← AICPA Town Hall
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Welcome to the AICPA Town Hall Series.
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Your resource for the latest news and.
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Updates on pressing issues facing the accounting profession.
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Good afternoon and welcome to the AICPA Town Hall. Today is November 6, 2025 and I'm here with Mark Kozio, the CEO of the AICPA. So Mark, great to see you. And we've got a fully packed town hall, a lot for us to discuss today. But first, just hello.
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D
Hello, Eric. Great to be here. And it looks like from the agenda, this is going to be the official Mark show. I think we have a Mark in every segment of today's agenda.
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A
There you go. But with a lot of, you know, we're starting out with the profession update with you and your recent travels and what you're seeing across the US and then going into a DC update, we've had elections this week, we still have a shutdown. We'll be talking about technology. Big, big things happening related to generative AI, not just in the broader marketplace, but right here with our firms and business, the finance marketplace as well. And then we're going to move into a technical update and then we've got a really interesting closing section where we're going to talk about year end tax and financial planning. So let's get into it. So Mark, with you, let's just kick things off and talk about how you're seeing things right now with the state of the economy and the state of the profession.
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D
Yeah, you know, the profession in general. What's interesting and I'm glad we also are doing the Technology Spotlight with Pascal. I always appreciate hearing Pascal, just one of the premier thinkers really globally, but has been very helpful to us as a profession. And so a lot of the discussions since the last two, since two weeks ago when I was on the town hall after our council meeting, I've had a number of meetings but in four other cities since then and a lot of discussion around the economy. What am I hearing from other firms? What am I hearing from other organizations? We've shown ad nauseum a number of surveys from our economic outlook for those who are in business, industry, our CFO community, but then also firms and showing what the past has looked like. But more so a lot of firms are asking what we're hearing from other firms about expectations. Some of that is based on news feeds that are out there and the news that there's been some layoffs in the profession. All of those layoffs, I talked about it two weeks ago. They have been but blips and firms that are just kind of counseling out those that may have been on a little bit longer, the turnover rate has stabilized. There has been less turnover over the last couple years. Firms typically, as they get ready for the upcoming busy season and a new influx of pipeline, they typically make some adjustments to get people counseled out of their organization. So it hasn't been significant by any means, but it always seems to get news headlines. And so far, from what we've seen, I don't think I've seen any firm over. It's been less than one and a half percent of employment in any one of them. And so it really has been more or less surrounding areas bad for, you know, you feel bad for those who get displaced. But we also think that there's a lot of great opportunities in the profession. So firms are cautious about the upcoming year. You know, it's definitely. We've seen this softening of advisory, but, you know, we still haven't seen the full effect of HR1 implementation. And I think this is what is really going to be this opportunity for the upcoming year. It's going to be busy, I'm sorry to say, you know, because HR1, especially with the shutdown, there's been drips and drabs of support coming out of the IRS around HR1 implementation. It will pick up. It has to pick up to get us ready. I know Melanie's got some updates on tax forms and the like, things that have been worked on, but once we come out of this government shutdown, I'd be hopeful that we start to get more information we should be getting out to our clients. You and I have talked a lot about tax research and opportunities. There's, you know, being able to utilize Blue J, coming up with summary documents, sending them out to our clients. We get smarter in this upcoming year around how we interact with our clients and create opportunities based on having this information in an AI environment at our fingertips.
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A
Yeah, Mark, I mean, there's a lot going on. I mean, people are looking at, they're looking at the stock market, you're looking at the adoption of AI. You know, things are changing and changing in business. But I look at 2026, I look at the opportunities for the firms. You know, in some ways, it's never been a better time. I mean, there's just so much value that they can provide to their business clients and their individuals. The capabilities, the investments are increasing in an exponential fashion. We're going to get into that with Pascal. But you are seeing some businesses, some of the larger businesses, ups, Amazon, there's displacement occurring because there's just changing ways on how work is being done. But there's going to be a lot of new business opportunities as well.
- [05:23]
D
A ton. A ton. And with our firm, same thing, especially with the AI landscape. AI, another opportunity I talked about, tax. Tax is here and now AI will continue to evolve for the profession where more of our clients are going to be asking the who, what, why? We talk about AI assurance and AI controls that CFOs need to put in place in their business. So a ton of opportunity on that in the upcoming year.
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A
Well, Mark, you and I are going to stay here for this next section. We will bring Mark Peterson up. Sorry for jumping the gun, Mark. And you look great today with that, you know, nice tie you're ready for. I mean, I'm sure you're out there, you know, meeting with members and elected officials, but it has been maybe even and you've been staying up rather late this week as well, unfortunately.
