Podcast Summary: AICPA Town Hall

Episode Title: Shutdown Watch, Economic Outlook and Benchmarking for Firms
Date: September 25, 2025
Hosts and Guests:

• Erik Asgeirsson, President & CEO, CPA.com (Host)
• Susan Coffey, CEO – Public Accounting, AICPA (Host)
• Mark Peterson (DC Update)
• Marcy Russell (Economic Update, Former Chief Economist, CNBC)
• Melanie Lauritsyn (Technical Update)
• Lisa Simpson & Erin Hartman (MAP Survey & Benchmarking Results)

Episode Overview

This episode delivers a comprehensive update on the state of the accounting profession amid government shutdown risks, an evolving economic environment, IRS technical changes, and new benchmarking data for firms. The hosts and expert guests address Washington developments, monetary policy shifts, tax updates, and recent survey insights on firm growth, compensation, and adoption of AI and best practices.

Key Segments and Insights

1. Washington & Government Shutdown Update

Speaker: Mark Peterson
[00:10 – 13:53]

Congressional Funding Standoff & Impending Shutdown

• Congress is on recess with no resolution on government funding, risking a shutdown after September 30th.
• House passed a "clean" continuing resolution (CR) to fund through November 21st, but Senate failed to reach 60 votes.
• "This one is probably more likely than not [to result in a shutdown] for a couple different circumstances." — Mark Peterson [01:26]
• Two camps: House Republicans want a straightforward extension at current levels; Senate Democrats push for permanent ACA premium tax credits and increased social program funding.

Shutdown History & Professional Impact

• From 1976 onward, shutdowns were often brief, sometimes just to finish paperwork; recent shutdowns have been longer (last: 35 days).
• Primary impacts: IRS and Treasury functions, Department of Labor, SEC, government contractors, and taxpayer services (e.g., passports, national parks).
• Importance of "essential" workers: during last near-shutdown, IRS deemed all employees essential to continue operations for fall tax deadlines.

"Essential. If you're deemed essential, then you keep your job—but your payment may be deferred." — Mark Peterson [05:15]

• New risk: Essential employees could face Reduction in Force (RIF), not merely furloughs.

Potential Tax Deadline Disruption

• Significant focus on IRS operations given the October 15 tax deadline; hope expressed that staff needed for deadlines will be designated "essential."
• "We're being very vocal that they're prepared for us." — Mark Peterson [07:55]

Legislative Climate

• Political gridlock persists due to narrow majorities and challenge of passing all 12 appropriations bills, leading to frequent continuing resolutions rather than regular order.

Other Regulatory Developments

• SEC Reporting: Ongoing debate over ending quarterly reporting requirements to encourage long-term business focus; mixed congressional support.
• Outsourcing Tax: Recent legislative proposal to tax overseas outsourcing more broadly—not just call centers—uncertain legislative path but administrative action possible.
• H1B Visa Program: Presidential proclamation would require a $100,000 employer fee to sponsor H1B visa candidates, surprising and concerning business leaders. Marks a significant rise from the previous cost of several thousand, with major impact expected in sectors employing skilled foreign labor. Likely legal challenges forthcoming.

"It's like a tariff on labor." — Erik Asgeirsson [13:42]

2. Economic Outlook

Speaker: Marcy Russell
[13:56 – 30:56]

Fed Policy and Interest Rates

• Fed recently cut rates by 25 basis points for the first time this year, shifting to post-COVID normalization.
• Major historical context: After the 2008 crisis, rates were near-zero for years; another drop to zero during COVID-19, with subsequent aggressive hikes as inflation soared.
• "We're moving back to some post-COVID final normalization." — Marcy Russell [15:29]
• Inflation fell from 8% to 3%, but not yet at Fed's 2% target.
• Real uncertainty prevails on the "right" interest rate; labor market weakness is an indicator of restrictive policy, but massive layoffs have not occurred.

