really moving forward with a massive disallowance phase and they are really sending out those notices to people. So if you were to get or your client were to get one of those notices, please don't wait, go ahead and initiate that appeals process. The sooner rather than later. You do have and are bound by the two year statute of limitations. So there is a finite period of time that you need to take action. So be proactive. Also leverage the taxpayer advocate services. They do have influence and they can help you. And then finally I do want to raise awareness. The link here takes you to the Form 907 that plays a critical role with those claim notices or the disallowance notices with that. Also I do want to bring you to the tax practice quarterly. That will be December 10th and that is very timely and December 10th at noon because it is about the 2026 busy season readiness. So take a look at that now talking about timely things. The AICPA did a survey with the Harris Poll and they wanted to know how Americans are approaching holiday spending this year. And of course all things need to be balanced between festivities and of course the realities of the financial realities. And what they found was that a quarter, only a quarter of Americans actually budgeted for the holiday spending. But even those didn't plan on sticking to the budget. And then we found that over half of the people actually were planning on getting in debt for this. And if you take deeper dive into that survey, they were talking about that debt. They were looking at minimum six months and even a year to pay off that holiday spending debt. So this is an opportunity for financial planning. And there is a link there to an article that actually offers some tips and for spending and some of those talking points that you can have with those clients. Okay. So taking a look at our engage communities, engage 365 communities. That really is a members only platform where you can connect, you can ask questions, you can grow and develop its networking, great networking with that. So as a tax person I will absolutely plug the tax portions which are individuals, small business, international and corporations. But we have more than that. There is and we are building a universe of communities. Mark.
- [50:24]
C
Yeah, so our communities, it's one of the things that when I started in this role I really wanted to see us get better at. We implemented it in my last position in my last organization. It is a great way based on whether it's going to be your service line or industry. It's a great way to connect with others who have common interests and for us to share resources and tools in one direct spot. Accessible, accessible, easily accessible. You know, don't quote me on this. Our website might not be the easiest to navigate in these days. So wouldn't it be nice to have a different way to be able to interact with us and the tools that we have available to be able to do things. And so you see a list of what's out there now, coming soon. Eric and I, we actually talked about this a couple of weeks ago. Now that this is. This here digital CPA is a community. And wouldn't it be great for the digital CPA community to have a platform to stay connected? Well, after this conference ends in December, and so we're going to do a client advisory services community and we're going to do an audit transformation community to be able to make that happen. I'm really excited about it. That's what this is about, being able to stay together on a regular basis. This is LinkedIn on steroids. It is a different way with all the tools that are going to be accessible through that. Yeah.
- [51:54]
B
And Mark, one thing I want to make clear, and maybe we should make it. We could do a digital CPA community as well on top of these, the client accounting services and our transformation. But we're going to be inviting you and we know that there are firms that have people that are here that are not necessarily AICPA members. You're going to be invited to this community. So this is going to be a community that we help monitor, I mean, and have our subject matter experts participating in. So I think this is an exciting development. We will definitely be talking about this probably regularly on town halls going forward. Mark. And we'll bring some of the probably information and the topics that these communities are discussing to the town halls.
- [52:41]
C
Yep, makes a lot of sense.
- [52:42]
B
So more details on that and we'll be getting guidance out to you on how to, in the newsletter, how to, how to sign up for these town halls. But you've got, you've got a link there that you can access as well.
- [52:56]
D
Great.
- [52:57]
B
So that's you. That's it. Well, we've got plenty of questions. I think we're close. We're close to a record here with the live audience here in the nation's capital. We've got well over 13,000 online with us and we also have our virtual attendees. So thank you. Thank you all for attending. Melanie, I'm going to go right back to you with a question. There's lots of questions about, you know, the no tax and tips and the overtime hours and all of that. But one question is related to overtime. There's. There's overtime that you can get for more than 40 hours overtime in a day. All of that guidance, where does that stand?
- [53:42]
A
So we still need more guidance on a lot of the different pieces. It's and there's a lot of aspects about it. And I'm hesitant to give you an answer because keep in mind a lot of the laws at the state levels, it's how you qualify it at each state. So we're looking at the state conformity to be able to then look forward to how it qualifies and what portion of it would qualify.
- [54:03]
B
Like I can tell, I mean talking some of there's a lot of complexity here. We've got, you know, the, the tax technology providers, the software providers are going to be working on helping the firms address some of this, but that's it's going to be by state. So a lot of complexity on how this will be for sure.
- [54:21]
C
Yeah, I think a lot of work ahead of us. And that just means you need to stay tuned to town halls.
- [54:27]
B
Yes. So Mark Peterson also just, you know, comments about, you know, the government potential shutdown happening again and just, you know, where is the whole Affordable Care act, you know, for that to get solved during this year or early in 2026.
- [54:52]
D
We did a lot of town halls heading into shutdowns that didn't happen. Right. So they would get a last minute deal to keep it open. Obviously this time that didn't occur. So it's going to be the facts and the circumstances. Each time we get to kind of the brink. They are trying to negotiate a deal before they leave town related to those premium tax credits. Whether there will be enough votes for whatever that product is is a significant question. The deadline is the end of the year.