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E
So you know what, I'm sure there's going to be some frustration in the town hall that we're talking about elections. But the reality is politics drives policy, particularly at a point in time when the government shut down. So off your elections. That's the narrowest of the cycle, you know, having these elections in an in a odd year, really. The marquee were New Jersey governor, Virginia governor, mayor of New York City. I'm going to focus on the two governor races, but these are the first elections that have been held since a year ago, you know, when President Trump won his election. And so it absolutely is going to have an impact on the shutdown negotiations. But the shutdown negotiations are just going to lead to a temporary funding that will mean that there are going to be more discussions in the near future related to longer term funding. They're going to have an impact on that. They're definitely going to have an impact on the tariff discussions as well. And not to mention the opportunities that there may still be for some bipartisan work around tax. And so, you know, when you look at the outcomes of these elections, a win is a win. And the Democrats had a very good night, no doubt about it. But you know, Virginia and New Jersey's the polls had the two Democrats ahead in polling. They exceeded expectations in the margins at which they won. Kamala Harris, vice president, did win both of those states in the presidential election. And so I would not say there were any upsets. But a win is a win. And you know, the next day, if you're a Democrat in Congress, you are really focused on how to leverage These wins, feeling emboldened around negotiations and related to the shutdown and then thinking about how can you leverage the messaging from these elections that you learned to go into the upcoming midterm elections. Interestingly, Mark and Eric, the winning issues were the economy and cost of living, which are two of the issues that President Trump won on just a year ago, but different party.
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A
So Mark, right now the 25 election's over, but it's all about the midterms now. And I know you've got this. We'll bring a slide back up. You've got a slide. Talking about another big topic of the week, redistricting.
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E
Redistribute. Yeah. Because the other, the other issue that was definitely has a national impact is Prop 50 in California, which was to rewrite their congressional districts. So there's a court case in Texas. So Texas rewrote their, their congressional districts. Very red. Texas advantaged Republicans. You know, Governor Newsom looked at the opportunity for a redistricting in, in California, they're potentially going to pick up five Democrat seats through that redistricting. It's redistricting supposed to happen every 10 years right after the census. And so these are in the middle of that cycle. So we are kind of seeing a redistricting arms race in numerous states and a lot of that is for reapportionment in order to advantage one or both of the parties. Operatives on the Republican side that will say when the map is done, they think they're going to pick up seats which will help them in the midterms. History has said that the party in the White House usually loses seats. So a lot is up in the air related to the upcoming election. But what happened in California on Tuesday is a big element related to that shutdown. Here we are, day 37. Discussions are ongoing. Just the state of play again is the House of representatives in September, September 19th voted on a resolution to keep the government open at current funding levels until November. November 21st got out of the House on a party line vote, went to the Senate and has been in the Senate since then. I think they voted on it 14 times. They don't have the 60 vote votes required because not enough Democrats are crossing over in order to vote yes. The Democrats are holding out for a priority they see in extending the ACA or Obamacare premium tax credits. They feel that's very important. So those negotiations have been going on. We have not been getting anywhere. And then we had the elections on Tuesday. So as I mentioned, politics drives policy. So if you're on the Democratic side, you're feeling very emboldened. You're feeling like that shutdown strategy of negotiating for some successions, some sessions related to those ACA health care premiums was working. This was the first election, by the way, that was during a government shutdown. And Virginia is a very sensitive state to that because of proximity to D.C. having said that, where we are today is if you want to go to the next slide, I can talk you through a little bit of, you know, the pinch points. Okay. The first and the 15th payday for the military, Homeland Security, TSA, those are a big deal. And when those paydays are missed, it creates a lot of tension. The outcome from the elections on Tuesday, major factor. Again, you know, if you're on the Republican side, you're up for reelection. You saw the outcome of these elections. Do you want to change this dynamic around a shutdown? Thanksgiving holiday traffic. I just got an alert from the United to anticipate cancellation starting this from the 6th to the 13th because they're shutting down 10% of flights and I think 40 different airports. That's definitely going to drive some behavior. Essential employees pay. So, you know, the government employees have not been getting paid. Some of those are furloughed, they're not at work, but some of them are working. And at the IRS and other agencies, they haven't been paid. The nutrition supplements is a big one. The federal government, the largest federal employee union has come out to say, do a short term extension, clean. You've got other issues. The Supreme Court has said, because there was pressure that maybe they would rif those furloughed employees. US District Court said, you can't do that. I gotta talk about this nuclear option because President Trump has come out and said that basically the Republicans lost these off year elections because they had not invoked the nuclear option. What the nuclear option is real quickly is it's the ability to undermine that procedural vote that requires 60 votes. So we always talked about needing 60 votes in the Senate for most things, not everything, most things. This option, this procedure was first used in 2013, I believe 2013 by then Democrat leader Harry Reid in order to move along some Obama nominations, was used by Mitch McConnell in 2017 for Justice Gorsuch at the Supreme Court. So it has been used, but in a very narrow way. There is concern from leaders that if you utilize this for a government funding showdown, it will be utilized for everything. And it really undermines that 60 vote requirements, which is what requires the bipartisan engagement that they need to have frustration when you have to get 60 votes and you can't get it. The president's basically saying, use the nuclear option, move forward with that and then we can push through my agenda. Consequences are that when Congress flips and the White House flips, the other side can do it as well. So we'll see how that plays out. A lot of pressure. I don't see enough votes for it yet, although there are some senators that previously been opposed to it that are softening to the idea. Bipartisan negotiations. There is ongoing discussions about maybe through the weekend the Senate is going to stay to talk about the idea of, you know, we'll do an ACA vote, premium on premiums. If we open up the government immediately following that, maybe we'll do something about the rehiring of RIFT employees. So there is some level of discussion going on. But I'll tell you, the X factor in all of that is the election and whether if you're in the position of the Democrats and you have this point of leverage in the minority, they're not the majority party. Do you utilize that in order to get something out of this? The other big point I would make is none of this, none of these discussions have been about a long term solution. So it's kicking the can to December 19th to get the work done or maybe into January or maybe into March. So that puts us at the same discussion potentially in the middle of another tax season, which is not a place we like to be. I think that we're going to get close. I think next year is looking next year, excuse me, next week is looking like it's a possibility of things coming together because all of the pressures I laid out. Speaker Johnson has told his folks in the House of representatives they're on 48 hour notice to get back to Washington in case there's a breakthrough in the Senate.