"[Interest rates were] unnaturally low... The real estate industry really enjoyed the mortgage rates...for most of the past 15 years." — Erik Asgeirsson [20:58]

Mortgage & Consumer Impact

• Most Americans hold mortgages under 4% due to long-term US loans. This has supported consumer spending and insulated many from recent hikes.

Fed Balance Sheet & Quantitative Tightening

• After crisis responses, Fed’s asset holdings reached $9 trillion—now gradually reducing ("quantitative tightening").
• Effect: Long-term rates stay elevated despite short-term cuts because the balance sheet shrinks in the background.

Current Economic Concerns (Poll Results)

• Top challenge for firms: Inflation (30%), Hiring challenges (25%), regulatory/tax changes (18%), interest rates (14%), tariffs (13%).
• "The Federal Reserve probably doesn't need to lower short term rates aggressively. If inflation is still the problem ... they're certainly not going to take them down to 2% or 1%." — Marcy Russell [26:24]

Labor Market Trends

• Post-COVID labor markets are stabilizing; hiring challenges reverting to a "normal" economy, not 2021/22's overheated market.
• Ongoing business caution: Uncertainty in tariffs, shutdowns, and especially the impact of AI on hiring decisions.

Long-Term Economic Prospects

• Deregulation, AI investments, and other slow-burn changes are expected to contribute more strongly from 2026 onward.

"It takes time for deregulation to roll out...for AI to make its real potential known... I think 2026 stacks up to be a really good year for the economy overall." — Marcy Russell [30:01]

3. IRS & Technical Updates

Speaker: Melanie Lauritsyn
[31:00 – 40:56]

E-Payment Transition & Refund Guidance

• IRS begins phasing out paper refund checks for individuals (as of Sept 30); 93% of refunds will be via direct deposit, prepaid cards, or digital wallets.
• Key clarification: Payments to IRS (i.e., taxpayer payments) may still be made via check; this phase is only for IRS-to-taxpayer disbursements.
• More details for business payments and entities coming for the 2025 tax year.

Form, Deduction & Regulation Updates

• Schedule 1A (draft): New additional deductions form, including for seniors. Some instructions and details remain pending.
• No Tax on Tips (Proposed Regs):
  • Qualifying tips must be cash or cash-equivalent (credit/debit OK); not employer-mandated charges.
  • Deduction cap: $25,000 per year, regardless of filing status.
  • Not all payments or activities (e.g., mandatory gratuity, tips related to certain illegal activities, SSTBs) qualify.
  • Detailed examples and official proposed regulations available; guidance to follow.

"A mandatory tip [for large parties] is not a qualified tip because it's not voluntary." — Melanie Lauritsyn [34:42]

• Secure Act 2.0:
  • Final regs address catch-up contributions for high-income earners—Roth designation required for certain ages.
  • Compliance mandatory 2026 (with latitude until full implementation in 2027).

Disaster Relief and IRS Modernization

• Expanded filing relief for recent disasters (e.g., Wisconsin); comprehensive resources and FAQs provided.
• Modernization: GAO reports IRS on track, though pause in 2024 due to treasury; new strategic plan expected.

Other Updates

• New resources on meals/entertainment deductibility.
• Updated forms (e.g., Form 706) can be used before vendor software support.
• National Taxpayer Advocate highlights EIN application struggles, urges IRS modernization.
• Notable upsurge in penalties for social media scams ($162M+ issued).

4. Benchmarking & MAP Survey Results

Speakers: Lisa Simpson & Erin Hartman
[41:24 – 53:17]

Survey Scope & Methodology

• MAP (Management of an Accounting Practice) Benchmarking Survey conducted biennially; over 1,400 firm participants.
• Median values used for analysis (minimizes outlier skew).