- [55:21]
And so that will either be resolved or it will be an outstanding question in January. And there's two things. I think it's the facts and circumstances of what they're negotiating over. 43 days we just went through was really about a clean extension of government funding or addressing those expiring provisions. And so when they get to January, end of January, it's going to be two things. It's going to be what are the facts and circumstances, the issues that are in play because there's only so many moments of real leverage. I don't care if it's the Republican Party or the Democratic Party. If you're in the minority, you only have a few moments of real negotiating leverage. And unfortunately that's usually during pending shutdown. And then it's going to be the numbers you know who's, who's or what's the size of the margin in the House and the Senate in order to get something done. So we'll see how that plays out. There's no certainty at all heading into the next two weeks.
- [56:13]
B
Well, one we were earlier this week, we were with Michael Faulkinder, who's the former Deputy Secretary of Treasury. Great discussion with him. We're going to be bringing him on a town hall shortly and there's lots of questions about the IRS here. So Mark, modernization of the IRS, that's a topic we're going to hit in 2026.
- [56:34]
C
It was, you know, it was interesting perspective and we've talked about the, that now with the Treasury Secretary and the plan right now is with Frank Bisagano being the CEO rather than having this confirmed commissioner in place. Frank comes from a banking background and Mike made a lot of references to the fact that the IRS system, they have like 17 or 18 different databases that don't talk to each other. And the banking community went through this and they were able to. And this is where AI is going to be a big enabler is get them to stack on top of each other and almost instantaneously search all 17 databases at the same time, which is going to make it far more efficient.
- [57:20]
D
Yeah, don't start over.
- [57:21]
C
That's right.
- [57:22]
A
And as far as the taxpayer experience, that would be phenomenal because when you call the irs, it depends what agent you get that has access to what server.
- [57:30]
C
Right.
- [57:30]
A
And then they can't even help you because they just don't have access to information.
- [57:33]
B
Right there. Renee, any comment on that was very interesting. Just, just, you know, using AI. There's been all. And he was, he was quite excited about the potential to really make this happen with the new AI capabilities to say, you know, we can solve this, we can solve these different database issues and drive massive efficiency at the, at the irs.
- [57:55]
E
I mean technology is solvable. And so I would agree with that. I don't, I mean this is a bit of the nerd in me. Like database design matters. So when you get back to trust, like you have to be very, very clear about how it all works. And so I think it's solvable. I don't think it's a three month fix. Like this is going to be a significant investment of people understanding the databases that'll be 10x faster than it would have been before because of AI. That much I believe. I just would say it's going to take some time.
- [58:22]
B
Yeah. But somewhat encouraging to have Somebody with technology, that banking background. It is a bunch of databases, a lot of, you know, tax experts at the irs. There's a system issue there.
- [58:33]
E
There's a lot of tech debt and banking. So I think he's well positioned.
- [58:36]
B
That's right.
- [58:36]
E
That's right.
- [58:37]
C
You know, the interesting quote he had when he was, I think it was in front of Congress, he said that the IRS was five years away from modernization. And he'd been saying that for the last 30.
- [58:45]
E
That's true.
- [58:46]
C
So, you know, again, it still may only it still may be five years, but it may be a more bigger reality, closer to five years now based on what they have in front of them.
- [58:56]
B
Well, we're now going to move to some closing slides. Here you can get Access to the 2025 MAP Survey. Great data. We've got a lot of benchmarking reports here at Digital cpa. Great way to learn by leveraging the map survey. We released today the Audit Transformation Report. So you can now download this. We did this. AICPancpa.com, a very important analysis of where firms stand today. So I strongly encourage you to take advantage of that. Coming up on December 18, we may have an additional guest, but this is the current lineup. We'll have Marcy Russell, the Economist, looking out into 2026 with some predictions and also a little reflection on 2025.
- [59:51]
Here's your town hall resources, so take advantage of those. One thing I want to say, we probably got the most questions today on the town hall mug. So we will come back to you on the next town hall. Some people, they're happy to see that we're not using plastic water bottles up here. And we're going to find a way. A lot of the attendees mark, they want their mug.
- [60:10]
C
Yeah, well, you know, for 29.95.
- [60:14]
B
And no.
- [60:16]
That'S, that's not happening. There it is. There's another quote from CEO of the aicpa. But thank you for being with us today. Thank you to the live audience here in the nation's capital. Thank you to all of those online. We look forward to being with you again on December 18th. And we look forward to talking to this community here shortly. Michael Cerami is going to come back on stage with a couple of remarks. But that's all here from today from the town hall.
- [60:45]
C
Great.
- [60:48]
A
Thank you for your participation. You can also subscribe to the AICPA Town hall series on your favorite podcast platform, as well as watch archives on YouTube and find resources@cpa.com Townhall Tune in for live broadcasts Thursdays at 3pm Eastern Time.
- [61:10]
C
This podcast is designed to provide illustrative information with respect to the subject matter covered and does not represent an official opinion or position of the AICPA or AICPA.org it is provided with the understanding that The AICPA and AICPA.org are not engaged in offering legal, accounting or other professional service. If such advice or expert assistance is required, the services of a competent professional person should be sought. The AICPA and AICPA.ORG make no representations, warranties, or guarantees as to, and assume no responsibility for the content or application of the material contained herein, and especially disclaim all liability for any damages arising out of the use of reference to, or reliance on such material.