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A
A lot of dialogue here online, Mark, and I know this is another topic that's getting a lot of attention. What's going on with tariffs?
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E
Yeah. So Supreme Court started oral arguments. Kind of interestingly, court watchers, they call themselves court watchers, are kind of describing the initial oral arguments, although they say you never should make predictions at the Supreme Court off orals. But kind of a cool breeze coming from the justices towards the administration's defense of utilizing these emergency powers. They're called International Emergency Powers act, that is from 1977 that they've utilized in order to impose these tariffs. So they didn't go through Congress. They utilized the statutory authority they were given under emergency circumstances to invoke these Reciprocal tariffs between countries. Right. Well, that's been challenged. So some small businesses brought a case to the Supreme Court. Whether they exceeded the authority of that emergency powers is the question. That's before the, before the courts. I think that this is going to have a significant impact on a couple of things. One is there's the potential for refunds of if it's, if it's ruled, you know, the tariffs were not imposed correctly. Are there refunds? What do those look like? What is the, is it a narrow decision on some countries but not others, depending on how it was utilized? Yet to be determined. The other big question is they are thinking about the administration's thinking about a plan B. So they're going to focus on winning at the Supreme Court. No doubt about it, because the reason they use this statute is because it was the broadest and the most appealing to move quickly. But there are other statutes they can utilize. So I think there's going to be a plan B effort that goes into that that they're going to work very hard to figure out. It will not be as broad and deep as what we've seen so far. I think from an international perspective they're paying attention to what the Supreme Court's going to say. I also believe though that they know the intention of this administration and that is to re establish manufacturing in the US and make changes to our dependency on supply chains. It's not just the Supreme Court. We've had several votes in the Senate that have passed that would actually revoke tariffs, reciprocal tariffs on several countries. It would have to withstand a presidential veto. It won't. But this is something where you see Congress reasserting their power as it relates to tariffs. And this also could be where the outcome of that election could have an impact. So with the outcome of that election, midterms coming, what's my vote going to be like on supporting tariffs if it looks like we're losing in the polls?
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D
And Mark, with that said, I mean, you know, they've already adopted some product based tariffs that would offset like your, your Plan B of the White House, Canada now with the wood and furniture tariff that was added to it. And then the other interesting thing about the argument, and I couldn't tell which Supreme Court justice were asking the questions, but really trying to focus on the point that these tariffs are almost like attacks and you know, implementing tax is a congressional responsibility, not White House responsibility.
- [18:24]
E
Exactly. And that will be part of the debate. And then, and then you know, was it truly an emergency? Did it meet the emergency threshold? So that's the other question. You know, we could see something by the end of the year, maybe early spring, but definitely before June.
- [18:42]
A
Well, Mark, quite an update there. Hopefully on the Next Town Hall November 20, the government is back open. So we will, we will. But we'll be bringing you back for Open Forum. We're now going to move into a great discussion, a technology spotlight discussion. We're having our partner Pascal Fannette join us. You heard Mark Peterson talk a little Mark Kozil, talk a little bit about him at the beginning. We've been working with Pascal for the past five plus years. Truly one of the leading innovation experts in America and around the world. He worked at Google, worked at ebay Singularity University. But one thing that is so great about Pascal, and this is what he's been working with us on, is teachable insights. He's been studying and he's working on a project right now with CPA.com studying the impact of AI around these technology solutions that are really supporting the transformation of finance and accounting. Welcome Pasco. Great to have you.
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B
Thank you. And I think I should change my name to Mark. It seems to be a trend here.
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D
That's right.
- [19:56]
A
Part of Radicle. You got a good name. Pascal Fannette from Radicle. Just a little background just on what we really think about@cpa.com every day we wake up with Mark Koziel and others thinking about the members, the firms and members in business and industry. But we also think a lot about the technology ecosystem and we've been doing that for the past 10 plus years. It really helped us with the cloud computing evolution. And cloud computing brought so many new capabilities to the profession. And what we do is we connect with these technology companies, they widen our lens, they help us see things differently. Then when we have a technology trigger like the cloud, like blockchain, like artificial intelligence, we lean in and we do research. And that's what we're doing right now with Pascal. We're going to share some of that. But what we also think a lot about is the transformation of the practice areas. And with cloud computing, client accounting services, that acronym CAAS came about. We didn't really have client accounting services before that. We needed accounting to move to the cloud. We needed bill payment, payroll, all of these things to go up into the cloud. And then we needed firms to think about how to build out those strategies. So we put in place a lot of workshops, a lot of strategies related to the enablement of the technologies. That's what we like to say a lot is the key thing is how you enable the technology. It's not just the technology for technology's sake. So what we're going to do now is we're going to talk a little bit about this massive movement we're in related to AI, generative AI. Pascal is going to talk a little bit about Agentic, the latest movement that's occurring. But Mark Kozio, you look at this. I know you've been here as CEO for just about a year. Well, ChatGPT is about to turn three years old. Look at these numbers. This three year old now has 800 million users. You can see here on this chart. I'm going to ask you, Pascal, to reflect on this. It took, I mean, if I'm reading it right, 13 years for the Internet to achieve that type of usage. What we're going to be talking about in a minute is it's not just the usage, it's the impact. We're really seeing great impact here with the firms and with members of business and industry.