Key Findings

• Healthy Firm Growth:
  • Median net total fees grew 6.7% YoY, down from prior 9.1%, but solid given COVID-era highs.
  • “Pretty solid steady growth last year.”
• Salary Trends:
  • Beginning salaries up sharply:
    • Bachelor’s degree +11% (to ~$61K)
    • Master’s +17% (to ~$68K)
  • Smaller firms under $5M saw the highest increases.
  • Growth in manager/senior associate compensation especially strong, addressing historic lag in these “danger zone” career years.
• Compensation Per Partner: Up ~10%; Net remaining per partner (profit before compensation): up ~12% (avg $253K).
• Top Performers:
  • Identified by top quartile net remaining per partner.
  • Strategies: Tech adoption, process efficiency, leveraging more staff per partner, targeting ideal clients, expanding advisory services, and talent augmentation.

"They're doing more right-sizing of their client base, saying no to clients, doing more cash advisory services, things faster and newer." — Erin Hartman [47:38]

• AI & Capacity:
  • 88% of firms are confident about adapting to AI in the next 3 years.
  • Many plan to use freed-up time to reduce hours and offer more consulting/advisory work.
  • Top performers are proactively experimenting with AI rather than waiting.

Action Steps for Firms

• Firms urged to select 2–3 key metrics to track and set improvement goals.
• PCPS (Private Companies Practice Section) members get deep drill-downs in the MAP platform, including regional insights.

Notable Quotes & Memorable Moments

• "I do think this [shutdown] is probably more likely than not for a couple different circumstances." — Mark Peterson [01:26]
• "We're being very vocal that they're prepared for us." (on IRS and tax deadlines) — Mark Peterson [07:55]
• "It's like a tariff on labor here, Mark." — Erik Asgeirsson [13:42]
• "[Interest rates were] unnaturally low... and the real estate industry really enjoyed the mortgage rates we had for most of the past 15 years." — Erik Asgeirsson [20:58]
• "The market is done and over with... this is what I would expect from a normal, pre-COVID economy." — Marcy Russell [28:05]
• "A mandatory tip... is not a qualified tip because it’s not voluntary, it’s going to automatically apply and show up on your receipt." — Melanie Lauritsyn [34:42]
• "They're doing more right-sizing of their client base, saying no to clients, doing more cash advisory services, doing things faster and newer." — Erin Hartman [47:38]
• "Firms are confident about adapting to AI... top performers are making decisions and trying it, not waiting for perfection." — Lisa Simpson & Erin Hartman [49:31–50:05]

Timestamps of Important Segments

| Topic | Speaker(s) | Timestamp | |----------------------------------------------------|-------------------------------------|---------------| | DC & Government Shutdown Update | Mark Peterson | 00:10–13:53 | | Economic Outlook & The Fed | Marcy Russell | 13:56–30:56 | | IRS & Technical Updates | Melanie Lauritsyn | 31:00–40:56 | | MAP Survey/Benchmarking Results | Lisa Simpson & Erin Hartman | 41:24–53:17 | | Notable Follow-up Questions & Open Forum | Mark Peterson, Melanie Lauritsyn, | 54:21–58:31 | | | Lisa Simpson, Erin Hartman | |

Episode Takeaways

• High shutdown risk due to ongoing political wrangling may impact IRS operations, especially around filing deadlines.
• Inflation remains the top economic challenge for CPA firms, with labor market pressures stabilizing and AI/de-regulation set to reshape the landscape moving forward.
• IRS updates: Phased e-payment transition, proposed tip deduction rules, Secure 2.0 implementation details, and increased focus on modernization and compliance.
• Firm benchmarking shows robust compensation increases and technology-driven growth strategies among top-performing firms.
• AI readiness: Most firms are optimistic and proactive, using new technologies to free capacity for higher-value advisory work.

Additional Resources & Next Steps

• MAP Survey results and platform access are available to PCPS members; nonmembers can obtain summaries.
• Firms should focus on 2–3 key metrics from benchmarking data to guide growth and competitiveness.
• Stay tuned for future AICPA Town Halls for updates on shutdowns, regulatory changes, and actionable firm best practices.

To learn more:

• Visit cpa.com/townhall for resources, webinars, and upcoming events.
• Subscribe to the AICPA Town Hall Series podcast for the latest updates.

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