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D
Well, and how does ChatGPT and all the other AI folks actually replace the Internet, what we use the Internet for? You talked about usage, usage of the Internet being replaced by that. So I'm really interested to hear what Pascal has.
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B
Yeah, absolutely. There's a lot to unpack here. And there is, in all fairness, ChatGPT runs on the Internet. So the fact that there is an Internet infrastructure ready for ChatGPT helped without a doubt. We're seeing massive growth. No doubt. As a little data point, I find this really telling. If you have been to the DCPA conference two years now. Two years, nearly two years ago, we actually ran a workshop where we had people do some prompt engineering. And it was new, it was like we asked, we polled the audience and they were like 25% of the audience had used ChatGPT and Gemini and all these other systems. Today, I don't think you will find a single person in that room who would not have used ChatGPT and other things. Eric, if you want to jump into my slides, I would love to walk us through a little bit of an overview of where we are today and what you probably want to put your focus on. So I love to start this off with, well, here's a couple of, first of all, headlines, right?
- [23:53]
A
Yeah, headlines. So just, yeah, we want to get in that a little bit. A headline slide a lot of the members have been talking about over the past couple of weeks. Staggering amounts of revenue gains, investments related to AI. And then also just to drill Down. We talked just about the macro adoption of ChatGPT, and that's just one of the many different generative AI solutions out there. Here's one in our category. And you look at this. This is a program that we like to think about with helping move categories. The future of tax research has changed. It's changed in front of our eyes over the past year. And an entity that's leading the way is Blue Jay. And we're working with them and we're learning about their solution and we're actually putting training in place to help firms better understand the, the opportunity here. But I mean, this client here should have said firms. The 3,500 firms are now using ChatGPT, and it was just a few hundred as of like last summer. Three million questions have been asked year to date. And then this slide here shows the research question growth up to this 3 million versus the disagreement rate. If you look in the right hand side, right now, it's 0.2%. Just the quality of how this curated data set is working is dramatically improving. Pascal, you know this really well. This is what's happening with all of this Genai movement in this final data point. And we can move to a few of your slides. Is that this Solution, there's an OpenAI case study here. You can link to that at the bottom of the slide. They have used 100 billion tokens. That puts them as close to one of the top 100 enterprise users of ChatGPT.
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B
Yeah, and I think Bluejay is a really beautiful example of what generative AI is actually good at, which is you have massive amounts of data. You need to find the needle in the haystack, but not just the needle in the haystack, but you need to make correlations between a whole bunch of needles to bring them together. And having had the pleasure of working with Bluejay a little bit, seeing the tool, it is a phenomenally good use case for generative AI. If we get into my slides, we can talk a little bit about more where this is all leading us to and where it's going. And for me, this journey starts with this quote. This is Stuart Brand. He's a legendary inventor out of Silicon Valley. And he once said in a different context, but he said that this present moment was once the unimaginable future. And I truly believe when you look at generative AI, that's kind of where we find ourselves. Now. I want to make one thing very clear. There's a lot of noise in the market at the moment about generative AI OpenAI particularly being like the poster child of that movement, maybe being in a bubble, being unsustainable, generating $13 billion of revenue, but having expenditures which are orders of magnitude higher. Yes, that is all true. And I don't know if we're in a bubble or not, and I will not speculate on that right here. But the really important thing is, and if we can go to my next slide, the really, really important thing is that you have to understand that AI is not going to go away. And it is disruptive enough already that you have to make decisions about it today. Even if you don't believe that the technology will advance any further, even if you believe that we are in a bubble and this will all collapse, AI is here, it is here to stay, and it will fundamentally change a lot of the things we're doing in our business. And I want to get into a particular aspect of AI which you hear being tossed around, thrown around quite a bit, which is agentic AI. So if you can get to the next slide as a quick essentially definition of what we are even talking about when we talk about agentic AI. And you literally cannot read a press release and headline about AI these days, where it's not that these words aren't being uttered. So agentic AI, if you go to the next slide, is essentially a generative AI system which you have given autonomy, so you give it a goal directed behavior. So basically you let it do something for you on your behalf and it can and it should make decisions on your behalf. The easiest, simplest example is auto classification of transactions, for example. So you have a whole, like you have a ledger, this is your, you know, like your bank statements, for example, and you want to classify those. You can let AI do this for you. We loop the human typically in as a, as a controller, which is already very interesting if you're thinking about this from a job perspective. So the job becomes less a doing rather than a orchestrating and controlling perspective, which that's a whole different conversation we can have about what does this actually mean about the skills we need. But if we get to the next slide, when we look at agentic AI, you can essentially look at it as an increasing capability flow. So on the one hand, at the lowest part, you have the glorified and the personalized help support systems. This is your chatbot you find on pretty much every website these days. They're mostly annoying. Sometimes they work, but then you get into the reactive recommendation space. This is where AI starts to give you recommendations, but you have to trigger it you have to ask it. This is a little bit what Clippy used to do, what 15 years ago and what a lot of the inflow processes now look like. And then we get to proactive recommendations. This is where you use a piece of software and it starts telling you while you're using this software, hey, you should think about X, Y and Z. Then the top flow here is you get into proactive action and then fully autonomous workflows. Proactive action is where the game is mostly today. So this is where when you open up your accounting software, for example, it will give you information, it will automatically do transaction recommendation classifications and you as the user essentially only have to say yes, this is right or no, I need to change this. Autonomous workflows is when you trust the system enough that you actually let it do all these things. If you go to our next slide, where this works today, really, really, really well and it gives you a glimpse of what that future looks like is code generation. So you might have heard of the word vibe coding where people literally, coders literally describe the software they want and then they have AI essentially coded up for them. Initially this was more of an autocomplete system. Now AI can literally open up text editors, write text files for you, it can create folder structures, it can check in your code into your code repository, et cetera, et cetera. This works in coding right now, today, and it's a good glimpse of how far this automation process can go. But do tread carefully. If you go to the next slide, there's a research firm called Penrose and what Penrose essentially wants to explore is their hypothesis is that we will find, we will see firms, companies being essentially run pretty autonomously by AI agents. If you think about it logically, it makes perfect sense. It's the logical conclusion of this whole AI agentic world. And to test this and to test how far along have we come, they have created use cases, specific use cases, a marketing use case, and in this case here, an actual accounting use case. So they took real world data from a firm, from a company accounting data, put it into a AI system and essentially let the AI run closure on the books and you know, like booking transactions and all the work and account would do on these books and then they benchmark this against a human edited and reviewed set of data sets so we know what is right because we have the edited and audited data set and we can compare it to what the AI does. And if you get to the next slide, what you're seeing here is, and I think There's a really important lesson in here is they're using all of the frontier models. They're using OpenAI's model, they use Anthropic's model Claude, they use Gemini, they use Groq. These are general purpose models you can buy for 20 bucks a month as a subscription. When you look at the accuracy, what you see here is displayed is the accuracy of your account balance of your book closing. What you see is that these models all fairly well in a short term, but they fall off a cliff once they get to longer term results. So a couple lessons in here I think which are important to pull out. One is we are probably not quite there with agents. Yes. And Eric already jumped the gun here because we are literally in mostly not in the year of the agent. But as Andre, who's one of the leading thinkers in the AI space builders, said recently in an interview, it is probably more the decade of the agent. I think that's number one. Number two is, and this is important I think too is that you will very most likely see much better results from systems which are built specifically for the profession. So instead of just using OpenAI, you should use a product which is baked into or comes from an accounting software firm, audit software firm. Here's a couple of ideas. Eric alluded that we have my firm, we I have the great privilege to work with CPA.com earlier this year we established an AI working group where we put firms and vendors together in this forum. We meet regularly. I literally am off the call. I was literally on the call about an hour ago. And we talk about where is this industry, where are we going as an industry, as a profession. And here's a couple of ideas on how these technologies will influence your work. And if you look at those categories and we'll not go through all of them, but if you look at those categories, you will see this is a good chunk of the manual labor you're currently doing. And you can fully expect that this will become highly automated up to the point where it becomes fully automated. And then if you go to our last slide.
- [35:21]
A
Yeah, Pascal, and that's one thing I think this is, it's so important and we've talked about these trends before, we talk about the solutions. A lot of questions coming in about some of these different categories. So thank you for these questions and these are things that we can discuss in future sessions. But let's just kind of lightning round here. This is like final recommendations to the town of community.
- [35:44]
B
So here's your Too long, don't Read, do not build your own solution. Please don't, unless you're a very large firm, go and buy solutions. It is insane to think we should build our own solutions. As I mentioned earlier, use those general purpose large language models, OpenAI, Claude, whatever it is, for anything creative, don't use them on your financial data quite yet. They are not good enough. You've seen this with the Penrose example. Then my personal recommendation is experiment with these tools. There's a whole bunch of new tools coming on the market, a whole bunch of startups which are building really fascinating, really helpful things. So my invitation for you is try those out, play around with them, see where they can help you. Then as a last point here, if you're semi technical, so if you know a little bit of coding, maybe you took a computer science class in college, this notion around vibe coding, so this idea that you have AI write code for you is actually fairly mature and if you halfway know what you're doing, you can actually vibe code small custom solutions. So these are little apps which can help you in very specific circumstances, very specific workflows you have in your firm. So those are the things I have to say for you. Again, my invitation for you is definitely keep an eye on the ball because this space is insanely fast moving.
- [37:20]
A
Well, thanks, Pascal. Great partnership, Mark. I guess we can talk a little more about some of this in open forum. But one thing that it does feel like as we've crossed the chasm, we're at this point point of productivity where you're really seeing productivity gains across the economy and clearly with the firms and members in business and industry.
- [37:43]
B
Yeah, absolutely. And I think again, it's really important to acknowledge the fact that there's a lot of hype in the market. No doubt. And at the same time, and this is where you need to hold two diverging views in your head at the same time, what you can do with AI today is spectacular. I personally use AI hours every single day and it helps me with many, many of my tasks. So again, my invitation is keep an eye on it and acknowledge the fact that it's also very fast moving. So something which might have not worked three months ago might very well work very well today.
- [38:21]
A
Okay, thank you. Thanks.
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F
Mark.
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D
Yeah, I thought that was great. The buy versus build. I think that is a great assurance to our market, our town hall community to say that's absolutely the right message.
- [38:42]
A
So with that, Melanie, I'm going to hand it over to you to kind of walk us through some important technical updates.
- [38:49]
E
Sure.
- [38:49]
C
And I'VE heard a lot of or I've seen a lot of the questions coming in about the status of the IRS. So on October 22nd, the IRS did release a statement regarding operations. But since then we also know that the IRS has been slowly bringing back employees. But our understanding, it's like it's trickling in throughout the various divisions. But despite the shutdown, and I've been asked this a lot, all taxpayers are still required to meet their filing and payment deadlines. That has not changed. Refunds are not going to be issued unless they were electronically filed. The returns are error free, and it was requested by direct deposit. The IRS is not responding to correspondence and unfortunately the automated notices are still going on. However, the IRS is accepting payments and processing payments regardless if it's paper or electronically sent to them. Live phone support is limited, but we've heard from members that they have been having success, particularly early in the morning. Transcripts are only really available unless you're using an automated tool. But the IRS is processing those requests, but only for those that are related to disaster relief. The Walk in Center's appeals, all that is canceled and shut down until the government opens again. And then the IRS has also said that since the 2026 filing season is so close to us that they continue to do the testing and preparations for the filing season and they think they'll be on track. However, yesterday in a conference, Danny Warfel was actually asked what he thought about the start of the filing season given the shutdown. And his response was that during his tenure back in 2023 that every minute of preparing for the start of the filing season was critical. Yet if you think about it, when he was there, he was fully staffed and there were also no sweeping tax legislation to implement. So that's something we really have to continue to keep our eye on onto this next slide. I just want to make you guys aware that yesterday the IRS released Notice 2025-62, which did announce penalty relief, but it was to employers and payers, not the individuals. And yes, it is related to the requirements on tips and overtime. And essentially employers and payers are going to face penalties for not correctly reporting the information. But at the same time, the IRS is, is also encouraging them to voluntarily provide as much information as they can to the employee. Now, what we really want to know regarding individuals and the taxpayers, that's expected to be released later on this month and there's a link to a Journal of Accountancy article where we have the recommendations that we've made to the IRS Next slide we have. We just want to make you aware that the IRS is releasing forms already@irs.gov and the ones in particular look interest you are listed on the slide. Let's jump into the round robin. I just want to hit on three things real quickly. The next slide. Yep. So for P10 renewals, it's just a reminder that you do need to renew your preparer tax identification number. The fee is 1875 for that. Also we just learned that through a Treasury report that is dated October 2, but it was released yesterday that they announced the suspension of direct file and they're going to focus their resources on free file instead. What's not listed on this slide? Just as a heads up for those of you that are tax section members, the 2025 engagement letters are now available for download onto the next slide. I'm actually very excited to announce that the AICPA has officially launched their Engage365 which really is a dynamic members only community platform. And and of no surprise, you can join any of the communities. But there's two that are tax focused and that's the individual and small business community and also the corporate and international community. And along with tax there is a personal financial planning community and it really is an area for you to connect with other people that are like yourself. So Eric, I turn it back to you.
- [43:10]
A
Hey Melanie, that was fantastic. Thank you very much. Now going to move into the year end tax and financial planning session. So let's bring Dan Snyder and Mark up. Dan, welcome. Mark, welcome.
- [43:25]
G
Thank you.
- [43:26]
F
Thank you. Good to be here. And glad to introduce Mark Gallegos and he's a tax advisory partner at Port Brown and speaker and writer, part of our masterclass on HR1. So what we wanted to focus on here is hit a couple of the key points that relate to year end and a couple of the biggest tax bills that are out there that have been impactful this year. The Secure act as well as the HR one. So with that, Mark, why don't you kick us off with HR1 and year end?
- [43:57]
G
Yeah, I mean, thanks Dan. Let's take a quick tour through HR1 and what it means for year end tax planning for individuals, business and international clients. Obviously, we know this bill reshapes the playing field. Instead of racing towards expirations or sunsets, we're entering a new era, right? One with fresh deductions, new limits and a few curve balls that we need to watch. So on the individual side, some things I think is year end tax planning should be happening and we need to be all over right now is locking in those tax brackets. Start planning now, really figuring out for our clients the best way to manage and I call it tax bracket management. Really take advantage of the lower tax brackets as we use them up in this progressive tax system. Looking at the SALT deduction and itemized deductions, huge here. You know that $40,000 SALT cap that we now have is a real game changer. So this needs to be part of the year end tax planning. And I, and I always tell people, think of 4, 5, 6, 40,000 for the 4, 500,000 you start to phase out and at 600,000 you lose the 40,000, you're back to 10,000. So key items here, when you put that together with the SALT cap, QBI eligibility and tax bracket management, it's huge. And I think these are areas that could really be a benefit to you and your clients but also at the same time could whack you pretty hard if you're not planning accordingly. Charitable deductions, I mean we had this before, but even more important now, donor advised funds, bunching deductions, QCDs, qualified charitable distributions, appreciated stock gifts, all of these matter, right? And play a role. So when we're trying to play those levers, how do we plan for year end tax planning? Make sure we're thinking about those things. And we can't forget the new deductions. The deduction for tip and overtime pay, car loan interest and the enhanced senior deduction. These all provide some great things. Remember, Congress didn't just write these deductions for us tax geeks, they wrote them for the US taxpayers. Our job is to help these clients see the opportunity and navigate those waters. On the business side, you're talking about, you know, accelerated capex bonus depreciation back to 100% effective after January 19th of 2025. 179 enhanced two and a half million. Great ideas to enhance cash flow, optimizing your QBI deduction. But even more importantly, entity structure and choice of entity, it matters. So make sure, when you're trying to talk to your clients, make sure we have the right entity in place, are we taking advantage of all the things that make sense for them in their organization? On top of that leveraging, if you're passed through the PTED election again, another way with this great workaround of the SALT cap to continue to maximize and find some great ways to save tax dollars for our clients. I think one of the biggest wins of the HR1 bill was the 174 being able to expense that starting at 25 and able to do something with the previous three years. So big win there. But also make sure you're planning that. And again, all these come into play, I think that are very, very important. And when you're thinking about maybe creating deductions, whether it's bonus depreciation or 174expensing, got 461L in play. Right. Look at suspended losses basis adjustments. Are we making sure that we can utilize all this so that all kind of goes in concert together? So we're looking at things through a overview lens, not just one item at a time. And then real quickly on international tax, just a few things that have come out here. The old Gilti Global Intangible Low Taxable Income has now been renamed the Net CFC Tested Income. So again, we can get into that at another time. But very, very important piece there. And then fdii fidi, I call it Foreign Derived Intangible Income has now been named the Foreign Derived Deduction Eligible Income. The important thing with international tax, especially for all those out there, whether you work on it or not, make sure you're compliant with your taxpayers on this. Because obviously there's penalties for not filing these forms and filing them timely. And if you're not comfortable with it, reach out and get the right people involved that can help you. Very important. And before I pass it to Dan, I'd just say this. As we head deeper into this new post HR1 environment in tax planning, the window is now it's wide open, but doesn't stay there forever.
- [48:11]
F
Right.
- [48:12]
G
The differentiator isn't just knowing the tax law, but it's using it and applying it to our clients. So I think there's some huge opportunity there.
- [48:19]
F
Yeah. And Mark, I think that really drives home the point, particularly on the individual side, that it the opportunities are there of connecting tax. These strategies and things you've been talking about aren't done in a vacuum. They're done in the context of the client's overall financial situation. So that financial planning component layered on with the tax is just incredible opportunities for our members.
- [48:42]
G
Absolutely. And we want to make sure we're thinking about that. And we're never getting ahead of our skis, but we're using what we know to help manage that and work with our clients.
- [48:52]
F
All right, if we can go to the next slide, we wanted to talk a little bit about Secure Act. We've had a lot of questions on this in the past, and I just want to try to hit some of the high Points of questions. The first one is the Roth only catch up contributions for age 50 and above. This goes into effect. So one of the questions has been what's the effective date? And you see a lot out there that says it's effective in 2027. That's when the final regs come out. But the reality is that statutorily it's effective operationally for 2026. And so in 2026 we're responsible for a reasonable good faith administration of those rules. So it's important that as we go in 2025, as you start to look and identify, are the plans ready to do this? Not the plan document, but are they ready operationally to be able to do this? The other question that comes up is on the wage based rules rule is 145, 45,000 of SPICA or Social Security FICA wages in the prior year. And so it's box five on the, on the W2. So what that means is no schedule C, no profit sharing. And if it's a schedule, if it's a S Corp, then it would be no K1s. But yes, if it's a W2 within it, within a S corp there. So the other question was, well, who's, you know, it's last year's is last year's earnings. So it's a look back and so a couple things relating to that. It's on the same employer and so if you worked at a different employer and you come in into your first year, then these don't apply to you until the second year. But the key is that the control group and section 414 is definitely part of that. So the control group rules apply. So if you transfer from one company to another, you would apply there. So that's the quick and dirty on the Roth catch up contributions. The second one is a super catch up. I've heard some things on the birth date. The key there is by 1231 then your birthday, your age as of 1231, if it's 60 to 63 there. So focusing on that particular piece. So the rule is $10,000 or 150% of the age 50 catch up. But the key is the birthday to making sure we're handling that this one is effective in 2025. So again for year end making sure that we're giving our identifying those clients that are able to do this and be able to have that conversation going to long term part time rule. This is for those perennially 500, you know, low hours people, 500 hours, they never quite make it to 1,000, which brings them into most plans. And so between 500 and 1,000. So Secure One said it was three years. Secure 2.0 now says that it's two years. So the reason that's important for 2025 is that in 2020, 2023, 2024. I'm sorry, 2023 and 2024, then that would allow them to be able to come into the plan. So once they've had two years of in that 500 to 1000 range, then they would be able to make a contribution the plan operationally, and this is the key for all of these items operationally, they have to put it into place. The actual plan document doesn't get updated until later, so come back to that. But that's effective for this year. So make sure don't miss that. I'm going to Skip the Roth IRA. It's just a Roth 401. RMDs are now allowed. So some good planning issues there. The last point on inherited IRAs is that I've seen a lot of talking about inherited IRAs. The question is, does the beneficiary have to take a contribution or have to take an RMD during years one through nine? And the answer there, people talk about it being has the owner started, did they start taking an rmd? And that's really a misrepresentation. The key is the owner's death in relation to their required beginning date. So if they died before the beginning date, regardless of whether they took their first one or not, then they would. The beneficiary would not have to take the required rmd. If the owner died after their beginning date, then the owner would have to take an RMD based on the longer of either theirs or their owners or the beneficiary's life expectancy. So that's kind of a misunderstanding point. Go to the next slide real quick. So we've talked about this year end. Just identify Those plans, those employees 60 to 63, those people that maybe had an inherited IRA. Key point there is for those people that maybe haven't been taking an RMD because they've had administrative relief from 2020 to 2024. Take a look at it this year because you need to know do they need to take an RMD or not? Businesses with qualified plans, it's a great opener to have a conversation. Mark talked about the different stacking of the thresholds and different things. Don't overlook the qualified plan contributions or withdrawals as levers and tools that can be used to move you up or down if you're trying to stay within a certain bracket. And then don't overlook the mega backdoor Roth conversions, those non deductible to Roth. There's no income limits on it. It's a great way to sock away a lot of extra income there. Last slide here or this one. We have our year end toolkit that's got our planning letters. We've opened up the year end planning checklist for town hall viewers. So that's within our kit. And then the last one just goes over the various other resources we have available. Thank you, Eric.
- [54:23]
A
All right, we're going to move right into Open Forum. So a lot of high quality information and a lot of really great resources here for the membership. So just Mark Kozil, a lot covered here today. Even just going back a little bit more to, you know, to where things stand. A lot of questions on the AI. You know, there's questions related to, you know, you know, how's AICPA approaching this? You know, there's a lot of uncertainty still here with the technology. You know, thoughts related to maybe some of some of the AICPA technical committee activities in that regard?
- [55:07]
D
Yeah, I mean the technical committee is a look at it from a kind of rules and boundaries standpoint. But I also think the opportunities abound. We're going to talk a lot about it on digital CPA coming up a month from now. And I also think, Eric, you've mentioned this before. I keep mentioning this in a lot of different sessions that I do. We have the Executive Roundtable. We are in constant discussion with the tech community that is feeding the CPA profession and making sure that they're well engaged. And they have absolutely been laser focused on AI integration. Back to Pascal's Point about buy it, don't build it. They're, they're getting into our tools on a very regular basis.
- [55:51]
A
Yeah, it's the great equalizer, you know, with these technologies are coming out. I know firms of 10 individuals now utilizing the same AI tool as top 10 or even the big four firms are using. And that's exciting. I think there's different ways for the firms to be thinking about their practice offerings. We talked a little bit about tax today. A lot going on related to the client accounting evolution, FP&A, a lot going on in the audit area. So I think 20, 20, 26th is going to be a great year. Melanie, I know you've been looking at some of the tax questions. Any question you want to take, I.
- [56:32]
C
Mean a lot of the questions on when the filing seems in will start when they're going to stop the E filing for now and we just don't have an answer to that. If you are following what the IRS says, they've said they're on track as far as terminating the E filing for this period in the season. It should be soon, but we don't have a definitive answer.
- [56:53]
D
Melanie, the release of the forums is not far off from where they typically are, is that correct?
- [56:59]
F
Correct.
- [56:59]
C
So far things have been on track and they are releasing guidance.
- [57:06]
A
So thanks for the question set. We utilize these to produce our newsletter which will be going out on Tuesday. It's great having this wide group here on today's town hall. Mark, you and I can kind of just kozio take us through the resources. Another person said, Mark here, we've heard this comment a few times now. The AICPA name is very appropriate. AI cpa, absolutely.
- [57:33]
D
Yep. Let's own the AI space as a profession. We're ready for it.
- [57:39]
A
So we've got a lot of resources here. Here's some additional resources to leverage related to the tax research topic that we covered earlier. There's a national tax conference coming up in D.C. at the end of this year, November 17th and 18th, 50th anniversary.
- [57:56]
D
Eric, 50 years we've been doing this conference.
- [57:59]
A
50 years. I know there's going to be some special events around that. We got Digital CPA coming up. We've got someone from OpenAI, former leader at OpenAI, Zach Kass. I was actually speaking with him yesterday. He's going to be fantastic. He's going to bring some insights to that conference for us and he's very connected to what we're doing. Here's another webinar that we have coming up. Information here is on November 18, prospects and clients evaluate SEO and superboost your brand. And Christy Short, someone who's well known, we've got Transforming youg Business. There's a whole webcast series here being driven by the AICPA PCBS team regarding reinventing your business model. So here we are. We're in early November of 2025. We've got three more town halls to close out the year November 20th. Then we're going to do one live from digital CPA. Both Marcos and I will be there at that event hosting that with others. Lisa Simpson will be with us and then we'll close out the year in December 18th. So Mark, I'll let you have closing remarks here today to the community looking.
- [59:14]
D
Forward to a fantastic year. The last three town halls will be critical as the government will hopefully be back open and we'll have additional ruling and guidance around the IRS and getting everybody ready for this upcoming opportunity season and we hope that it's going to be just as good as years past.
- [59:34]
A
Thanks Mark.
- [59:36]
C
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.
- [59:57]
E
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